RenaissanceRe, a Bermuda-based property reinsurer whose chief executive may face civil action by the US Securities and Exchange Commission for violating federal securities laws, last night posted net income of $170.2 million.

Quarterly net income rose 42 percent year-on-year from $121.2 million in the second quarter last year, after the company reduced its prior-year catastrophe reserves by $118.2 million, and a net income boost of $108.2 million, after a $10 million adjustment. Partly offsetting this was an adverse development of $29.9 million in RenRe?s reinsurance segment from unprecedented hurricane activity last year. A wave of serious storm in 2004 left reinsurers who sell property-catastrophe policies in Florida facing billion dollar claims.

RenRe?s second quarter net income was $2.39 a share compared to $1.69 a share, in the year-ago period.

Profit from operations, income that excludes net realised gains or losses, was $170.4 million, or $2.37 a share, compared to $148.1 million, or $2.07 a share, in the second quarter a year ago.

Analysts who follow RenRe expected quarterly net income of around $2.04 a share. Chairman and chief executive James N. Stanard said catastrophe premium declined by nine percent in the first half of 2005. The company previously predicted an annual decline of 15 percent in catastrophe premium. He said the positive development was ?the result of higher than expected premium in Florida given the favourable market conditions there?.

RenRe said premiums in its specialty sector had declined modestly in the first six months, and predicted that trend would continue instead of the ten percent growth the company previously predicted. The company?s individual risk business is ?on track? for 35 percent growth, or better, he said.

?All told we?re seeing the increasing scale of our individual risk business as the driver of top line growth,? Mr. Stanard said, as the reinsurance market becomes more competitive and pricing softens.

RenRe?s net policy sales in the quarter were $387.9 million, a 35 percent improvement from $285.9 million a year ago.

The company?s quarterly combined ratio was 52.2 percent compared to 57.5 percent in the year-ago period. A combined ratio measures profitability of an insurer?s main business, underwriting. If the number, listed as a percentage, is under 100, a profit has been made. The lower the number, the more profitable underwriting was in the period.

On Monday, RenaissanceRe said the SEC notified Mr. Stanard, by ?Wells Notice?, that he could face civil enforcement action related to RenRe?s announcement in February of a multi-year restatement to fix accounting errors from a contract it had with Inter-Ocean Reinsurance. Michael Cash, a former senior vice president who refused an SEC subpoena earlier this month and then resigned, also received a ?Wells Notice?, according to the company.

Insurance rating agencies Standard & Poor?s and Fitch both said RenRe?s credit, debt and financial strength ratings could be cut because of uncertainty over management because of the possible SEC action. A.M. Best affirmed its RenaissanceRe ratings, saying it believed the company had a ?strong and seasoned management team capable of maintaining the group?s leading market position in the event that Mr. Stanard should no longer remain in his current position?.

RenaissanceRe has seen a number of senior executives leave or alter their duties since last year. Only Mr. Cash is known to have resigned because of the regulatory issues facing the company. Chief underwriting officer David Eklund left RenRe for personal reasons a year ago, chief investment officer Preston Hutchings left for a job at a rival Bermuda insurer, and president William I. Riker reduced his obligations for medical reasons. Former controller Martin Merritt remains with the company in a different position; senior vice-president in the company?s finance division.

RenRe shares rose $1.22, or 2.84 percent, to $44.20 in trading on the New York Stock Exchange after falling nine percent the previous day on news of the possible SEC action against Mr. Stanard. RenRe investors yesterday bought and sold 2.5 million shares, making it the second day the company?s shares saw volume between five and six times its three-month average for daily trading. RenRe shares have traded between $42.27 and $44.51 in the last year. The company?s second quarter results were released after the close of the US markets.