Exor and Covéa sign MoU for the sale of PartnerRe
The sale of Bermuda-based reinsurer PartnerRe to French mutual insurer Covéa for $9 billion is set.
A statement on the Exor website said that the transaction would reinforce PartnerRe’s strategy, further confirming its status as one of the world’s leading reinsurers.
By the end of the year, the parties intend to sign a definitive sale agreement with the transaction closing in mid-2022, based on PartnerRe’s audited consolidated common shareholders’ equity as at December 31, 2021, and subject to approvals from regulatory and competition authorities.
The parties have already agreed that the businesses and geographies of Covéa and PartnerRe are a good fit.
They say that they do not anticipate a material impact on employment or customer relationships.
Covéa and Exor, the diversified holding company controlled by the Agnelli family, have signed a memorandum of understanding under which Covéa would agree to acquire one of the last "Class of ‘93“ reinsurers.
The $9 billion (approximately €7.7 billion) to be paid by Covéa on the closing of the transaction is based on a consolidated common shareholders’ equity value of $7 billion.
Preferred shares issued by PartnerRe and listed on the New York Stock Exchange would not be included in the proposed acquisition.
The Exor statement said that the transaction was consistent with Covéa’s long-term strategy. Entering the global reinsurance business at this high level represents a further decisive step in Covéa’s development, creating as it does a top-tier European diversified insurance and reinsurance group.
The statement continued: “PartnerRe, as one of the world’s leading reinsurers, is a natural partner for Covéa.
“The reinsurance and investment co-operation agreements implemented by Exor, PartnerRe and Covéa in August 2020 have resulted in an even-greater appreciation by Covéa of the shared culture with PartnerRe of customer service excellence, deep technical expertise and underwriting discipline.
“This has also facilitated a close co-operation between the PartnerRe and Covéa executive and operating teams.
“A transaction with Covéa would reinforce PartnerRe’s development as a great company in its industry, thanks to a significant increase in the scale and capital strength that membership of a larger financial institution would bring, and the value placed on this by primary insurance clients when reinsuring their risks.
“It is also envisaged that following a successful closing of the transaction, Exor and Covéa would continue their reinsurance cooperation, with Exor acquiring from Covéa interests in special-purpose reinsurance vehicles managed by PartnerRe for approximately $725 million (€625 million).
“These vehicles will invest in property catastrophe and other short-tail reinsurance contracts underwritten by PartnerRe.
“Covéa, Exor and PartnerRe would also continue to invest jointly in Exor-managed funds with reinforced alignment of interests.”
John Elkann, chairman and chief executive officer of Exor, said: “The co-operation agreement signed in the summer of 2020 with Covéa has been positive in many ways and has contributed to a strong level of mutual trust between our companies.
“Also, thanks to Jacques Bonneau’s leadership and the excellent work of his team, PartnerRe has further improved its performance and strengthened its distinctive capabilities.
“Together, these have created a new opportunity to significantly reinforce PartnerRe’s development as a global reinsurance company.”
Thierry Derez, chairman and chief executive of Covéa, said: “PartnerRe has proved in the past year the relevance of its strategy, risk management and resilience in the pandemic’s uncertain environment and the quality of its management team.
“Our proposed transaction comes at the right time with the insurance sector undergoing a fundamental transformation.
“It fits perfectly with Covéa’s growth and diversification strategy, our ability to adapt and to bring together complementary expertise, extend our geographic reach and manage risks on a global basis.
“It would further strengthen the excellent prospects for PartnerRe and for our group, serving the interests of our members and clients, as well as those of our employees and partners.
“And all this while continuing the reinsurance and investment partnerships we have successfully developed with Exor, and maintaining strong solvency and capital flexibility.”
Jacques Bonneau, CEO of PartnerRe, said: “Our focus at PartnerRe is on building a great and diversified (re)insurance business, constantly improving every aspect of our company, our expertise and the services we provide to our clients and broker partners.
“A combination with Covéa represents an important opportunity to grow profitably and achieve more rapidly these objectives.”
The proposed transaction is subject to the consultation of Covéa workers’ councils.
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