Two former executives of Bermuda company RenaissanceRe Holdings Ltd. are fighting in a US court against a regulator?s accusation that they committed securities fraud.

Former chief executive officer Jim Stanard and Bermudian Michael Cash were accused in a complaint filed by the US Securities and Exchange Commission (SEC) last September of using accounting tricks to ?smooth? earnings.

But on January 2, the two men filed motions in the US District Court in New York to have the complaint dismissed, KYC News? Inside Bermuda newsletter has revealed.

Mr. Stanard wants the court to throw out the complaint ?for failure to state a claim upon which relief can be granted?. And Mr. Cash has claimed the US court does not have personal jurisdiction over him, among other arguments.

Mr. Stanard resigned from RenRe, which he had founded in late 1992, after the company had restated its 2001, 2002 and 2003 earnings due to mis-accounted finite reinsurance deal.

Mr. Cash, who had been senior vice-president of specialty reinsurance at a subsidiary, and controller Martin Merritt also quit.

Mr. Merritt was also named in the complaint, but made a ?partial settlement? with the SEC, in which he did not admit guilt, but which bars him from serving as an officer or director of a public company.

After the restatement, the SEC investigated and declared that the finite reinsurance deal had been a ?sham? transaction designed to distort the company?s true financial position.

Effectively, it allowed RenRe to defer $26 million worth of 2001 earnings to later years.

?The defendants enabled RenRe to take excess revenue from one good year and, in effect, ?park? it with a counterparty so it would be available to bring back in a future year when the company?s financial picture was not as bright,? SEC official Mark Schonfeld said.

But in his motion, Mr. Stanard argued that the company?s motives for the transaction with Bermuda-based Inter-Ocean Reinsurance Company Ltd. were ?the essence of reinsurance?.

?The SEC complaint charges that Jim Stanard and other defendants participated in an alleged ?scheme? to the net income of RenaissanceRe Holdings Ltd,? Mr. Stanard?s motion stated.

?According to the complaint, in early 2001 Mr. Stanard and other defendants ? as well as other RenRe officials not named as defendants ? searched for a transaction that would permit RenRe ?to defer approximately $26 million of income to protect itself from future insurance losses?.

?Of course, ?putting away? income to protect against future insurance losses is the essence of reinsurance; according to the SEC, however, in this case doing so somehow amounted to fraud.?

Mr. Stanard went on to play down the significance of the accounting manoeuvre.

?The net effect of the correction of this mistaken accounting treatment ? for one transaction among thousands ? was the historical shifting of roughly $26 million during a three-year period in which RenRe?s net income was roughly ,? Mr. Stanard?s motion contended.

?Given this inconsequential monetary effect at a time when RenRe?s net income was soaring at levels well above any previous periods in its history, there can be little disagreement that the isolated accounting mistake that was corrected in the restatement was not material from a quantitative perspective.?

Mr. Stanard claimed the SEC had failed to allege a material misstatement or omission and asserted the deal had, if anything, done the opposite of ?smoothing? earnings.

?It shifted income from a good year (2001), in which the company had pre-restatement net income of $165.8 million, into (2002 and 2003), in which the company had pre-restatement net income of $377 million and $623 million, respectively,? Mr. Stanard?s motion argued.

?As a result, RenRe?s earnings were actually smoother after the restatement than they had been before, although again, not in an amount that any reasonable investor would considered to be significant.?

Mr. Stanard added that there was no evidence of a need for RenRe to put away funds to protect against disappointing future earnings, as the company was going through a period of sustained profitability and growth.

The motion on behalf of Mr. Cash argued that the SEC complaint contained no allegations that he was actually involved in the transactions in question, or had knowledge of them.

And the motion also argued that ?there is no proper basis for this court to exercise personal jurisdiction over Mr. Cash, a citizen and resident of Bermuda, who is not alleged to have done business, or to have caused any ?effects?, in the United States?.

Mr. Cash?s motion said the SEC complaint had failed ?adequately to allege that the charged misstatements and improper accounting entries by RenRe were material?.

According to the SEC complaint, Mr. Cash, who had 11 years? experience in the insurance industry was put to work on ?Project Christmas Present? almost immediately after joining Renaissance in 2000 as vice president-specialty reinsurance.

In January 2001, Mr. Stanard sent an e-mail entitled ?Levelling Contract?. In this e-mail, he asked Mr. Merritt and a senior officer of Renaissance to try to ?structure a ceded contract that allows us to put away $25 million?.

This e-mail, which Mr. Stanard sent to Mr. Cash and others, was the impetus for the Inter-Ocean transaction.

Mr. Cash began to develop proposals ?to smooth earnings?, according to an e-mail he sent, and kept Mr. Stanard and Mr. Merritt updated on his progress.