NEW YORK—Assurant Inc. last week placed five top executives--including the insurer's chief executive officer--on "administrative leave" amid an expanding federal investigation into the company's use of finite reinsurance.

The move by New York-based Assurant's board of directors comes as the U.S. Securities and Exchange Commission is considering bringing civil fraud charges against the executives as part of the agency's ongoing probe of finite risk products.

Assurant announced last week that Robert B. Pollock, president and CEO; Philip Bruce Camacho, executive vp and chief financial officer; and Adam Lamnin, executive vp and CFO of the Assurant Solutions/Assurant Specialty Property unit, received so-called Wells notices from the SEC related to "certain loss-mitigation insurance products." Earlier this month, such notices were issued to two other Assurant executives (see box).

Wells notices indicate the SEC staff plans to recommend that the agency bring a civil enforcement action for violations of federal securities laws. Under the SEC's procedures, Wells notice recipients can respond to the SEC staff before staff members make a formal recommendation to pursue civil charges.

A spokesman for Assurant said he could not speculate on how the individuals will respond to the SEC.

"After careful consideration, the board has decided to place all five employees who have received Wells notices on administrative leave, pending further review of the matter," Assurant said in a statement. The insurer continues to pay the executives, a spokesman said.

The Wells notices against the group of executives come more than two years after Assurant, like several other industry companies, was subpoenaed by the SEC as part of its investigation into finite risk products. Federal officials have been looking into whether companies have improperly used finite coverage to smooth earnings and conceal their true financial position.

According to a company spokesman, the SEC is centering on a catastrophe reinsurance contract that expired in 2004 and was not renewed. He declined to provide the reinsurer's name. In a 2005 SEC filing, Assurant said the company "has concluded that there was a verbal side agreement with respect to one of the company's reinsurers under its catastrophic reinsurance program."

Assurant said it is cooperating with regulators' finite probe. "Over the past two years, Assurant has cooperated fully with the SEC's industrywide investigation and will continue to do so," said John Palms, Assurant's chairman, in the statement.

The insurer will work with federal officials "to try to conclude the investigation in a timely manner," a spokesman said.

Following the announcement, rating agencies Standard & Poor's Corp. in New York, Chicago-based Fitch Ratings and Oldwick, N.J.-based A.M. Best Co. Inc. placed Assurant and its subsidiaries under review.

"The uncertainty surrounding the aftermath of the recent announcement and the distraction of management highlight serious corporate governance concerns," said S&P credit analyst Shellie Stoddard in a statement. "Furthermore, it remains uncertain whether growing reputational issues could impair large credit-partner/client relationships, which could affect Assurant's competitive position and cut future revenue and earnings," she said.

Last week, Assurant Inc.'s board of directors chose J. Kerry Clayton and Michael J. Peninger to step in as the company's interim president and CEO, and interim CFO, respectively.

Mr. Clayton previously served in various senior management roles at Assurant, including CEO of the company from 2000 till his retirement in 2006. Mr. Peninger has been the president and CEO of Assurant Employee Benefits since 1999. Mr. Peninger will be succeeded as head of Assurant Employee Benefits by John S. Roberts on an interim basis.

Meanwhile, law firm Kahn Gauthier Swick L.L.C. in New Orleans said in a statement last week that it has "initiated an investigation" into Assurant "to determine whether it has violated federal securities laws," noting that shares of Assurant dropped 12.7% to $51.35 after the Wells notices were announced.

A representative for the firm declined to comment on whether it plans to file a lawsuit against the company.