Partner Re, the Bermuda-based reinsurance firm, is said to be the subject of discussions over a $9 billion potential sale between its current owner the Agnelli family-owned Exor and French insurance group Covéa.
Already rumoured, Exor has now confirmed that PartnerRe is the subject of sale talks.
The still rumoured price of $9 billion would be a significant increase on the $6.9 billion all cash buyout when Exor SpA acquired the reinsurer in an acquisition deal that completed in 2016.
“Advanced talks” are said to be underway between PartnerRe owner Exor and French insurer Covéa, with the target sale price said around the $9 billion mark, representing as much as a 30% mark-up on the price Exor paid for the reinsurer.
It’s reported that Covea instigated the talks and Exor agreed to enter into them.
Exor confirmed Sunday that it has entered into exclusive discussions with Covéa regarding a possible all-cash acquisition deal for PartnerRe.
But the holding company noted that the discussions are ongoing and said there is no guarantee that they will result in a transaction being executed. EXOR said it won’t comment further until the final outcome of the sale discussions is understood.
Exor, which is run by Agnelli family member John Elkann, acquired PartnerRe in what turned into a hostile tussle with AXIS Capital to buy the firm.
For Exor, PartnerRe was seen as a good diversification opportunity. But, at the end of the day, Exor is a holding company with a track-record for investments and flipping them, so a sale wouldn’t be too surprising if the price was right.
Covéa too is looking for diversification, given it is not a significant global reinsurance player and PaertnerRe would offer it a significant way to expand into reinsurance and global specialty lines insurance as well, a good fit with its existing primary focused portfolio.
Covéa had been looking at another reinsurer in SCOR last year, resulting in a messy legal situation in recent months.
Closing the loop, SCOR had also reportedly seen PartnerRe as a potential target back in 2018, although it denied the rumours at the time.
Becoming part of an enlarged insurance and reinsurance group, with strong European primary market access, could be a benefit to PartnerRe, in terms of building out a platform that providers more options for future growth and contains potential efficiencies within it.
Whether Exor and Covea could strike a deal that sees the former remaining a significant investor in the combined entity is also something to consider.
The holding company and investor (Exor) may appreciate being able to retain a stake in re/insurance, while monetising its acquisition of PartnerRe and investing in a larger entity. While a capital injection may also be of benefit for growing the combined entity much more rapidly, should a deal be struck..
If it closes it will be the largest M&A transaction in the reinsurance sector since AXA acquired XL Catlin.
Market forces suggest that another round of reinsurance M&A is possible, as scale, access to risk across the market chain and efficiency remain key to prospects, despite the market having firmed somewhat in recent renewals.