SAC Capital Advisors, the hedge fund established by billionaire investor Steven A. Cohen, reached an agreement to sell its reinsurance unit, SAC Re after reaching a settlement agreement to put an end to a criminal case against it.
SAC Capital Advisors sale of the reinsurance business
Commenting on the sale of the reinsurance business, Jonathan Gasthalther, spokesperson for SAC Capital Advisors at Sard Verbinnen & Co. said, “We are proud of our role in founding SAC Re, but we are now focusing on our transition to a family office.”
Also see: SAC Capital To Close London Office
Cohen was one of the several hedge fund managers who established reinsurers over the past years to obtain additional capital for investing while taking advantage of tax benefits outside the United States. Cohen created SAC Re Ltd in 2012.
SAC Capital Advisors’ decision to sell its reinsurance business is not surprising given the fact that it pleaded guilty to the securities fraud charges in connection with the insider trading allegations against the firm by the Department of Justice. The hedge fund agreed to stop managing investments from outside investors and to pay a penalty of $1.2 billion to settle the charges.
Hamilton Reinsurance agrees to buy SAC
Hamilton Reinsurance Group, a privately held company led by Brian Duperreault and Two Sigma Investments agreed to buy SAC Re Ltd. The parties did not disclose the terms of the transaction.
Commenting on the acquisition, Duperreault said, “They’re a technology company that has really been at the forefront of data analysis. In addition to their ability to manage the money of this company, I look forward to working with them to expand the science of insurance.”
According to the statement of the buyers, they will change the name of the reinsurer to Hamilton Re, and its operations will focus on catastrophe risks. The reinsurance company will also look for opportunities in other types of coverage.
Two Sigma Investments will serve as the sole investment manager for Hamilton Re after the completion of the transaction. Duperreault expects to close the transaction by the end the month.