Hurt by rating company downgrades, Bermuda-based Alea Group Holdings Ltd. announced a second deal to sell off renewal rights today as well as the cessation of its underwriting in London.

Alea said it is selling the renewal rights to part of its London-based insurance and reinsurance business to Canopius Holdings UK Ltd., the specialist Lloyd's underwriter.

The company said terms of the agreement include cash payments of 5 percent of gross premiums written offset against cash payments of up to $2.5 million payable January 2006 and January 2007 in each case depending on level of premium expected.

Alea estimated the combined payments over the duration of the agreement will be in the range of $8 million to $12 million. The consideration is capped at $30 million. Assets with a value of less than $200,000 will be transferred. Completion will occur today.

For the full year 2004, the book of business, subject of the transaction, generated $222 million in gross premiums written and underwriting profit of $14.6 million before allocation of central corporate expenses and before the impact of aggregate excess contracts.

Canopius said it expects to target for renewal specific MGA contracts within this portfolio reflecting business consistent with its strategy.

Proceeds will be placed in low risk investments in accordance with the Alea Group's existing investment guidelines until the strategic direction of the Group has been completed. Future distribution of proceeds would be subject to regulatory approval.

Alea said its board has decided to place the company's remaining London-based operations into run-off as soon as practical.

The firm said the renewal rights transaction and decision to cease underwriting was taken as a result of the inability to attract a suitable volume and quality of business stemming from rating agency downgrades in this year's third quarter.

Discussions with potential buyers for certain remaining parts of the Group continue, Alea said. As a result of this announcement Alea is entering into consultation with its 125 London-based employees regarding their contracts of employment. A consultation with employees is a statutory requirement in the UK when a company is potentially making redundancies.

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