Tags: Reinsurer | Axis Capital | PartnerRe | Merger

Axis to Merge With PartnerRe to Create $11 Billion Reinsurer

Sunday, 25 Jan 2015 10:32 PM


Axis Capital Holdings Ltd. agreed to merge with PartnerRe Ltd., combining two Bermuda-based reinsurers with a total market value of almost $11 billion amid accelerating consolidation in the industry.

PartnerRe shareholders will own 51.6 percent of the new company after the “merger of equals,” while Axis investors hold 48.4 percent, the firms said late Sunday in New York. The new company will be among the world’s five largest reinsurers, with more than $10 billion in combined policy sales. Invested assets and cash will be more than $33 billion.

“This transformational combination will leverage the complementary strengths of both companies,” Axis Capital Chief Executive Officer Albert A. Benchimol, who will serve as CEO of the combined firm, said in the statement. The deal will “create an organization with the size and breadth to enhance product and service offerings, maximize growth opportunities, optimize portfolios, and deliver both economies of scale and capital efficiencies.”

Traditional reinsurers have been seeking deals to diversify offerings and gain scale amid increased competition from hedge funds and other investors pushing into their market. XL Group Plc agreed this month to buy Catlin Group Ltd., a Lloyd’s of London company, for about $4.2 billion. RenaissanceRe Holdings Ltd. struck a deal in November to purchase Platinum Underwriters Holdings Ltd.

Five Largest

Reinsurers take on risks initiated by primary carriers. They have also been seeking to add specialty offerings for commercial clients.

Combining will help Axis and PartnerRe compete with larger rivals like Warren Buffett’s Berkshire Hathaway Inc., Munich Re and Swiss Re AG. The merged firm also will sell specialty policies to businesses, as well as life and accident-and-health coverage. The deal will lead to at least $200 million of annual cost savings before tax within the first 18 months of operations, the pair said.

Seven directors from each company will constitute the combined firm’s board, with PartnerRe Chairman Jean-Paul L. Montupet serving as non-executive chairman. Axis Capital Chairman Michael A. Butt will become chairman emeritus. Costas Miranthis is stepping down as CEO of PartnerRe and leaving its board. Another director, David Zwiener, will serve as interim CEO until the deal’s expected completion in the second half of this year, the companies said.

More ‘Opportunities’

PartnerRe investors will get 2.18 shares of the combined company for each of their shares. The ratio will be one-to-one for Axis shareholders. PartnerRe’s stock climbed 8.3 percent since the start of last year to $114.14, while Axis Capital’s gained 3.7 percent to $49.33.

Credit Suisse Group AG is providing financial advice to PartnerRe on the deal. Davis Polk & Wardwell and Appleby Global are serving as legal counsel. Goldman Sachs Group Inc. is Axis Capital’s financial adviser. Simpson Thacher & Bartlett and Conyers Dill & Pearman are acting as legal counsel.

Expansion provides “opportunities in terms of relationship with clients and brokers,” Catlin CEO Stephen Catlin said after agreeing to sell his Bermuda-based company to XL. “It’s the question of being relevant.”

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Axis Capital Holdings Ltd. agreed to merge with PartnerRe Ltd., combining two Bermuda-based reinsurers with a total market value of almost $11 billion amid accelerating consolidation in the industry.
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2015-32-25
Sunday, 25 Jan 2015 10:32 PM
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