Bermuda based reinsurer PartnerRe Ltd. (PRE) announced that it has completed the acquisition of Switzerland-based diversified reinsurer PARIS RE. The process went according to plans and got completed on time.
Announced in July 2009, the transaction costing $2 billion took place in a series of transactions and ended with Partner Re paying 0.3018 of its common shares for each remaining PARIS RE common share. The company has maintained uniformity in terms of share exchange ratio in its prior purchases.
From an initial stake of 6%, PartnerRe had acquired 77% of PARIS RE during October, building its ownership to 83%.
We think the acquisition will help PartnerRe’s visibility in a wider market and strengthen its operations to weather the ongoing market volatility. Following the closing of the acquisition, PartnerRe announced that it has successfully cross-listed itself on NYSE Euronext Paris.
We remain positive on PartnerRe due to its global operating platform, diversified portfolio (by product as well as geography), rigorous underwriting process, prudent capital management, solid ratings and reputation in the market, which will enable it to take advantage of the stronger demand and better pricing being witnessed currently in the reinsurance markets. However, we suspect that additional losses in the investment portfolio and the current negative sentiment for the financial industry as a whole may somewhat weigh on the share price. The PARIS RE acquisition will further support its already successful strategy, though we cannot rule out the possibility of integration risk. As such, we expect the company to perform better than its peer group in the coming quarters.
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