Axis Capital, PartnerRe agree to merge, forming ‘a global top 5 reinsurer’

Axis Capital Holdings Ltd. and PartnerRe Ltd. announced Sunday the boards of directors of both insurance firms unanimously approved a merger agreement, which is subject to shareholder approval.

Both Axis and PartnerRe are based in Pembroke, Bermuda. Both insurers operate in Canada from offices in Toronto.

The combined company is expected to have “premiums in excess of” US$10 billion, the firms stated in a press release Jan. 25.

The Canadian branch of PartnerRe U.S. is licensed to write property and casualty business in Ontario and Quebec, the company stated in an earlier filing with the United States Securities and Exchange Commission.

PartnerRe stated in an SEC filing that its “principal” offices are in: Hamilton, Bermuda, Dublin, Greenwich, Conn., Paris and Zurich. Worldwide, PartnerRe provides reinsurance and specialty lines, including property, casualty, motor, agriculture, aviation/space, catastrophe, credit/surety, engineering, energy, marine, specialty property, specialty casualty and multiline, among others.

Axis Capital stated in an earlier SEC filing that Axis Reinsurance Company conducts business in Canada “from Axis Reinsurance Company (Canadian Branch).” Axis’ primary coverages in Canada include liability and cyber while reinsurance coverages in Canada include property, casualty, professional liability, surety and regional multiline, among others.

Axis Syndicate is authorized to write insurance in or from Canada, with several exceptions, including hail insurance in respect of crop in Quebec.

Worldwide, Axis Capital also has operations in Bermuda, the U.S., Europe, Singapore, Australia and Latin America.

Under the merger agreement, PartnerRe shareholders would receive 2.18 shares of the combined company’s common shares for each share of PartnerRe common shares they own and Axis Capital shareholders would receive one share of the combined company’s common shares for each share of Axis Capital common shares they own, the companies stated in a Jan. 25 press release.

“The combined company will have three strongly positioned businesses – a top-five global reinsurer, a $2.5 billion specialty insurance underwriting business, and a highly successful and growing life, accident and health franchise – all with increased strategic flexibility,” Axis Capital CEO Albert A. Benchimol stated in the release. Benchimol will be CEO of the combined firm.

“Upon completion of the transaction, shareholders of PartnerRe and AXIS Capital will own approximately 51.6 percent and 48.4 percent of the combined company, respectively.”

The merger “is expected to close in the second half of 2015, subject to approval by the shareholders of both companies, regulatory clearance and customary closing conditions,” the firms stated. “In connection with the transaction, Costas Miranthis will step down as CEO of PartnerRe and as a member of the PartnerRe Board, effective today. At that time, current PartnerRe Director David Zwiener will assume the position of interim CEO of PartnerRe until the completion of the transaction.”

PartnerRe chairman Jean-Paul L. Montupet will be non-executive chairman of the combined company while Axis Capital chairman Michael Butt will continue as a director, as chairman emeritus of the board.

Zwiener, chairman of the PartnerRe board of directors’ audit committee, had been chief financial officer at Wachovia Corp. and president and chief operating officer of the property and casualty operations at Hartford Financial Services Group Inc.

For the three months ending Sept. 30, 2014, Axis had reported net premiums earned of US$966 million, of which US$461.8 million was in insurance and US$504.3 million was in reinsurance. Its combined ratio, for the third quarter, was 92.2%.

For the same period, PartnerRe had reported net premiums earned of US$1.557 billion, of which US$1.226 billion was in non-life. The combined ratio was 84.2%.