Tuesday, February 6, 2007
The SEC filed settled securities fraud charges against RenaissanceRe Holdings Ltd. (RenRe), a property catastrophe reinsurance company, for creating a sham reinsurance transaction that had no economic substance and no purpose other than to smooth and defer over $26 million of earnings from 2001 to 2002 and 2003. In effect, the transaction enabled RenRe to create a "cookie jar" into which it put excess revenue in one good year, to be pulled out in a future year to increase income.
In settling the Commission's charges, RenRe agreed to an injunction, to retain an independent consultant, and to pay a $15 million civil penalty, among other things. See Reinsurer RenaissanceRe Settles Securities Fraud Charges for Sham Reinsurance Transaction.