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Billionaire Agnellis Sells PartnerRe to Covea for $9 Billion

Tommaso Ebhardt

(Bloomberg) -- The Agnelli family’s Exor NV agreed to sell its reinsurance business, PartnerRe, to French insurer Covea for about $9 billion in cash.

Exor signed preliminary accord with Covea that will become binding after it receives approval from workers’ councils, according to a statement late Tuesday. PartnerRe will also pay a $50 million cash dividend before the closing of the deal.

Covea approached Exor last month with an offer for the Bermuda-based reinsurer and started exclusive talks with the holding company, which also controls Fiat Chrysler Automobiles NV and Ferrari NV. Bloomberg News first reported details of the talks Feb. 9.

The acquisition of PartnerRe will 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 dealmaking and ways of diversifying their revenue streams, including moves into reinsurance and asset management.

The sale will mark a significant gain for the Italian billionaire Agnelli family and will mark another major deal for Exor just months after Fiat Chrysler agreed to combine with PSA Group to create the world’s fourth-biggest carmaker. Exor said it will post an aggregate cash return of $3 billion with the sale, which is expected to be completed by the end of the year.

Following the latest deal “an extra-dividend distribution in 2020 and 2021 can’t be ruled out,” analysts at Mediobanca wrote in a note. Exor jumped as much as 4.6% in Milan trading, giving the company a market value of 15.8 billion euros ($17.6 billion).

Exor, led by Agnelli scion John Elkann -- who’s also chairman of Fiat and Ferrari -- bought PartnerRe in 2016 for $6.72 billion, it said in the statement. The purchase had been part of a plan to diversify assets away from the capital-intensive automotive industry. PartnerRe has paid Exor $661 million in dividends since its acquisition thanks to the improvement of its operating performances.

The Agnelli family owns 53% of Exor through a separate holding company named after Fiat founder Giovanni Agnelli that includes dozens of his descendants as investors.

The PartnerRe acquisition, which requires approval by regulators, would be biggest deal in the industry since Axa SA bought XL in 2018 for $15.3 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.

Exor won a hostile takeover battle for PartnerRe in 2015, breaking up a merger agreement between the reinsurer and Axis Capital Holdings Ltd.

(Update with Exor shares, analyst reaction in sixth paragraph)

--With assistance from Jan-Henrik Förster and Chiara Remondini.

To contact the reporter on this story: Tommaso Ebhardt in Milan at tebhardt@bloomberg.net

To contact the editors responsible for this story: Chad Thomas at cthomas16@bloomberg.net, Michael Hytha, Ross Larsen

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