Alea Group Holdings, a Bermuda insurer and reinsurer plunged into crisis by the downgrade of its financial strength rating in September, has reached an agreement to sell the renewal rights of one of its US units to a New York-based insurance and financial services firm.

The announcement comes on the heels of Alea, over the past two months, looking at what parts of its business it can sell, and what parts should be put into run-off, or effectively shut down.

Spokesman Keith Anderson yesterday told decisions were still being made on what would happen with Alea?s Bermuda office, with Alea?s holding company being based on the Island.

The company?s troubles follow capital adequacy issues being raised by rating agencies A.M. Best and Standard & Poor?s in September, and the inability to raise new capital after suffering a financial strength downgrade, effectively forcing Alea to reanalyse its future as a going concern.

The company has also seen upheaval in its management ranks over the last year or more.

Under the US agreement announced yesterday, Alea is selling the renewal rights for certain business sold by Alea Alternative Risk, a US unit, to subsidiaries of AmTrust Group, a privately held company.

The company?s head, Rob Byler, will transfer to the new company, as part of the arrangement. And Alea could be compensated up to a maximum of $75 million, under the deal. An initial $12 million cash payment is to be made to Alea by AmTrust when the deal closes.

And over the next five years, Am Trust will pay Alea three percent of any gross premium policies sold under the renewal agreement. Alea could earn up to a maximum of $75 million but expects compensation to be in the range of $20 million to $40 million.

Investors did not react favourably to the announcement on Alea Alternative Risk, which had been one of the company?s bigger profit generators. It generated an underwriting profit of $11.2 million in 2004.

Shareholders pushed down the company?s share price by 11 pence, or almost ten percent, to trading at 101 pence a share. Alea, long backed by buyout firm Kholberg Kravis Roberts, has traded on the London Stock Exchange since a 2003 IPO.

Alea said ?a substantial number? of Alea Alternative Risk?s 110 employees were expected to be offered employment by AmTrust.

The group continues to own US units, Alea North America Insurance Company and Alea North America Specialty Insurance Company.

Any part of Alea Alternative Risk?s business not covered in the deal with AmTrust will be put into run-off, said Alea.

A company that has business in run-off remains open, usually with a skeleton staff, to meet claims obligations from prior policy sales but ceases to sell any new policies.