Former RenaissanceRe chief Stanard fined $100K over Inter-Oc

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February 9, 2009

NEWS; Pg. 4

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Former RenaissanceRe chief Stanard fined $100K over Inter-Ocean deal

JUDY GREENWALD



NEW YORK-A judge has imposed a $100,000 civil fine on former RenaissanceRe Holdings Ltd. Chairman and Chief Executive Officer James N. Stanard for his role in orchestrating a two-part sham reinsurance deal with another reinsurer in 2001, according to the U.S. Securities and Exchange Commission.

In 2006, Mr. Stanard and two other former RenaissanceRe officials-former Controller Martin Merritt and former Senior Vp Michael Cash-were charged by the SEC with orchestrating the deal with Inter-Ocean Reinsurance Co. Ltd., a finite-risk reinsurer now in runoff. Messrs. Merritt and Cash, as well as the company itself, earlier settled with the SEC.

The SEC charged that the effect of that transaction was to smooth and defer $26.2 million of Pembroke, Bermuda-based RenaissanceRe's income from 2001 to 2002 and 2003.

In his bench-trial ruling in favor of the SEC, Judge Gerald E. Lynch said: ``Even if Stanard did not decide, in so many words, `I want to do something fraudulent,' the SEC has demonstrated that Stanard was, at the least, highly reckless with respect to the Inter-Ocean transaction.'' The SEC showed ``by a substantial preponderance of the evidence,'' that Mr. Stanard wanted to engage in a transaction that was ``without economic reality,'' Judge Lynch ruled.

The court, in finding that Mr. Stanard violated federal securities laws, issued the fine and permanently enjoined him from violating or aiding or abetting violations of their provisions. But the court denied the SEC's request that Mr. Stanard, who resigned from RenaissanceRe in 2005, be barred from serving as an officer or director of a publicly held company, stating the SEC has not shown that he ``obtained any ill-gotten gains or unjust enrichment as a result of the fraudulent accounting.''

Asked about the possibility of an appeal, Mr. Stanard's attorney, James D. Mathias of DLA Piper US L.L.P. in Baltimore, said, ``At this point, we're still considering all our alternatives.''

February 13, 2009

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