Covéa & EXOR sign on $9bn PartnerRe sale. Reinsurance investments to continue

French mutual insurer Covéa and Italian holding company EXOR have now signed a definitive agreement on the sale of PartnerRe, with the insurer to pay $9 billion to acquire the reinsurance firm, while EXOR will now take over and continue the special purpose vehicle reinsurance investment agreements that were in place.

Covéa agreed and signed a Memorandum of Understanding to acquire Bermuda headquartered global reinsurer PartnerRe from Italian holding company EXOR back in October.

It is the same purchase price that had originally been agreed between the pair back in early 2020, but that attempt to acquire PartnerRe fell apart after Covéa attempted unsuccessfully to renegotiate the price in the context of the ongoing pandemic situation.

After that first acquisition attempt fell apart, Covéa and EXOR struck an agreement to cooperate on reinsurance-linked investments, finding a way to settle with each other over the failed PartnerRe deal.

That settlement agreement saw Covéa injecting €750 million of capital into special purpose reinsurance vehicles, so effectively private collateralised reinsurance sidecar type structures, that were managed by PartnerRe.

Which provided the company with a way to both stay involved, but also importantly to diversify its sources of income using reinsurance underwriting profits as well.

The agreement was a significant boost to PartnerRe’s own burgeoning third-party capital business, since which the reinsurer has continued to expand this and grow its third-party reinsurance capital.

Now, with a definitive sale agreement signed, it seems PartnerRe’s change of ownership is assured this time, while it was also confirmed that EXOR will now take on the special purpose reinsurance vehicle investments as well.

The agreed $9 billion price (approximately €7.8 billion) to be paid by Covéa is based on a consolidated common shareholders’ equity value of $7 billion for PartnerRe, but the deal does not include Preferred Shares listed on the NYSE.

“This transaction with Covéa will 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 will bring, and the value that it represents for its clients,” the French mutual insurer said.

As part of the deal, EXOR will acquire the interests in special purpose reinsurance vehicles managed by PartnerRe for approximately $725 million from Covéa, while the three parties will also continue to jointly invest in EXOR managed investment funds as well.

Subject to all necessary approvals, the parties said they expect that the transaction will complete in mid-2022.