Private investors led by former ACE Ltd. vice chairman Don Kramer are to buy parts of Rosemont Re from troubled UK parent Goshawk Insurance Holdings Plc and plan to set up a new Bermuda-based reinsurer.

The $2.5 million sale was announced on Saturday by Goshawk, which saw Rosemont?s ratings downgraded last week and put the company into run-off.

Bloomberg News reported that the investors will create a new Bermuda-based reinsurance company with capital of at least $750 million. The company would be the first Class Four reinsurer to be formed in Bermuda since Hurricanes Rita and Katrina smashed into the US Gulf Coast, causing tens of billions of dollars worth of damage.

Russell Brooke and Jon Beck will resign as directors of Goshawk and Rosemont upon completion of the agreement.

It seems likely that the group will buy Rosemont?s renewal rights, an option that Mr. Beck said last week was being negotiated.

Rosemont Re went into run-off ? meaning it will no longer write new business but will honour claims from existing customers ? on Tuesday after receiving the ratings downgrade.

Mr. Kramer is a highly respected insurance executive who founded Bermuda-registered Tempest Re in 1993 in the wake of Hurricane Andrew, which sent catastrophe insurance premiums soaring.

Tempest Re was later bought by ACE, and Mr. Kramer went on to hold a number of senior posts in the Bermuda insurance giant. He resigned from the company in May this year after stepping down from the board a year earlier.

Mr. Kramer was also the founder and chairman of the board of NAC Re Corp (a company that was later to be bought up by Bermuda-based XL Capital), president of Carteret Federal Savings Bank and chairman and chief financial officer of KCP Holdings and National American Insurance Co. of California, a board member of National Benefit Life Insurance Company of New York City (a Citigroup subsidiary) and was until recently the chairman of Assured Guaranty Corporation, the financial guaranty reinsurer that ACE spun off last year.

Goshawk was forced to stop insuring in the Lloyd?s of London market in 2003 and was fined by Britain?s Financial Services Authority last week over a failure to monitor underwriting at Lloyd?s.

A.M. Best downgraded Rosemont?s financial strength rating to ?B? (Fair) from ?A-? (Excellent) and the issuer credit rating to ?bb? from ?a-? and assigned them a negative outlook. It was also said that Rosemont Re would likely go into run-off.

Goshawk noted in a statement on Thursday that Best had previously announced on September 9 that it was reviewing the financial strength of Rosemont Re.

After noting Best?s rating action, Goshawk said: ?This will severely impair Rosemont Re?s ability to write existing or new business and makes the prospect of run-off more likely.?

The bulletin also noted: ?The Board continues to believe that in the last two years, the risk portfolio, underwriting team and technical ability it has developed, has value. It will continue to seek ways to maximise this value for shareholders. A further announcement will be made when appropriate.?

Rosemont went into run-off after it failed to replenish capital drained away by heavy storm losses, Mr. Beck, the chief financial officer said last week.

In total, about 37 percent of the Rosemont?s shareholders? equity ($242 million at June 30) was wiped away by $90 million in net losses from Katrina and Rita, two hurricanes which devastated the US Gulf Coast.

Mr. Beck said last week he hoped the company?s 20 staff may be offered jobs with an unnamed company Rosemont management are currently negotiating with over renewal rights.

Under this scenario, the third party would purchase the right to sell policies to insurers already clients of Rosemont, when it came time to renew marine and property policies. Reinsurance is effectively insurance for insurers, with reinsurers contracting to take on some of the risk in policies already sold to companies and individuals.

Mr. Beck would not be drawn on whether management are talking with an already established company, or persons who may be looking at starting up a new Bermuda venture. ?All I can say right now is we are talking to a number of parties.?