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PartnerRe’s sale to Covea resurrected at original $9bn price

Covea PartnerRe logo paris.jpg

Exor is selling its pure-play reinsurer PartnerRe to French mutual insurer Covea for $9bn, reviving a deal that collapsed at the height of the pandemic.

Covea first agreed to buy PartnerRe in March of 2020, which would have meant Covea paying $9bn cash for the Bermudian reinsurer.

However, the takeover deal was scrapped last May after the French mutual attempted to renegotiate terms due to the impact of Covid-19 and was rejected by the Agnelli family investment firm.

The transaction values PartnerRe at 1.25x H1 shareholder equity, the same multiple to trailing book value which was agreed for last year’s deal.

Covea has long been seeking a reinsurance platform, and it pursued Scor doggedly before turning its attentions to PartnerRe. Following the collapse of the first incarnation of the PartnerRe deal, Covea also held talks with Axa about acquiring Axa XL Re.

The news broke in the Italian business press earlier this week that the two sides had reignited deal talks.

A statement release by both firms on Thursday said the newly announced transaction fits with Covea’s long-term strategic ambitions for international growth, as well as diversification of products, risks and geographies.

The companies also said that ties between Covea and the reinsurer had strengthened after Covea agreed to invest EUR1.5bn ($1.76bn) with Exor, a family-owned conglomerate. About EUR750mn of those funds were directed towards PartnerRe-managed reinsurance vehicles.

With the agreement on Thursday, Exor will now take on a $725mn (€625mn) investment in the PartnerRe reinsurance vehicles, while Covea will continue with its investment in Exor.

“The cooperation agreement signed in the summer of 2020 with Covea has been positive in many ways and has contributed to a strong level of mutual trust between our companies,” John Elkann said in a statement.

He also thanked PartnerRe CEO Jacques Bonneau, who took over running the company last year, for improving the reinsurer’s performance.

Covea chairman and CEO Thierry Derez said in a statement: “PartnerRe has proved in the past year the relevance of its strategy, risk management and resilience in the pandemic’s uncertain environment and the quality of its management team.”

He added: “Our proposed transaction comes at the right time with the insurance sector undergoing a fundamental transformation. It fits perfectly with Covea’s growth and diversification strategy, our ability to adapt and to bring together complementary expertise, extend our geographic reach and manage risks on a global basis.”

Bonneau added: “Our focus at PartnerRe is on building a great and diversified (re)insurance business, constantly improving every aspect of our company, our expertise and the services we provide to our clients and broker partners.

“A combination with Covea represents an important opportunity to grow profitably and achieve more rapidly these objectives.”

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