Covéa swoops for PartnerRe again
Bermuda’s PartnerRe looks set for a new owner after its parent, Italian investment company Exor, entered into a Memorandum of Understanding (MoU) with French mutual insurer Covéa.
The deal, which would see PartnerRe acquired for a cash consideration of $9 billion, appears to be the same as the one mooted a year ago. Then, Covéa decided to walk away from the deal blaming the pandemic.
The $9 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 NYSE would not be included in the proposed acquisition.
Exor stated that the proposed transaction is subject to the consultation of Covéa workers councils. By the end of the year, the parties intend to sign a definitive sale agreement with the transaction closing in mid-2022.
Following the closing of the transaction, Exor and Covéa expect to 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.
The Exor statement said that the transaction is "fully consistent with Covéa’s long-term strategy" and PartnerRe is a natural partner for Covéa. Entering the global reinsurance business represents a further decisive step in the Covéa’s development, creating a top tier European diversified insurance and reinsurance group.
"The reinsurance and investment cooperation 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 cooperation between the PartnerRe and Covéa executive and operating teams," it noted.
"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," explained Exor.
Exor acquired PartnerRe in March 2016 for a total of $6.72 billion in cash. In March 2020, it signed a MoU with Covéa to sell the business for $9 billion plus a cash dividend of $50 million to be paid before closing. However, the deal was called off after Covéa's "refused to honour its commitments under the MoU" and Exor decided to not sell PartnerRe on "inferior" terms.
