French insurer Covea has walked away from its planned $9 billion purchase of PartnerRe, the Bermuda-based reinsurer owned by Exor, the holding firm of Italy’s Agnelli family, saying it could no longer buy under the terms of their agreement.

The deal is the biggest involving a European buyer to collapse because of market dislocation caused by the coronavirus pandemic, which has made it increasingly hard for bidders to close pre-crisis transactions due to share price drops.

The global reinsurers’ stock index is down around 36% since the end of February.

Covea said in a statement it had informed Exor that it could not complete the purchase under the agreed terms due to the “current unprecedented conditions and significant uncertainties threatening the global economic outlook.”

A source close to the matter said the risk tied to the COVID-19 pandemic had been excluded from the deal’s ‘material adverse change’ (MAC) clauses of a memorandum of understanding (MoU) Exor and Covea entered into earlier this year regarding the sale of PartnerRe in its entirety.

Exor said in a separate statement that Covea, while trying to renegotiate the deal’s agreed terms, “never suggested the existence of a material adverse change, including pandemic risk, or any other issues at PartnerRe that would explain its refusal to honor its commitments under the MoU.”

“Exor believes that no such basis exists” it said.

Exor said PartnerRe had one of the highest capital and liquidity ratios in the global reinsurance industry and was not expected to be significantly affected by the COVID-19 outbreak.

“The board therefore reiterated its strong belief that a sale of PartnerRe on terms inferior to those established in the MoU fails to reflect the value of the company,” it said.

A spokesman for Exor said Covea would have to pay an indemnity, or a break-up fee, but added that its amount was confidential.

The MoU included a $175 mln penalty for Covea to get out of the deal, according to a March report in the Italian daily newspaper Il Sole 24 Ore.

Exor, led by Agnelli scion John Elkann, bought PartnerRe for $6.9 billion in 2016 after a long hostile takeover battle.

Under the original terms of the agreement with Covea, Exor would have received an aggregate cash return of $3 billion from its purchase and disposal of PartnerRe, including dividends paid by the Bermuda-based group since 2016, Exor has said.

According to the MoU, Exor would also have received a cash dividend of $50 million from PartnerRe before the closure of the deal.

Exor also controls Italian American carmaker Fiat Chrysler (FCA), which in December struck a binding merger deal with France’s Peugeot owner PSA to create the world’s fourth largest carmaker.

FCA Chief Executive Michael Manley last week said the two carmakers remained committed to the 50-50 tie-up and that the terms of the deal had not changed.