Investors led by insurance industry veteran Brian Duperreault have made a deal to buy out Bermuda reinsurer SAC Re.

The company, which was launched with the backing of billionaire trader Steve A Cohen last year, will be renamed Hamilton Re on the closing of the deal, expected to happen this month.

Mr Duperreault, the former chief executive officer of Ace Ltd and Marsh & McLennan Companies, will become CEO of the new business.

The company has fewer than 20 staff and most are expected to stay with the firm, Mr Duperreault indicated to the Wall Street Journal yesterday, stressing that the quality of the management team was one the attractions for the investor group. However, SAC Re CEO Simon Burton is expected to pursue other opportunities.

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.

The hedge fund which managed SAC Re’s assets pleaded guilty in November to insider trading, accepting responsibility for criminal behaviour 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.

SAC Re chief financial officer Jonathan Reiss said in a statement: “This provides clarity for our clients and our regulators and we are confident Hamilton has a bright future ahead.”

In addition to Mr 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.

The sale price was not disclosed, but the Journal gave an estimate of between $500 million and $1 billion, citing a person with knowledge of the deal.

In a statement, Mr Duperreault said: “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 endeavour.

“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.”

In an interview with the Wall Street Journal, Mr Duperreault stressed that he was happy to be partnering with Two Sigma, a roughly $16 billion firm that describes itself as a technology company but is known for its systematic trading strategies.

Two Sigma applies a data-driven approach to investing, and he said he believed it could apply that approach to assessing and pricing risk.

“Insurance is all about analysing data to determine risk and quantify that risk, so I thought this would be a great partnership,” Mr Duperreault said. “I can’t emphasise enough how excited I am about all this.”

An SAC spokesman said in a statement: “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.”

SAC Re’s shareholders’ equity, a measure of assets minus liabilities, was $533 million as of December 31, according to a regulatory filing.