Bermuda-based Axis Capital and PartnerRe are to merge, creating an $11bn-in-premiums top-five global reinsurer.
The companies said that the paper-based deal was a "merger of equals" and that it had been approved unanimously by both boards of directors.
Under the terms of the deal, PartnerRe shareholders will receive 2.18 shares of the combined company's shares for each share owned of PartnerRe. Axis Capital shareholders will receive "new" Axis-PartnerRe shares at a ratio of one-to-one.
Upon completion of the deal PartnerRe shareholders will own about 51.6% of the combined company, while Axis Capital shareholders will own about 48.4%.
The deal is at about a 6% premium to the Friday closing price of Axis Capital if PartnerRe's share price is constant, valuing Axis at about 1.03 times projected full year 2014 book value per share of $50.63. PartnerRe trades at about 0.90 x book value per share of $126.24.
PartnerRe chairman Jean-Paul Montupet will be non-executive chairman of the combined company, with Michael Butt serving on the board as chairman emeritus. Axis Capital chief executive Albert Benchimol will head the combined operation. PartnerRe chief executive Costas Miranthis will step down with immediate effect. PartnerRe director David Zwiener will become interim CEO of PartnerRe until the deal completes.
Miranthis said "it has been my pleasure to serve as PartnerRe's CEO as we continued to build upon its leadership position in reinsurance. This merger with Axis Capital offers a unique opportunity to enhance PartnerRe's scale in the reinsurance sector and to enter the primary insurance market with a high-quality partner with a global franchise. This is the right step for PartnerRe at the right time".
Other senior positions in the new company have also been announced.
1. 1: Emmanuel Clarke: CEO Reinsurance
2. 2: Peter Wilson: CEO Insurance
3. 3: Chris DiSipio: CEO Life, Accident & Health
4. 4: Jay Nichols: Strategic Business Development and capital solutions
5. 5: Joseph Henry: CFO
6. 6: Bill Babcock: Deputy CFO, Chief Integration Officer
Babcock will become CFO upon Henry's retirement in July 2016.
The companies said that the deal was expected to achieve at least $200m in annual pre-tax cost synergies in the first 18 months, being accretive to earnings per share and return on equity for both companies.
The deal is expected to close in H2 2015.
Crédit Suisse is acting as financial adviser to PartnerRe. Davis Polk & Wardwell and Appleby Global Services are legal counsel. Goldman Sachs is acting as legal adviser to Axis. Simpson Thacher & Bartlett and Conyers Dill & Pearman are legal counsel.