A group of investors led by insurance-industry veteran Brian Duperreault struck a deal to buy billionaire trader Steven A. Cohen's SAC Capital Advisors LP's reinsurance business.
The deal for Bermuda-based SAC Re Ltd. is expected to close in December, a spokesman representing Duperreault and the investor group said on Monday, declining to specify terms. SAC Re will be renamed Hamilton Re upon the deal's closing, with Duperreault becoming chief executive officer.
The sale of SAC Re, which began operations in 2012 with $500 million in capital from Cohen, Capital Z Partners and other investors, had been expected.
SAC pleaded guilty in November to insider trading, accepting responsibility for criminal behavior by at least six of its employees. That admission could cost the firm $1.8 billion in civil and criminal penalties. A federal judge still needs to approve SAC Capital's criminal guilty plea.
As part of the settlement, SAC agreed to give up managing outside investors' money--terms that would preclude it from investing premiums for a reinsurance company.
"We are proud of our role in founding SAC Re, but we are now focusing on our transition to a family office and our core investing business," an SAC spokesman said in a statement.
Duperreault brings significant insurance industry leadership and underwriting experience to Hamilton as the former CEO of ACE Limited and Marsh & McLennan Companies.
Duperreault left Marsh in December 2012 following a five-year period during which he led the company's turnaround to over $1 billion in annual profitability. Prior to joining Marsh, Duperreault led ACE as president and CEO for almost 10 years from 1994 to 2004, a period during which the company's shareholders' equity grew from approximately $1 billion to more than $9 billion.
In addition to Duperreault, those in the investor group buying SAC Re include affiliates of the New York hedge-fund firm Two Sigma Investments LLC, private-equity firms Capital Z Partners and Performance Equity Management, and some institutional investors.
Two Sigma Investments, LLC will become the sole investment manager for Hamilton Re's investable assets.
"We believe that there is a significant opportunity to bring a fresh approach to insurance and reinsurance, one based not just on world-class underwriting, but also a strong foundation of large data analytics, research, and fully-integrated technology. I am very excited to partner with Two Sigma in this endeavor," Duperreault said in a statement.
"Two Sigma and I have been working together towards the launch of a new company in the industry and this transaction provides the ability to move forward on an accelerated timetable with a strong team in Bermuda."
(Reporting by Jennifer Ablan; Editing by Bob Burgdorfer)