General Re Corp. has entered into a $12.2 million settlement agreement with the U.S. Securities and Exchange Commission.
The SEC said today it has charged Gen Re, Stamford, Conn., with helping to manipulate the reported financial results of American International Group Inc., New York, (NYSE:AIG) and Prudential Financial Inc., Newark, N.J. (NYSE:PRU)
Transactions described as reinsurance arrangements really were loans used to cover up decreases in loss reserves, SEC officials allege.
"Gen Re arranged to sell financial products to AIG and Prudential for the sole purpose of enabling those companies to manipulate their accounting results and mislead investors," Andrew Calamari, associate director of the SEC's New York regional office, says in a statement.
Gen Re has not admitted or denied the allegations in the SEC's complaint, but the company has consented to a judgment enjoining it from aiding in violations of securities laws, the SEC says in a complaint describing the allegations against Gen Re.
Gen Re also will pay the U.S. Postal Inspection Service Consumer Fraud fund $19.5 million, and it will pay AIG shareholders $60.5 million through a civil class-action settlement, SEC officials say. Gen Re already has forfeited about $5 million in fees it earned from participating in the AIG arrangement, officials say.
The SEC and Gen Re are seeking court approval for the Gen Re settlement agreement.
Gen Re representatives could not immediately be reached for comment.
