By Enda Curran
Axis Capital Holdings Ltd. and PartnerRe Ltd. said Sunday they
have agreed to merge and form one of the world's biggest
reinsurance and specialist insurance companies, a firm with a
combined market value of $11 billion.
The new company will be in the top five of reinsurers globally,
rivaling such companies as Swiss Re AG, Munich Re and Berkshire
Hathaway Inc.'s Gen Re subsidiary.
The merger is the latest example of consolidation in the
reinsurance sector, which has been suffering from shrinking
premiums and stiff competition.
In November, RenaissanceRe Holdings Ltd. agreed to buy Platinum
Underwriters Holdings Ltd. in a stock-and-cash deal valued at more
than $1.9 billion. Earlier this month, XL Group PLC agreed to buy
rival Catlin Group Ltd. in a deal valued at GBP2.79 billion ($4.21
billion).
Reinsurers charge fees to insurers for taking on some
responsibility for policies sold to a company or person.
Described as a "merger of equals," the combination of Axis and
PartnerRe will create a company with gross premiums in excess of
$10 billion and total capitalization above $14 billion, the two
companies said.
The new company will also have a $2.5 billion specialty
insurance underwriting business along with a life, accident and
health business.
"This transformational combination will leverage the
complementary strengths of both companies and create an
organization with the size and breadth to enhance product and
service offerings, maximize growth opportunities, optimize
portfolios, and deliver both economies of scale and capital
efficiencies," Albert A. Benchimol, chief executive officer of Axis
Capital, said in the statement.
Mr. Benchimol will also be CEO of the newly combined company.
Costas Miranthis is to step down as PartnerRe CEO.
Under the deal, PartnerRe shareholders will receive 2.18 shares
of the combined company's common shares for each PartnerRe common
share they own.
Shareholders in Axis Capital will receive one share of the
combined company's common shares for each Axis Capital common share
they own.
When the deal is completed, PartnerRe shareholders will own
51.6% of the new company and Axis Capital shareholders around
48.4%.
The transaction, which is expected to achieve a minimum of $200
million in cost savings, is expected to close in the second half of
2015.
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