Rating agency Standard & Poor’s (S&P) has bolstered the proposed merger of Bermudian Axis Capital and PartnerRe following the companies removal from credit watch negative.
S&P initially placed the companies on negative watch in January, following the announcement of the proposed merger. It has now affirmed the pair’s ratings, with a stable outlook.
"The affirmation reflects our opinion that this merger of equals will bring together two strong insurance and reinsurance franchises, which will benefit from increased scale and enhanced market presence," said S&P credit analyst Taoufik Gharib.
"Axis and PartnerRe will merge in an all-stock transaction that we believe will ultimately create a stronger global competitive position in the next two years, with 2014 pro forma gross premiums written in excess of $10 billion, total capital of more than $14 billion, and cash and invested assets of more than $31 billion.
“We believe the combination of the two companies will likely result in business overlap within their reinsurance business, which we think is limited with virtually no business overlap in the global specialty insurance business and minimal within the life, and accident and health business."
The rating agency said that it expects the new entity to continue to generate strong underwriting results with a combined ratio of 90 to 95 percent, if the management teams can integrate the two complex companies and effectively manage and optimise the consolidated exposures.
Standard & Poor's, S&P, Bermuda, Axis Capital, PartnerRe, Ratings, Mergers & Acquisitions