Italy’s Exor said on Monday that French insurer Covea had agreed to invest a total of 1.5 billion euros ($1.8 billion), partly in entities managed by PartnerRE, after walking away from a deal to buy the reinsurer from Exor earlier this year.
The agreement is set to “normalize” relations between the two companies, a source close to the matter told Reuters, after Covea in May pulled out of its planned $9 billion cash acquisition of the Bermuda-based reinsurer.
“This agreement draws a line under the failure of the PartnerRe deal,” the source said. “We preferred to find a productive and practical way to look ahead, which was beneficial for both parties, rather than looking into any potential controversy.”
Italian daily Il Sole 24 Ore reported that when the deal fell through the memorandum of understanding (MoU) signed by the two companies included a $175 million penalty for Covea to get out.
Exor, the holding company of Italy’s Agnelli family, said Covea would allocate 750 million euros for undisclosed investments related to Exor.
Covea would also allocate a similar amount with a three- to five-year lock-up period in a number of special purpose insurance vehicles managed by PartnerRE, investing in property catastrophe and other short-tail reinsurance contracts.
“After having decided definitively to continue our project to build one of the world’s leading independent reinsurers, we’re more than happy now to have been able to agree with Covea this constructive cooperation extending also to other fields of our activity,” Exor Chairman and Chief Executive John Elkann said. ($1 = 0.8519 euros)