Axis Capital failed in its bid to merge with rival PartnerRe after Italian investment firm Exor won a bidding war — but the firm is $315 million better off as a result of a massive break fee.

The firm accepted defeat after PartnerRe’s board yesterday announced a U-turn and backed the $6.9 billion cash offer from Exor, controlled by the billionaire Agnelli family, over the $11 billion merger deal with Axis.

Axis CEO and president Albert Benchimol said: “Our proposed transaction with PartnerRe stood to create a powerful mix of two financially strong and independent companies with compelling insurance/reinsurance franchises.

“While I am disappointed that the merger will not proceed, I have no doubt that the best days for Axis Capital our employees, clients, brokers and shareholders lie ahead.

“We have built a powerful global platform on which to continue to advance our hybrid insurance model with three diversified businesses in specialty insurance, reinsurance and accident and health.”

Shares of Axis yesterday closed up 3.8 per cent at $59.77.

Axis also announced that, in the wake of the failed merger, it will restart its share repurchase programme, which has nearly $750 million authorised by the board and which runs to the end of 2016.

A $300 million accelerated share repurchase is expected to start in the near future and continue through to the end of this year.

Mr Benchimol said: “We are prepared to move ahead with our fiscally disciplined growth strategy and a commitment to return excess capital to shareholders in the form of dividends and stock repurchases.

“Since becoming a public company, we have repurchased approximately 92.8 million shares of Axis Capital stock for a total of $3.3 billion.”

He added: “As we go forward independently, I would like to thank our employees for their diligent efforts over the past several months and for their ongoing focus on the ‘business-of-the-business’.

“We have learned a great deal from this process and we intend to apply what we have learned to make Axis Capital a better company in the months and years ahead.”

Axis chairman Michael Butt said: “Prior to PartnerRe reaching out to us last December to discuss a combination of our companies, we were confident in continuing with our strategy as a stand-alone company, building our three strong businesses incrementally.

“We will now proceed with that strategy, with strengthened resolve. We have been very conscious of our responsibilities to our shareholders throughout these negotiations and believe we have demonstrated prudence and financial discipline in our approach.”

Axis was previously linked to a buyout by rival insurer Arch and reports said the firm was prepared to offer at least $65 a share. Axis yesterday declined to add any further comment on its future.