Beleaguered Mutual Risk Management has sold off one its Bermuda divisions, its fund administration service, Hemisphere Group of Companies, to American BISYS for $110 million.

Last month Mutual Risk announced that, as a bid to service the company's debt, it had put its fund administration company Hemisphere Management up on the sales block with anticipated proceeds of $100 million.

Yesterday came the much anticipated announcement that it had been sold, but not to a local buyer, instead going to the BISYS Group, Inc., a leading provider of outsourcing services to the financial services sector.

Markets reacted to the change by pushing the company's shares back into a penny stock, dropping to 96 cents, down eight cents or 7.7 percent after a day-time high of $1.25.

Yesterday, Mutual Risk announced it had sold the division for $110 million and was to report a gain on the sale of approximately $100 million after-tax.

An announcement from Mutual Risk said: "The proceeds of the sale will be used to repay indebtedness and the company's banks and debenture holders have approved the transaction."

Last month the troubled Bermuda-based insurer had two rating downgrade and its share price continued drop following the company's release of its fourth quarter results last week - which showed net losses nearing $100 million.

AM Best moved Mutual Risk from 'A' down to 'B', and said the company was on credit watch, with negative implications, while Standard & Poor's lowered its counter-party credit and subordinated debt ratings to single 'B' and single 'B minus', respectively.

At the time, Mutual Risk said it was to sell off Hemisphere and the S&P said: "The announcement of the preliminary sale of (Hemisphere) though raising additional cash, also suggests further deterioration in the business franchise, which could affect future earnings power.

"The revised ratings also reflect management's disclosure that a qualified audit opinion could be provided as of December 31, 2001 which will heighten the difficulty of raising new capital and limit strategic alternatives."

The Hemisphere companies is a leading provider of outsourcing services for the rapidly growing hedge fund market and Hemisphere is the largest hedge fund administrator in Europe and the third largest globally.

BISYS said in a release: "This acquisition extends BISYS' position as a leading provider of value-added services for the investment management industry, and expands its presence and potential in the rapidly growing hedge fund and alternative investment products markets.

"The hedge fund market, which currently has more than $500 billion in assets under management, is expected to have approximately $1.7 trillion in assets by 2008."

Hemisphere provides an extensive range of outsourcing services, including fund administration, record keeping, regulatory and tax services, and corporate secretary and director services. Hemisphere currently services funds with approximately $50 billion in assets under management from service centres in Bermuda, Boston, and Dublin, Ireland.

Its clients are global in scope and represent many of the industry's largest investment managers.

Lynn Mangum, chairman and chief executive officer of BISYS, said: "The hedge fund industry represents a major growth opportunity and strategy for BISYS.

"Acquiring Hemisphere positions BISYS as a market leader in this dynamic segment of the financial services industry, and provides a high-growth platform proven to support the requirements of some of the largest global asset managers."

Tom Healy, Hemisphere's chief executive officer, added, "We have recognised BISYS as a leading provider of sophisticated fund services and a technology innovator, and we have monitored BISYS' growth in terms of its client base, product and service offerings, and global presence.

"We welcome the opportunity to become a strategic component of this dynamic organisation. We are excited about enhancing the services we provide to our existing clients by leveraging BISYS' resources and industry experience, and about the significant opportunities to cross-sell additional services to our respective client bases."

The BISYS Group, Inc. (NYSE: BSG), headquartered in New York City, supports more than 20,000 financial institutions and corporate clients through three integrated business units.

Completion of the transaction is subject to regulatory approval and other usual terms and conditions.

Mutual Risk also announced that it has retained Greenhill & Co., LLC, an independent global merchant banking firm, to assist in developing a restructuring of its balance sheet.

Additional information on the new owners of Hemisphere is available at www.bisys.com.