March 18, 2016 by Canadian Underwriter
PartnerRe Ltd., a Bermuda reinsurer and commercial primary insurance carrier with a Toronto branch office, announced Friday its acquisition by EXOR S.p.A. has been completed and former chief executive officer Patrick A. Thiele will now sit on its board of directors.
The transaction – valued earlier at US$6.9 billion – was approved in November, 2015 by shareholders of Pembroke, Bermuda-based PartnerRe, which at the time was traded on the New York Stock Exchange.
In addition to reinsurance, PartnerRe writes commercial auto, agriculture, aviation/space, credit/surety, engineering, energy and marine, among others.
Turin, Italy-based EXOR is controlled by the Agnelli family. EXOR’s holdings include significant minority interests in Fiat Chrysler Automobiles N.V. and power train manufacturer CNH Industrial N.V., whose products farming and construction equipment under the Case and New Holland brands. EXOR also owns The Economist magazine and the Juventus Football Club.
EXOR’s acquisition of PartnerRe was the third-largest M&A transaction made in 2015 in the property and casualty insurance industry, “where either the target or acquirer has U.S. operating property/casualty insurance subsidiaries,” A.M. Best Company Inc. stated in a report released in February, titled 2016 Review & Preview of U.S. P&C.
PartnerRe said those holding shares prior to the effective time of the EXOR acquisition “are entitled to receive per share consideration of $137.50 and a one-time special cash dividend of $3.00 per share.” All figures are in United States dollars. PartnerRe said it “is also paying a pro-rata quarterly dividend of $0.13 per common share for the period March 1- March 17, 2016, payable to common shareholders of record as of immediately prior to the effective time of the Merger.”
The firm was ranked ninth, by A.M. Best, on a list of the top 50 global reinsurance groups. In its segment review on global reinsurance released Sept. 2, 2015, Oldwick, N.J.-based A.M. Best ranked the reinsurance groups by gross reinsurance premiums written, in life and non-life, in 2014. In non-life reinsurance, PartnerRe ranked 10th in 2014, behind Munich Re, Swiss Re, Berkshire Hathaway, Hannover Re, SCOR, the Lloyd’s market, Everest Re, China Reinsurance Corp. and Korean Reinsurance Company.
PartnerRe reported net written premiums, in non-life, of US$4.022 billion in 2015. It reported net income of US$107.5 million on revenue of US$5.43 billion last year.
In 2015, PartnerRe paid US$315 million in amalgamation termination fee and reimbursement of expenses to Axis Capital Holdings Ltd., also of Pembroke, Bermuda. The boards of both Axis Capital and PartnerRe announced Jan. 25, 2015 that they were recommending their shareholders approve a merger. Had that merger proposal gone through, a combined firm would have formed a global top 5 reinsurer, Axis Capital said at the time.
But then on April 14 EXOR, announced it was also offering to acquire PartnerRe.
“Although the Axis Capital deal originally was accepted by PartnerRe management, Exor SpA made several increasingly lucrative hostile offers eclipsing the monetary value of the Axis Capital offer,” wrote A.M. Best in a report – titled Return of the Mega Deal During First Half of 2015 – released in September, 2015. “The final offer from Exor was ultimately accepted after a proxy advisory company recommended shareholders vote in favor of the Exor offer.”
In that report, A.M. Best noted there were 76 announced transactions in P&C insurance, with a total value of about US$21 billion, in the first half of 2015. It counted the proposal to merge PartnerRe with Axis Captial but not EXOR’s offer to acquire PartnerRe.
When Axis Capital and PartnerRe originally announced their proposal Jan. 25, 2015, Costas Miranthis stepped down as PartnerRe CEO and resigned from the board. David Zwiener assumed the position of interim CEO. At the time, Zwiener was chairman of the PartnerRe board of directors’ audit committee. He was previously chief financial officer at Wachovia Corp. and president and chief operating officer of the property and casualty operations at Hartford Financial Services Group Inc.
On March 18, 2016, PartnerRe announced its board of directors will now include Thiele, CEO of PartnerRe from 2000 until his retirement in 2010. The Insurance Hall of Fame reports that Thiele was born in Wisconsin in 1950 and joined the investment department of St. Paul Fire and Marine in 1978.
PartnerRe also announced the appointment of Brian Dowd, 53, to its board. Dowd, who joined ACE Ltd. in 1995, was appointed vice chairman of ACE in May, 2009, ACE said in its annual report for 2010. ACE changed its name to Chubb Ltd. in January, 2016 when it closed its US$28.3-billion acquisition of The Chubb Corp.
The three other PartnerRe board members are now:
•EXOR chairman and CEO John Elkann (above), who was born in New York in 1976 and is also chairman of Fiat Chrysler;
•EXOR managing director Mario Bonaccorso, a former research and development telecom engineer at Qualcomm Inc., who was born in Italy in 1976; and
•EXOR chief financial officer Enrico Vellano, who was born in Italy in 1967 and started his professional career in 1992 with Arthur Andersen.
As of Feb. 15, 2016, the chairman of PartnerRe’s board was Jean-Paul L. Montupet, 66, who was executive vice president of Emerson Electric Co. from 1990 through 2012.
PartnerRe’s board was also comprised of:
•Judith Hanratty, 72, a former executive with British Petroleum a former member of the Council of Lloyds of London;
•Jan H. Holsboer, 69, former Chief Executive Officer of Netherlands Reinsurance Group N.V;
•Roberto Mendoza, 70, whose previous positions include managing director of Goldman Sachs Services Ltd. from 2000 to 2001, chairman of XL Capital Ltd. and non-executive director of ACE;
•Debra Perry, 64, who held various positions with Moody’s Investors Service Inc. between 1992 and 2004;
•Rémy Sautter, 70, chairman of the supervisory board of RTL Radio France;
•Greg Seow, 62, president of the Singapore Government Council for Estate Agencies; and
ªKevin Twomey, 69, former president and chief operating officer of The St. Joe Company.
Other large P&C transactions announced in 2015 include:
•ACE’s acquisition of Warren, N.J.-based Chubb, originally announced July 1, 2015;
•Tokio Marine Holdings Inc.’s US$7.5-billion acquisition of Houston Casualty Company’s corporate parent, HCC Insurance Holdings Inc. The acquisition closed Oct. 27, 2015;
•XL Group PLC’s US$4.1-billion acquisition of Catlin Group Ltd., which closed May 1;
•CM International Holding PTE Ltd.’s US$2.235-billion purchase of Sirius International Insurance Group Ltd. from White Mountains Insurance Group Ltd.; and
•The US$1.88-billion acquisition, by Toronto-based Fairfax Financial Holdings Ltd. (the corporate parent of Northbridge Insurance and OdysseyRe), of the majority of Brit PLC, a London-based Lloyd’s insurer of which the Ontario Municipal Employees Retirement System owns a minority interest.