Axis Health Insurance to Merge with PartnerRe

Axis Capital Holdings, a group of insurance companies operating all over the world and PartnerRe (PR) Ltd, two of the largest Bermuda-based reinsurers, agreed an $11 billion merger on the second half of the year.

Analysts had stated that the merger may create one of the world’s largest reinsurers. In 2013, credit rating agency Moody’s had ranked PR the world’s 10th largest reinsurers while Axis ranked no. 22. The collaboration of the two companies may have a great impact in the Insurance Industry. According to the report, the combination of the two Bermuda-based companies may displace and serve as a warning to France's Scor as the world's fifth largest property and casualty reinsurer.

Albert A. Benchimol, Axis’ Chief Executive, assured everyone in a conference call with the investors that their deal with PartnerRe is not a sale. Benchimol will be the CEO of the new company when the merger takes place.

PRon the other hand predicts the merger will have a premium gross topping $10 billion. Benchimol also added that the merger would improve diversification and prospects of growth of both companies, including through acquisitions.

Analysts stated that the deal is the latest in a series of moves made by insurance and reinsurance companies to seek greater coverage by expanding product lines and geographical reach, with some branching out more into the curb because of a very competitive market. Top 40 reinsurers have been starting to review their moves and are taking part in consolidation of interest in the past couple of years. Analysts have predicted there are more potential companies to follow their steps.

The terms mean PartnerRe shareholders will own 51.6 percent of the merged company and Axis holders 48.4 percent, the statement said. PR shareholders will get 2.18 shares of the combined company's common shares for each PartnerRe share. Axis Capital shareholders will get one share for each share they own. Asked when they are open for a third party collaborator, Benchimol had said, “I’m not going into hypotheticals”.

In exchange of profits, these reinsurers pay large damage claims. Axis Capital also has their own insurance company operating in Canada, Australia, Europe, Singapore, Jakarta Indonesia and over 10 states in America. The company had just recently been graded A+ (Strong) by Standard & Poor’s and A+ (Superior) XV by A.M. Best for their enviable record of success in the insurance and reinsurance industry.

Comment Stream

2 years ago

These insurance companies have their own way of strategizing. There may be a lot of complaints to consider when all of them are all doing this. What would happen to all the policies that each of the companies handle when they both have different terms?