French insurer Covéa have reached an agreement with holding company EXOR over the sale of Bermuda based reinsurer PartnerRe which is wholly owned by EXOR. They have entered into a Memorandum of Understanding (MoU) under the terms that EXOR would receive a total cash consideration of $90bn plus a cash dividend of $50mn to be paid before closing.
In 2016, EXOR acquired Partner Re for a cash total of $6.72bn representing roughly a 30% profit for the company. Since then EXOR has worked closely with the company to strengthen and develop the company’s business and expanding its presence in Life and Health reinsurance.
In a recent press release, EXOR explains PartnerRe’s operating performance since 2016 has enabled it to pay EXOR a total of $661mn in dividends and to increase its book value to common shareholders by $510mn to $6.57bn. The firm notes that this was achieved despite the recent challenges witnessed across the reinsurance industry.
Including dividends received since 2016, the aggregate cash return to EXOR following completion of the proposed transaction will amount to $3 billion.
The proposed transaction is expected to be completed by the end of this year, subject to customary closing conditions, antitrust, regulatory and other approvals.
John Elkann, chairman and CEO at EXOR, commented: “PartnerRe today is a stronger company, with a more complete and efficient business. We have now been presented with an outstanding chance for PartnerRe to further strengthen its competitive advantage while providing important new opportunities for its people under Covéa’s ownership. We are proud to have fulfilled EXOR’s purpose of building another great company and are grateful to PartnerRe’s Board, leadership and people for all they have done to make this possible.”
Emmanuel Clarke, the CEO of PartnerRe, added: “Over the past four years, under EXOR’s ownership, we have strengthened PartnerRe’s position as a global, diversified reinsurer, thanks to a continuous focus on enhancing our client and broker franchise, our underwriting and investments portfolios and our operational efficiency. And I’m confident we are in a very good position to further evolve under our new ownership.”
Thierry Derez, chairman and CEO of Covéa, said: “This acquisition project comes at a time when the insurance sector is undergoing fundamental transformation, with emergence of new risks and new lifestyles, and increasing new participants entering insurance markets. It perfectly fits our growth strategy, our ability to adapt, the necessary complementarity of expertises and the importance of risks mutualization on a global basis. It would consolidate the future of PartnerRe and our mutual Group, serving the interests of our members and clients, as well as of our employees and partners.”