Anonyme Francaise de Reassurances for $950 million in cash and shares.

Paris-based SAFR, founded in 1884, is a significant European direct reinsurer with assets estimated at about $2.5 billion and $750 million equity. PartnerRe has assets of $1.5 billion and $1.4 million equity.

The acquisition is a major departure for PartnerRe which has emphasised property catastrophe reinsurance. Last year, 97 percent of the company's premium was in this line.

PartnerRe will be the last of the Bermuda "property cats'' to diversify from property catastrophe reinsurance.

The world's reinsurance industry is currently consolidating with premium rates having steadily declined over the last 18 months. Some reinsurers are finding it more challenging to deploy capital back into the reinsurance market.

In February, Swiss Reinsurance Co., the world's second largest reinsurer after Munich Re of Germany, said it would buy the 78.4 percent of SAFR it did not already own, and then sell the company to PartnerRe. Swiss Re will raise its stake in PartnerRe to 21.8 percent from 11.1 percent and will limit voting rights to a 30 percent maximum.

When it was announced that PartnerRe would acquire SAFR, Standard & Poor's placed a PartnerRe's rating on credit watch with negative implications and said the rating may be cut.

While there may be a modest dilution to operating earnings per share in 1997, PartnerRe said it anticipated the transaction will contribute to the company's earnings and growth in 1998 and beyond.

"The realisation of this unique opportunity will provide PartnerRe with an exciting future, bringing completely new dimensions to our company,'' said PartnerRe president and CEO Herbert Haag.

"SAFR's strong position in Europe and the world's developing markets, combined with PartnerRe's existing strengths, will create global synergies, which will translate to added benefit to clients and shareholders through cross-selling opportunities and enhanced utilisation of capital.'' In 1996, PartnerRe wrote 28 percent direct business, and the remainder through brokers. Comparatively, SAFR estimated 80 percent of it business was direct written with 20 percent brokered.

SAFR's 1996 gross written premiums were $700 million, of which 29 percent originated from France, 44 percent from the rest of Europe, 13 percent from Asia/Australia/New Zealand and 14 percent from other countries. Last year, more than half of PartnerRe's premium distribution was in North America.

SAFR, which writes non-life and life business, 93 and seven percent respectively, posted profits of $57 million for 1995, the latest published annual results.

Mr. Haag called SAFR a company of fine reputation and high solvency.

"We found the company well-managed, well reserved and highly motivated to face the new challenge of a combined future with PartnerRe,'' he said.

"At a time when the number of independent providers of reinsurance capacity is decreasing, we believe the combination of PartnerRe and SAFR will create a new choice in global reinsurance.'' Swiss Re will own 79 percent of SAFR's outstanding shares after completing the acquisition of holdings of SAFR held by Assurances Generales de France and French insurance group Athena. Swiss Re has held a stake in SAFR is 1926.

Swiss Re will then commence a cash tender offer for the remaining shares of SAFR which are held by the public.

PartnerRe will then acquire all SAFR shares owned by Swiss Re.

Under the terms of the PartnerRe and Swiss Re agreement, SAFR's purchase price consists of about $800 million in cash and 6.45 million PartnerRe common shares.