SAC Reaches Deal to Sell Reinsurance Firm

The billionaire trader Steven A. Cohen is one step closer to converting his onetime $15 billion hedge fund into a family office after a tentative deal to sell a reinsurance firm he formed in 2012.

Hamilton Reinsurance Group — a privately held firm led by the former insurance executive Brian Duperreault and Two Sigma Investments — will be buying the firm, known as SAC Re Ltd., for an undisclosed amount.

The move was not unexpected and comes just weeks after the hedge fund Mr. Cohen founded, SAC Capital Advisors, pleaded guilty to securities fraud charges as part of a long-running federal investigation into allegations of insider trading at the firm. In its plea deal, SAC Capital agreed to pay a $1.2 billion penalty to federal authorities and said it would stop managing money for outside investors.

The firm’s guilty plea effectively forced Mr. Cohen to find a buyer for SAC Re. His hedge fund has managed the reinsurer’s approximately $550 million in assets and was its largest investor. SAC Capital has been returning billions in outside money to investors all year.

Mr. Cohen began shopping SAC Re even before the hedge fund agreed to plead guilty, in preparation for the transition to a lightly regulated family office, which will manage much of Mr. Cohen’s reported $9 billion in personal wealth. Two Sigma had been widely seen as the leading bidder for SAC Re.

“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,” said Jonathan Gasthalter, an SAC Capital spokesman.

Two Sigma will become the sole investment manager for the reinsurer, which will be renamed Hamilton Re after the deal closes. Other investors in the deal include Performance Equity Management and Capital Z Partners, which was an investor in SAC Re, according to a person briefed with the matter.

The sale of SAC Re will mean a return to the insurance business for Mr. Duperreault, who most recently was chief executive of Marsh & McLennan Companies and before that was the chief executive of ACE Ltd. Mr. Duperreault left Marsh in December 2012 after a five-year stint at the company’s helm.

The SAC Re deal is expected to close by year’s end.