Regulators charged three former

RenaissanceRe

(RNR) - Get Report

executives, including the insurer's former CEO, with securities fraud, stemming from a scheme to manage the firm's earnings.

The

Securities and Exchange Commission

on Wednesday said it filed a civil lawsuit in federal court in Manhattan against former RenRe CEO James Stanard and the firm's former controller, Martin Merritt. Also charged was Michael Cash, a former senior executive.

The SEC charges come a little over year after the Bermuda-based reinsurer disclosed that the SEC was considering filing civil charges against Stanard over allegations that the firm had misused a so-called finite insurance policy. Stanard was chairman and chief executive officer of RenRe from 1993 until November 2005, when he resigned.

In the lawsuit, the SEC charges that Stanard and the other RenRe executives "structured and executed a sham transaction that had no economic substance and no purpose other than to smooth and defer over $26 million of RenRe's earnings.''

The alleged sham transaction was structured as a finite insurance policy, a type of insurance coverage that regulators have found is prone to abuse.

Finite insurance transactions -- deals between insurers and reinsurance firms to transfer a portion of a projected claim -- have become the scourge of the industry because they are easily abused and lend themselves to earnings manipulation. While many finite insurance contracts are legitimate, others are nothing more than disguised loans from one insurer to another with little or no transfer of risk.

The SEC, federal prosecutors and New York Attorney General Eliot Spitzer have launched a wide-ranging investigation into the misuse of finite insurance transactions.