The CEO of RenaissanceRe Holdings, James N. Stannard has received a Wells Notice from the SEC.

A Wells notice informs Mr Stannard that staff at the SEC are preparing to recommend action be taken against, him. He now has time to refute any accusations.

Renaissance has recently had to restate three years of earnings.

The Bermudan-based company has said that it will fully co-operate with the SEC investigation.

Mr Michael W. Cash, Renaissance's vice-president in its speciality reinsurance unit also received a Wells notice. He however resigned on July 11.

Renaissance's restatement was caused by use of nontraditional insurance contracts. Accounting rules can be broken if the contracts do not represent a true transfer of risk to another insurer.

Another name is finite reinsurance or financial reinsurance.

Renaissance is not alone in its run-in with Insurance regulators. American International Group and ACE have both had to restate their financial statements. Berkshire Hathaway has also been caught up in the mess, through its General Re subsidiary.

The problem comes when the contracts are not used to spread the risk. Instead they can be used to smooth earnings or hide bad trading.

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