PartnerRe-Covéa deal called off, Exor says won't sell on 'inferior' terms

Italian investment company Exor said Tuesday (May 12) that it would retain control of Bermuda-based global reinsurer  PartnerRe after French mutual insurer Covéa's "refusal to honour its commitments under the MoU".

Earlier in Feburary, Exor entered into " exclusive discussions" with Covéa regarding a possible all-cash acquisition of PartnerRe, which is wholly owned by Exor, for $9 billion.

Exor stated that its board believes that a "sale of PartnerRe on terms inferior to those established in the MOU fails to reflect the value of the Company".

"In attempting to renegotiate the agreed deal terms, Covéa has never suggested the existence of a material adverse change, including pandemic risk, or any other issues at PartnerRe that would explain its refusal to honor its commitments under the MOU and Exor believes that no such basis exists,"  Exor said in a statement.

"Exor communicates that its Board of Directors, meeting under the Chairmanship of John Elkann, has acknowledged Covéa’s notice that Covéa will not honour its commitment to acquire PartnerRe in accordance with the terms of the Memorandum of Understanding (“MOU”) announced on March 3, 2020," it added.

The Italian firm noted that the outlook for PartnerRe remains positive.

"PartnerRe enjoys one of the highest capital and liquidity ratios in the global reinsurance industry and is not expected to be significantly affected by the Covid-19 outbreak," Exor said.

Commenting on the announcement, Moody’s analyst Benjamin Serra said: “the cancellation of the Partner Re acquisition is a missed opportunity for Covea to significantly diversify its business profile. However, this decision will allow the group to maintain a very high level of solvency and to absorb, without difficulty, the shocks resulting from the coronavirus outbreak.”

Exor acquired PartnerRe in March 2016 for $6.9 billion following a lengthy takeover battle with rival AXIS, which had also sought to acquire the Bermuda-based re/insurer.