Three former executives at RenaissanceRe Holdings Ltd. were yesterday accused by the US Securities and Exchange Commission of using accounting tricks to smooth the leading Bermuda reinsurer's earnings.

James Stanard, the company's former chief executive officer and one of its founders, Martin Merritt, its former controller, and Bermudian Michael Cash, who had been senior vice president of specialty reinsurance at a subsidiary, were accused of abusing reinsurance accounting to defer more than $26 million of earnings from 2001 to later years, the SEC said in a suit filed at the US District Court in New York.

"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," said SEC official Mark Schonfeld.

RenaissanceRe restated 2001 to 2004 earnings last year, and Mr. Stanard, Mr. Cash and Mr. Merritt later resigned from the company.

The former executives are the first in Bermuda to face formal charges, although in the US, four former executives of Berkshire Hathaway Inc.'s General Re were indicted this year on charges they used sham transactions to help American International Group Inc. distort its results.

Several other Bermuda insurers have restated earnings since the probe into financial insurance began last year.

The SEC alleges that under the "sham" transaction ? known internally at RenaissanceRe as "Project Christmas Present" ? RenaissanceRe negotiated a financial insurance contract with Bermuda reinsurer Inter-Ocean Re in which it placed income from a strong financial period to be used later to boost earnings or to cover larger than expected claims.

The SEC also claims that the executives misled the company's auditors about the nature of the contract, which should have been treated as a loan, and not an expense.

Attorneys for Mr. Stanard, 57, and Mr. Cash, 38, said their clients denied the charges and would vindicate themselves, while Mr. Merritt, 43, agreed to cooperate with the SEC and has accepted a partial settlement.

RenaissanceRe said yesterday that the SEC staff recommended the commissioners accept the company's offer to settle its part of the probe for $15 million.

The offer was disclosed in July. The company said it would be inappropriate for it to comment on the charges against the former executives, but said "it believes these developments will have no impact on the company's business going forward".

The company's shares fell 77 cents, or 1.4 percent, to $54.51 on the New York Stock Exchange.

Mr. Stanard's lawyer, James Mathias, said the company's board concluded that the single transaction requiring correction was a result of mistakes, not misconduct.

Mr. Cash's lawyer, Martin Perschetz, said his client was "never responsible for RenRe's publicly filed financial statements".

Mr. Cash resigned from the company in 2005 after he after he declined to accept a SEC subpoena for his testimony.

Mr. Merritt consented to orders barring him from working as an accountant or serving as an officer or director of a public company, the SEC said. The partial settlement defers a decision on civil penalties.

"He's glad that he has it resolved and he's looking forward to getting on with his life," said Merritt's lawyer, Robert Plotkin.

If the SEC charges are proven, the three face being ordered to "disgorge any ill-gotten gains" from the conduct alleged in the SEC complaint, to pay civil money penalties and being permanently barred from serving as an officer or director of any company whose securities are publicly traded on a US exchange.

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