RenaissanceRe Holdings Ltd. (“RenRe”) has offered to pay $15 million to settle Securities and Exchange Commission (“SEC”) probes into the company’s three-year restatement of earnings. Under the proposed settlement—under which RenRe will not admit or deny any wrongdoing—the reinsurer will pay the SEC $15 million in civil penalties and will disgorge $1. In addition, RenRe will hire an outside consultant to review the reinsurer’s internal controls and policies, among other things. The settlement would not resolve an ongoing investigation by the U.S. Attorney’s office for the Southern District of New York, or a consolidated securities class action lawsuit pending against the company and certain current and former officers.
RenRe acknowledged in its 2004 10-K filing that two transactions that were accounted for as insurance failed to transfer enough risk to meet accounting standards. One was an aggregate excess-of-loss reinsurance agreement under which RenRe ceded business to Inter-Ocean; the other, an agreement to sell reinsurance recoverables to Inter-Ocean. The effect of the restatement was to boost RenRe’s 2001 and 2003 net income by $20.6 million and $1.3 million, respectively, and reduce its 2002 net income by $21.9 million.