Axis Capital Holdings Ltd., the reinsurer seeking to grow its business after losing a bidding war for PartnerRe, is looking for more partnerships and may try another comparable takeover, its chief executive officer said.

“PartnerRe was an example of a possible acquisition that might have worked, there are others,” Albert Benchimol said in an interview in Monte Carlo on Sunday. “They may not be pure reinsurance companies and they may not be the size of PartnerRe, but there are certainly interesting companies out there. Whether they want to be acquired is another question.”

Axis, a specialty insurer and reinsurer, is among carriers that have been hurt by falling rates for property and casualty reinsurance amid rising competition from money managers seeking weather-related bets. Last year, Benchimol lost a bidding war for PartnerRe to Italy’s Exor SpA, the investment firm of the Agnelli family. Exor agreed in July last year to pay $6.9 billion for PartnerRe. Axis and PartnerRe have said their merger would have created the world’s fifth-largest property-and-casualty reinsurer.

“Life is about always keeping an eye out for opportunities; you always have to screen the market for targets, but our focus is to expand organically through joint ventures and partnerships,” the CEO said, declining to say whether any talks are taking place.

Bigger Targets

Axis could “do anything in the $3 billion to $5 billion range,” Benchimol said. “PartnerRe showed that we could, under the right circumstances, pursue a $5 billion company.”

Axis would probably be drawn to an insurer or reinsurer that would allow it expand selective business lines including accident and health and create a more efficient underwriting platform, said Jonathan Adams, an analyst at Bloomberg Intelligence.

“Companies such as reinsurer Aspen or insurer Navigators Group are two examples of relatively smaller companies that might meet these goals, but it’s a broad field and many insurers are looking for ways to obtain operating leverage,” he said.

Excess capacity in the industry means that large companies with healthy balance sheets will mostly rely on acquisitions for growth, Fitch Ratings said in a report on Monday. Weak profits means more companies will be vulnerable to takeover next year, the ratings company said.

‘More M&A’

“There will certainly be more M&A in the reinsurance market,” Hannover Re Chief Executive Officer Ulrich Wallin said at a press conference, adding that the world’s third-biggest reinsurer is currently not holding any talks. “Since last year, there hasn’t been that much M&A activity and because valuations are not very high, it’s quite expensive to buy a competitor with your own shares.”

The biggest deal last year was Ace Ltd.’s purchase of Chubb Corp. in July. Other transactions included XL Group Plc’s purchase of Catlin Group Ltd. and MS&AD Insurance Group Holdings Inc. buying Lloyd’s of London insurer Amlin Plc.

“We expect fairly large deals to happen in the future because as margins contract, you are going to see transactions that improve scale,” said Paul Schultz, head of investment banking at Aon Benfield, the reinsurance broker of Aon Plc.

Bermuda-based Axis in July completed a $600 million capital increase for a new reinsurance startup named Harrington Re, increasing its underwriting scope with the help of third-party capital. Axis will manage the underwriting for the company and invest $100 million while Blackstone Group LP, the world’s largest manager of alternative assets, will invest $50 million. Other investors provided the rest.

Further similar deals could follow, Benchimol said. While Harrington Re focuses on mid-to longer-term risk coverage, “you can expect us to be raising more capital to access more short-term lines,” he said, adding that it’s too early to talk about details. “It’s an important part of our strategy.”