Covéa buying PartnerRe for $9bn. EXOR taking on reinsurance investments

Covéa buying PartnerRe for $9bn. EXOR taking on reinsurance investments

John Elkann, Chairman and Chief Executive Officer of Exor commented, “The cooperation arrangement signed in the summertime of 2020 with Covéa has been positive in lots of methods and has contributed to a strong level of mutual trust in between our business. Thanks to Jacques Bonneaus management and the outstanding work of his group, PartnerRe has actually further enhanced its efficiency and enhanced its unique capabilities. Together, these have produced a brand-new chance to significantly reinforce PartnerRes development as an international reinsurance business.”
Thierry Derez, Chairman and Chief Executive of Covéan included, “PartnerRe has actually shown in the previous year the importance of its method, risk management and strength in the pandemics unsure environment and the quality of its management group. It would even more strengthen the exceptional prospects for PartnerRe and for our Group, serving the interests of our customers and members, as well as those of our workers and partners.

French mutual insurance company Covéa has actually now agreed and signed a Memorandum of Understanding to obtain Bermuda headquartered international reinsurance company PartnerRe from Italian investment holding company EXOR for the very same $9 billion evaluation as had been on the cards in the deal that fell-apart in 2020. EXOR and Covéa have actually also agreed to expand their reinsurance investment cooperation, involving unique function reinsurance vehicles handled by PartnerRe.
As we reported on Monday, the deal was rumoured to have actually been revived and now the parties have stepped forward and revealed that, as long as a needed assessment with works councils completes effectively, then PartnerRe will be offered to Covéa this time.
The deal is anticipated to reinforce PartnerRes strategy and more validate its status as one of the worlds leading reinsurance business.
EXOR and Covéa had actually previously concurred to a deal that would have seen Covéa paying a cost tag of United States $9 billion for PartnerRe, an amount that represented a roughly 30% earnings on the $6.9 billion that Exor spent for PartnerRe in 2016.
That deal fell apart, after tried renegotiations over the price faltered in the wake of the Covid-19 pandemic and the set failed to find a contract on how to value PartnerRe in the context of the scenario in the first-half of 2020.
Later on in 2020, Covéa and EXOR struck an agreement to cooperate on reinsurance-linked investments moving forward, finding a method to settle with each other over the stopped working PartnerRe offer.
Evaluation was stated to be the main topic of discussion around the rekindling of settlements between EXOR and Covéa and at the very same rate it appears the offer might even be more attractive for Covéa at this time, offered PartnerRe has actually grown its book over the in 2015.
Given that the deal broke down in 2020, PartnerRe has continued to broaden its service and grow its third-party reinsurance capital, perhaps likewise making it even more appealing and which many thought might have improved its valuation also.
The $9 billion price tag is still a premium, as its based upon PartnerRes combined typical shareholders equity value of $7 billion. Preferred Shares provided by PartnerRe and noted on the NYSE are not included in the suggested acquisition.
Covea said the acquisition of PartnerRe is constant with its technique of international growth and through the diversification of risks, geographies and products.
” The entry at scale into the global reinsurance organization represents a further definitive action in the Covéas development, developing as it does a leading tier European varied insurance and reinsurance group,” the company said.
Because the offer broke down the reinsurance-linked financial investment and the very first time arrangements were signed, Covéa now says it has an even higher gratitude for the reinsurance business and for PartnerRe, while a close cooperation between the PartnerRe and Covéa executive and running groups has been cultivated.
” A transaction with Covéa would enhance PartnerRes advancement as an excellent company in its market thanks to a substantial increase in the scale and capital strength that membership of a larger banks would bring, and the worth positioned on this by main insurance customers when reinsuring their threats,” the insurer stated.
Surprisingly, the reinsurance-linked investments, that previously saw Covéa injecting EUR750 million of capital into special purpose reinsurance lorries, so successfully private collateralised reinsurance sidecar type structures, managed by PartnerRe is set to continue, although the investment will now come from EXOR instead.
Exor will acquire the interests in the special purpose reinsurance automobiles handled by PartnerRe from Covéa for around $725 million (EUR625 million).
Keep in mind that the original investment by Covea into them was for EUR500 million on January 1st 2021, with an additional EUR250 million financial investment agreed to be made before the January 1st 2024 renewals.
These special function automobiles will continue to purchase property catastrophe and other short-tail reinsurance agreements financed by PartnerRe.
Covéa, Exor and PartnerRe are set to continue collectively investing into Exor-managed funds with an enhanced positioning of interests.
So the benefits of the previous arrangement to scrap the acquisition are kept and possibly even reinforced for all celebrations.
John Elkann, Chairman and Chief Executive Officer of Exor commented, “The cooperation agreement checked in the summer season of 2020 with Covéa has actually been positive in many methods and has added to a strong level of mutual trust in between our companies. Likewise, thanks to Jacques Bonneaus leadership and the exceptional work of his team, PartnerRe has even more improved its performance and reinforced its unique abilities. Together, these have actually produced a brand-new opportunity to significantly strengthen PartnerRes advancement as a global reinsurance company.”
Thierry Derez, Chairman and Chief Executive of Covéan added, “PartnerRe has shown in the previous year the importance of its technique, risk management and resilience in the pandemics unsure environment and the quality of its management group. Our proposed transaction comes at the correct time with the insurance coverage sector going through an essential improvement. It fits completely with Covéas development and diversity method, our capability to adjust and to bring together complementary knowledge, extend our geographic reach and manage threats on a global basis. It would further reinforce the excellent prospects for PartnerRe and for our Group, serving the interests of our clients and members, in addition to those of our workers and partners. And all this while continuing the reinsurance and investment collaborations we have actually effectively developed with Exor, and preserving strong solvency and capital versatility.”
Jacques Bonneau, CEO of PartnerRe also stated, “Our focus at PartnerRe is on developing a fantastic and varied (re) insurance coverage business, constantly enhancing every element of our business, our expertise and the services we offer to our clients and broker partners. A mix with Covéa represents an essential chance to grow successfully and accomplish more rapidly these objectives.”
The goal is to sign a conclusive sale contract by the end of this year and for the deal to finish in mid-2022.
All of the reasons to pursue this acquisition remained intact even after the break in negotiations due to the pandemic and are maybe now reinforced after the cooperation for some months.
For PartnerRe, keeping the reinsurance connected financial investments is likewise a favorable, as that has actually ended up being a crucial lever along with its other third-party reinsurance capital activities.

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