It’s business as usual for PartnerRe after Covéa deal as CEO grasps stability

Covéa’s acquisition of PartnerRe means the reinsurer can put a period of uncertainty behind it—something that cannot be said for many other reinsurers in a time of insecurity and volatility for the industry that could drive more consolidation.

That is the perspective of Jacques Bonneau, president and chief executive officer of PartnerRe since July 2020. He has just overseen the sale of the company to Covéa from EXOR, more than two years after a previous incarnation of the deal collapsed amid the uncertainty of the early days of COVID-19.

Bonneau plays down any notion that the past two years has been unsettling for the business—or its clients. But he does admit that the certainty the acquisition brings is welcome, and something not all other reinsurers have.

“The deal ends any speculation around the company being for sale, which is in contrast to the position a lot of other reinsurers find themselves in,” he told Monte Carlo Today. “There has to be a question mark in some other reinsurers, which sits not only with their employees, but also with their clients.

“We’ve put that behind us now and I feel very good about where we’re heading as a business; everything is pointing in the right direction. It’s business as usual now. I like where we’re positioned, and it’s now up to us to execute.”

Covéa’s $9 billion acquisition of the business closed on July 12, after almost two-and-a-half years since a first Memorandum of Understanding was signed in March 2020. That deal was scrapped by May 2020, after Covéa sought to renegotiate the price amid the uncertainty associated with COVID-19. A new approach was made in the second half of 2021, which has now come to fruition.

Bonneau admits being surprised that the deal resurfaced but stresses the positives for the business. “When I took the role of CEO in July 2020, I never thought that this would happen; this was in the furthest recesses of my mind,” he said.

“But it is a good thing. We are now in a good place in terms of ownership. Some people might have said ‘you went to the altar once with these people and the ring never got on the finger’, but it was exceptional circumstances the first time. And, it did happen this time.

“The deal has been very well received by our brokers, our clients, the rating agencies. That was a real reaffirmation; it’s all been very positive.”

The same approach

Aside the certainty that deal offers PartnerRe, Bonneau stresses that it is business as usual for the reinsurer. Covéa bought the business because of its strong market position and business plan, he said. Thus, he anticipates no fundamental changes to its approach, just a dialogue around the best way to deploy capital in the existing market conditions.

“It is business as usual with the focus on 2023,” he said. “We’re looking at our portfolio, where we see opportunities and where to position the company. We do see places where we want to allocate more capital and we will be communicating our underwriting appetite in the coming weeks. But the $9 billion Covéa spent was predicated on our existing business plan. So it will be business as usual in most ways.”

One of PartnerRe’s USPs in recent years has been its stance as a pure play reinsurer—not writing a book of primary business, thus competing with its clients.

To some extent, Bonneau says, PartnerRe has always written modest amounts of direct business, through a mixture of relationships with managing general agents, writing on PartnerRe insurance paper and other insurance business written directly. But the intention is that PartnerRe will always be predominantly a reinsurance company.

“The important message is that we don’t look to compete directly with our clients and nothing is going to change on that front. There is no plan to flip the business extensively from reinsurance to insurance or write much more direct business. Maybe it would marginally increase but not in any meaningful way,” he said.

Its position is helped by the favourable market conditions. Bonneau says the industry is clearly in a hardening market, which he forecasts will last at least another two years, but is keen to stress he has seen harder markets.

“There was a true hard market in 1986. If you could not make money in 1986, there was something wrong,” he said. “We’re not in that position. It is definitely hardening but it’s certainly not at a point where it’s like shooting fish in a barrel. You have to be selective and there is a price at which the risk will clear. I think it will continue through 2023 and maybe 2024. Much will depend on what cat events we see and how things such as inflation pan out.”