Torus Insurance Holdings (Bermuda) Ltd. is set to take over the renewal rights of New Castle Re contracts, signalling the continued withdrawal of Citadel Investment Group (CIG) from Bermuda's reinsurance market in the face of increasing pressure on its managed hedge funds.

The move will see Torus acquire some of the New Castle Re personnel, but the service of the existing New Castle portfolio will not be transferred to Torus.

Torus will also provide run-off services to CIG Re, an affiliated company of New Castle Re, which was launched in the wake of Hurricane Katrina with $500 million of capital.

On Wednesday The Royal Gazette reported that Bermuda-based reinsurer New Castle Re's A- rating from AM Best had been placed under review as its hedge fund operator owner Citadel deals with redemption requests and dwindling assets.

This followed the closure of Citadel's collateralised Bermuda reinsurer CIG Re and the suspension of $1.2 billion in investor redemptions from its Kensington Global Strategies Fund Ltd. and Citadel Wellington LLC funds.

Kensington and Wellington - Citadel's two largest funds which capitalise New Castle Re - are down almost 50 percent so far in 2008.

Citadel had guaranteed $800 million in internal loans to the Kensington and Wellington funds, predominantly with assets from the reinsurance business.

"We are delighted to acquire a highly-respected and talented underwriting team, along with the renewal rights on an attractive book of property catastrophe business," said Clive Tobin, who will assume the role of CEO of Torus on January 1, in a statement. "Establishing a reinsurance operation is part of our strategic plan."