PartnerRe board to review revised takeover offer from EXOR

PartnerRe Ltd., a commercial insurer and reinsurer which previously agreed to merge with competitor Axis Capital Holdings Ltd., announced this week it “will review” a revised $6.8-billion takeover offer from EXOR S.p.A., an Italian investment firm with a 9.32% stake in PartnerRe.

Neither the proposed merger with Axis Capital, nor the takeover offer from EXOR, has been put to PartnerRe shareholders for a vote.

“Consistent with its fiduciary duties and subject to the existing merger agreement with AXIS Capital, PartnerRe’s Board of Directors, in consultation with its legal and financial advisors, will review the revised EXOR proposal in order to make a recommendation that is in the best interest of the company and its shareholders,” PartnerRe stated May 12 in a press release.

PartnerRe was referring to an offer from EXOR, announced May 12, to buy all PartnerRe shares for $137.50. Unlike EXOR’s first offer – for $130 per share announced April 14 – the latest offer is “not subject to due diligence,” EXOR stated May 12. All figures are in United States dollars.

Both Axis and PartnerRe are based in Pembroke, Bermuda. Both firms have Toronto offices, both offer insurance and reinsurance worldwide and in 2013 both firms put together made about the same amount in non-life reinsurance premiums as Paris-based SCOR SE.

Turin-based EXOR, which is controlled by the Agnelli family, has a variety of investments, including about 44% of voting shares of Fiat-Chrysler Automobile, a majority stake in real estate firm Cushman & Wakefield, and a significant minority in CNH Industrial N.V., whose products include Case and New Holland farm and construction equipment.

PartnerRe – whose board said they rejected EXOR’s first acquisition offer – announced Jan. 25 its board unanimously approved a merger with Axis Capital. If approved by shareholders and regulators, PartnerRe shareholders would own 51.6% of the merged firm and Axis Capital shareholders would own the other 48.4%. After EXOR made its initial $130-per-share acquisition offer, PartnerRe and Axis revised the terms of their merger agreement, such that PartnerRe shareholders would also receive a one-time dividend of $11.50 a share if it were to merge with Axis.

In a press release Jan. 25, Axis Capital CEO Albert A. Benchimol stated that a merger with PartnerRe would form “a top-five global reinsurer” and a “$2.5 billion specialty insurance underwriting business.”

PartnerRe and Axis Capital were ranked 10th and 15th respectively, by A.M. Best Company Inc., in a report issued in 2014. That report, titled How Relevant is the Underwriting Cycle, was released before XL Group plc acquired Catlin Group Ltd. In one table, A.M. Best – an Oldwick, N.J.-based credit rating agency focusing on the insurance industry – ranks the top 15 reinsurers by gross written premiums in 2013. A.M. Best reported that PartnerRe and Axis had $4.59 billion and $2.138 billion gross written premiums respectively in non-life reinsurance in 2013, for a combined total of $6.728 billion – 0.8% less than SCOR SE, which ranked fifth with $6.675 billion. A.M. Best essentially counts the Lloyd’s market as one reinsurer, which ranked fourth (behind Munich Re, Swiss Re and Hannover Re) with $15.594 billion GWP in 2013.

PartnerRe’s specialty lines, worldwide, include property, casualty, motor, agriculture, aviation/space, catastrophe, credit/surety, engineering, energy, marine, specialty property, specialty casualty and multiline, among others.

Axis Capital’s primary coverages include property, business interruption, marine, offshore energy, aviation, credit and political risk, professional lines and liability.

EXOR stated May 12 it is filing “preliminary proxy materials with the U.S. Securities and Exchange Commission” in connection with a special meeting scheduled in July for PartnerRe shareholders.

That filing would enable EXOR “to solicit PartnerRe shareholders” to vote against the proposal to merge with Axis Capital.