Covea casts its eye on $9bn deal with Agnelli family

French insurer in talks with Exor NV to buy reinsurance business PartnerRe

Exor shares rose as much as 4.9 per cent in Milan trading, giving the company a market value of €17.6 billion

Exor shares rose as much as 4.9 per cent in Milan trading, giving the company a market value of €17.6 billion

 

French insurer Covea is in advanced talks with the Agnelli family’s Exor NV to buy the Italian company’s reinsurance business PartnerRe for about $9 billion (€8.24 billion) in cash, according to people familiar with the discussions.

Covea approached Exor with an offer for the Bermuda-based reinsurer and is in exclusive talks with the holding company, which also controls Fiat Chrysler NV and Ferrari NV, said the people, who asked not to be identified as the discussions are private.

Exor and Covea confirmed the exclusive discussions, which were first reported by Bloomberg. Talks “are ongoing and there is no certainty that they will result in a transaction”, Amsterdam-based Exor said in a statement late Sunday.

Exor shares rose as much as 4.9 per cent in Milan trading, giving the company a market value of €17.6 billion.

Exor, led by Agnelli scion John Elkann – who is also chairman of Fiat and Ferrari – agreed to buy PartnerRe in 2015, valuing the company at about $6.9 billion (€6.32 billion). That was part of a plan to diversify assets away from the capital-intensive automotive industry. A sale for $9 billion in cash would mark a significant gain for the Italian billionaire clan.

The Agnelli family owns 53 per cent of Exor through a separate holding company which takes its name from Fiat founder Giovanni Agnelli and polls dozens of his dependents as its investors.

Takeover battle

Exor won a hostile takeover battle for PartnerRe in 2015, breaking up a merger agreement between the reinsurer and Axis Capital Holdings Ltd. A sale of the company would be another major deal for Elkann just months after Fiat Chrysler agreed to combine with PSA Group to create the world’s fourth-biggest carmaker.

Insurers and reinsurers are under pressure from low to negative interest rates

“A disposal of PartnerRe would increase the M&A appeal on Exor on top of the Fiat-PSA deal and CNH Industrial’s spinoff plan,” Mediobanca analysts wrote in a note to clients. Fiat will pay a special dividend of €5.5 billion with the completion of the PSA deal and CNH Industrial plans to separate its truck unit at the beginning of next year. Exor owns 27 per cent of CNHI and 29 per cent of Fiat Chrysler.

The acquisition of PartnerRe would help Covea diversify its business beyond home, auto, life and health insurance coverage. Insurers and reinsurers are under pressure from low to negative interest rates at which they have to invest a large chunk of their premiums. Insurers thus have turned to deal-making and ways of diversifying their revenue streams, including moves into reinsurance and asset management.

If successful, it would be biggest deal in the industry since Axa SA bought XL in 2018 for $15.3 billion (€14 billion). Covea abandoned efforts to buy its French rival Scor in 2019, ending one of the country’s most acrimonious takeover attempts in recent years. Reinsurers insure risks of primary insurers such as Covea and have themselves been subject to pricing pressure and consolidation in the industry.

– Bloomberg