BY Richard Summerfield
Axis Capital Holdings Ltd and PartnerRe Ltd announced on 25 January that the two firms had agreed to an $11bn merger which will reshape the reinsurance market by creating the world’s fifth largest global reinsurer.
As a result of the deal, the amalgamation of the two firms will create a speciality insurer and reinsurer with more than $7bn in combined gross premiums written and over $14bn in available capital. The firm will also have a speciality insurance arm with around $2.5bn in gross premiums.
The transaction, which is being treated as a merger of equals, has been unanimously approved by the boards of both Axis and PartnerRe, and is expected to close in the second half of 2015, pending the approval of the two company’s shareholders. In a statement announcing the deal, it was confirmed that PartnerRe and Axis Capital’s shareholders will own approximately 51.6 percent and 48.4 percent of the combined company, respectively.
The combined firm will be headquartered in Bermuda, where Axis and ParterRe are already based. The new firm will maintain a presence across five continents, including offices across 39 different locations employing around 2300. As a result of the merger, the newly combined firm expects to achieve considerable annual cost savings of around $200m in the first 18 months of operations. With duplicate offices in various locations including New York, Bermuda and Ireland, there will likely be a number of job losses, though how many are at risk has not been disclosed.
Axis’ incumbent chief executive Albert Benchimol will take up the same post with the newly combined company. PartnerRe’s chairman Jean-Paul L. Montupet will serve as non-executive chairman, while current Axis chairman Michael Butt will serve as the new company’s chairman emeritus.
In a statement, Mr Benchimol expressed his pleasure at having agreed the considerable merger. “This transformational combination will leverage the complementary strengths of both companies and create an organisation with the size and breadth to enhance product and service offerings, maximise growth opportunities, optimize portfolios, and deliver both economies of scale and capital efficiencies” said Mr Benchimol. “The combined company will have three strongly positioned businesses – a top-five global reinsurer, a $2.5bn speciality insurance underwriting business, and a highly successful and growing life, accident and health franchise – all with increased strategic flexibility. As a top five global reinsurer with leading positions in a number of specialty lines, we will be strongly positioned to turn the challenges presented by the structural changes in the reinsurance market into opportunities.”