Axis Capital Holdings and PartnerRe announced on Sunday they have reached a $11-billion merger agreement to form one of the worlds biggest reinsurers.
The new entity will rank within top five of the worlds largest reinsurers, with over $10 billion in gross premiums and $33 billion of invested assets and cash. The company would compete at the top of the industry with companies like Swiss Re AG, Munich Re and Gen Re, owned by Berkshire Hathaway.
The “merger of equals” has been unanimously approved by both companies board, the insurers said in a statement released Sunday.
Under the agreement, PartnerRes stockholders will receive 2.18 shares of the new company for each stock they own, while Axiss investors will get an one-to-one exchange ratio.
Once the deal is done PartnerRes shareholders will get around 51.6% of the merged giant and Axis will account for about 48.4%.
The new company will have a total capitalization of more than $14 billion, according to the statement. The two companies will operate three major units, a $2.5 billion specialty insurance underwriting business, a life, accident and health franchise and its global reinsurance division.
PartnerRes Chief Executive Officer Costas Miranthis will step down, effective immediately, and be replaced by David Zwiener until the transaction is completed. Albert A. Benchimol, currently CEO of Axis, will be appointed to take the wheel of the new company.
Mr. Benchimol was chief financial officer of PartnerRe for almost 10 years, before he joined Axis as CFO in 2011 and then was voted CEO a year later.
The deal is projected to reflect in at least $200 million in cost synergies within three years, the companies said.
Should the shareholders of both companies vote in favor of the merger and the deal get approved by regulators, it is expected to close during the second half of 2015.
“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,” said Mr. Benchimol.
Axis Capital lost 0.32% on Friday and closed at $49.33 in New York, marking a one-year increase of 10.78%. The company is valued at $5.04 billion.
PartnerRe slid 0.74% to close at $114.4 in New York, with an increase of 17.28% during the past twelve months, the company has a market capitalization of $5.59 billion.
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