PartnerRe Ltd.’s former Chief Executive Officer Patrick Thiele said the reinsurer’s shareholders should vote against a planned merger with AXIS Capital Holdings Ltd. and called the cash offer from Italy’s EXOR SpA a better option.

A combination with AXIS would be “high risk with limited or no increase in return,” Thiele, who stepped down as CEO in 2010, said by email. He said he expects more value generated with EXOR, the investment firm of the billionaire Agnelli family.

After an AXIS merger, the company would “fire a lot of people and reduce expenses, which you always have to weigh against what you’re losing in premium that’s associated with those people,” Thiele said Wednesday in an interview at Bloomberg headquarters in New York. PartnerRe was “already more efficient in terms of their capital use than AXIS. So what’s the point of putting them together?”

PartnerRe has scheduled a shareholder vote on the AXIS proposal on July 24. The companies said in a Jan. 25 statement announcing the deal that they expected $200 million in cost savings in the first 18 months after the merger. Both boards have approved the combination.

EXOR, which is offering $6.8 billion in cash to acquire the Bermuda-based reinsurer, has said taking PartnerRe private can help it weather market volatility as prices are pressured by competition and a lull in catastrophes. EXOR Chairman John Elkann pledged to continue the company’s existing strategy and maintain leadership.

AXIS, PartnerRe and EXOR have been meeting with investors, issuing statements and filing presentations to woo shareholders ahead of the vote.

‘Longstanding Relationship’

“Mr. Thiele’s comments will probably carry some (deserved, in our view) weight with investors, not least because of his longstanding relationship with AXIS CEO Albert Benchimol,” Meyer Shields, an analyst at Keefe, Bruyette & Woods Inc., said in a note to clients Thursday.

Benchimol, who previously worked at PartnerRe with Thiele as chief financial officer, said a merger would create the world’s fifth-largest property/casualty reinsurer. It could help Bermuda-based AXIS compete with larger rivals like Warren Buffett’s Berkshire Hathaway Inc., Munich Re and Swiss Re AG.

Thiele contacted PartnerRe in late January about taking a role in the planned AXIS integration and serving on the board of the combined company, and was later rebuffed, emails show. He said it could be difficult to combine two demoralized organizations and sought a bonus with a target of $2 million, according to the correspondence.

Approaching Elkann

Then, as EXOR approached PartnerRe, Thiele reached out to Elkann and offered to help in an unpaid advisory role. EXOR has an open dialogue with Thiele, and he isn’t getting any financial compensation, said a spokesman for the Turin-based company. PartnerRe confirmed the authenticity of the email correspondence.

Thiele said in the interview that adding primary insurance operations through AXIS would put it in competition with clients. He said he’s arguing against the merger, in part, because employees of his former firm “deserve better.”

The former CEO built PartnerRe in the decade through 2010 by keeping a focus on reinsurance and completing an almost $2 billion takeover of Paris Re. Reinsurers provide backup coverage to primary insurers. The firm was an early backer in mortgage guarantor Essent Group Ltd. with Goldman Sachs Group Inc. and JPMorgan Chase & Co.

PartnerRe Chairman Jean-Paul L. Montupet has rejected EXOR’s offer as unacceptable and reiterated his support for AXIS in an e-mailed statement after Thiele’s remarks.

The planned merger “will provide the best value for all shareholders and the opportunity to participate in the upside generated from substantial synergies in a more diversified company with market-leading profitability, greater marketplace relevance and an even stronger capital structure,” Montupet said.

–With assistance from Tommaso Ebhardt in Milan