A Gen Re executive today became the second top player to confessin federal court to a role in a $500 million sham reserving schemewith American International Group.

The admission in U.S. District Court in Alexandria, Va., byRichard Napier, a former senior vice president for Stamford,Conn.-based Gen Re, came as part of a plea agreement with theEastern District of Virginia U.S. Attorney's Office and U.S.Justice Department's criminal division.

Mr. Napier's confession follows yesterday's plea by JohnHouldsworth the former chief executive of Gen Re subsidiary CologneRe Dublin. Gen Re is a unit of Omaha, Neb.-based BerkshireHathaway.

Both pleaded guilty to one count of conspiring to falsify SECfilings, and both as a consequence face up to five years in prison,a fine of $250,000 and twice any gain or loss. At a minimum theywould face a year of probation. Judge James Cacheris set Dec. 9 forMr. Napier's sentencing.

In 2000, when the scheme was allegedly hatched by AIG's thenchairman, Maurice Greenberg, with Gen Re's chief executive officerat the time, Ronald E. Ferguson, Mr. Napier was responsible formanaging relations with AIG, according to court filings with hisplea.

According to the filing, the two CEOs agreed to a shamtransaction enabling AIG to book $500 million in reinsurancereserves, even though AIG assumed no real risk in thetransaction.

According to federal prosecutors, Mr. Napier was told that AIGwanted the transaction in response to stock market and insuranceindustry analysts' criticism of AIG's previous reduction ofreserves.

The arrangements, according to prosecutors, were done throughGen Re's Dublin-based unit outside the United States so that itwould not be apparent that Gen Re and AIG were booking thetransaction in inconsistent ways.

AIG has since admitted the transaction was improperlydocumented, and has revised its annual financial statement toreflect changes--thus reducing the company's book value by $2.7billion.

Mr. Greenberg and Mr. Ferguson have both refused to answerquestions and invoked their Fifth Amendment right against selfincrimination when questioned by state and federal investigatorsabout the transaction.

The Justice Department said Mr. Napier, in a related civil casebrought by the SEC, has agreed to a judgment barring him fromserving as an officer or director of a public company.