MILAN (Bloomberg) — PartnerRe exited junk bonds and shifted funds into property as the Bermudian reinsurer reshaped a $16.3 billion investment portfolio after being acquired by Italian investment firm Exor SpA.

Exor’s approach is to focus on holdings that “we know and understand very well,” Mario Bonaccorso, PartnerRe’s chief financial officer, previously a managing director at Exor, said yesterday at an annual gathering held by the Italian firm. “That’s the philosophy we have applied to PartnerRe.”

Exor, controlled by John Elkann’s billionaire Agnelli family, acquired PartnerRe in a $6.9 billion deal this year, winning a hostile takeover battle with Axis Capital Holdings Ltd to complete the firm’s largest-ever deal.

Mr Elkann, who is chairman of PartnerRe, said last year that he would shun risks related to financial investments at the reinsurer and seek instead to boost returns through superior insurance underwriting.

Exor in March sold its stake in Almacantar, a UK property investment group, to PartnerRe for 485 million euros ($541 million) and used the funds to reduce its debt. The reinsurer exited about $179 million of emerging-market fixed-income holdings in addition to $354 million of high-yield bonds since September 30, according to a presentation on the firm’s website.

It also added to its private-equity fund holdings, up from $228 million to $419 million at April 30.

“Real estate is definitely an asset class which makes sense for PartnerRe to have,” Elkann said on the call. The reinsurer will “will increase its presence” in that arena, he said.

In the presentation, Exor said it expected PartnerRe to generate an annual return on equity of between 8 and 10 per cent over the next decade.

Exor also controls Fiat Chrysler Automobiles NV and Ferrari NV, and raised its stake in The Economist magazine last year.