Exor to proceed with 'difficult' but 'competitively advantageous' PartnerRe-Covéa deal

Italian investment company Exor has decided to move ahead with the "difficult" but "competitively advantageous"  $9 billion sale of re/insurer PartnerRe to French mutual insurer Covéa, despite the ongoing pandemic.

Earlier in Feb, Exor entered into " exclusive discussions" with Covéa regarding a possible all-cash acquisition of Bermuda-based global reinsurer PartnerRe, which is wholly owned by Exor.

Exor boss John Elkann told shareholders in a ‘letter from lockdown’ that the business has "overcome wars, revolutions, crises and pandemics" and remains robust in the face of adversity.

He said: "This year began with a $9 billion unsolicited offer from Covéa, the French mutual insurance company, for PartnerRe. We thought carefully about our response to this since we were very focused on building a great company for the long-term and we were pleased with the progress that had been made since we acquired PartnerRe in 2016. This included strengthening the Board of Directors and the leadership team, which benefited from new talent from both internal promotions and recruitment from within the industry.

"By the time we received Covéa's offer, PartnerRe had become a much leaner company with its expense base improved by approximately 25 percent compared to the pre-EXOR acquisition levels, a more robust balance sheet and stronger underwriting and investment skills. Its book value grew by 13% (16% dividend adjusted) from $5.8 billion in 2018 to $6.6 billion in 2019."

Elkann further stated that "the decision to move ahead with the sale was therefore a difficult one. But, in the end, we concluded that Covéa would provide a good home for PartnerRe and its employees and that having access to Covéa’s balance sheet would be competitively advantageous.

"The welcome the transaction received from clients, brokers and rating agencies, with Standard & Poor’s and Fitch improving PartnerRe's rating outlook to positive, endorsed this decision. Covéa's commitment to entering the re-insurance industry as an attractive 13 adjacent and complementary business and as a way to diversify globally its strong French domestic presence, makes it a good fit with PartnerRe and the first interactions between the Covéa and PartnerRe teams have been very positive."