Bermuda reinsurer RenaissanceRe Holdings Ltd. will pay a $15 million fine to settle an investigation into ?sham? accounting, the US Securities and Exchange Commission (SEC) said yesterday.

The SEC accused the company of using accounting trickery through abuse of ?finite reinsurance? deals to set aside around $26 million from one year to be used to boost earnings in a future year.

The company neither admitted, nor denied wrongdoing in agreeing to the penalty, which matches an amount it proposed in July last year. RenRe has also agreed to retain an independent consultant to review the company?s internal controls and procedures.

RenRe said yesterday in a statement that the $15 million fine had been ?previously provided for?.

The deal ends a difficult period for the company, which resulted in the departure of founder and former chairman and chief executive officer James Stanard and other officers in 2005.

RenRe restated its earnings in restated its earnings in February 2005 to correct accounting on reinsurance contracts the company bought to limit losses.

As part of a wider investigation into industry misuse of finite reinsurance to ?smooth earnings?, the SEC launched a probe into RenRe?s affairs.

In a statement yesterday, the SEC said RenRe had created 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.

Mark Schonfeld, director of the SEC?s Northeast Regional Office, said, ?This is yet another action arising from our ongoing investigation of the misuse of finite reinsurance products to commit securities fraud.

?In this case, RenRe essentially played a shell game with its revenue ? hiding it in one year when it was not needed, only to reveal it in a later year when it would improve the bottom line.?

In September 2006, the SEC charged Mr. Stanard, as well as RenRe?s former controller Martin Merritt, and a former senior vice-president of RenRe?s principal reinsurance subsidiary, Bermudian Michael Cash. Those charges remain pending in federal court in Manhattan, said the SEC.

RenRe chief executive officer Neill Currie said yesterday: ?We are pleased to have put this difficult chapter in our company?s history behind us.

?Throughout the settlement process, a transition of leadership at the company and a volatile market environment, our company continued to serve its clients and deliver value to shareholders on an uninterrupted basis.

?We also cooperated fully with all authorities in their investigations. We want to express our gratitude for the support provided to us during this period. RenRe will continue to demonstrate leadership in the months and years ahead as a company that strives to operate with the highest level of integrity at every level.?

Investigations into finite reinsurance by the SEC and New York Attorney General Eliot Spitzer, have led to several companies restating their their earnings, including Bermuda companies RenRe, Ace and Max Re.

Like Mr. Stanard, Max Re chief executive officer Robert Cooney stood down over the issue.

Companies have hit trouble when regulators believe there was insufficient risk transfer for a finite insurance transaction to actually be treated in accounts as insurance.

Last month both Mr. Stanard and Mr. Cash filed motions in a US District Court to have the SEC complaints against them dismissed.

Mr. Stanard argued in his motion: ?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. Merritt, who was also named in the complaint, 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.