Bermuda reinsurers Axis Capital, PartnerRe in $11 billion merger

Mon Jan 26, 2015 11:38am EST
 
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NEW YORK/FRANKFURT (Reuters) - Axis Capital Holdings Ltd (AXS.N: Quote) and PartnerRe Ltd PRE.N have agreed an all-share $11 billion merger to create one of the world's largest reinsurers, responding to intensifying pressure in the industry to consolidate.

Reinsurers are being squeezed by price competition and subdued demand from insurers for their products and consolidation in various forms is expected for companies that lack either global reach or a specialized focus.

The combination of the two Bermuda-based companies may displace France's Scor (SCOR.PA: Quote) as the world's fifth largest property and casualty reinsurer. It will have gross premiums topping $10 billion, PartnerRe said in a statement.

"This is not a sale; we're not buying them, they're not buying us," Axis Capital Chief Executive Albert A. Benchimol, who will be CEO of the new company, told a conference call with investors.

"We are both contributing our operations, our potential and our tangible book value," Benchimol said.

The deal is the latest in a series of moves by reinsurance firms to seek greater heft by expanding product lines or geographical reach, with some looking to branch more into insurance and curb exposure to the tough reinsurance market.

Earlier this month, XL Group Plc (XL.N: Quote) said it would buy underwriter Catlin Group Ltd CGL.L for about 2.79 billion pounds ($4.2 billion), increasing the Dublin-based insurer's share of business written in the Lloyd's of London market to nearly 10 percent.

Analysts have frequently flagged a number of small-to-medium sized players among the global Top 40 reinsurers as potentially taking part in consolidation, including Everest Re (RE.N: Quote), Arch Capital (ACGL.O: Quote), Endurance ENH.N and Aspen (AHL.N: Quote).

Reinsurers help insurers pay large damage claims, in exchange for part of the profit.   Continued...