Fiat Chrysler’s major shareholder offers to buy reinsurer PartnerRe for US$6.4 billion

Less than three months after it announced an agreement to merge with Axis Capital Holdings Ltd., PartnerRe Ltd. announced Tuesday it has received a US$6.4 billion acquisition offer from EXOR S.p.A., the Italian investment firm that effectively controls Fiat-Chrysler Automobile.

PartnerRe, based in Pembroke, Bermuda, has an operating branch in Toronto and provides both life and property & casualty reinsurance, as well as primary insurance in specialty lines.

EXOR submitted Tuesday a proposal to PartnerRe’s board of directors to acquire all PartnerRe shares (which are traded on the New York Stock Exchange) for $130 each, valuing the firm at $6.4 billion, EXOR said in a release. All figures are in United States dollars.

“Consistent with its fiduciary duties, the PartnerRe Board of Directors will review the EXOR proposal to determine the course of action that it believes is in the best interests of PartnerRe and its shareholders,” PartnerRe stated Tuesday. “The Board will announce its position regarding the EXOR proposal following its review, which will be completed in due course.”

On Jan. 25, PartnerRe entered into an agreement with Axis Capital – also based in Pembroke, Bermuda – to amalgamate. At that time, Costas Miranthis stepped down as PartnerRe CEO and resigned from the board. David Zwiener assumed the position of interim CEO. Under the terms of that agreement – approved by both firms’ boards – shareholders of both firms would be issued shares in the new firm, such that PartnerRe shareholders would own 51.6% of the merged firm and Axis Capital shareholders would own the other 48.4%. The agreement is still subject to approval from shareholders and regulators.

Turin-based EXOR, which is controlled by the Agnelli family, owns nearly 30% of Fiat-Chrysler Automobile’s shares (with about 44% of voting rights). EXOR also owns about 81% of real estate firm Cushman Wakefield and about 40% of voting rights of CNH Industrial N.V., whose products include New Holland farm equipment.

EXOR said its offer to acquire PartnerRe “is envisaged to be friendly (and) can be completed expeditiously.”

Compared to the all-share agreement with Axis, EXOR’s offer “provides PartnerRe shareholders with superior value and greater certainty since it is all cash, fully financed, and does not require a capital increase by EXOR nor a vote by its shareholders,” EXOR said Tuesday.

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“EXOR has invested successfully in the insurance and reinsurance sectors for over two decades, including as a minority investor in PartnerRe when it was formed in 1993, and believes there is significant long-term potential for a global reinsurer such as PartnerRe,” EXOR added. “Its deep underwriting expertise, significant financial strength, scale and diversification would be enhanced by EXOR’s permanent capital base and ability to deploy additional resources to accelerate growth under the right conditions, further strengthening its position as a world leading reinsurer.”

PartnerRe reinsures property, casualty, motor, agriculture, aviation/space, catastrophe, credit/surety, engineering, energy and marine, among others. It also provides primary reinsurance, including aviation, energy, engineering and marine.

The firm said Jan. 25 if combined with Axis Capital, it would have gross written premiums in excess of $10 billion. By comparison, Hannover Re reported 7.9 billion euros in P&C gross written premiums in 2014.

In 2014, PartnerRe reported $4.667 billion in gross written premiums in non-life and $1.265 billion gross written premiums in life and health. In non-life, $1.642 billion in gross written premiums were from North America.

In its annual report for 2014, PartnerRe broke down its non-life gross written premiums by line of business, reporting:

•14% each from property, casualty and aviation;

•9% each from catastrophe and credit/surety;

•8% from motor;

•7% from marine;

•6% from multline and other;

•5% from aviation/space;

•4% each from engineering, specialty casualty and specialty property; and

•2% from energy.

Axis Capital’s primary coverages in Canada include liability and cyber. Reinsurance in Canada includes property, casualty, professional liability, surety and regional multiline, among others. In the Lloyd’s market, Axis Syndicate 1686 is authorized to write insurance in or from Canada, with several exceptions, including hail insurance in respect of crop in Quebec. Axis Syndicate 1686’s coverages include property, terrorism, marine, energy, aviation, casualty and professional lines.