19 June 2015 Insurance

Analysts divided over who will claim PartnerRe

The recent bidding war for Bermuda-based PartnerRe has divided analyst opinion. Intelligent Insurer looks at the findings of Keefe, Bruyette & Woods (KBW) and Macquarie Research.

KBW has continued to back Axis Capital in the ongoing struggle, adding that it expects a narrow Axis Capital win. The analysts have met with Axis, PartnerRe and Exor.

“Our key takeaway from our meeting with Exor’s representatives was an improved understanding of the choices facing PartnerRe’s preferred shareholders, and Standard & Poor’s clarifying comments about its rating processes make it a closer call than we’d previously thought,” said KBW.

“Still, at Axis’ current valuation (which we think is much more relevant than pre-announcement levels), its offer represents only about a -2.4 percent discount to Exor’s cash offer, and we think that the potential upside to shareholders more than reasonably balances the risks. We still think PartnerRe’s investors should vote for the AXS transaction, and while the picture isn't terribly clear, that’s still how we think it will play out.”

However, Macquarie Research has offered up a differing opinion. Following a meeting with Exor’s management, which surrounded “several clarifications on the process and the deal metrics”, Maccquarie explained that it felt “Exor has a better chance at winning the process than initially anticipated”.

During the meeting, Exor clarified that the preferred shares of PartnerRe would be treated identically as they are under a standalone PRE model. Standard & Poor’s (S&P) affirmed that Exor’s rating and the ratings of its investee companies are independent of one another.

“Our prior discussion with preferred investors reveals meaningful confusion on this and a fear over a negative ratings change,” said Macquarie.

Already registered?

Login to your account

To request a FREE 2-week trial subscription, please signup.
NOTE - this can take up to 48hrs to be approved.

Two Weeks Free Trial

For multi-user price options, or to check if your company has an existing subscription that we can add you to for FREE, please email Elliot Field at efield@newtonmedia.co.uk or Adrian Tapping at atapping@newtonmedia.co.uk