BISYS Group Inc. has agreed to sell its operations to Citigroup Inc., and Citigroup says it will keep the BISYS mutual fund and hedge fund operations and sell the company’s retirement and insurance services divisions to J.C. Flowers & Company L.L.C.

Citigroup, New York, will end up paying about $1.5 billion in cash for the mutual fund and hedge fund operations, and J.C. Flowers, New York, a private equity firm, will pay $645 million for the BISYS retirement and insurance operations, according to Citigroup.

The BISYS insurance services business provides independent wholesale distribution for life insurance and commercial property-casualty insurance manufacturers.

J.C. Flowers may be best known in the insurance industry as the private equity firm that acquired Fox-Pitt, Kelton, New York, an investment bank, from Swiss Reinsurance Corp., Zurich.

J.C. Flowers plans to combine a commercial insurance business it already owns, Crump, with the BISYS commercial insurance operations, according to BISYS, Roseland, N.J.

Citigroup and J.C. Flowers hope to complete the deals by the end of the year.

The deals are subject to BISYS shareholder approval and to regulatory approvals in the United States, Ireland and Bermuda, Citigroup says.

The Citigroup and BISYS boards already haved approved the deals.

BISYS sold its financial services education division to a unit of the Washington Post Company, Washington, in 2005.

BISYS began reviewing “strategic alternatives” for the rest of the company in August 2006, after it ran into accounting challenges that interfered with efforts to file financial reports with the U.S. Securities and Exchange Commission in a timely fashion.

“We are pleased at this outcome of the strategic alternatives process,” BISYS Chairman Robert Casale says in a statement about the Citigroup transaction and the J.C. Flowers transaction. “We believe this deal is the best transaction for our shareholders and clients, while providing new opportunities to our employees.”