All stock $2bn takeover to create fourth largest reinsurer
Partner Re is to takeover Paris Re in a stock-for-stock transaction that values Paris Re at $2bn, but adding $1.7bn in new Partner Re equity.
Partner Re will exchange 0.30 of its common shares for each Paris Re common share.
Paris Re is expected to distribute $310m in cash to its shareholders.
Partner Re president & CEO Patrick Thiele said: “This is an important acquisition for Partner Re and provides us the opportunity to enhance our already successful franchise. The greater market presence, risk diversification, capital strength and scale that is created will provide more balance and stability to our Company in the face of uncertain and volatile financial and reinsurance markets.”
“Paris Re has established itself as a premier European reinsurer and has a successful track record as a publicly-traded company. This acquisition strengthens Partner Re’s balance sheet and financial flexibility and allows us to leverage our infrastructure and capabilities over a broader base for the benefit of key stakeholders of both companies: clients, shareholders and employees. Our history of success in integrating acquired companies and the rigorous analysis completed gives us confidence that this integration process will be a smooth and successful one.”
Paris happy
Hans-Peter Gerhardt, CEO of Paris Re said: “We are convinced that the combination of Paris Re and Partner Re will create one of the premier global reinsurance operations. In an uncertain world, scale and diversification coupled with unquestioned financial strength and full dedication to effective risk management are the key ingredients to success in our industry. This combination is clearly a 'win win' transaction for our clients and our shareholders and should offer attractive opportunities to the employees of Paris Re.”
Axa still involved
Reuters added that Partner Re chief financial officer Albert Benchimol said the acquisition was expected open up significant opportunities.
It also pointed out that Paris Re is Axa’s former reinsurance business and French insurer still owns some Paris Re stock and has agreed to the Partner Re exchange agreement.
Axa will remain responsible for maintaining reserves for any Axa Re liabilities prior to 2006, cutting the risk of prior-year claims.
Partner Re said it expects to achieve at least 13% return on equity for investors, and 10% growth in book value per share annually.
Higher risk environment
The deal will make Partner Re the fourth largest reinsurer.
The FT quoted Benchimol as saying: “What the whole world has learned in the last year is that we need to be prepared for extreme circumstances. In a higher risk environment, risk assuming entities must reduce overall risk and this is achieved with increased capital and a more diversified business portfolio."
