UPDATE: 12/11/12, 10:20 a.m. EST. The names of the lawyers from Willkie advising longtime client SAC Capital have been added to the third and fourth paragraphs of this story.

A month after agreeing to a $1.8 billion settlement on insider trading charges, hedge fund billionaire Steven Cohen’s SAC Capital Advisors has agreed to sell its SAC Re reinsurance arm to an investor group led by former Marsh & McLennan CEO Brian Duperreault.

While terms of the deal were undisclosed, The Wall Street Journal and The Royal Gazette of Bermuda report that Duperreault’s investor group will pay between $500 million and $1 billion for Bermuda-based SAC Re. An affiliate of SAC Capital is the largest shareholder in SAC Re.

As part of its deal with federal regulators—structured as a $900 million fine, another $900 million in forfeitures and a $600 million settlement with the Securities and Exchange Commission earlier this year—SAC Capital is in the process of shutting down its advisory business and converting itself to a family office to manage the assets of Cohen and certain employees and their relatives. Willkie Farr & Gallagher, which has been advising Cohen and SAC Capital in their dealings with regulators, is counseling the hedge fund on its sale of SAC Re through corporate partner Robert Stebbins.

Stebbins, who has done work for SAC Capital since 1995, is leading a Willkie team working on the SAC Re sell-off that includes tax partner James Brown, IP partner Eugene Chang, employee benefits partner Jordan Messinger and associates Rajab Abbassi and Andrew Endicott. SAC Capital has been a longtime Willkie client, with litigation partner Martin Klotz handling a number of high-profile matters for the $15 billion hedge fund in recent years.

Akin Gump Strauss Hauer & Feld corporate partner Jeffrey Kochian, who joined the firm’s New York office in 2008 from Gibson, Dunn & Crutcher, is leading a team from his current firm advising SAC Re on its sale that includes tax cohead Stuart Leblang, employee benefits senior counsel Austin Lilling and counsel Nyron Persaud, and associates Timothy Clark, Alyssa Dossick, Brett Fieldston, Erika Leon and Kate Powers.

Kochian and Leblang advised SAC Capital last year on a $500 million private placement that launched SAC Re, helping Cohen join fellow hedge fund magnates like Third Point’s Daniel Loeb and Greenlight Capital’s David Einhorn in the reinsurance business. (Bloomberg reported at the time that hedge funders were drawn to reinsurance because it secured money not subject to investor withdrawals.)

The Duperreault-led group buying SAC Re, which is known as the Hamilton Reinsurance Group, is being advised on the transaction by Skadden, Arps, Slate, Meagher & Flom. M&A partners Todd Freed and Christopher Ulery and corporate finance partner Dwight Yoo—who was promoted to partner last year—are leading a team from the firm working on the deal.

Other members of the private investor group include New York–based hedge fund Two Sigma Investments and private equity firms Capital Z Partners Management and Performance Equity Management. Former Akin Gump counsel Craig Fisher serves as general counsel and chief compliance officer for New York–based Capital Z, while Two Sigma’s general counsel is Matthew Siano.

SAC Re’s roughly 20 employees—including general counsel Victoria Guest—are expected to be absorbed into the renamed Hamilton Re under the ownership of Duperreault’s investor group once the deal is completed by year’s end.

The in-house legal and compliance team at SAC Re’s soon-to-be former parent SAC Capital is led by chief compliance officer Steven Kessler and general counsel Peter Nussbaum, the latter of which appeared in court last month as the hedge fund entered a guilty plea to resolve the federal government’s criminal insider trading probe.

Since SAC Capital inked its insider trading settlement—Paul, Weiss, Rifkind, Wharton & Garrison and Willkie took the lead for the Stamford, Conn.–based hedge fund in negotiations with prosecutors—its founder Cohen has been busy selling off select pieces of art from his private collection that recently raised about $88 million, according to news reports.

Cohen, an avid art aficionado long considered one of Wall Street’s most prolific traders, has watched federal prosecutors indict several former SAC Capital employees on insider trading charges. Last month a federal judge ruled that the hedge fund’s plea deal should not preclude the trial of former SAC Capital portfolio manager Michael Steinberg from going forward, according to sibling publication The Litigation Daily. Steinberg, who is being represented by Kramer Levin Naftalis & Frankel litigation cochair Barry Berke, is currently on trial in a Manhattan courtroom.