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As filed with the Securities and Exchange Commission on June 1, 2015

Registration No. 333-202764

333-202764-01

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

AMENDMENT NO. 1

TO

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

PARTNERRE LTD.

AXIS CAPITAL HOLDINGS LIMITED

(Exact Name of Registrant as Specified in Its Charter)

 

 

BERMUDA		6331		Not Applicable
(State or Other Jurisdiction of Incorporation or Organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

BERMUDA		6331		98-0395986
(State or Other Jurisdiction of Incorporation or Organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

90 Pitts Bay Road

Pembroke HM 08

Bermuda

(441) 292-0888

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

 

c/o Theodore C. Walker

PartnerRe U.S. Corporation

One Greenwich Plaza

Greenwich, CT 06830-6352

(203) 485-4200

(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service)

 

92 Pitts Bay Road

Pembroke HM 08

Bermuda

(441) 496-2600

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

 

CT Corporation System

111 Eighth Avenue, 13th Floor

New York, New York 10011

(212) 894-8940

(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service)

 

Copies to:

 

William Babcock Executive Vice President & Chief Financial Officer PartnerRe Ltd. 90 Pitts Bay Road Pembroke HM 08 Bermuda (441) 292-0888		Richard T. Gieryn, Jr., Esq. Corporate Secretary, General Counsel AXIS Capital Holdings Limited 92 Pitts Bay Road Pembroke HM 08 Bermuda (441) 496-2600		Phillip R. Mills, Esq. Richard J. Sandler, Esq. Davis Polk & Wardwell LLP 450 Lexington Avenue New York, NY 10017 (212) 450-4000		Gary Horowitz, Esq. Patrick Naughton, Esq. Lesley Peng, Esq. Simpson Thacher & Bartlett LLP 425 Lexington Avenue New York, NY 10017 (212) 455-2000

 

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this Registration Statement becomes effective and upon consummation of the amalgamation described in the enclosed joint proxy statement/prospectus.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, as amended, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer		x		Accelerated filer		¨
Non-accelerated filer		¨  (Do not check if a smaller reporting company)		Smaller reporting company		¨

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)  ¨    Exchange Act Rule 14d-l(d) (Cross-Border Third-Party Tender Offer)  ¨

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, and the rules thereunder, or until the registration statement shall become effective on such dates as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

CALCULATION OF REGISTRATION FEE

 

Title Of Each Class Of Securities To Be Registered		Amount To Be Registered (1)		Proposed Maximum Offering Price Per Share		Proposed Maximum Aggregate Offering Price (2)		Amount Of Registration Fee (3)(4)
Common Shares, par value $0.0125 per share		217,272,320		N/A		$12,618,019,870		$1,466,214

(1)

This is the number of common shares, par value $0.0125 per share, of PartnerRe AXIS Capital Limited (“PartnerRe AXIS Capital Limited common shares”) potentially issuable upon the consummation of the amalgamation (the “amalgamation”) contemplated by the Agreement and Plan of Amalgamation, dated as of January 25, 2015 and amendments thereto dated as of February 17, 2015, March 10, 2015, March 31, 2015 and May 3, 2015 (as amended, the “amalgamation agreement”), by and among PartnerRe Ltd. (“PartnerRe”) and AXIS Capital Holdings Limited (“AXIS”). This number is the number of PartnerRe AXIS Capital Limited common shares that are potentially issuable in exchange for PartnerRe common shares, par value $1.00 per share (“PartnerRe common shares”) and AXIS common shares, par value $0.0125 per share (“AXIS common shares”) pursuant to the amalgamation agreement.

(2)

Pursuant to Rules 457(f)(1) and 457(c) under the Securities Act of 1933 and solely for the purpose of calculating the registration fee, the proposed maximum aggregate offering price is the sum of (a) the product obtained by multiplying (i) $55.37 (the average of the high and low prices of AXIS common shares on May 29, 2015) by (ii) 105,713,000 AXIS common shares (the maximum number of AXIS common shares that may be exchanged in the amalgamation), plus (b) the product obtained by multiplying (x) $132.19 (the average of the high and low prices of PartnerRe common shares on May 29, 2015) by (y) 51,174,000 PartnerRe common shares (the maximum number of PartnerRe common shares that may be exchanged in the amalgamation).

(3)	Determined in accordance with Section 6(b) of the Securities Act by multiplying the proposed maximum aggregate offering price by 0.0001162.

(4)	The Registrant previously paid $1,224,678 in connection with the initial filing of this Registration Statement.

 

 

 

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The information in this joint proxy statement/prospectus is not complete and may be changed. A registration statement relating to the securities described in this joint proxy statement/prospectus has been filed with the Securities and Exchange Commission. The securities described herein may not be sold nor may offers to buy these securities be accepted until the registration statement (of which this joint proxy statement/prospectus forms a part) becomes effective. This joint proxy statement/prospectus is not an offer to sell the securities described herein and none of AXIS, PartnerRe and the amalgamated company is soliciting an offer to buy such securities in any state or jurisdiction in which such sale or offer is not permitted.

 

PRELIMINARY—SUBJECT TO COMPLETION—JUNE 1, 2015

AN AMALGAMATION PROPOSAL—YOUR VOTE IS IMPORTANT

 

 

To the Shareholders of PartnerRe Ltd. and AXIS Capital Holdings Limited:

The boards of directors of PartnerRe Ltd. and AXIS Capital Holdings Limited each have unanimously approved and adopted an Agreement and Plan of Amalgamation, dated as of January 25, 2015, between PartnerRe and AXIS and amendments thereto dated as of February 17, 2015, March 10, 2015, March 31, 2015 and May 3, 2015 (together, the “amalgamation agreement”). A conformed copy of the amalgamation agreement, which includes the amendments thereto, is included as Annex A to the attached joint proxy statement/prospectus. Pursuant to the amalgamation agreement, PartnerRe and AXIS will amalgamate with the resulting company being named “PartnerRe AXIS Capital Limited”. We believe PartnerRe AXIS Capital Limited, which we sometimes refer to as the “amalgamated company”, will establish itself as a leading specialty insurance and reinsurance company, operating through established platforms with the enhanced scale and financial flexibility to manage its business and deliver superior value over time. Following the closing of the amalgamation, we anticipate that the amalgamated company will (subject to approval of its shareholders and the Registrar of Companies in Bermuda) change its name, adopt a new New York Stock Exchange (“NYSE”) symbol for its common shares, and register a new trade name and logo that reflect the key attributes of the amalgamated company.

Upon the consummation of the amalgamation, PartnerRe shareholders who hold common shares will be entitled to receive 2.18 common shares, par value $0.0125 per share, of PartnerRe AXIS Capital Limited for each common share of PartnerRe which such shareholders own immediately prior to the amalgamation (or the “effective time”) (such common shares of PartnerRe AXIS Capital Limited, “PartnerRe AXIS Capital Limited common shares” and such exchange ratio of 2.18, the “PartnerRe Exchange Ratio”). PartnerRe common shareholders will receive cash in lieu of any fractional PartnerRe AXIS Capital Limited common share. In addition, each holder of PartnerRe common shares issued and outstanding immediately prior to the effective time shall be entitled to receive a one-time special cash dividend (the “special dividend”) in the amount of $11.50 per common share. The declaration of the special dividend will occur prior to the effective time and is subject to compliance with the Companies Act 1981 of Bermuda and will be contingent upon the submission of the formal application to the Bermuda Registrar of Companies (which we refer to as the “Registrar of Companies”) for the amalgamation to be registered with payment conditional on, and such payment date following, the consummation of the amalgamation by the issuance of the certificate of amalgamation by the Registrar of Companies. For the avoidance of doubt, the special dividend will not have been effectively declared and, therefore, will not be payable if the formal application to register the amalgamation is not submitted to the Registrar of Companies. AXIS shareholders who hold common shares will be entitled to receive one PartnerRe AXIS Capital Limited common share for each common share of AXIS (the “AXIS exchange ratio” and, with the PartnerRe exchange ratio, the “exchange ratios”), par value $0.0125 per share (“AXIS common shares”), which such shareholders respectively own immediately prior to the effective time as further described in the amalgamation agreement. The exchange ratios are fixed and will not be adjusted to reflect share price changes prior to the closing of the amalgamation. PartnerRe common shares are currently traded on the NYSE under the symbol “PRE,” and AXIS common shares are currently traded on the NYSE under the symbol “AXS.” We intend to apply to list the PartnerRe AXIS Capital Limited common shares on the NYSE. Each PartnerRe preferred share and each AXIS preferred share issued and outstanding immediately prior to the effective time will continue as a preferred share of the amalgamated company and will be entitled to the same dividend and other relative rights, preferences, limitations and restrictions as are now provided by the respective certificate of designation, preferences and rights of such PartnerRe preferred shares or AXIS preferred shares, respectively.

Based on the estimated number of PartnerRe common shares and AXIS common shares that will be outstanding immediately prior to the closing of the amalgamation, we estimate that, on a fully diluted basis, upon such closing, former PartnerRe shareholders will own approximately 51.5% of the amalgamated company and former AXIS shareholders will own approximately 48.5% of the amalgamated company. At the effective time, each PartnerRe preferred share and each AXIS preferred share issued and outstanding immediately prior to the effective time will continue as a preferred share of the amalgamated company and will be entitled to the same dividend and other relative rights, preferences, limitations and restrictions as are now provided by the respective certificate of designation, preferences and rights of such PartnerRe preferred shares or AXIS preferred shares, respectively.

The amalgamation is generally intended, for U.S. federal income tax purposes, to be tax-free to shareholders of PartnerRe common shares and AXIS common shares, other than with respect to any cash received in the special dividend or in lieu of fractional PartnerRe AXIS Capital Limited common shares.

PartnerRe and AXIS will each hold a meeting of their respective shareholders (the “special general meetings”) in connection with the amalgamation. At the special general meeting of PartnerRe shareholders, (the “PartnerRe special general meeting”), PartnerRe shareholders holding PartnerRe common shares will be asked to vote on (1) the adoption of the amalgamation agreement, the statutory amalgamation agreement and the amalgamation, (2) the compensation advisory proposal and (3) the adjournment of the PartnerRe special general meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to approve the amalgamation agreement, the statutory amalgamation agreement and the amalgamation at such special general meeting whilst PartnerRe shareholders holding PartnerRe preferred shares will be entitled to vote on proposals (1) and (3). At the special general meeting of AXIS shareholders (the “AXIS special general meeting”), AXIS shareholders holding AXIS common shares will be asked to vote on the approval of (1) an amendment to the AXIS bye-laws (the “bye-law amendment”), (2) the adoption of the amalgamation agreement, the statutory amalgamation agreement and the amalgamation, (3) the compensation advisory proposal and (4) the adjournment of the AXIS special general meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to approve the amalgamation agreement, the statutory amalgamation agreement and the amalgamation at such special general meeting whilst AXIS shareholders holding AXIS preferred shares will be entitled to vote on proposals (2) and (4).

We cannot complete the amalgamation unless the shareholders of each of AXIS and PartnerRe approve the proposals related to the amalgamation. Your vote is very important, regardless of the number of shares you own. Whether or not you expect to attend the applicable special general meeting in person, please take the time to vote on the proposals by signing and returning the enclosed proxy card or voting instruction form, or by submitting your proxy over the Internet or by telephone, as soon as possible to ensure that your shares may be represented and voted at the applicable special general meeting.

The PartnerRe board of directors has unanimously (1) determined that the amalgamation, on the terms and conditions set forth in the amalgamation agreement, is fair to, and in the best interests of, PartnerRe, (2) approved the amalgamation agreement, the statutory amalgamation agreement and the transactions contemplated thereby and (3) resolved that the amalgamation proposal be submitted to the PartnerRe shareholders for their consideration at the PartnerRe special general meeting. Accordingly, the PartnerRe board of directors unanimously recommends that PartnerRe shareholders vote (1) “FOR” the amalgamation proposal and (2) “FOR” the other proposals described in this joint proxy statement/prospectus in respect of which they are entitled to vote.

The AXIS board of directors has unanimously (1) determined that the bye-law amendment is advisable to and in the best interests of AXIS, and authorized and approved the bye-law amendment, (2) resolved that the bye-law amendment proposal and the amalgamation proposal be submitted to the AXIS shareholders for their consideration at the AXIS special general meeting, (3) determined that the amalgamation, on the terms and conditions set forth in the amalgamation agreement, is fair to, and in the best interests of, AXIS, and (4) approved the amalgamation agreement, the statutory amalgamation agreement and the transactions contemplated thereby. Accordingly, the AXIS board of directors unanimously recommends that AXIS shareholders vote (1) “FOR” the bye-law amendment proposal, (2) “FOR” the amalgamation proposal and (3) “FOR” the other proposals described in this joint proxy statement/prospectus in respect of which they are entitled to vote.

The accompanying joint proxy statement/prospectus contains detailed information about PartnerRe, AXIS, the special general meetings, the amalgamation agreement, the statutory amalgamation agreement and the amalgamation. You should read this joint proxy statement/prospectus carefully and in its entirety before voting, including the section entitled “Risk Factors ” beginning on page 18.

We look forward to the successful amalgamation of PartnerRe and AXIS.

Sincerely,

Jean-Paul Montupet Chairman of the Board of Directors PartnerRe Ltd.		Michael A. Butt Chairman of the Board of Directors AXIS Capital Holdings Limited

None of the Securities and Exchange Commission, any state securities commission, the Registrar of Companies in Bermuda, the Bermuda Monetary Authority or any other regulatory body has approved or disapproved of the securities to be issued under this joint proxy statement/prospectus or determined if this joint proxy statement/prospectus is accurate or adequate. Any representation to the contrary is a criminal offense.

This joint proxy statement/prospectus is dated June 1, 2015 and is first being mailed to the holders of shares of PartnerRe and AXIS on or about June 1, 2015.

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90 Pitts Bay Road

Pembroke HM 08 Bermuda

NOTICE OF SPECIAL GENERAL MEETING OF SHAREHOLDERS

TO BE HELD ON JULY 24, 2015

June 1, 2015

To the Shareholders of PartnerRe Ltd.:

Notice is hereby given that a special general meeting of shareholders (which we refer to as the “PartnerRe special general meeting”) of PartnerRe Ltd. (which we refer to as “PartnerRe”) will be held at PartnerRe’s offices at 90 Pitts Bay Road, Pembroke HM 08 Bermuda, on July 24, 2015 at 9:00 a.m., Atlantic time, for the following purposes:

 

•

Proposal 1: to consider and vote on a proposal to approve and adopt the amalgamation agreement, the statutory amalgamation agreement and the amalgamation;

 

•

Proposal 2: to consider and vote on a proposal, on an advisory (nonbinding) basis, to approve the compensation that may be paid or become payable to PartnerRe’s named executive officers in connection with the amalgamation; and

 

•

Proposal 3: to consider and vote on a proposal to adjourn the PartnerRe special general meeting, if necessary or appropriate, to solicit additional proxies, if there are insufficient votes to approve the amalgamation proposal at such special general meeting.

Consummation of the amalgamation is conditioned on, among other things, the approval of Proposal 1 above (which we refer to as the “amalgamation proposal”), but is not conditional on the approval of Proposals 2 and 3.

Only PartnerRe shareholders of record, as shown in PartnerRe’s register of members at the close of business on May 18, 2015, will be entitled to notice of, and to vote at, the PartnerRe special general meeting and any postponement or adjournment thereof. Of such PartnerRe shareholders, the holders of PartnerRe common shares (as defined below) will be entitled to vote on all of the above proposals and the holders of PartnerRe preferred shares (as defined below) will be entitled to vote on only Proposal 1 and Proposal 3.

Your vote is important. Whether or not you plan to attend the PartnerRe special general meeting, please take the time to vote on the proposals by signing and returning the enclosed WHITE proxy card or voting instruction form, or by submitting your proxy over the Internet or by telephone, as soon as possible to ensure that your shares may be represented and voted at the PartnerRe special general meeting.

At any time prior to their being voted at the PartnerRe special general meeting, proxies are revocable by written notice to the Secretary of PartnerRe, by a duly executed proxy bearing a later date or by voting in person at the PartnerRe special general meeting.

The PartnerRe board of directors considers the fair value for each common share of PartnerRe, par value $1.00 per share (which we refer to as “PartnerRe common shares”) to be (i) 2.18 common shares par value $0.0125 each of the Bermuda exempted company which would continue as a result of an amalgamation of AXIS Capital Holdings Limited with PartnerRe (which we refer to as the “amalgamated company”) and (ii) a one-time

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special cash dividend in the amount of $11.50 per PartnerRe common share. The declaration of the special dividend will occur prior to the effective time and is subject to compliance with the Companies Act 1981 of Bermuda and will be contingent upon the submission of the formal application to the Bermuda Registrar of Companies for the amalgamation to be registered with payment conditional on, and such payment date following, the consummation of the amalgamation by the issuance of the certificate of amalgamation by the Bermuda Registrar of Companies. For the avoidance of doubt, the special dividend will not have been effectively declared and, therefore, will not be payable if the formal application to register the amalgamation is not submitted to the Bermuda Registrar of Companies. The PartnerRe board of directors considers the fair value for each preferred share of PartnerRe, par value $1.00 per share (which we refer to as “PartnerRe preferred shares”) to be such preferred share continuing as a preferred share par value $1.00 each of the amalgamated company with the same dividend and other relative rights, preferences, limitations and restrictions as are now provided by its certificate of designation. PartnerRe shareholders who are not satisfied that they have been offered fair value for their shares and whose shares are not voted in favor of the amalgamation proposal may exercise their appraisal rights under the Companies Act 1981 of Bermuda, as amended, to have the fair value of their shares appraised by the Supreme Court of Bermuda. PartnerRe shareholders intending to exercise appraisal rights MUST file their application for appraisal of the fair value of their shares with the Supreme Court of Bermuda within ONE MONTH of the giving of the notice convening the PartnerRe special general meeting.

By order of the Board of Directors,

 

Christine Patton

Secretary and Corporate Counsel to the Board

Pembroke, Bermuda

June 1, 2015

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92 Pitts Bay Road

Pembroke HM 08 Bermuda

NOTICE OF SPECIAL GENERAL MEETING OF SHAREHOLDERS

TO BE HELD ON JULY 24, 2015

June 1, 2015

To the Shareholders of AXIS Capital Holdings Limited:

Notice is hereby given that a special general meeting of shareholders (which we refer to as the “AXIS special general meeting”) of AXIS Capital Holdings Limited (which we refer to as “AXIS”) will be held at AXIS’ offices at 92 Pitts Bay Road, Pembroke HM 08 Bermuda, on July 24, 2015 at 9:00 a.m., Atlantic time, for the following purposes:

 

•

Proposal 1: to consider and vote on a proposal to approve amending the AXIS bye-laws by inserting the words “(including for the purposes of Section 106(4A) of the Act)” after the first mention of the word “business” in bye-law 38 (Quorum for general meetings) and after the word “meeting” in subparagraph (1) of bye-law 43 (Voting at meetings);

 

•

Proposal 2: to consider and vote on a proposal to approve and adopt the amalgamation agreement, the statutory amalgamation agreement and the amalgamation;

 

•

Proposal 3: to consider and vote on a proposal, on an advisory (nonbinding) basis, to approve the compensation that may be paid or become payable to AXIS’ named executive officers in connection with the amalgamation; and

 

•

Proposal 4: to consider and vote on a proposal to adjourn the AXIS special general meeting, if necessary or appropriate, to solicit additional proxies, if there are insufficient votes to approve the amalgamation proposal at such special general meeting.

Consummation of the amalgamation is conditioned on, among other things, the approval of Proposal 2 above (which we refer to as the “amalgamation proposal”), but is not conditional on the approval of Proposals 1, 3 and 4.

Only AXIS shareholders of record, as shown in AXIS’ register of members at the close of business on May 18, 2015, will be entitled to notice of, and to vote at, the AXIS special general meeting and any postponement or adjournment thereof. Of such AXIS shareholders, the holders of AXIS common shares (as defined below) will be entitled to vote on all of the above proposals and the holders of AXIS preferred shares (as defined below) will be entitled to vote on only Proposal 2 and Proposal 4.

Your vote is important. Whether or not you plan to attend the AXIS special general meeting, please take the time to vote on the proposals by signing and returning the enclosed proxy card or voting instruction form, or by submitting your proxy over the Internet or by telephone, as soon as possible to ensure that your shares may be represented and voted at the AXIS special general meeting.

At any time prior to their being voted at the AXIS special general meeting, proxies are revocable by written notice to the Secretary of AXIS, by a duly executed proxy bearing a later date or by voting in person at the AXIS special general meeting.

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The AXIS board of directors considers the fair value for each common share of AXIS, par value $0.0125 per share (which we refer to as “AXIS common shares”) to be one common share par value $0.0125 each of the Bermuda exempted company which would continue as a result of an amalgamation of AXIS with PartnerRe Ltd. (which we refer to as the “amalgamated company”). The AXIS board of directors considers the fair value for each preferred share of AXIS, par value $0.0125 per share (which we refer to as “AXIS preferred shares”) to be such preferred share continuing as a preferred share par value $0.0125 each of the amalgamated company with the same dividend and other relative rights, preferences, limitations and restrictions as are now provided by its certificate of designation. AXIS shareholders who are not satisfied that they have been offered fair value for their shares and whose shares are not voted in favor of the amalgamation proposal may exercise their appraisal rights under the Companies Act 1981 of Bermuda to have the fair value of their shares appraised by the Supreme Court of Bermuda. Any AXIS shareholder intending to exercise appraisal rights MUST file their application for appraisal of the fair value of their shares with the Supreme Court of Bermuda within ONE MONTH of the giving of the notice convening the AXIS special general meeting.

By order of the Board of Directors,

 

Richard T. Gieryn, Jr.

Corporate Secretary, General Counsel

Pembroke, Bermuda

June 1, 2015

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ABOUT THIS JOINT PROXY STATEMENT/PROSPECTUS

This joint proxy statement/prospectus forms a part of a registration statement on Form S-4 (Registration No. 333-202764) filed by PartnerRe and AXIS with the Securities and Exchange Commission (which we refer to as the “SEC”). It constitutes a prospectus of PartnerRe AXIS Capital Limited under Section 5 of the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, with respect to the PartnerRe AXIS Capital Limited common shares to be issued to shareholders of PartnerRe and AXIS pursuant to the Agreement and Plan of Amalgamation, dated as of January 25, 2015, between PartnerRe and AXIS and the amendments thereto dated as of February 17, 2015, March 10, 2015, March 31, 2015 and May 3, 2015 (which we refer to as the “amalgamation agreement”). A conformed copy of the amalgamation agreement, which includes the amendments thereto, is included as Annex A to this joint proxy statement/prospectus. In addition, it constitutes a proxy statement under Section 14(a) of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the “Exchange Act”), a notice of meeting with respect to the PartnerRe special general meeting, and a notice of meeting with respect to the AXIS special general meeting.

This joint proxy statement/prospectus is dated June 1, 2015, and you should not assume that the information contained in this joint proxy statement/prospectus is accurate as of any date other than that date or that the information incorporated by reference into this joint proxy statement/prospectus is accurate as of any date other than the date of the incorporated document containing such information. Neither the mailing of this joint proxy statement/prospectus to the PartnerRe or AXIS shareholders nor the issuance by PartnerRe AXIS Capital Limited of the PartnerRe AXIS Capital Limited common shares pursuant to the amalgamation agreement will create any implication to the contrary.

This joint proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation.

Unless otherwise indicated or as the context requires, all references in this joint proxy statement/prospectus to “we,” “our,” “us” or “the parties” refer to PartnerRe and AXIS, collectively. Also, in this joint proxy statement/prospectus, “$” refers to U.S. dollars.

See the section of this joint proxy statement/prospectus titled “Where You Can Find More Information.”

You should rely only on the information contained in or incorporated by reference into this joint proxy statement/prospectus. We have not authorized anyone to provide you with information that is different from what is contained in or incorporated by reference into this joint proxy statement/prospectus. Therefore, if anyone does give you other information, you should not rely on it. If you are in a jurisdiction where offers to exchange or sell, or solicitations of offers to exchange or purchase, the securities offered by this joint proxy statement/prospectus or the solicitation of proxies is unlawful, or if you are a person to whom it is unlawful to direct these types of activities, then the offer presented in this joint proxy statement/prospectus does not extend to you.

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REFERENCES TO ADDITIONAL INFORMATION

This joint proxy statement/prospectus incorporates by reference important business and financial information about PartnerRe and AXIS from documents previously filed with the SEC that are not included in or delivered with this joint proxy statement/prospectus. This information is available to you without charge from the SEC’s website at www.sec.gov. You can also obtain the documents that are incorporated by reference into this joint proxy statement/prospectus from PartnerRe or AXIS by requesting them in writing or by telephone using the following contact information:

 

PartnerRe Ltd. Attn: Secretary and Corporate Counsel 90 Pitts Bay Road Pembroke HM 08 Bermuda (441) 292-0888		or		AXIS Capital Holdings Limited Attn: Corporate Secretary and General Counsel 92 Pitts Bay Road Pembroke HM 08 Bermuda (441) 496-2600

If you would like to request any documents, in order to ensure timely delivery, please do so by July 17 in order to receive them before the applicable special general meeting. PartnerRe or AXIS, as the case may be, will promptly mail properly requested documents to requesting shareholders by first-class mail, or another equally prompt means.

See the section of this joint proxy statement/prospectus titled “Where You Can Find More Information” for more information about the documents referred to in this joint proxy statement/prospectus.

In addition, if you have questions about the special general meetings, the amalgamation agreement, the bye-law amendments, the statutory amalgamation agreement or the amalgamation described in this joint proxy statement/prospectus, you may contact PartnerRe’s or AXIS’ proxy solicitors. If you are an AXIS shareholder and you have additional questions about the amalgamation or you would like additional copies of this joint proxy statement/prospectus or assistance voting your shares, you should contact MacKenzie Partners, Inc. at:

 

 

105 Madison Avenue

New York, NY 10016

proxy@mackenziepartners.com

Call Collect: (212) 929-5500

Toll Free: (800) 322-2885

If you are a PartnerRe shareholder and you have additional questions about the amalgamation or you would like additional copies of this joint proxy statement/prospectus or assistance voting your shares, you should contact Innisfree M&A Incorporated at:

 

501 Madison Avenue, 20th floor

New York, New York 10022

Shareholders may call toll free: (877) 825-8971

Banks and Brokers may call collect: (212) 750-5833

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TABLE OF CONTENTS

 

 

 

		Page
Questions and Answers About the Amalgamation and the Special General Meetings			i
Summary			1
PartnerRe AXIS Capital Limited			1
PartnerRe			1
AXIS			2
Risk Factors			2
The Amalgamation			2
Amalgamation Consideration			3
The Amalgamation Agreement			3
The Special General Meetings			3
Recommendations of the PartnerRe Board of Directors			7
Recommendations of the AXIS Board of Directors			7
Opinion of Financial Advisor for PartnerRe			7
Opinion of Financial Advisor for AXIS			8
Conditions to Closing			8
Consents and Approvals			8
Restrictions on Solicitation of Takeover Proposals by PartnerRe and AXIS; Requirement to Submit to Vote			9
Termination of the Amalgamation Agreement			9
Effect of Termination; Termination Related Fees			10
Treatment of PartnerRe’s Equity Awards			11
Treatment of AXIS’ Equity Awards			12
Interests of PartnerRe’s Directors and Executive Officers in the Amalgamation			12
Interests of AXIS’ Directors and Executive Officers in the Amalgamation			12
Dividends, Distributions and Share Repurchases			12
Material U.S. Federal Income Tax Consequences			13
Listing of the PartnerRe AXIS Capital Limited Common Shares			14
Comparison of Shareholder Rights			14
Appraisal Rights			14
Forward-Looking Statements			16
Risk Factors			18
Risk Factors Relating to the Amalgamation			18
Risk Factors Relating to the Amalgamated Company Following the Amalgamation			22
Other Risk Factors Relating to PartnerRe			27
Other Risk Factors Relating to AXIS			27
The Companies			28
PartnerRe AXIS Capital Limited			28
PartnerRe			28
AXIS			29
Selected Historical Consolidated Financial Data of PartnerRe			30
Selected Historical Consolidated Financial Data of AXIS			33
Preliminary Unaudited Pro Forma Condensed Consolidated Financial Information			35
Notes To Preliminary Unaudited Pro Forma Condensed Consolidated Financial Statements			40
Comparative Per Share Data			48
Market Price and Dividend Information			51
PartnerRe			51
AXIS			51
The Amalgamation			56
Effects of the Amalgamation			56

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Background of the Amalgamation			56
PartnerRe’s Reasons for the Amalgamation and Recommendation of PartnerRe’s Board of Directors			98
AXIS’ Reasons for the Amalgamation and Recommendation of the AXIS Board of Directors			106
Certain PartnerRe Prospective Financial Information			113
Certain AXIS Prospective Financial Information			115
Opinion of PartnerRe’s Financial Advisor			117
Opinion of AXIS’ Financial Advisor			125
Leadership of the Amalgamated Company			134
Interests of PartnerRe’s Directors and Executive Officers in the Amalgamation			135
Interests of AXIS’ Directors and Executive Officers in the Amalgamation			142
Dividends, Distributions and Share Repurchases			148
Regulatory Clearances Required for the Amalgamation			148
Exchange of Shares in the Amalgamation			149
Listing of the PartnerRe AXIS Capital Limited Common Shares			150
Delisting of PartnerRe and AXIS Common Shares			151
Dissenters’ Rights of Appraisal for PartnerRe and AXIS Shareholders			151
The Amalgamation Agreement			152
Structure of the Amalgamation			152
Closing; Effective Time of the Amalgamation			153
Amalgamation Consideration			153
Exchange of Shares in the Amalgamation			153
Treatment of Share Options and Other Share-Based Awards and Programs			154
Representations and Warranties			155
Conduct of Business			158
No Solicitation of Acquisition Proposals			160
Efforts to Obtain Required Shareholder Votes			163
Efforts to Complete the Amalgamation			163
Consents and Approvals			164
Governance Matters After the Amalgamation			164
Directors’ and Officers’ Indemnification and Insurance			165
Employees and Employee Benefits			165
Other Covenants and Agreements			166
Conditions to Consummation of the Amalgamation			166
Termination of the Amalgamation Agreement			167
New York Stock Exchange De-listing and Exchange Act Deregistration			168
Effect of Termination; Liability for Breach			169
Expenses			170
Amendments, Extensions and Waivers			170
Governing Law; Jurisdiction			171
Dissenting Shares			171
No Third-Party Beneficiaries			171
Specific Performance			171
Regulatory Matters			172
Antitrust			172
Insurance and Other Regulatory Matters			172
The PartnerRe Special General Meeting			174
Date, Time and Place			174
Purposes of the PartnerRe Special General Meeting			174
PartnerRe Record Date and Voting by PartnerRe Directors and Executive Officers			174
Quorum			174

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Required Vote			174
Voting Securities			175
Abstentions and “Broker Non-Votes”			176
Revocation of Proxies			176
Proposals to Be Submitted to PartnerRe Shareholders; Voting Requirements and Recommendations			177
Proposal 1. Approval and Adoption of the Amalgamation Proposal			177
Proposal 2. Approval of the Compensation Advisory Proposal			177
Proposal 3. Approval of the Adjournment Proposal			178
The AXIS Special General Meeting			179
Date, Time and Place			179
Purposes of the AXIS Special General Meeting			179
AXIS Record Date and Voting by AXIS Directors and Executive Officers			179
Quorum			179
Required Vote			180
Voting Securities			180
Abstentions and “Broker Non-Votes”			181
Proposals to Be Submitted to AXIS Shareholders; Voting Requirements and Recommendations			182
Proposal 1. Approval of the Bye-Law Amendment			182
Proposal 2. Approval and Adoption of the Amalgamation Proposal			182
Proposal 3. Approval of the Compensation Advisory Proposal			183
Proposal 4. Approval of the Adjournment Proposal			183
Comparison of Shareholder Rights			185
Material U.S. Federal Income Tax Consequences			215
Description of Share Capital			225
General			225
Authorized Share Capital			225
Common Shares			225
Preferred Shares			226
Adjustment of Voting Power			226
Dividend Rights			228
Variation of Rights			228
Transfer of Shares			228
Compulsory Acquisitions; Appraisal Rights			228
Meetings of Shareholders			230
Quorum			230
Access to Books and Records and Dissemination of Information			230
Director Nominations by Shareholders			231
Shareholder Proposals			232
Election and Removal of Directors			233
Proceedings of Board of Directors			234
Indemnification of Directors and Officers			234
Amendment of Memorandum of Association and Bye-Laws			235
Amalgamations and Mergers			235
Registrar or Transfer Agent			235
Certain Provisions of Bermuda Law			236
Share Certificates			236
Stock Exchange Listing			236
Certain Relationships and Related Transactions			237
PartnerRe and AXIS			237
PartnerRe			237
AXIS			237

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		Page
Legal Matters			238
Experts			238
Enforceability of Civil Liabilities under the United States Federal Securities Laws			238
Costs of Soliciting Proxies			239
Future Shareholder Proposals			239
Other Matters			239
Householding of Joint Proxy Statement/Prospectus			240
Where You Can Find More Information			240
Annex A: Agreement and Plan of Amalgamation			A-1
Annex B: Opinion of Credit Suisse Securities (USA) LLC			B-1
Annex C: Opinion of Goldman, Sachs & Co.			C-1
Part II Information not Required in Prospectus; Undertakings			II-1

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QUESTIONS AND ANSWERS ABOUT THE AMALGAMATION AND THE SPECIAL GENERAL MEETINGS

The following questions and answers highlight selected information from this joint proxy statement/prospectus and may not contain all the information that is important to you. We encourage you to read this entire document carefully.

Q: Why am I receiving this joint proxy statement/prospectus?

A: PartnerRe and AXIS have entered into the amalgamation agreement, pursuant to which PartnerRe and AXIS will amalgamate and continue thereafter as a Bermuda exempted company, PartnerRe AXIS Capital Limited.

In order to consummate the amalgamation, the PartnerRe shareholders and AXIS shareholders must approve certain proposals and the transactions related to the amalgamation described in this joint proxy statement/prospectus. PartnerRe and AXIS will hold separate special general meetings to obtain these approvals. This joint proxy statement/prospectus, which you should read carefully, contains important information about the amalgamation and related transactions and other matters being considered at the PartnerRe and AXIS special general meetings.

Q: When and where are the special general meetings?

A: The PartnerRe special general meeting will take place at 9:00 a.m., Atlantic time, on July 24, 2015, at PartnerRe’s offices at 90 Pitts Bay Road, Pembroke HM 08 Bermuda and the AXIS special general meeting will take place concurrently at 9:00 a.m., Atlantic time, on July 24, 2015, at AXIS’ offices at 92 Pitts Bay Road, Pembroke HM 08 Bermuda.

Q: What is happening at the special general meetings?

A: At the PartnerRe special general meeting, the holders of PartnerRe preferred shares will be asked to consider and vote only on Proposal 1 and Proposal 3 below and the holders of PartnerRe common shares will be asked to consider and vote on all of the following proposals:

 

•

Proposal 1: to approve and adopt the amalgamation agreement, the statutory amalgamation agreement and the amalgamation (which we refer to as the “amalgamation proposal”);

 

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Proposal 2: on an advisory (nonbinding) basis, to approve the compensation that may be paid or become payable to PartnerRe’s named executive officers in connection with the amalgamation; and

 

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Proposal 3: to approve the adjournment of the special general meeting, if necessary or appropriate, to solicit additional proxies, in the event that there are insufficient votes to approve the amalgamation proposal at the special general meeting (which we refer to as the “adjournment proposal”).

At the AXIS special general meeting, the holders of AXIS preferred shares will be asked to consider and vote only on Proposal 2 and Proposal 4 below and the holders of AXIS common shares will be asked to consider and vote on all of the following proposals:

 

•

Proposal 1: to approve amending the AXIS bye-laws by inserting the words “(including for the purposes of Section 106(4A) of the Act)” after the first mention of the word “business” in bye-law 38 (Quorum for general meetings) and after the word “meeting” in subparagraph (1) of bye-law 43 (Voting at meetings);

 

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Proposal 2: to approve and adopt the amalgamation agreement, the statutory amalgamation agreement and the amalgamation (which we refer to as the “amalgamation proposal”);

 

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•

Proposal 3: on an advisory (nonbinding) basis, to approve the compensation that may be paid or become payable to AXIS’ named executive officers in connection with the amalgamation; and

 

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Proposal 4: to approve an adjournment of the special general meeting, if necessary or appropriate, to solicit additional proxies, in the event that there are insufficient votes to approve the amalgamation proposal at the special general meeting (which we refer to as the “adjournment proposal”).

Q: What will happen in the amalgamation?

A: If the PartnerRe and AXIS shareholders approve and adopt the amalgamation proposal and all other conditions to the amalgamation have been satisfied or waived, PartnerRe and AXIS will amalgamate and the amalgamated company will continue as a Bermuda exempted company. At the effective time of the amalgamation, the amalgamated company will succeed to and assume all the rights, properties, liabilities and obligations of PartnerRe and AXIS.

Q: What will PartnerRe and AXIS shareholders receive in the amalgamation?

A: Pursuant to the terms of the amalgamation agreement and the statutory amalgamation agreement, each PartnerRe common share issued and outstanding immediately prior to the effective time shall automatically be cancelled and converted into the right to receive 2.18 PartnerRe AXIS Capital Limited common shares. PartnerRe common shareholders will receive cash in lieu of any fractional PartnerRe AXIS Capital Limited common share. In addition, each holder of PartnerRe common shares issued and outstanding immediately prior to the effective time shall be entitled to receive a one-time special cash dividend (which we refer to as the “special dividend”) in the amount of $11.50 per PartnerRe common share. The declaration of the special dividend will occur prior to the effective time and is subject to compliance with the Companies Act 1981 of Bermuda and will be contingent upon the submission of the formal application to the Bermuda Registrar of Companies (which we refer to as the “Registrar of Companies”) for the amalgamation to be registered with payment conditional on, and such payment date following, the consummation of the amalgamation by the issuance of the certificate of amalgamation by the Registrar of Companies. For the avoidance of doubt, the special dividend will not have been effectively declared and, therefore, will not be payable if the formal application to register the amalgamation is not submitted to the Registrar of Companies.

Pursuant to the amalgamation agreement and the statutory amalgamation agreement, each AXIS common share issued and outstanding immediately prior to the effective time shall automatically be cancelled and converted into the right to receive one PartnerRe AXIS Capital Limited common share.

Pursuant to the terms of the amalgamation agreement and the statutory amalgamation agreement, each PartnerRe preferred share and each AXIS preferred share issued and outstanding immediately prior to the effective time will continue as a preferred share of the amalgamated company and will be entitled to the same dividend and other relative rights, preferences, limitations and restrictions as are now provided by the respective certificate of designation, preferences and rights of such PartnerRe preferred shares or AXIS preferred shares, respectively.

Q: When and to whom will the special dividend be paid?

A: Each holder of PartnerRe common shares issued and outstanding immediately prior to the effective time shall be entitled to receive a one-time special cash dividend in the amount of $11.50 per PartnerRe common share. The declaration of the special dividend will occur prior to the effective time and is subject to compliance with the Companies Act 1981 of Bermuda and will be contingent upon the submission of the formal application to the Registrar of Companies for the amalgamation to be registered with payment conditional on, and such payment date following, the consummation of the amalgamation by the issuance of the certificate of amalgamation by the Registrar of Companies. For the avoidance of doubt, the special dividend will not have been effectively declared and, therefore, will not be payable if the formal application to register the amalgamation is not submitted to the Registrar of Companies. PartnerRe will equitably adjust the exercise price of and, if applicable, the number of PartnerRe common shares covered by, each vested and unvested option and share appreciation right to account

 

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for the extraordinary cash dividend. No special dividend will be paid with respect to AXIS common shares, AXIS preferred shares or PartnerRe preferred shares. If you are an AXIS shareholder, and do not also hold PartnerRe common shares immediately prior to the effective time, you will not be entitled to receive the special dividend.

Q: Are shareholders able to exercise appraisal rights?

A: Dissenting shareholders may exercise, within one month after the date the notice convening the respective PartnerRe or AXIS special general meeting is deemed to have been given, appraisal rights under Bermuda law to have the fair value of their PartnerRe common shares or preferred shares or AXIS common shares or preferred shares, as applicable, appraised by the Bermuda Court subject to compliance with all of the required procedures, as described in the section of this joint proxy statement/prospectus titled “The Amalgamation—Dissenters’ Rights of Appraisal for PartnerRe and AXIS Shareholders.”

Q: When do the parties expect to complete the amalgamation?

A: The parties expect to complete the amalgamation in the third quarter of 2015, although there can be no assurance that the parties will be able to do so. The closing of the amalgamation is subject to customary closing conditions, including shareholder approvals and receipt of certain insurance and other regulatory approvals. Please see the section of this joint proxy statement/prospectus titled “The Amalgamation Agreement—Conditions to the Amalgamation” for more information.

Q: What happens if the amalgamation is not completed?

A: If the amalgamation proposal is not approved by either the requisite vote of the AXIS shareholders or the requisite vote of PartnerRe shareholders, or the amalgamation is not completed for any other reason, AXIS and PartnerRe will not amalgamate and AXIS shareholders and PartnerRe shareholders will not receive their respective consideration under the amalgamation agreement (the “amalgamation consideration”), which is described in greater detail in the section of this joint proxy statement/prospectus titled “Summary—Amalgamation Agreement”). Instead, AXIS shareholders will continue to own their AXIS common shares or AXIS preferred shares, as the case may be, and PartnerRe shareholders will continue to own their PartnerRe common shares or PartnerRe preferred shares, as the case may be and the special dividend will not be paid. AXIS and PartnerRe will each remain independent public companies and the AXIS common shares and PartnerRe common shares will continue to be registered under the Exchange Act and traded on the NYSE. If the amalgamation agreement is terminated under certain specified circumstances, AXIS or PartnerRe, as the case may be, may be required to pay the other party a fee of $55 million or $280 million and out of pocket costs and expenses in connection with the amalgamation in an amount not to exceed $35 million, as described in the sections of this joint proxy statement/prospectus titled “The Amalgamation Agreement—Termination of the Amalgamation Agreement” and “The Amalgamation Agreement—Effects of Termination; Liability for Breach.”

Q: What are the U.S. federal income tax consequences of the amalgamation?

A: The amalgamation is intended to qualify as a reorganization for U.S. federal income tax purposes within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, (the “Code”). Accordingly, a U.S. holder (as defined in the section of this joint proxy statement/ prospectus titled “Material U.S. Federal Income Tax Consequences”) generally will not recognize any gain or loss for U.S. federal income tax purposes on the exchange of PartnerRe common shares or AXIS common shares for PartnerRe AXIS Capital Limited common shares, except with respect to any cash received in the special dividend or in lieu of a fractional PartnerRe AXIS Capital Limited common share. Please see the section titled “Material U.S. Federal Income Tax Consequences” for more information.

 

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YOU SHOULD READ THE SECTION OF THIS JOINT PROXY STATEMENT/PROSPECTUS TITLED “MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES” FOR A MORE DETAILED DISCUSSION OF THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE AMALGAMATION. TAX MATTERS ARE COMPLICATED AND THE TAX CONSEQUENCES OF THE AMALGAMATION TO YOU WILL DEPEND UPON THE FACTS OF YOUR PARTICULAR SITUATION. BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, THE PARTIES URGE YOU TO CONSULT WITH YOUR TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES OF THE AMALGAMATION TO YOU, INCLUDING THE APPLICABILITY OF U.S. FEDERAL, STATE, LOCAL, NON-U.S. AND OTHER TAX LAWS.

Q: Why are AXIS’ shareholders voting on the bye-law amendment proposal?

A: The AXIS bye-laws do not currently provide for the required vote and quorum at a general meeting of shareholders to consider an amalgamation or merger of AXIS with another company. The Bermuda Companies Act 1981, as amended (which we refer to as the “Companies Act”), however, does permit a company’s bye-laws to provide for the required vote and quorum at a general meeting of shareholders to consider an amalgamation or merger and, in the absence thereof, the required vote and quorum under the Companies Act requires the resolution of the shareholders must be approved by the affirmative vote of 75% of those voting at the general meeting, the quorum for which is two persons at least holding or representing by proxy more than one-third of the issued shares of the company. Under this proposal, the amendment to the AXIS bye-laws would result in the required vote and quorum at a general meeting of shareholders to consider an amalgamation or merger of AXIS with another company being aligned with the existing required vote and quorum for a resolution of the shareholders currently provided for in AXIS’ bye-laws. Accordingly, in this proposal, AXIS is asking its shareholders to approve amending the AXIS bye-laws to provide that an amalgamation or merger of AXIS with another company requires the affirmative vote of a majority of the votes cast at an AXIS general meeting, at which the quorum required is two or more persons present in person and representing in person or by proxy shares representing more than 50% of the aggregate voting power of all AXIS shares.

Q: What shareholder vote is required to approve the items to be voted on at the special general meetings, including the amalgamation?

PartnerRe

A: The holders of PartnerRe preferred shares will be entitled to vote on only the amalgamation proposal and the adjournment proposal, whereas the holders of PartnerRe common shares will be entitled to vote on all of the proposals. Each PartnerRe share, including the PartnerRe preferred shares, carries the right to vote on the amalgamation proposal and, the affirmative votes of a majority of votes cast at the PartnerRe special general meeting at which a quorum under PartnerRe’s bye-laws is present, will be required to approve and adopt the amalgamation proposal. The affirmative vote of a majority of votes cast at the PartnerRe special general meeting at which a quorum under PartnerRe’s bye-laws is present is required to approve each other matter to be considered, including any adjournment proposal. Each PartnerRe share, including the PartnerRe preferred shares, will carry the right to vote on the adjournment proposal. Please see the description in the section of this joint proxy statement/prospectus titled “Questions and Answers About the Amalgamation and the Special General Meetings—Who is entitled to vote at the special general meetings?”

AXIS

A: The holders of AXIS preferred shares will be entitled to vote on only the amalgamation proposal and the adjournment proposal, whereas the holders of AXIS common shares will be entitled to vote on all of the proposals. The affirmative vote of a majority of the votes cast, by the holders of the AXIS common shares, at the AXIS special general meeting at which a quorum under AXIS’ bye-laws is present, is required to approve the bye-law amendment proposal, which will become effective immediately if so approved. Each AXIS share, including the AXIS preferred shares, carries the right to vote on the amalgamation proposal and, if the bye-law amendment proposal is approved, the affirmative vote of a majority of the votes cast, at the AXIS special general

 

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meeting at which a quorum under AXIS’ amended bye-laws is present, will be required to approve and adopt the amalgamation proposal. If the bye-law amendment proposal is not approved, then in accordance with the Companies Act the affirmative vote of 75% of the votes cast, at the AXIS special general meeting at which a quorum consisting of at least two persons at least holding or representing by proxy more than one-third of the issued shares of AXIS is present, will be required to approve and adopt the amalgamation proposal. The affirmative vote of a majority of votes cast at the AXIS special general meeting at which a quorum under AXIS’ bye-laws is present is required to approve each other matter to be considered, including any adjournment proposal. Each AXIS share, including the AXIS preferred shares, will carry the right to vote on the adjournment proposal. Please see the description in the section of this joint proxy statement/prospectus titled “Questions and Answers About the Amalgamation and the Special General Meetings—Who is entitled to vote at the special general meetings?”

Q: Do the boards of directors of PartnerRe and AXIS recommend approval of the proposals?

A: PartnerRe’s board of directors unanimously recommends that PartnerRe shareholders vote “FOR” the amalgamation proposal and “FOR” the other proposals described in this joint proxy statement/prospectus. AXIS’ board of directors unanimously recommends that AXIS shareholders vote “FOR” the amalgamation proposal and “FOR” the other proposals described in this joint proxy statement/prospectus.

Q: What percentage of the issued and outstanding PartnerRe AXIS Capital Limited common shares, calculated on a fully diluted basis, will the former PartnerRe and AXIS shareholders own, in the aggregate, after the amalgamation?

A: Based on the fixed exchange ratios and the estimated number of PartnerRe common shares and AXIS common shares that will be issued and outstanding immediately prior to the consummation of the amalgamation, PartnerRe and AXIS estimate that, on a fully diluted basis, upon the consummation of the amalgamation, former PartnerRe shareholders will own in the aggregate approximately 51.5% of the amalgamated company and former AXIS shareholders will own in the aggregate approximately 48.5% of the amalgamated company.

Q: Are PartnerRe’s and AXIS’ financial conditions relevant to my decision to vote in favor of the proposals?

A: Yes. The amalgamated company will continue with all the rights, properties, liabilities and obligations of PartnerRe and AXIS. You should therefore consider the financial condition of each of PartnerRe and AXIS before you decide to become a shareholder of the amalgamated company through the amalgamation. You should also consider the likely effect the combination of AXIS and PartnerRe will have on the amalgamated company’s financial condition. Please read the section of this joint proxy statement/prospectus titled “Risk Factors.” This joint proxy statement/prospectus contains financial information regarding AXIS and PartnerRe, as well as pro forma financial information in connection with the amalgamation of AXIS and PartnerRe, all of which we encourage you to review carefully. Please read the section of this joint proxy statement/prospectus titled “Preliminary Unaudited Pro Forma Condensed Consolidated Financial Information.”

Q: Do PartnerRe and AXIS have the financial resources to complete the amalgamation?

A: PartnerRe and AXIS expect to have sufficient cash on hand to consummate the transactions contemplated by the amalgamation agreement, including any cash that may be required to pay fees, expenses and other related amounts, and the amalgamated company will also have the necessary financial resources for dividends, and to fully complete the integration of the businesses of AXIS and PartnerRe following the consummation of the amalgamation. Furthermore, PartnerRe expects to have sufficient cash on hand to pay the special dividend upon the consummation of the amalgamation by the issuance of the certificate of amalgamation by the Registrar of Companies. The consummation of the amalgamation is not subject to any financing condition.

 

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Q: What will be the composition of the amalgamated company’s board of directors and senior management following consummation of the amalgamation and how will the amalgamated company be managed?

A: Upon the consummation of the amalgamation, the board of directors of the amalgamated company will consist of seven directors initially designated by AXIS and seven directors initially designated by PartnerRe, and the committees of the board of directors of the amalgamated company will consist equally of AXIS and PartnerRe designated directors. The initial directors of the amalgamated company will be Jean-Paul L. Montupet (Chairman of the board of directors), Albert A. Benchimol (Chief Executive Officer), Michael A. Butt (Chairman Emeritus of the board of directors), Charles A. Davis, Robert L. Friedman, Christopher V. Greetham, Roberto Mendoza, Debra J. Perry, Thomas C. Ramey, Rémy Sautter, Henry B. Smith, Kevin M. Twomey, Egbert Willam and David Zwiener.

The amalgamated company’s management team will be drawn from the existing PartnerRe and AXIS management teams, and the combined management team will be led by Albert Benchimol, AXIS’ current President and Chief Executive Officer, who will serve as President and Chief Executive Officer of the amalgamated company; Joseph Henry, currently Chief Financial Officer of AXIS, who will continue in this role as Chief Financial Officer of the amalgamated company; William Babcock, currently Chief Financial Officer of PartnerRe, who will serve as Deputy Chief Financial Officer and Lead Integration Officer of the amalgamated company and will assume the role of Chief Financial Officer of the amalgamated company upon the retirement of Mr. Henry in July 2016; Emmanuel Clarke, currently Chief Executive Officer of PartnerRe Global, who will serve as Chief Executive Officer of Reinsurance of the amalgamated company; Peter Wilson, currently Chief Executive Officer of AXIS Insurance, who will serve as Chief Executive Officer of Insurance of the amalgamated company; Chris DiSipio, currently Chief Executive Officer of AXIS Accident and Health, who will serve as Chief Executive Officer of Life, Accident and Health of the amalgamated company; and John (Jay) Nichols, currently Chief Executive Officer of AXIS Re, who will serve as Executive Vice President of Strategic Business Development and Capital Solutions at the amalgamated company. For a more complete description of the governance matters of the amalgamated company, please see the sections of this joint proxy statement/prospectus titled “Summary—Leadership of the Amalgamated Company” and “The Amalgamation Agreement—Governance Matters after the Amalgamation.”

Q: Who is entitled to vote at the special general meetings?

A: Only PartnerRe shareholders and AXIS shareholders of record, as shown on PartnerRe’s or AXIS’ register of members, respectively, at the close of business on May 18, 2015, the record date for the PartnerRe and AXIS special general meetings, will be entitled to notice of, and to vote at, the respective special general meetings or any adjournment or postponement thereof. In accordance with the Companies Act each PartnerRe share, including the preferred shares, carries the right to vote in respect of the amalgamation proposal. If it becomes necessary or appropriate to solicit additional proxies for the amalgamation proposal then each PartnerRe common share and preferred share carries the right to vote in respect of the adjournment proposal. In respect of the other proposals to be decided on at the PartnerRe special general meeting only holders of PartnerRe common shares are entitled to vote. In accordance with the Companies Act each AXIS common share and preferred share carries the right to vote in respect of the amalgamation proposal. If it becomes necessary or appropriate to solicit additional proxies for the amalgamation proposal then each AXIS common share and preferred share also carries the right to vote in respect of the adjournment proposal. In respect of the other proposals to be decided on at the AXIS special general meeting only holders of AXIS common shares are entitled to vote.

Q: What do I need to do now?

A: We urge you to carefully read this joint proxy statement/prospectus, including its annexes and the documents incorporated by reference herein. You are also encouraged to review the documents referenced under the section of this joint proxy statement/prospectus titled “Where You Can Find More Information” and consult

 

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with your accounting, legal and tax advisors. Once you have considered all relevant information, we encourage you to fill in and return the relevant proxy card (if you are a shareholder of record) or voting instruction form you receive from your bank, broker or other nominee (if you are a shareholder who holds your shares through a bank, broker or other nominee).

Q: How do I vote my shares?

A: Shareholder of Record. If your PartnerRe shares or AXIS shares are registered directly in your name, then you are considered a shareholder of record of PartnerRe or AXIS with respect to those shares and this joint proxy statement/prospectus and a WHITE proxy card or an AXIS proxy card was sent to you directly by PartnerRe or AXIS (as the case may be). As a PartnerRe or AXIS shareholder of record, you may vote by completing, dating, signing and mailing the enclosed WHITE proxy card or AXIS proxy card in the return envelope provided as soon as possible or by following the instructions on the WHITE proxy card or AXIS proxy card to submit your proxy by telephone or over the Internet at the website indicated. Consummation of the proxy over the Internet is available through 11:59 p.m. Eastern Time on the business day before the respective special general meeting. PartnerRe or AXIS shareholders of record may also vote by attending the respective special general meeting in person. However, whether or not you plan to attend the respective special general meeting in person, we encourage you to vote your PartnerRe or AXIS shares in advance to ensure that your vote is represented at the respective special general meeting. Abstentions and, if applicable, “broker non-votes” will be counted toward the presence of a quorum at the PartnerRe or AXIS special general meeting, but will not be considered votes cast on any proposal brought before the PartnerRe or AXIS special general meeting, as described below under the question titled “—What effect do abstentions and ‘broker non-votes’ have on the proposals?”

Beneficial Owner of Shares Held in Street Name. If your PartnerRe shares or AXIS shares are held in the name of a bank, broker or other similar organization or nominee, then you are considered a beneficial owner of such shares held for you in what is known as “street name.” Most shareholders of PartnerRe or AXIS hold their respective shares in “street name.” If this is the case, this joint proxy statement/prospectus has been forwarded to you by your bank, broker or other organization or nominee together with a voting instruction form. You may vote by completing and returning your voting instruction form to your broker. Please review the voting instruction form to see if you are able to submit your voting instructions by telephone or over the Internet. The organization or nominee holding your account is considered the shareholder of record for purposes of voting at the PartnerRe or AXIS special general meeting. As a beneficial owner, you have the right to instruct the organization that holds your shares of record how to vote the PartnerRe shares or AXIS shares that you beneficially own. If you are a beneficial owner of PartnerRe or AXIS shares held in “street name” rather than a shareholder of record, you may only vote your PartnerRe shares or AXIS shares in person at the PartnerRe or AXIS special general meeting if you obtain and bring a letter from the organization or nominee holding your PartnerRe or AXIS shares identifying you as the beneficial owner of those shares and authorizing you to vote your PartnerRe or AXIS shares at the special general meeting. A legal proxy form from your broker and valid identification is required.

Q: What do I do if I want to change my vote?

A: You may change your vote at any time before the vote takes place at the PartnerRe or AXIS special general meeting. To do so, you may either complete and submit a new WHITE proxy card or AXIS proxy card with a later date by mail or send a written notice to the Secretary of PartnerRe or the Secretary of AXIS, as the case may be, stating that you would like to revoke your proxy. You may also complete and submit a new PartnerRe or AXIS proxy by telephone or over the Internet. In addition, you may elect to attend the PartnerRe or AXIS special general meeting and vote in person, as described above under the question titled “—How do I vote my shares?”. If you are a PartnerRe or AXIS shareholder and you hold your shares through a bank, broker or other nominee, you may revoke the instructions only by informing the bank, broker or nominee in accordance with any procedures established by that nominee.

 

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Q: What effect do abstentions and “broker non-votes” have on the proposals?

A: Abstentions and “broker non-votes” will be counted toward the presence of a quorum at the PartnerRe or AXIS special general meeting, but will not be considered votes cast on any proposal brought before such respective special general meeting. Because the vote required to approve the proposals to be voted upon at the respective special general meeting is the affirmative vote of the specified required percentage of the votes cast assuming a quorum is present, an abstention or a “broker non-vote” with respect to any proposal to be voted on at the respective special general meeting will not have the effect of a vote for or against the relevant proposal, but will reduce the number of votes cast and therefore increase the relative influence of those shareholders voting. It is not anticipated that there will be any “broker non-votes” as all proposals are non-routine in nature.

Q: Why did the PartnerRe board of directors decide to reject the EXOR Offer?

A: The PartnerRe board of directors considered in detail the price and non-price terms of both the EXOR Proposal and the superseding EXOR Offer and concluded the EXOR Offer, the price of which EXOR subsequently confirmed would not be increased, was not in the best interests of PartnerRe including PartnerRe’s shareholders. The PartnerRe board of directors concluded acting honestly and in good faith with a view to the best interests of PartnerRe EXOR’s final offer of $137.50 per common share:

 

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significantly undervalued PartnerRe and failed to adequately compensate PartnerRe’s shareholders for the strength of the PartnerRe balance sheet, expected growth of tangible book value per share between December 31, 2014 and the closing of a potential transaction with EXOR and did not include a control premium for or adequately value the PartnerRe franchise (please see “The Amalgamation—PartnerRe’s Reasons for the Amalgamation and Recommendation of PartnerRe’s Board of Directors—Price of the EXOR Proposal” with respect to the EXOR Proposal and “—Updated EXOR Offer” with respect to the EXOR Offer);

 

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undervalues the PartnerRe business by comparison to the benefits of the amalgamation with AXIS;

 

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failed to adequately compensate PartnerRe’s shareholders for the delay and associated risk inherent in any acquisition by EXOR, which would be expected to involve a significantly longer time period to closing compared to the amalgamation (please see “The Amalgamation—PartnerRe’s Reasons for the Amalgamation and Recommendation of PartnerRe’s Board of Directors—Protracted Timing Associated with the EXOR Proposal” with respect to the EXOR Proposal and “—Updated EXOR Offer” with respect to the EXOR Offer); and

 

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involved high execution risks (please see “The Amalgamation—PartnerRe’s Reasons for the Amalgamation and Recommendation of PartnerRe’s Board of Directors—High Execution Risk Associated with the EXOR Proposal” with respect to the EXOR Proposal and “—Updated EXOR Offer” with respect to the EXOR Offer) including:

 

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the absence of an absolute commitment that EXOR, its shareholders and lenders were willing to do everything necessary to obtain regulatory clearances;

 

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EXOR’s proposed use of shell entities or entities at a level in the EXOR corporate chain below where EXOR’s material assets are held without providing that it would be accountable for breach or default by such buyer entities or any comfort EXOR and its controlling shareholders would be contractually committed to make the necessary regulatory filings and associated commitments;

 

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the absence of an EXOR commitment to assume the risk of the termination fees of up to $315 million associated with the AXIS transaction if the EXOR transaction were not to close for any reason;

 

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the absence of a customary reverse termination fee to incentivize EXOR to obtain necessary regulatory approvals and to compensate PartnerRe in those circumstances; and

 

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the possibility of adopting deal protection provisions that would be unacceptable for an all cash acquisition.

Please see the section of this joint proxy statement/prospectus titled “The Amalgamation—PartnerRe’s Reasons for the Amalgamation and Recommendation of PartnerRe’s Board of Directors” for more information.

 

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Q: Who should PartnerRe or AXIS shareholders contact with any additional questions?

A: If you are an AXIS shareholder and you have additional questions about the amalgamation or you would like additional copies of this joint proxy statement/prospectus or assistance voting your shares, you should contact MacKenzie Partners, Inc. at:

 

 

105 Madison Avenue

New York, NY 10016

proxy@mackenziepartners.com

Call Collect: (212) 929-5500

Toll Free: (800) 322-2885

If you are a PartnerRe shareholder and you have additional questions about the amalgamation or you would like additional copies of this joint proxy statement/prospectus or assistance voting your shares, you should contact Innisfree M&A Incorporated at:

 

501 Madison Avenue, 20th floor

New York, New York 10022

Shareholders may call toll free: (877) 825-8971

Banks and Brokers may call collect: (212) 750-5833

Q: Where can I find more information about the companies?

A: You can find more information about PartnerRe and AXIS in the documents described under the section of this joint proxy statement/prospectus titled “Where You Can Find More Information.”

 

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FORWARD-LOOKING STATEMENTS

This joint proxy statement/prospectus, including information contained or incorporated by reference into this joint proxy statement/prospectus, may include forward-looking statements, both with respect to PartnerRe and AXIS and their industries, that reflect their current views with respect to future events and financial performance. Statements that include the words “expect,” “intend,” “plan,” “believe,” “project,” “anticipate,” “will,” “may,” “would” and similar statements of a future or forward-looking nature identify forward-looking statements. All forward-looking statements address matters that involve risks and uncertainties, many of which are beyond PartnerRe’s and AXIS’ control. Accordingly, there are or will be important risks and uncertainties that could cause actual results to differ materially from those indicated in such statements and, therefore, you should not place undue reliance on any such statements. PartnerRe and AXIS believe that these risks and uncertainties include, but are not limited to, the following: (1) we are exposed to significant losses from catastrophic events and other exposures that we cover, which we expect to cause significant volatility in our financial results from time to time; (2) the inherent uncertainties in our reserving process, particularly as regards to large catastrophic events and longer tail casualty lines; (3) the frequency and severity of catastrophic and other events which we cover could exceed our estimates and cause losses greater than we expect; (4) the risk of the lowering or loss of any of the financial strength, claims paying or enterprise wide risk management ratings of PartnerRe, AXIS or any of their respective subsidiaries, or changes in the policies or practices of the rating agencies; (5) risks associated with appropriately modeling, pricing for, and contractually addressing new or potential factors in loss emergence; (6) the risk we might be bound to policyholder obligations beyond our underwriting intent, or unable to enforce our own intent in respect of retrocessional arrangements, including in each case due to emerging claims and coverage issues; (7) risks due to reliance on a small and decreasing number of reinsurance brokers and other distribution services for a material portion of our revenue; (8) the risk that our customers may fail to make premium payments due to us, as well as the risk of failures of our reinsurers, brokers or other counterparties to honor their obligations to us, including as regards to large catastrophic events, and also including their obligations to make third-party payments for which we might be liable; (9) a contention by the IRS that any of our Bermuda subsidiaries is subject to U.S. taxation; (10) other risks relating to potential adverse tax developments, including potential changes to the taxation of inter-company or related party transactions; (11) risks relating to adverse legislative developments that could reduce the size of the private markets we serve, or impede their future growth, including proposals to shift U.S. catastrophe risks to federal mechanisms; similar proposals at the state level in the U.S. or failing to implement reforms to reduce such coverage; and the risk that new legislation will be enacted in the international markets we serve which might reduce market opportunities in the private sector, weaken our customers or otherwise adversely impact us, which risks could also be retrospective and could impact business that has already been written and priced; (12) risks relating to the inability, or delay, in the claims paying ability of private market participants, particularly following large catastrophic events, for example hurricanes in the United States, cyclones in Europe, earthquakes in California or Japan, which could weaken or destabilize a particular geographic market and give rise to an unpredictable range of impacts which might be adverse to us, perhaps materially so; (13) risks associated with our investment portfolio, including the risk that our investment assets may fail to yield attractive or even positive results; and the risk that investment managers may breach our investment guidelines, or the inability of such guidelines to mitigate investment risks; (14) risks associated with implementing our business strategies and initiatives; (15) risks associated with potential for loss of services of any one of our key senior officers, and the risk that we fail to attract or retain the executives and employees necessary to manage our business; (16) changes in economic conditions, including interest rate, currency, equity and credit conditions which could affect our investment portfolio or declines in our investment returns for other reasons which could reduce our profitability and hinder our ability to pay claims promptly in accordance with our strategy; (17) risks associated with highly subjective judgments, such as valuing our more illiquid assets, and determining the impairments taken on our investments, all of which impact our reported financial position and operating results; (18) risks associated with inflation, which could cause loss costs to increase, and impact the performance of our investment portfolio, thereby adversely impacting our financial position or operating results; (19) operational risks, including system or human failures or cyber attacks, which could result in our incurring material losses; (20) risks that we may require additional capital in the future, which may not be available or may be available only on unfavorable terms; (21) risks relating to our potential failure to comply with covenants in our debt agreements, which failure could provide our lenders the right to accelerate our

 

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debt which would adversely impact us; (22) the risk of potential challenges to the claim of exemption from insurance regulation of PartnerRe, AXIS and certain of their respective subsidiaries in certain jurisdictions under certain current laws and the risk of increased global regulation of the insurance and reinsurance industry; (23) risks relating to the inability of our operating subsidiaries to declare and pay dividends, which could cause us to be unable to pay dividends to our shareholders or to repay our indebtedness; (24) the risk that there could be regulatory or legislative changes adversely impacting PartnerRe or AXIS, each as a Bermuda-based company, relative to our competitors, or actions taken by multinational organizations having such an impact; (25) risks relating to operating in a highly competitive environment, which we expect to continue to increase over time from new competition from traditional and non-traditional participants; (26) risks arising out of possible changes in the distribution or placement of risks due to increased consolidation of customers or insurance and reinsurance brokers; and (27) risks relating to changes in regulatory regimes and/or accounting rules, which could result in significant changes to our financial results; as well as PartnerRe’s or AXIS’ management’s response to any of the aforementioned factors.

Additionally, the amalgamation is subject to risks and uncertainties, including: (A) that PartnerRe and AXIS may be unable to complete the amalgamation because, among other reasons, conditions to the consummation of the amalgamation may not be satisfied or waived; (B) uncertainty as to the timing of consummation of the amalgamation, (C) uncertainty as to the long-term value of PartnerRe AXIS Capital Limited common shares; and (D) failure to realize the anticipated benefits of the amalgamation, including as a result of failure or delay in integrating the PartnerRe and AXIS businesses, as well as PartnerRe’s and AXIS’ management’s response to any of the aforementioned factors.

The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included herein and elsewhere, including the risk factors set forth in the section of this joint proxy statement/prospectus titled “Risk Factors” and those included in PartnerRe’s most recent Annual Report on Form 10-K and the risk factors included in AXIS’ most recent Annual Report on Form 10-K and any other documents of PartnerRe and AXIS on file with the SEC. Any forward-looking statements made or referenced in this joint proxy statement/prospectus are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by PartnerRe or AXIS will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, PartnerRe and AXIS or their respective businesses or operations. Each forward-looking statement speaks only as of the date of the particular statement and, except as may be required by applicable law, PartnerRe and AXIS undertake no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

 

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RISK FACTORS

In addition to the other information included or incorporated by reference into this joint proxy statement/prospectus, including the matters addressed in the section of this joint proxy statement/prospectus titled “Forward-Looking Statements,” you should carefully consider the following risks before deciding whether to vote in favor of the amalgamation proposal. In addition, you should read and consider carefully the risks associated with the businesses of PartnerRe and AXIS because these risks will also affect the amalgamated company following consummation of the amalgamation. These risks can be found in the Annual Reports on Form 10-K for the fiscal year ended December 31, 2014, and any amendments thereto, for each of PartnerRe and AXIS, as such risks may be updated or supplemented in each company’s subsequently filed Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, which are incorporated by reference into this joint proxy statement/prospectus. You should also read and consider carefully the other information in this joint proxy statement/prospectus and the other documents incorporated by reference into this joint proxy statement/prospectus. See the section of this joint proxy statement/prospectus titled “Where You Can Find More Information” for information on how you can view PartnerRe’s and AXIS’ incorporated documents. If any of the risks described below or in the reports incorporated by reference into this joint proxy statement/prospectus actually occurs, the respective businesses, financial results, financial conditions, operating results or share prices of PartnerRe or AXIS or the amalgamated company could be materially adversely affected.

Risk Factors Relating to the Amalgamation

Failure to complete the amalgamation could negatively impact the price of PartnerRe and/or AXIS common shares, as well as its future business and financial results, and have an adverse effect on PartnerRe and AXIS.

The amalgamation agreement contains a number of conditions precedent that must be satisfied or waived prior to the consummation of the amalgamation. There are no assurances that all of the conditions to the amalgamation will be so satisfied or waived. If the conditions to the amalgamation are not satisfied or waived, then PartnerRe and AXIS may be unable to complete the amalgamation. See the section of this joint proxy statement/prospectus titled “The Amalgamation Agreement—Conditions to Consummation of the Amalgamation” for a discussion of the conditions to the amalgamation.

If the amalgamation is not completed, the ongoing businesses of PartnerRe and AXIS may be adversely affected as follows:

 

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the attention of management of PartnerRe and AXIS will have been diverted to the amalgamation instead of being directed solely to their own operations and the pursuit of other opportunities that could have been beneficial to the companies;

 

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the manner in which brokers, insurers, cedents and other third parties perceive PartnerRe and AXIS may be negatively impacted, which in turn could affect their ability to compete for or write new business or obtain renewals in the marketplace;

 

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the loss of time and resources;

 

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under certain circumstances, AXIS or PartnerRe, as the case may be, may be required to pay to the other party a fee of $55 million or $280 million in the event the amalgamation agreement is terminated, and costs and expenses incurred in connection with the amalgamation agreement and the transactions contemplated thereby in an amount not to exceed $35 million;

 

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employees may leave in anticipation of the amalgamation thereby leaving PartnerRe and AXIS less able to operate as effectively as before the transaction was announced; and

 

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PartnerRe and AXIS would have incurred fees and costs, such as legal, accounting and certain financial advisor fees.

 

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Additionally, in approving the amalgamation agreement and the transactions contemplated thereby, each of the boards of directors of PartnerRe and AXIS considered a number of factors and potential benefits, as described in the section of this joint proxy statement/prospectus titled “The Amalgamation–PartnerRe’s Reasons for the Amalgamation and Recommendation of PartnerRe’s Board of Directors” and “The Amalgamation–AXIS’ Reasons for the Amalgamation and Recommendation of the AXIS Board of Directors.”

Because the market price of PartnerRe AXIS Capital Limited common shares will not be known until after the consummation of the amalgamation, PartnerRe and AXIS shareholders cannot be sure of the value of the amalgamation consideration they will receive.

Upon the closing of the amalgamation, each PartnerRe common share will be converted into the right to receive 2.18 PartnerRe AXIS Capital Limited common shares. PartnerRe common shareholders will receive cash in lieu of any fractional PartnerRe AXIS Capital Limited common share. In addition, each holder of record of PartnerRe common shares issued and outstanding immediately prior to the effective time shall subject to compliance with the Companies Act be entitled to receive the special dividend. The special dividend will not be effectively declared or payable if the application to register the amalgamation is not submitted to the Registrar of Companies. Upon the closing of the amalgamation, each AXIS common share will be converted into the right to receive 1 PartnerRe AXIS Capital Limited common share. The PartnerRe AXIS Capital Limited common shares will not begin trading publicly until after the closing of the amalgamation, and thus the market price of the PartnerRe AXIS Capital Limited common shares will not be known prior to closing of the amalgamation. Accordingly, at the time of the special general meetings, PartnerRe or AXIS shareholders will not necessarily know or be able to calculate the value of the amalgamation consideration they would receive upon consummation of the amalgamation. Neither company is permitted to terminate the amalgamation agreement, and neither PartnerRe nor AXIS is permitted to resolicit the vote of its shareholders, solely because of changes in the market prices of either company’s shares. See the sections of this joint proxy statement/prospectus titled “Comparative Per Share Data” and “Market Price and Dividend Information.”

The amalgamated company, PartnerRe and AXIS must obtain certain approvals of, and satisfy certain requirements imposed by, governmental and regulatory authorities to complete the amalgamation, which, if delayed or not granted, may delay or result in termination of the amalgamation.

The amalgamation is conditioned on, among other things, the receipt or consummation of authorizations, consents, orders and approvals of, or declarations or filings with various U.S. and international insurance and governmental regulatory authorities, the expiration or termination of the applicable waiting period required under the HSR Act, and the approvals of certain antitrust authorities. If the consent from other governmental, insurance and regulatory authorities is not received, or if PartnerRe and AXIS fail to satisfy the regulatory requirements under the HSR Act or merger control or foreign investment laws outside of the U.S., then PartnerRe and AXIS may not be obligated to complete the amalgamation.

Subject to the terms and conditions of the amalgamation agreement and in accordance with applicable laws, PartnerRe and AXIS have agreed to use reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to close the amalgamation and the other transactions contemplated by the amalgamation agreement in the most expeditious manner practicable and in any event prior to the end date, as discussed in the section of this joint proxy statement/prospectus titled “The Amalgamation Agreement—Consents and Approvals.” In connection with obtaining a required regulatory approval, however, neither PartnerRe nor AXIS nor any of their respective subsidiaries will be required to sell, divest or dispose of any of its businesses, products lines or assets or otherwise agree to take or refrain from taking any action that would be expected to have a regulatory material adverse effect.

Under the HSR Act, PartnerRe and AXIS cannot consummate the amalgamation until PartnerRe and AXIS have notified the Antitrust Division and the FTC of the amalgamation and furnished them with certain information and materials relating to the amalgamation and the applicable statutory waiting period has terminated or expired. The termination of the waiting period means the parties have satisfied their regulatory requirements

 

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under the HSR Act. PartnerRe and AXIS filed the required notifications with the Antitrust Division and the FTC on March 3, 2015. The parties received early termination of the waiting period on March 23, 2015. Additionally, all other antitrust approvals required to consummate the amalgamation have been obtained.

See the section of this joint proxy statement/prospectus titled “The Amalgamation Agreement—Conditions to Consummation of the Amalgamation” for a discussion of the conditions to the amalgamation and the section titled “Regulatory Matters” for a description of the requisite regulatory consents or requirements that must be satisfied in connection with the amalgamation.

PartnerRe and/or AXIS may waive certain of the conditions to the consummation of the amalgamation without resoliciting or seeking shareholder approval.

Each of the conditions to PartnerRe’s or AXIS’ obligations to complete the amalgamation may be waived, to the extent legally permissible, in whole or in part by PartnerRe or AXIS, as applicable. The respective boards of directors of PartnerRe or AXIS will evaluate the materiality of any such waiver to determine whether resolicitation of proxies is necessary or, if shareholders have approved the amalgamation proposal, whether further shareholder approval is necessary. In the event that any such waiver is not determined to be significant enough to require resolicitation or additional approval of PartnerRe and/or AXIS shareholders, the amalgamation may be completed without seeking any further shareholder approval.

The amalgamation agreement contains provisions that could discourage potential acquirers from making a competing proposal.

The amalgamation agreement contains provisions that could discourage potential acquirers from making a competing proposal, including the applicable termination fees and expense reimbursement provisions, a party’s right to match the terms of any superior proposal the other party receives and a requirement that each party hold its special general meeting even if it receives a superior proposal or its board changes its recommendation. As a result of these limitations, PartnerRe or AXIS may lose opportunities to enter into a more favorable transaction than the amalgamation. See the section of this joint proxy statement/prospectus titled “The Amalgamation Agreement—No Solicitation of Alternative Proposals” for a discussion of the restrictions on PartnerRe’s and AXIS’ abilities to pursue alternative transactions.

Once PartnerRe and AXIS shareholders approve the amalgamation, the closing may occur even if a more attractive transaction becomes available to a party and its shareholders.

The ability of PartnerRe or AXIS to participate in any discussions or negotiations with, or furnish information to, any third-party in response to a superior acquisition proposal will cease upon shareholder adoption and approval of the amalgamation proposal. As a result, once PartnerRe or AXIS shareholders have adopted and approved the amalgamation proposal and unless the amalgamation agreement is terminated pursuant to its terms, PartnerRe or AXIS will be required to close the amalgamation upon the satisfaction of all the other conditions to closing (which conditions include a number of insurance and other regulatory approvals but do not include the obtaining of any contractual consents) even if, after the requisite PartnerRe or AXIS shareholder approval has been obtained but before the closing of the amalgamation, a superior acquisition proposal is received from a third-party.

PartnerRe and AXIS will be subject to business uncertainties and contractual restrictions while the proposed amalgamation is pending, which could adversely affect PartnerRe’s and AXIS’ business.

The amalgamation agreement requires PartnerRe and AXIS to act in the ordinary course of business and restricts PartnerRe and AXIS, without approval, from taking certain specified actions until the amalgamation occurs or the amalgamation agreement terminates. See the section of this joint proxy statement/prospectus titled “The Amalgamation Agreement—Conduct of Business” for a more detailed description of the restrictions on PartnerRe’s and AXIS’ conduct of business. These restrictions may prevent PartnerRe and AXIS from pursuing

 

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otherwise attractive business opportunities and making other changes to its business before consummation of the amalgamation or, if the amalgamation is not completed, termination of the amalgamation agreement.

PartnerRe and AXIS will each be exposed to underwriting and other business risks during the period that each party’s business continues to be operated independently from the other.

Until consummation of the amalgamation, each of PartnerRe and AXIS will operate independently from the other in accordance with such party’s distinct underwriting guidelines, investment policies, referral processes, authority levels and risk management policies and practices. As a result, during this period, PartnerRe may assume risks that AXIS would not have assumed for itself, accept premiums that, in AXIS’ judgment, do not adequately compensate it for the risks assumed, make investment decisions that would not adhere to AXIS’ investment policies or otherwise make business decisions or take on exposure that, while consistent with PartnerRe’s general business approach and practices, are not the same as those of AXIS. At the same time, AXIS may assume risks that PartnerRe would not have assumed for itself, accept premiums that, in PartnerRe’s judgment, do not adequately compensate it for the risks assumed, make investment decisions that would not adhere to PartnerRe’s investment policies or otherwise make business decisions or take on exposure that, while consistent with AXIS’ general business approach and practices, are not the same as those of PartnerRe. Significant delays in completing the amalgamation will materially increase the risk that PartnerRe or AXIS will operate its business in a manner that differs from how the business would have been conducted by the other party to the amalgamation.

Uncertainties associated with the amalgamation may cause a loss of management personnel and other key employees or result in the departure of customers of PartnerRe and/or AXIS, which could adversely affect their businesses.

Uncertainty about the effect of the amalgamation on PartnerRe’s and AXIS’ employees and customers may have an adverse effect on their businesses. These uncertainties may impair PartnerRe’s and/or AXIS’ ability to attract, retain and motivate key personnel until the amalgamation is completed and for a period of time thereafter, and could cause customers and others that transact with each party to seek to change the existing business relationships with PartnerRe and/or AXIS. Employee retention may be particularly challenging during the pendency of the amalgamation. If key employees depart or if customers and others that deal with PartnerRe or AXIS change in an adverse manner their existing business relationships with PartnerRe or AXIS, their business could be seriously harmed. If the business of PartnerRe or AXIS is adversely affected, the companies may not be able to realize the anticipated benefits of the amalgamation.

Some directors and executive officers of PartnerRe and AXIS have interests in the amalgamation that are different from, or in addition to, the interests of PartnerRe and AXIS shareholders generally.

In considering the recommendations of the PartnerRe and AXIS boards of directors with respect to the amalgamation, shareholders should be aware that some of PartnerRe’s and AXIS’ directors and executive officers have financial interests in the amalgamation that are different from, or in addition to, the interests of PartnerRe and AXIS shareholders generally. See the sections of this joint proxy statement/prospectus titled “The Amalgamation—Interests of PartnerRe’s Directors and Executive Officers in the Amalgamation” and “The Amalgamation—Interests of AXIS’ Directors and Executive Officers in the Amalgamation.”

PartnerRe and AXIS shareholders will have reduced ownership and voting interests after the consummation of the amalgamation and will exercise less influence over the management of the amalgamated company than they currently exercise over the management of PartnerRe and AXIS.

After the consummation of the amalgamation, PartnerRe and AXIS shareholders will own in the aggregate a significantly smaller percentage of the amalgamated company than they currently own of PartnerRe or AXIS. PartnerRe shareholders are expected to own, in the aggregate, immediately following the closing of the amalgamation, approximately 51.5% of the issued and outstanding PartnerRe AXIS Capital Limited common shares on a pro forma fully-diluted basis and AXIS shareholders are expected to own, in the aggregate,

 

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immediately following the closing of the amalgamation, approximately 48.5% of the issued and outstanding PartnerRe AXIS Capital Limited common shares on a pro forma fully-diluted basis. Consequently, PartnerRe and AXIS shareholders as a group will have less influence over the management and policies of the amalgamated company than they currently exercise over the management and policies of their respective companies.

PartnerRe may be unable to cause the special dividend to be paid.

Under the Amalgamation Agreement, each holder of record of PartnerRe common shares issued and outstanding immediately prior to the effective time shall be entitled to receive a one-time special cash dividend in the amount of $11.50 per common share. The declaration of the special dividend will occur prior to the effective time and is subject to compliance with the Companies Act 1981 of Bermuda and will be contingent upon the submission of the formal application to the Registrar of Companies for the amalgamation to be registered with payment conditional on, and such payment date following, the consummation of the amalgamation by the issuance of the certificate of amalgamation by the Registrar of Companies. For the avoidance of doubt, the special dividend will not have been effectively declared and, therefore, will not be payable if the formal application to register the amalgamation is not submitted to the Registrar of Companies. Bermuda law imposes certain restrictions on companies with respect to the payment of dividends, specifically under the Companies Act, a company shall not declare or pay a dividend if there are reasonable grounds for believing that: (a) the company is, or would after the payment be unable to pay its liabilities as they become due or (b) the realizable value of the company’s assets would thereby be less than its liabilities. Grounds for payment of a dividend must be established by the company at both declaration and payment of the dividend. Furthermore, to the extent that a dividend or distribution is required to be paid by any insurance subsidiaries registered under the Bermuda Insurance Act 1978, as amended (which we refer to as the “insurance subsidiaries”) in order to fund the special dividend and such insurance subsidiaries experience unexpected catastrophic loss activity or other events that materially affect their financial results, Bermuda law may prohibit or the applicable regulators may prevent the payment of such dividends or distributions and, consequently, the payment of the special dividend to PartnerRe shareholders may be unable to be made. If the special dividend is unable to be paid for these or any other reasons, investors may lose confidence in PartnerRe AXIS Capital Limited and/or the share price of the PartnerRe AXIS Capital Limited common shares could fall.

Risk Factors Relating to the Amalgamated Company Following the Amalgamation

Future results of the amalgamated company may differ materially from the Preliminary Unaudited Pro Forma Condensed Consolidated Financial Information of the amalgamated company presented in this joint proxy statement/prospectus.

The future results of the amalgamated company following the consummation of the amalgamation may be materially different from those shown in the Preliminary Unaudited Pro Forma Condensed Consolidated Financial Information of the amalgamated company presented in this joint proxy statement/prospectus, which show only a combination of PartnerRe’s and AXIS’ historical results after giving effect to the amalgamation. Additionally, if the amalgamation is consummated, the amalgamated company anticipates incurring significant integration costs, which costs have not been reflected in the Preliminary Unaudited Pro Forma Condensed Consolidated Financial Information of the amalgamated company presented in this joint proxy statement/prospectus, as they are nonrecurring in nature and difficult to determine as of the date of this joint proxy statement/prospectus. In addition, the amalgamation and post-amalgamation integration process may give rise to unexpected liabilities and costs, including costs associated with the defense and resolution of possible litigation or other claims. Unexpected delays in completing the amalgamation or in connection with the post-amalgamation integration process may significantly increase the related costs and expenses incurred by the amalgamated company.

The integration of PartnerRe and AXIS following the amalgamation may present significant challenges and costs.

The amalgamated company may face significant challenges, including technical, accounting and other challenges, in combining PartnerRe’s and AXIS’ operations. PartnerRe and AXIS entered into the amalgamation agreement because each company believes that the amalgamation will be beneficial to it and its respective

 

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shareholders. Achieving the anticipated benefits of the amalgamation will depend in part upon whether the amalgamated company will be successful in integrating PartnerRe’s and AXIS’ businesses in a timely and efficient manner. The amalgamated company may not be able to accomplish this integration process smoothly or successfully, and it may incur unanticipated costs in connection with obtaining regulatory consents and approvals required to complete the amalgamation, which could also adversely affect its ability to integrate the operations of PartnerRe and AXIS or reduce the anticipated benefits of the amalgamation.

Potential difficulties the amalgamated company may encounter as part of the integration process include the following:

 

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delays in the integration of management teams, strategies, operations, products and services;

 

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diversion of the attention of management as a result of the amalgamation;

 

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differences in business backgrounds, corporate cultures and management philosophies;

 

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the inability to retain key employees;

 

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the inability to establish and maintain integrated risk management systems, underwriting methodologies and controls, which could give rise to excess accumulation or aggregation of risks, underreporting or underrepresentation of exposures or other adverse consequences;

 

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the inability to create and enforce uniform financial, compliance and operating controls, procedures, policies and information systems;

 

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complexities associated with managing combined operating units, including the challenge of integrating complex systems, technology, networks and other assets of PartnerRe and AXIS in a seamless manner that minimizes any adverse impact on customers, brokers, employees and other constituencies;

 

•

potential unknown liabilities and unforeseen increased expenses or delays associated with the amalgamation, including one-time cash costs to integrate PartnerRe and AXIS beyond current estimates; and

 

•

the disruption of, or the loss of momentum in, the amalgamated company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies,

any of which could adversely affect the amalgamated company’s ability to maintain relationships with customers, brokers, employees and other constituencies or the amalgamated company’s ability to achieve the anticipated benefits of the amalgamation or could otherwise adversely affect the business and financial results of the amalgamated company after the amalgamation.

In addition, the amalgamated company will incur integration and restructuring costs following the consummation of the amalgamation as it integrates the businesses of PartnerRe and AXIS. Although the parties expect that the realization of efficiencies related to the integration of the businesses will offset incremental transaction, integration and restructuring costs over time, none of the amalgamated company, PartnerRe nor AXIS can give any assurance that this net benefit will be achieved at any time in the future.

The price of PartnerRe AXIS Capital Limited common shares after the amalgamation will be affected by factors different from those affecting the price of PartnerRe common shares or AXIS common shares or the value of PartnerRe common shares or AXIS common shares before the amalgamation.

As the businesses and business strategies of PartnerRe and AXIS are different, the results of operations as well as the price of PartnerRe AXIS Capital Limited common shares following the amalgamation may be affected by factors different from those factors affecting PartnerRe or AXIS as independent stand-alone entities. For a discussion of PartnerRe’s and AXIS’ businesses and certain risk factors to consider in connection with their

 

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respective businesses, see the respective sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in each of PartnerRe’s and AXIS’ Annual Reports on Form 10-K for the year ended December 31, 2014 and other documents incorporated by reference into this joint proxy statement/prospectus.

The market price of PartnerRe AXIS Capital Limited common shares may decline in the future as a result of the sale of such shares held by former PartnerRe or AXIS shareholders or due to other factors.

The amalgamated company will issue up to 217,272,320 PartnerRe AXIS Capital Limited common shares to PartnerRe and AXIS shareholders (including for this purpose each eligible holder of PartnerRe and AXIS equity awards) in the amalgamation. Upon the receipt of PartnerRe AXIS Capital Limited common shares as amalgamation consideration, former holders of PartnerRe or AXIS common shares may seek to sell the PartnerRe AXIS Capital Limited common shares delivered to them. These sales (or the perception that these sales may occur) may affect the market for, and the market price of, PartnerRe AXIS Capital Limited common shares in an adverse manner. None of these shareholders are subject to a “lock-up” or “market standoff” agreement.

The market price of PartnerRe AXIS Capital Limited common shares may also decline in the future as a result of the amalgamation for a number of other reasons, including:

 

•

the unsuccessful integration of PartnerRe and AXIS;

 

•

the failure of the amalgamated company to achieve the anticipated benefits of the amalgamation, including financial results, as rapidly as or to the extent anticipated;

 

•

decreases in the amalgamated company’s financial results after the closing of the amalgamation;

 

•

as described below, any failure to maintain the amalgamated company’s financial strength, claims paying and enterprise-wide risk management ratings as a result of the amalgamation; or

 

•

general market or economic conditions unrelated to the amalgamated company’s performance.

These factors are, to some extent, beyond the control of the amalgamated company.

The financial analyses and forecasts considered by PartnerRe’s and AXIS’ financial advisors and PartnerRe’s and AXIS’ boards of directors may not be realized, which may adversely affect the market price of PartnerRe AXIS Capital Limited’s common shares following the amalgamation.

The respective financial advisors to PartnerRe and AXIS performed certain financial analyses and delivered their respective opinions to PartnerRe’s and AXIS’ boards of directors that, as of January 25, 2015 in the case of PartnerRe and May 3, 2015 in the case of AXIS, and based upon and subject to the factors and assumptions set forth therein, the aggregate consideration to be paid pursuant to the amalgamation agreement (after taking into account the special dividend, in the case of the opinion delivered by AXIS’ financial advisor) was fair from a financial point of view to the holders of the outstanding PartnerRe common shares and AXIS common shares. In performing such financial analyses and delivering such opinions, the financial advisors reviewed, among other things, projected non-public financial statements and other projected non-public financial data prepared and furnished to it by PartnerRe and AXIS management, respectively. None of the projected non-public financial statements and other projected non-public financial data was prepared with a view toward public disclosure or compliance with the published guidelines of the SEC or the American Institute of Certified Public Accountants regarding projections and forecasts. These projections are inherently based on various estimates and assumptions that are subject to the judgment of those preparing them. These projections are also subject to significant economic, competitive, industry and other uncertainties and contingencies, all of which are difficult or impossible to predict and many of which are beyond the control of PartnerRe and AXIS. Accordingly, there can be no assurance that the amalgamated company’s financial condition or results of operations will not be significantly worse than those set forth in such projected non-public financial statements and other projected non-public financial data.

 

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The amalgamation may result in a ratings downgrade of the amalgamated company or its insurance affiliates relative to PartnerRe or AXIS, which may result in a material adverse effect on the amalgamated company’s business, financial condition and operating results, as well as the market price of PartnerRe AXIS Capital Limited common shares following the amalgamation.

Ratings with respect to claims paying ability and financial strength are important factors in maintaining customer confidence in the amalgamated company and its ability to market insurance and reinsurance products and compete with other insurance and reinsurance companies. Rating organizations regularly analyze the financial performance and condition of insurers and reinsurers. The insurance financial strength ratings assigned in respect of PartnerRe and AXIS by certain rating organizations are detailed in the table below:

 

		AXIS Ratings		PartnerRe Ratings		Agency’s Rating Definition		Rating Review Status
Standard & Poor’s		A+		A+		“Strong financial security characteristics”		Both companies have been affirmed with stable outlook
A.M. Best		A+		A+		“Superior ability to meet ongoing insurance obligations”		Under review with negative implications for both companies
Moody’s Investor Services		A2		A1		“Insurance companies offer good financial strength”		AXIS rating under review with possible upgrade. PartnerRe rating has been affirmed with stable outlook
Fitch		A+		A+		“Strong capacity to meet policyholder and contract obligations”		AXIS rating placed on Rating Watch Positive and PartnerRe rating placed on Rating Watch Negative

Following the amalgamation, any ratings downgrades, or the potential for ratings downgrades, of the amalgamated company or its subsidiaries could adversely affect the amalgamated company’s ability to market and distribute products and services and successfully compete in the marketplace, which could have a material adverse effect on its business, financial condition and operating results. For example, many of the reinsurance contracts of each of PartnerRe’s and AXIS’ reinsurance subsidiaries contain provisions that would allow ceding companies to terminate the contract or demand security following a downgrade in financial strength ratings below specified levels by one or more rating agencies. Neither PartnerRe nor AXIS can predict the extent to which these termination rights would be exercised, if at all; however, the effect of such termination could have a significant and negative effect on the amalgamated company’s financial condition and results of operations following the amalgamation. Even in the absence of such contractual provisions, numerous cedents and brokers prefer to secure coverage or assign preferential allocations to the highest rated reinsurers, and accordingly, any decrease in ratings could adversely affect the ability of the amalgamated company to access the businesses it will seek to underwrite.

While management anticipates that the amalgamated company’s financial strength and claims paying ratings will be affirmed subsequent to the closing of the amalgamation, there is no guarantee that such affirmations will occur.

In addition, each of PartnerRe and AXIS are rated on their holding company indebtedness. A downgrade in such credit ratings could increase each company’s borrowing costs. A credit rating downgrade subsequent to the amalgamation could increase the amalgamated company’s cost of borrowing, or may negatively impact the amalgamated company’s ability to raise additional debt capital or the willingness of financial counterparties to deal with the amalgamated company.

 

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PartnerRe’s and AXIS’ counterparties to contracts and arrangements may acquire certain rights upon the amalgamation, which could negatively affect the amalgamated company following the amalgamation.

PartnerRe and AXIS and their operating subsidiaries are parties to numerous contracts, agreements, licenses, permits, authorizations and other arrangements that contain provisions giving counterparties certain rights (including, in some cases, termination rights) upon a “change in control” of PartnerRe or AXIS or their subsidiaries, as applicable. The definition of “change in control” varies from contract to contract, ranging from a narrow to a broad definition, and in some cases, the “change in control” provisions may be implicated by the amalgamation. If such “change in control” provisions are triggered as a result of the amalgamation, a wide range of consequences may result, including the possibility that cedents will have the right to cancel and commute a contract, or the requirement that PartnerRe or AXIS return unearned premiums, net of commissions, or post certain collateral requirements.

Whether a counterparty would have any of these or other rights in connection with the amalgamation depends upon the terms of its agreement with PartnerRe or AXIS or its applicable subsidiaries. Whether a counterparty exercises any cancellation rights it has would depend on, among other factors, such counterparty’s views with respect to the financial strength and business reputation of the amalgamated company following the amalgamation, the extent to which such counterparty currently has reinsurance coverage with the amalgamated company’s affiliates, the prevailing market conditions, the pricing and availability of replacement reinsurance coverage and the amalgamated company’s ratings following the amalgamation. Neither PartnerRe nor AXIS can currently predict the extent to which such cancellation rights would be triggered or exercised, if at all.

In addition to the fact that a significant portion of PartnerRe’s and AXIS’ in-force reinsurance contracts contain special termination provisions that may be triggered following a change in control, many of these reinsurance contracts, as well as most reinsurance and insurance contracts of PartnerRe’s and AXIS’, renew annually, and so whether or not they may be terminated following the amalgamation, reinsurance cedents or policyholders may choose not to renew these contracts with the amalgamated company following the amalgamation.

Termination of in-force contracts or failure to renew reinsurance or insurance agreements and policies by contractual counterparties could adversely affect the benefits to be received by the amalgamated company from PartnerRe’s and AXIS’ contractual arrangements. If the benefits from these arrangements are less than expected, including as a result of these arrangements being terminated, determined to be unenforceable, in whole or in part, or the counterparties to such arrangements failing to satisfy their obligations thereunder, the benefits of the amalgamation may be significantly less than anticipated.

Any PartnerRe AXIS Capital Limited common shares received by PartnerRe and AXIS shareholders as a result of the amalgamation will have different rights from PartnerRe and AXIS common shares.

Following consummation of the amalgamation, PartnerRe and AXIS shareholders will no longer be shareholders of PartnerRe or AXIS and will instead become shareholders of the amalgamated company. There will be important differences between the current rights of PartnerRe and AXIS shareholders and the rights to which such shareholders will be entitled as shareholders of the amalgamated company. See the section of this joint proxy statement/prospectus titled “Comparison of Shareholder Rights” for a discussion of the different rights associated with PartnerRe AXIS Capital Limited common shares.

Changes in U.S. federal income tax law could materially adversely affect an investment in PartnerRe AXIS Capital Limited common shares.

In the past, legislation has been introduced in the U.S. Congress intended to eliminate some perceived tax advantages of companies (including insurance companies) that have legal domiciles outside the United States but have certain U.S. connections. It is possible that similar legislation could be introduced and enacted by the current Congress or future Congresses that could have an adverse impact on the amalgamated company.

 

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In addition, the U.S. federal income tax laws and interpretations, including those regarding whether a company is engaged in a U.S. trade or business or is a passive foreign investment company (which we refer to as a “PFIC”), or whether U.S. holders would be required to include “subpart F income” or “related person insurance income” (which we refer to as “RPII”) in their gross income, are subject to change, possibly on a retroactive basis. The regulations regarding RPII are still in proposed form. Proposed regulations regarding the application of the PFIC rules to insurance companies were recently released (the “proposed PFIC insurance regulations”). Although the proposed PFIC insurance regulations are not effective until finalized, it is possible that, if finalized in their current form, the regulations could be interpreted to heighten the risk that the amalgamated company or one or more of its subsidiaries could be treated as a PFIC. Even if the proposed PFIC insurance regulations were finalized in their current form, various aspects of the application of the PFIC rules to insurance companies would remain unclear. In addition to the PFIC regulations described in the previous sentence, new regulations or pronouncements interpreting or clarifying the U.S. trade or business, PFIC, subpart F income and RPII rules may be forthcoming. None of the amalgamated company, PartnerRe nor AXIS can be certain if, when, or in what form, such regulations or pronouncements may be provided, and whether such guidance will have a retroactive effect.

Other Risk Factors Relating to PartnerRe

You should read and consider carefully other risk factors specific to PartnerRe that will also affect the amalgamated company after the amalgamation, described in Part I, Item 1A of PartnerRe’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, under this section of this joint proxy statement/prospectus, “Risk Factors,” as such risks may be updated or supplemented by subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and other documents that have been filed by PartnerRe with the SEC and which are incorporated by reference into this joint proxy statement/prospectus. See the section of this joint proxy statement/prospectus titled “Where You Can Find More Information” for the location of information incorporated by reference into this joint proxy statement/prospectus.

Other Risk Factors Relating to AXIS

You should read and consider carefully other risk factors specific to AXIS that will also affect the amalgamated company after the amalgamation, described in Part I, Item 1A of AXIS’ Annual Report on Form 10-K for the fiscal year ended December 31, 2014, under this section of this joint proxy statement/prospectus, “Risk Factors,” as such risks may be updated or supplemented by subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and other documents that have been filed by AXIS with the SEC and which are incorporated by reference into this joint proxy statement/prospectus. See the section of this joint proxy statement/prospectus titled “Where You Can Find More Information” for the location of information incorporated by reference into this joint proxy statement/prospectus.

 

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THE COMPANIES

PartnerRe AXIS Capital Limited

Pursuant to the amalgamation agreement and the statutory amalgamation agreement, at the effective time, PartnerRe and AXIS will amalgamate with PartnerRe AXIS Capital Limited continuing thereafter as a Bermuda exempted company with limited liability, with all the rights, properties, liabilities and obligations of PartnerRe and AXIS. The amalgamated company will be a significant global specialty insurance and reinsurance company. The amalgamated company will have a substantial global presence and capabilities across a broad range of business lines, with gross premiums written expected to be in excess of $10 billion, total capital greater than $14 billion and cash and invested assets of approximately $31 billion. The board of directors of the amalgamated company will consist of seven directors initially designated by AXIS and seven directors initially designated by PartnerRe. The initial directors of the amalgamated company will be Jean-Paul L. Montupet (Chairman of the board of directors), Albert A. Benchimol (Chief Executive Officer), Michael A. Butt (Chairman Emeritus of the board of directors), Charles A. Davis, Robert L. Friedman, Christopher V. Greetham, Roberto Mendoza, Debra J. Perry, Thomas C. Ramey, Rémy Sautter, Henry B. Smith, Kevin M. Twomey, Egbert Willam and David Zwiener.

The amalgamated company’s management team will be drawn from the existing PartnerRe and AXIS management teams, and the combined management team will be led by Albert Benchimol, AXIS’ current President and Chief Executive Officer, who will serve as President and Chief Executive Officer of the amalgamated company; Joseph Henry, currently Chief Financial Officer of AXIS, who will continue in this role as Chief Financial Officer of the amalgamated company; William Babcock, currently Chief Financial Officer of PartnerRe, who will serve as Deputy Chief Financial Officer and Lead Integration Officer of the amalgamated company and will assume the role of Chief Financial Officer of the amalgamated company upon the retirement of Mr. Henry in July 2016; Emmanuel Clarke, currently Chief Executive Officer of PartnerRe Global, who will serve as Chief Executive Officer of Reinsurance of the amalgamated company; Peter Wilson, currently Chief Executive Officer of AXIS Insurance, who will serve as Chief Executive Officer of Insurance of the amalgamated company; Chris DiSipio, currently Chief Executive Officer of AXIS Accident and Health, who will serve as Chief Executive Officer of Life, Accident and Health of the amalgamated company; and John (Jay) Nichols, currently Chief Executive Officer of AXIS Re, who will serve as Executive Vice President of Strategic Business Development and Capital Solutions at the amalgamated company.

Following the closing of the amalgamation, we anticipate that the amalgamated company will (subject to approval of its shareholders and the Registrar of Companies) change its name, adopt a new NYSE symbol for its common shares, and register a new trade name and logo that reflect the key attributes of the amalgamated company.

PartnerRe

PartnerRe provides reinsurance on a worldwide basis through its principal wholly-owned subsidiaries, including Partner Reinsurance Company Ltd., Partner Reinsurance Europe SE and Partner Reinsurance Company of the U.S. Risks reinsured include, but are not limited to, property, casualty, motor, agriculture, aviation/space, catastrophe, credit/surety, engineering, energy, marine, specialty property, specialty casualty, multiline and other lines, mortality, longevity and health and alternative risk products. PartnerRe’s alternative risk products include weather and credit protection to financial, industrial and service companies on a worldwide basis. PartnerRe is an exempted limited liability company incorporated under the laws of Bermuda, with its principal executive offices located at 90 Pitts Bay Road, Pembroke HM 08, Bermuda. Its telephone number is (441) 292-0888.

For additional information about PartnerRe and its business, including how to obtain the documents that PartnerRe has filed with the SEC, see the section of this joint proxy statement/prospectus titled “Where You Can Find More Information.”

 

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AXIS

AXIS provides specialty lines insurance and reinsurance on a worldwide basis through its operating subsidiaries which include AXIS Specialty Limited, AXIS Specialty Europe SE, AXIS Re SE, AXIS Insurance Company, AXIS Reinsurance Company and AXIS Surplus Insurance Company. AXIS’ specialty insurance lines of business include property, marine, terrorism, aviation, credit and political risk, professional lines, liability and accident and health. AXIS’ reinsurance lines of business include catastrophe, property, professional lines, credit and surety, motor, liability, engineering, agriculture and other lines. AXIS’ reinsurance business also includes, primarily derivative based, risk management products designed to address weather and commodity price risks. AXIS has operating subsidiaries and branch networks based in Bermuda, the United States, Europe, Singapore, Canada and Australia. AXIS also maintains marketing offices in Brazil, France and Spain. AXIS is an exempted company with limited liability incorporated under the laws of Bermuda with its principal executive offices located at 92 Pitts Bay Road, Pembroke HM 08, Bermuda. Its telephone number is (441) 496-2600.

For additional information about AXIS and its business, including how to obtain the documents that AXIS has filed with the SEC, see the section of this joint proxy statement/prospectus titled “Where You Can Find More Information.”

 

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF PARTNERRE

Set forth below is certain selected historical consolidated financial data relating to PartnerRe and its consolidated subsidiaries. The selected historical consolidated financial data as of December 31, 2014 and 2013, and for each of the years in the three-year period ended December 31, 2014, has been derived from PartnerRe’s audited consolidated financial statements and accompanying notes included in its Annual Report on Form 10-K for the year ended December 31, 2014, which is incorporated by reference into this joint proxy statement/prospectus. The selected historical consolidated financial data as of December 31, 2012, 2011 and 2010, and for the years ended December 31, 2011 and 2010, has been derived from PartnerRe’s audited consolidated financial statements and accompanying notes for such years, which have been filed with the SEC but which are not incorporated by reference into this joint proxy statement/prospectus. The selected historical consolidated financial data as of March 31, 2015 and 2014, and for the three months ended March 31, 2015 and 2014, has been derived from PartnerRe’s unaudited consolidated financial statements included in its Quarterly Reports on Form 10-Q as filed with the SEC and incorporated by reference into this proxy statement/prospectus. The consolidated financial statements as of March 31, 2015 and 2014, and for the three months ended March 31, 2015 and 2014, are unaudited, but, in the opinion of PartnerRe’s management, contain all adjustments necessary to present fairly PartnerRe’s financial position and results of operations for the periods indicated. You should not take historical results as necessarily indicative of the results that may be expected for any future period.

More comprehensive financial information, including management’s discussion and analysis of financial condition and results of operations, is contained in other documents filed by PartnerRe with the SEC, and the following summary is qualified in its entirety by reference to such other documents and all of the financial information and notes contained in those documents. See the section of this joint proxy statement/prospectus titled “Where You Can Find More Information.”

(Expressed in millions of U.S. Dollars or shares, except ratios and per share data)

 

		For the three months ended March 31,								For the year ended December 31,
		2015				2014				2014				2013				2012				2011				2010
Selected Consolidated Statements of Operations Data
Gross premiums written		$	1,749			$	1,872			$	5,932			$	5,570			$	4,718			$	4,633			$	4,885
Net premiums written			1,653				1,738				5,720				5,397				4,573				4,486				4,705
Net premiums earned		$	1,235			$	1,254			$	5,609			$	5,198			$	4,486			$	4,648			$	4,776
Net investment income			105				117				480				484				571				629				673
Net realized and unrealized investment gains (losses)			116				142				372				(161	)			494				67				402
Other income			4				—				16				17				12				8				10
Total revenues			1,460				1,513				6,477				5,538				5,563				5,352				5,861
Losses and loss expenses and life policy benefits			721				749				3,463				3,158				2,805				4,373				3,284
Total expenses			1,128				1,144				5,185				4,830				4,234				5,797				4,892
Income (loss) before taxes and interest in (losses) earnings of equity method investments			332				369				1,292				708				1,329				(445	)			969
Income tax expense			80				62				239				49				204				69				129
Interest in (losses) earnings of equity method investments			(4	)			6				15				14				10				(6	)			13
Net income (loss)		$	248			$	313			$	1,068			$	673			$	1,135			$	(520	)		$	853
Net income attributable to noncontrolling interests			2				3				13				9				—				—				—
Net income (loss) attributable to PartnerRe Ltd.		$	246			$	310			$	1,055			$	664			$	1,135			$	(520	)		$	853
Preferred dividends			14				14				57				58				62				47				35
Loss on redemption of preferred shares			—				—				—				9				—				—				—
Net income (loss) attributable to PartnerRe Ltd. common shareholders			232				296				998				597				1,073				(567	)			818

 

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		For the three months ended March 31,								For the year ended December 31,
		2015				2014				2014				2013				2012				2011				2010
Basic net income (loss) per common share		$	4.88			$	5.72			$	19.96			$	10.78			$	17.05			$	(8.40	)		$	10.65
Diluted net income (loss) per common share		$	4.76			$	5.61			$	19.51			$	10.58			$	16.87			$	(8.40	)		$	10.46
Dividends declared and paid per common share		$	0.70			$	0.67			$	2.68			$	2.56			$	2.48			$	2.35			$	2.05
Operating earnings (loss) attributable to PartnerRe Ltd. common shareholders (1)(4)		$	151			$	218			$	755			$	722			$	664			$	(642	)		$	492
Diluted operating earnings (loss) per common share and common share equivalents outstanding (1)		$	3.09			$	4.37			$	14.76			$	12.79			$	10.43			$	(9.50	)		$	6.29
Operating return on beginning diluted book value per common share and common share equivalents outstanding (2)(4)			9.8	%			16.0	%			13.5	%			12.7	%			12.3	%			(10.1	)%			7.4	%
Weighted average number of common shares and common share equivalents outstanding			48.7				50.0				51.2				56.4				63.6				67.6				78.2
Non-life ratios
Loss ratio			51.4	%			53.8	%			56.1	%			56.7	%			58.5	%			96.7	%			65.9	%
Acquisition ratio			25.9				23.6				24.3				22.5				22.3				21.3				21.3
Other expense ratio			5.5				6.5				5.8				6.1				7.0				7.4				7.8
Combined ratio			82.8	%			83.9	%			86.2	%			85.3	%			87.8	%			125.4	%			95.0	%
		As of March 31,								As of December 31,
		2015				2014				2014				2013				2012				2011				2010
Selected Consolidated Balance Sheet Data
Total investments, funds held—directly managed and cash and cash equivalents		$	17,045			$	17,513			$	17,222			$	17,431			$	18,026			$	17,898			$	18,181
Total assets			22,489				23,518				22,270				23,038				22,980				22,855				23,364
Unpaid losses and loss expenses and policy benefits for life and annuity contracts			11,398				12,648				11,796				12,620				12,523				12,919				12,417
Debt related to senior notes			750				750				750				750				750				750				750
Debt related to capital efficient notes			71				71				71				71				71				71				71
Total shareholders’ equity attributable to PartnerRe Ltd.			7,197				6,781				7,049				6,710				6,933				6,468				7,207
Diluted book value per common share and common share equivalents outstanding		$	129.86			$	114.13			$	126.21			$	109.26			$	100.84			$	84.82			$	93.77
Diluted tangible book value per common share and common share equivalents outstanding (3)		$	118.40			$	103.10			$	114.76			$	98.49			$	90.86			$	76.47			$	85.53
Number of common shares outstanding, net of treasury shares			48.8				51.9				49.1				53.6				58.9				65.3				70.0

 

(1)

Operating earnings or loss attributable to PartnerRe common shareholders (operating earnings or loss) is calculated as net income or loss available to PartnerRe common shareholders excluding net realized and unrealized gains or losses on investments, net of tax (except where PartnerRe has made a strategic investment in an insurance or reinsurance related investee), net foreign exchange gains or losses, net of tax, loss on redemption of preferred shares, interest in earnings or losses of equity investments, net of tax (except where PartnerRe has made a strategic investment in an insurance or reinsurance related investee and where PartnerRe does not control the investee’s activities) and certain withholding taxes on inter-company dividends, net of tax, and is calculated after preferred dividends. Diluted operating earnings or loss per common share and common share equivalent outstanding (diluted operating earnings or loss per share) are calculated using operating earnings or loss for the period divided by the weighted average number of common shares and common share equivalents outstanding. The presentation of operating earnings or loss or diluted operating earnings or loss per share are non-GAAP financial measures within the meaning of Regulation G. See Key Financial Measures in Item 7 of Part II of the Annual Report on Form 10-K for the year ended December 31, 2014, which is incorporated by reference into this joint proxy statement/prospectus, for a detailed discussion of the measures used by PartnerRe to evaluate its financial performance.

 

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(2)

Operating return on beginning diluted book value per common share and common share equivalents outstanding (Operating ROE) is calculated using diluted operating earnings or loss per share, as defined above, divided by diluted book value per common share and common share equivalents outstanding at the beginning of the year. The presentation of Operating ROE is a non-GAAP financial measure within the meaning of Regulation G. See Key Financial Measures in Item 7 of Part II of the Annual Report on Form 10-K for the year ended December 31, 2014, which is incorporated by reference into this joint proxy statement/prospectus, for a detailed discussion of the measures used by PartnerRe to evaluate its financial performance.

(3)

Diluted tangible book value per common share and common share equivalents outstanding (Diluted Tangible Book Value per Share) is calculated using common shareholders’ equity attributable to PartnerRe Ltd. (total shareholders’ equity less noncontrolling interests and the aggregate liquidation value of preferred shares) less goodwill and intangible assets, net of tax, divided by the weighted average number of common shares and common share equivalents outstanding (assuming exercise of all share-based awards and other dilutive securities). The presentation of Diluted Tangible Book Value per Share is a non-GAAP financial measure within the meaning of Regulation G. See Key Financial Measures in Item 7 of Part II of the Annual Report on Form 10-K for the year ended December 31, 2014, which is incorporated by reference into this joint proxy statement/prospectus, for a detailed discussion of the measures used by PartnerRe to evaluate its financial performance.

(4)

Effective January 1, 2011, management of PartnerRe redefined its operating earnings or loss available to common shareholders calculation to additionally exclude net foreign exchange gains or losses. In addition, management of PartnerRe redefined its Operating return on beginning diluted book value per share and common share equivalents outstanding calculation to measure operating return on a diluted per share basis (Operating ROE, previously referred to as operating return on beginning common shareholders’ equity). Operating earnings or loss and Operating ROE for all periods presented have been recast to reflect PartnerRe’s redefined non-GAAP measures. See Key Financial Measures in Item 7 of Part II of the Annual Report on Form 10-K for the year ended December 31, 2014, which is incorporated by reference into this joint proxy statement/prospectus, for a discussion of Management’s reasons for redefining these measures.

 

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF AXIS

Set forth below is certain selected historical consolidated financial data relating to AXIS and its consolidated subsidiaries. The selected historical consolidated financial data as of December 31, 2014 and 2013, and for each of the years in the three-year period ended December 31, 2014, has been derived from AXIS’ audited consolidated financial statements and accompanying notes included in its Annual Report on Form 10-K for the year ended December 31, 2014, which is incorporated by reference into this joint proxy statement/prospectus. The selected historical consolidated financial data as of December 31, 2012, 2011 and 2010, and for the years ended December 31, 2011 and 2010, has been derived from AXIS’ audited consolidated financial statements and accompanying notes for such years, which have been filed with the SEC but which are not incorporated by reference into this joint proxy statement/prospectus. The selected historical consolidated financial data as of March 31, 2015 and 2014, and for the three months ended March 31, 2015 and 2014, has been derived from AXIS’ unaudited consolidated financial statements included in its Quarterly Reports on Form 10-Q as filed with the SEC and incorporated by reference into this proxy statement/prospectus. The consolidated financial statements as of March 31, 2015 and 2014, and for the three months ended March 31, 2015 and 2014, are unaudited, but, in the opinion of AXIS’ management, contain all adjustments necessary to present fairly AXIS’ financial position and results of operations for the periods indicated. You should not take historical results as necessarily indicative of the results that may be expected for any future period.

More comprehensive financial information, including management’s discussion and analysis of financial condition and results of operations, is contained in other documents filed by AXIS with the SEC, and the following summary is qualified in its entirety by reference to such other documents and all of the financial information and notes contained in those documents. See the section of this joint proxy statement/prospectus titled “Where You Can Find More Information.”

(Expressed in millions of U.S. Dollars or shares, except per share data)

 

		For the three months ended March 31,								For the year ended December 31,
		2015				2014				2014				2013				2012				2011				2010
Selected Statement of Operations Data:
Gross premiums written		$	1,679			$	1,821			$	4,712			$	4,697			$	4,140			$	4,096			$	3,751
Net premiums earned			906				946				3,871				3,707				3,415				3,315				2,947
Net investment income			92				83				343				409				381				362				407
Net realized investment gains (losses)			(43	)			11				132				76				127				121				195
Net losses and loss expenses			519				544				2,187				2,134				2,096				2,675				1,677
Acquisition costs			172				172				737				664				628				587				489
General and administrative expenses			164				153				622				575				561				459				450
Interest expense and financing costs			12				17				75				62				62				63				56
Preferred share dividends			10				10				40				40				38				37				37
Net income available to common shareholders (1)			156				137				771				684				495				9				820
Operating income (loss) (2)		$	136			$	137			$	563			$	633			$	423			$	(153	)		$	611
Per Common Share Data:
Basic earnings per common share		$	1.56			$	1.26			$	7.38			$	6.02			$	4.05			$	0.08			$	6.74
Diluted earnings per common share			1.54				1.24				7.29				5.93				4.00				0.07				6.02
Diluted operating income (loss) per common share (2)			1.35				1.24				5.32				5.49				3.41				(1.26	)			4.49
Cash dividends declared per common share		$	0.29			$	0.27			$	1.10			$	1.02			$	0.97			$	0.93			$	0.86
Operating ROACE (3)			10.3	%			10.6	%			10.8	%			12.1	%			8.2	%			(3.1	%)			12.1	%
Basic weighted average common shares outstanding			99.9				109.1				104.4				113.6				122.1				122.5				121.7
Diluted weighted average common shares outstanding			101.1				110.4				105.7				115.3				123.7				128.1				136.2

 

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		For the three months ended March 31,								For the year ended December 31,
		2015				2014				2014				2013				2012				2011				2010
Operating Ratios: (4)
Net loss and loss expense ratio			57.3	%			57.5	%			56.5	%			57.6	%			61.4	%			80.7	%			56.9	%
Acquisition cost ratio			18.9	%			18.2	%			19.0	%			17.9	%			18.4	%			17.7	%			16.6	%
General and administrative expense ratio			18.1	%			16.2	%			16.1	%			15.5	%			16.4	%			13.9	%			15.2	%
Combined ratio			94.3	%			91.9	%			91.6	%			91.0	%			96.2	%			112.3	%			88.7	%

 

(1)	The three months ended March 31, 2015 and March 31, 2014, and year ended December 31, 2014, net income available to common shareholders includes an amount attributable from (to) noncontrolling interests of $5, ($1) and $6, respectively.

(2)

Operating income (loss) represents after-tax operational results without consideration of after-tax net realized investment gains and losses, foreign exchange gains and losses, and losses on repurchase of preferred shares. Diluted operating income (loss) per common share is calculated using operating income (loss) for the period divided by the diluted weighted average number of common shares and common share equivalents outstanding. The presentation of operating income (loss) and diluted operating income (loss) per common share are non-GAAP financial measures within the meaning of Regulation G. See Non-GAAP Financial Measures in Item 7 of Part II of the AXIS Annual Report on Form 10-K for the year ended December 31, 2014, and in Item 2 in Part I of the AXIS Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2015, which are incorporated by reference into this joint proxy statement/prospectus, for a detailed discussion of the measures used by AXIS to evaluate its financial performance.

(3)

Operating return on average common equity (Operating ROACE) is calculated using diluted operating income (loss), as defined above, divided by average common shareholders’ equity determined by using the common shareholders’ equity balances at the beginning and end of the period. The presentation of Operating ROACE is a non-GAAP financial measure within the meaning of Regulation G. See Non-GAAP Financial Measures in Item 7 of Part II of the AXIS Annual Report on Form 10-K for the year ended December 31, 2014, and in Item 2 in Part I of the AXIS Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2015, which are incorporated by reference into this joint proxy statement/prospectus, for a detailed discussion of the measures used by AXIS to evaluate its financial performance.

(4)	Operating ratios are calculated by dividing the respective operating expenses by net premiums earned.

 

		As of March 31,								As of December 31,
		2015				2014				2014				2013				2012				2011				2010
Selected Balance Sheet Data:
Investments and cash and cash equivalents		$	14,862			$	15,402			$	14,980			$	14,768			$	14,397			$	13,550			$	12,570
Reinsurance recoverable on unpaid and paid losses			1,921				1,913				1,926				1,930				1,864				1,770				1,578
Total assets			20,459				20,998				19,956				19,635				18,852				17,806				16,446
Reserve for losses and loss expenses			9,443				9,668				9,597				9,582				9,059				8,425				7,032
Unearned premiums			3,294				3,372				2,735				2,684				2,455				2,454				2,334
Senior notes			991				1,490				991				996				995				995				994
Total shareholders’ equity attributable to AXIS Capital		$	5,977			$	5,827			$	5,821			$	5,818			$	5,780			$	5,444			$	5,625
Book value per common share (1)		$	53.38			$	48.71			$	52.23			$	47.40			$	44.75			$	39.37			$	45.60
Diluted book value per common share (1)		$	51.97			$	47.13			$	50.63			$	45.80			$	42.97			$	38.08			$	39.37
Common shares outstanding			100.2				106.7				99.4				109.5				117.9				125.6				112.4
Common shares outstanding—diluted			102.9				110.3				102.6				113.3				122.8				129.8				130.2

 

(1)	Book value per common share and diluted book value per common share are based on total common shareholders’ equity attributable to AXIS Capital divided by common shares and diluted common share equivalents outstanding, respectively.

 

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PRELIMINARY UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

The following preliminary unaudited pro forma condensed consolidated financial statements are based on the separate historical financial statements of AXIS and PartnerRe after giving effect to the amalgamation and the assumptions and adjustments described in the accompanying notes to the preliminary unaudited pro forma condensed consolidated financial statements. The preliminary unaudited pro forma condensed consolidated balance sheet as of March 31, 2015 is presented as if the amalgamation with PartnerRe had occurred on March 31, 2015. The preliminary unaudited pro forma condensed consolidated statements of income for the three months ended March 31, 2015 and the year ended December 31, 2014 are presented as if the amalgamation had occurred on January 1, 2014. The historical condensed consolidated financial information has been adjusted to reflect factually supportable items that are directly attributable to the amalgamation and, with respect to the statements of income only, expected to have a continuing impact on the consolidated results of operations.

The preparation of the preliminary unaudited pro forma condensed consolidated financial statements and related adjustments required management to make certain assumptions and estimates. The preliminary unaudited pro forma condensed consolidated financial statements should be read together with:

 

•

the accompanying notes to the preliminary unaudited pro forma condensed consolidated financial statements;

 

•

AXIS’ separate audited historical consolidated financial statements and accompanying notes as of and for the year ended December 31, 2014, included in AXIS’ Annual Report on Form 10-K for the year ended December 31, 2014;

 

•

PartnerRe’s separate audited historical consolidated financial statements and accompanying notes as of and for the year ended December 31, 2014, included in PartnerRe’s Annual Report on Form 10-K for the year ended December 31, 2014;

 

•

AXIS’ separate unaudited historical consolidated financial statements and accompanying notes as of and for the three months ended March 31, 2015, included in AXIS’ Quarterly Report on Form 10-Q for the three months ended March 31, 2015;

 

•

PartnerRe’s separate unaudited historical consolidated financial statements and accompanying notes as of and for the three months ended March 31, 2015, included in PartnerRe’s Quarterly Report on Form 10-Q for the three months ended March 31, 2015; and

 

•

other information pertaining to AXIS and PartnerRe contained in or incorporated by reference into this joint proxy statement/prospectus. See “Selected Historical Consolidated Financial Data of AXIS” and “Selected Historical Consolidated Financial Data of PartnerRe” included elsewhere in this joint proxy statement/prospectus.

The preliminary unaudited pro forma condensed consolidated financial information has been prepared using the acquisition method of accounting for business combinations under accounting principles generally accepted in the United States (U.S. GAAP). After considering the relevant U.S. GAAP guidance, it has been determined that AXIS is the acquiring entity for accounting purposes, primarily due to the number of the senior management positions, including the Chief Executive Officer, in the amalgamated company being filled by current AXIS employees.

The preliminary unaudited pro forma adjustments, including the allocations of the acquisition consideration, have been made solely for the purpose of providing preliminary unaudited pro forma condensed consolidated financial information. A final determination of the acquisition consideration and fair values of PartnerRe’s assets and liabilities, which cannot be made prior to the completion of the amalgamation, will be based on the actual net tangible and intangible assets of PartnerRe that exist as of the date of completion of the transaction. Consequently, amounts preliminarily allocated to goodwill and intangible assets could change significantly from

 

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those allocations used in the preliminary unaudited pro forma condensed consolidated financial statements presented below and could result in a material change in amortization of acquired intangible assets.

In connection with the plan to integrate the operations of AXIS and PartnerRe following the completion of the amalgamation, management anticipates that nonrecurring charges will be incurred. Management is not able to determine the timing, nature and amount of these integration charges as of the date of this joint proxy statement/prospectus. However, these charges will affect the results of operations of AXIS and PartnerRe, as well as those of the combined company following the completion of the amalgamation, in the periods in which they are incurred. The preliminary unaudited pro forma condensed consolidated financial statements do not include the effects of the costs associated with any restructuring or integration activities resulting from the transaction, as they are nonrecurring in nature and not factually supportable at the time that the preliminary unaudited pro forma condensed consolidated financial statements were prepared.

The adjustments that will be recorded as of the completion of the amalgamation may differ materially from the information presented in these preliminary unaudited pro forma condensed consolidated financial statements as a result of:

 

•

the occurrence of natural or man-made catastrophic events which trigger losses on catastrophe-exposed (re)insurance contracts written by PartnerRe;

 

•

changes in the fair value of PartnerRe’s investment portfolio due to market volatility, changes in interest rates and foreign exchange movements;

 

•

changes in the trading price for AXIS’ common shares;

 

•

net cash used or generated in PartnerRe’s operations prior to the date of completion of the amalgamation;

 

•

the timing of the completion of the amalgamation; and

 

•

other changes in PartnerRe’s net assets that occur prior to completion of the amalgamation, which could cause material differences in the information presented below.

The preliminary unaudited pro forma condensed consolidated financial statements are provided for informational purposes only. Additionally, the preliminary unaudited pro forma condensed consolidated financial statements are not necessarily, and should not be assumed to be, an indication of the results that would have been achieved had the transaction been completed as of the dates indicated or that may be achieved in the future. The preliminary unaudited pro forma condensed consolidated financial statements do not give consideration to the impact of possible revenue enhancements, potential revenue decreases due to lost business, any expense efficiencies, synergies or asset dispositions that may result from the amalgamation.

Management has recorded reclassifications of PartnerRe information to conform to AXIS’ presentation. Additionally, as of the date of this joint proxy statement/prospectus, management has identified material preliminary adjustments necessary to conform PartnerRe’s accounting policies to AXIS’ accounting policies. Management of the combined company following the completion of the amalgamation will conduct a final review of PartnerRe’s accounting policies as of the date of the completion of the amalgamation in an effort to determine if further differences in accounting policies require adjustment to conform to AXIS’ accounting policies or if further reclassifications are considered necessary. As a result of this review, management may identify further differences that, when conformed, could have a material impact on these unaudited pro forma condensed consolidated financial statements.

 

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PRELIMINARY UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

 

		As of March 31, 2015
		(in thousands, except for per share data)
		AXIS				PartnerRe				Adjustments				Total
Assets
Investments:
Fixed maturities and short-term investments, available for sale		$	12,051,267			$	—			$	13,432,066	(a)		$	25,483,333
Fixed maturities and short-term investments, trading			—				13,432,066				(13,432,066	)(b)			—
Equity securities, available for sale			601,329				—				—				601,329
Equity securities, trading			—				1,320,284				—				1,320,284
Other investments			939,006				286,596				44,152	(c)			1,269,754
Total investments			13,591,602				15,038,946				44,152				28,674,700
Cash and cash equivalents, including restricted cash			1,270,092				1,413,799				—				2,683,891
Insurance and reinsurance premium balances receivable			2,241,875				2,899,821				1,047,212	(d)			6,188,908
Reinsurance recoverable on unpaid and paid losses			1,921,311				290,018				(278,312	)(e)			1,933,017
Deferred acquisition costs			616,966				706,779				(706,779	)(f)			616,966
Value of business acquired			—				—				348,100	(g)			348,100
Goodwill			47,148				456,380				145,990	(h)			649,518
Intangible assets			41,360				152,836				64,510	(i)			258,706
Other assets			728,465				1,530,016				273,036	(j)			2,531,517
Total assets		$	20,458,819			$	22,488,595			$	937,909			$	43,885,323
Liabilities
Reserve for losses and loss expenses		$	9,443,222			$	9,401,397			$	(139,352	)(k)		$	18,705,267
Policy benefits for life and annuity contracts			—				1,996,519				160,000	(l)			2,156,519
Unearned premiums			3,293,952				2,159,446				379,980	(m)			5,833,378
Debt			991,045				820,989				120,772	(n)			1,932,806
Other liabilities			684,365				855,416				848,876	(o)			2,388,657
Total liabilities			14,412,584				15,233,767				1,370,276				31,016,627
Shareholders’ equity
Preferred shares			627,843				34,150				819,600	(p)			1,481,593
Common shares			2,200				87,237				(85,891	)(q)			3,546
Additional paid-in capital			2,287,065				3,959,465				2,004,320	(r)			8,250,850
Accumulated other comprehensive loss			(17,070	)			(37,240	)			37,240	(s)			(17,070	)
Retained earnings			5,842,239				6,442,442				(6,496,545	)(t)			5,788,136
Treasury shares			(2,765,114	)			(3,288,909	)			3,288,909	(u)			(2,765,114	)
Total shareholders’ equity attributable to controlling interests			5,977,163				7,197,145				(432,367	)			12,741,941
Noncontrolling interests			69,072				57,683				—				126,755
Total shareholders’ equity			6,046,235				7,254,828				(432,367	)			12,868,696
Total liabilities and shareholders’ equity		$	20,458,819			$	22,488,595			$	937,909			$	43,885,323
Selected Share Data
Diluted common shares outstanding			102,924				48,850				58,553	(v)			210,327
Diluted book value per common share		$	51.97			$	129.86				n/a			$	53.54

 

n/a - not applicable

See accompanying notes to the preliminary unaudited pro forma condensed consolidated financial statements.

 

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PRELIMINARY UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

 

		For the Three Months Ended March 31, 2015
		(in thousands, except for per share data)
		AXIS				PartnerRe				Adjustments				Total
Revenues
Net premiums earned		$	906,222			$	1,234,722			$	63,786	(a)		$	2,204,730
Net investment income			92,110				104,631				—				196,741
Other income			7,676				4,292				—				11,968
Net realized investment (losses) gains (1)			(42,553	)			115,645				(79,389	)(b)			(6,297	)
Total revenues			963,455				1,459,290				(15,603	)			2,407,142
Expenses
Net losses and loss expenses and life policy benefits			518,937				721,281				31,351	(c)			1,271,569
Acquisition costs			171,702				275,791				24,709	(d)			472,202
General and administrative expenses			163,065				124,750				—				287,815
Foreign exchange gains			(63,220	)			(13,147	)			(128,692	)(e)			(205,059	)
Amortization of intangible assets			452				6,768				(131	)(f)			7,089
Interest expense and financing costs			12,257				12,245				(8,080	)(g)			16,422
Total expenses			803,193				1,127,688				(80,843	)			1,850,038
Income before income taxes and interest in losses of equity method investments			160,262				331,602				65,240				557,104
Income tax (benefit) expense			(690	)			79,665				11,987	(h)			90,962
Interest in losses of equity method investments			—				(3,838	)			—				(3,838	)
Net income			160,952				248,099				53,253				462,304
Amounts attributable (from) to noncontrolling interests			(4,873	)			2,182				—				(2,691	)
Net income attributable to controlling interests			165,825				245,917				53,253				464,995
Preferred share dividends			10,022				14,184				—				24,206
Net income available to common shareholders		$	155,803			$	231,733			$	53,253			$	440,789
Per share data
Net income per common share
Basic net income		$	1.56			$	4.88				n/a			$	2.12
Diluted net income		$	1.54			$	4.76				n/a			$	2.11
Weighted average number of common shares outstanding - basic			99,910				47,525				n/a				207,993
Weighted average number of common shares outstanding - diluted			101,139				48,710				n/a				208,840

 

n/a - not applicable

(1)	PartnerRe’s net realized investment gains also include the change in net unrealized investment gains for the three months ended March 31, 2015.

See accompanying notes to the preliminary unaudited pro forma condensed consolidated financial statements.

 

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PRELIMINARY UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

 

		For the Year Ended December 31, 2014
		(in thousands, except for per share data)
		AXIS				PartnerRe				Adjustments				Total
Revenues
Net premiums earned		$	3,870,999			$	5,609,195			$	(86,480	)(a)		$	9,393,714
Net investment income			342,766				479,696				—				822,462
Other income			650				16,190				—				16,840
Net realized investment gains (1)			132,108				371,796				(178,355	)(b)			325,549
Total revenues			4,346,523				6,476,877				(264,835	)			10,558,565
Expenses
Net losses and loss expenses and life policy benefits			2,186,722				3,462,770				(95,266	)(c)			5,554,226
Acquisition costs			737,197				1,213,822				96,298	(d)			2,047,317
General and administrative expenses			619,894				449,688				—				1,069,582
Foreign exchange gains			(104,439	)			(18,201	)			(128,959	)(e)			(251,599	)
Amortization of intangible assets			1,982				27,486				(940	)(f)			28,528
Interest expense and financing costs			74,695				48,963				(32,770	)(g)			90,888
Total expenses			3,516,051				5,184,528				(161,637	)			8,538,942
Income before income taxes and interest in earnings of equity method investments			830,472				1,292,349				(103,198	)			2,019,623
Income tax expense			25,908				239,506				(1,355	)(h)			264,059
Interest in earnings of equity method investments			—				15,270				—				15,270
Net income			804,564				1,068,113				(101,843	)			1,770,834
Amounts attributable (from) to noncontrolling interests			(6,181	)			13,139				—				6,958
Net income attributable to controlling interests			810,745				1,054,974				(101,843	)			1,763,876
Preferred share dividends			40,088				56,735				—				96,823
Net income available to common shareholders		$	770,657			$	998,239			$	(101,843	)		$	1,667,053
Per share data
Net income per common share
Basic net income		$	7.38			$	19.96				n/a			$	7.85
Diluted net income		$	7.29			$	19.51				n/a			$	7.81
Weighted average number of common shares outstanding			104,368				50,019				n/a				212,451
Weighted average number of common shares outstanding			105,713				51,174				n/a				213,461

 

n/a - not applicable

(1)	PartnerRe’s net realized investment gains also include the change in net unrealized investment gains for the year ended December 31, 2014.

See accompanying notes to the preliminary unaudited pro forma condensed consolidated financial statements.

 

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NOTES TO PRELIMINARY UNAUDITED PRO FORMA CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

Note 1—Basis of Pro Forma Presentation

The preliminary unaudited pro forma condensed consolidated balance sheet as of March 31, 2015 and the preliminary unaudited pro forma condensed consolidated statement of income for the three months ended March 31, 2015 and the year ended December 31, 2014 are based on the historical financial statements of AXIS and PartnerRe after giving effect to the completion of the amalgamation and the assumptions and adjustments described in the accompanying notes. It does not give consideration to the impact of revenue enhancements or potential lost business, expense efficiencies, synergies, integration costs, asset dispositions, or other actions that may result from the amalgamation. The preliminary unaudited pro forma information was prepared in accordance with applicable SEC pro forma guidance under Regulation S-X Article 11.

The transaction will be accounted for under the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”), with AXIS as the acquiring entity. In business combination transactions in which the consideration given is not in the form of cash (that is, in the form of non-cash assets, liabilities incurred, or equity interests issued), measurement of the acquisition consideration is based on the fair value of the consideration given or the fair value of the assets (or net assets) acquired, whichever is more clearly evident and, thus, more reliably measurable.

Under ASC 805, all of the PartnerRe assets acquired and liabilities assumed in this business combination are recognized at their acquisition-date fair value, while transaction costs and restructuring costs associated with the business combination are expensed as incurred. The amount of the acquisition consideration over the fair value of assets acquired and liabilities assumed is allocated to goodwill. Changes in deferred tax asset valuation allowances and income tax uncertainties, if any, after the acquisition date will generally affect income tax expense. Subsequent to the completion of the amalgamation, AXIS and PartnerRe will finalize an integration plan, which may affect how the assets acquired, including intangible assets, will be utilized by the combined company.

The preliminary unaudited pro forma information is presented solely for informational purposes and is not necessarily indicative of the consolidated results of operations or financial position that might have been achieved for the periods or dates indicated, nor is it necessarily indicative of the future results of the combined company.

Note 2—Preliminary Acquisition Consideration

On January 25, 2015, AXIS entered into a definitive agreement and plan of amalgamation with PartnerRe, which the agreement was thereafter amended on February 17, 2015, March 10, 2015, and March 31, 2015, pursuant to which AXIS will be amalgamated with PartnerRe. On May 3, 2015, the Company and PartnerRe further amended the agreement to allow PartnerRe to pay a one-time special dividend of $11.50 per share to PartnerRe’s common shareholders in connection with the closing of the amalgamation. At the closing (as defined in the amalgamation agreement), each PartnerRe common share issued and outstanding immediately prior to the amalgamation’s effective time (as defined in the amalgamation agreement) will be automatically canceled and converted into the right to receive 2.18 validly issued, fully paid and non-assessable common shares of the amalgamated company, par value $0.0125 per share, together with any cash paid in lieu of fractional shares. At the closing, each AXIS common share issued and outstanding immediately prior to the amalgamation’s effective time will be automatically canceled and converted into the right to receive one validly issued, fully paid and non-assessable amalgamated company common share.

The share price used in determining the preliminary acquisition consideration is based upon the closing price of AXIS common shares on May 15, 2015. The estimated maximum number of PartnerRe common shares which may be canceled in the amalgamation is based on the PartnerRe common shares outstanding on May 15, 2015.

 

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The effect of an increase (decrease) in the price of an AXIS common share of 1% would be to increase (decrease) the pro forma goodwill and to increase (decrease) contributed capital by approximately $59.5 million reflecting the increase (decrease) in the acquisition consideration. There would be no impact on the pro forma net income.

The preliminary acquisition consideration excludes the impact of fractional shares and is calculated as follows (dollars and shares in thousands, except per share data):

Calculation of Acquisition Consideration

 

Estimated number of PartnerRe’s common shares which may be canceled in the amalgamation			49,382
Exchange ratio per the amalgamation agreement			2.18
Amalgamated company’s share issuance to PartnerRe’s shareholders			107,653
Multiplied by AXIS’s closing price per share on May 15, 2015		$	55.29
Amalgamated company’s share issuance consideration		$	5,952,134

Note 3—Preliminary Acquisition Consideration Allocation

Under the acquisition method of accounting, the total acquisition consideration is allocated to the acquired tangible and identifiable intangible assets and assumed liabilities of PartnerRe based on their estimated fair values as of the closing of the amalgamation. The excess of the acquisition consideration over the fair value of assets acquired and liabilities assumed is allocated to goodwill.

The allocation of the estimated acquisition consideration is preliminary because the proposed amalgamation has not yet been completed. The preliminary allocation is based on estimates, assumptions, valuations and other studies which have not progressed to a stage where there is sufficient information to make a definitive allocation. Accordingly, the acquisition consideration allocation reflected in the preliminary unaudited pro forma adjustments will remain preliminary until management determines the final acquisition consideration and the fair values of assets acquired and liabilities assumed. The final determination of the acquisition consideration allocation is anticipated to be completed as soon as practicable after the completion of the amalgamation and will be based on the value of the AXIS share price at the closing of the transaction and on the fair values of PartnerRe’s assets acquired and liabilities assumed at the closing of the transaction. The final amounts allocated to PartnerRe’s assets acquired and liabilities assumed could differ significantly from the amounts presented in the preliminary unaudited pro forma condensed consolidated financial statements.

 

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The total preliminary acquisition consideration is allocated to PartnerRe’s tangible and identifiable intangible assets and liabilities as of March 31, 2015 based on their preliminary fair values as follows (dollars in thousands):

Preliminary Acquisition Consideration Allocation

 

PartnerRe’s shareholders’ equity attributable to controlling interests as of March 31, 2015		$	7,197,145
Preliminary adjustments for fair value, by applicable balance sheet caption:
Assets:
Other investments			11,367
Deferred acquisition costs			(1,075,231	)
Value of business acquired			348,100
Goodwill			(456,380	)
Intangible assets			64,510
Other assets			58,045
Liabilities:
Reserve for losses and loss expenses			(69,251	)
Policy benefits for life and annuity contracts			(160,000	)
Unearned premiums			1,011,667
Debt			(120,772	)
Other liabilities (reflecting estimated payment of the one-time special dividend and PartnerRe’s transaction costs)			(605,686	)
Estimated fair value of net assets acquired			6,203,514
Estimated purchase price			5,952,134
Liquidation value of PartnerRe’s preferred shares as of March 31, 2015			853,750
Goodwill, before AXIS’ estimated transaction costs		$	602,370

See Note 2 to the Preliminary Unaudited Pro Forma Condensed Consolidated Financial Statements above for the impact of an increase (decrease) in the price of the AXIS common share price on the purchase price.

Note 4—Preliminary Unaudited Pro Forma and Acquisition Accounting Adjustments

The preliminary unaudited pro forma financial information is not necessarily indicative of what the financial position and results from operations actually would have been had the amalgamation been completed at the date indicated and includes adjustments which are preliminary and may be revised. Such revisions may result in material changes. The financial position shown herein is not necessarily indicative of what the past financial position of the combined companies would have been, nor necessarily indicative of the financial position of the post-amalgamation periods.

The following preliminary unaudited pro forma adjustments result from accounting for the amalgamation, including the determination of fair value of the assets, liabilities, and commitments which AXIS, as the acquiring entity for accounting purposes, will acquire and assume from PartnerRe. The adjustments below include initial accounting policy conclusions on the treatment of PartnerRe’s investments and the related realized and unrealized investment gains and losses and foreign exchange impacts. These conclusions are preliminary and may be subject to change following a full review of the PartnerRe’s investment portfolio.

 

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The descriptions related to the preliminary adjustments are as follows (dollars in thousands):

Balance Sheet

 

		Increase (decrease) as of March 31, 2015
Assets:
(a)    Adjustment to Fixed maturities and short-term investments, available for sale:
To reclassify fixed maturities and short-term investments to available for sale to conform accounting policies		$	13,432,066
(b)    Adjustment to Fixed maturities and short-term investments, trading:
To reclassify fixed maturities and short-term investments to available for sale to conform accounting policies			(13,432,066	)
(c)    Adjustments to Other investments:
To reclassify derivative assets and liabilities to conform presentation			32,785
To fair value investments held at cost or valued under the equity method			11,367
(d)    Adjustments to Insurance and reinsurance premium balances receivable:
To align written premium methodologies to conform accounting policies			1,054,141
To eliminate intercompany transactions between PartnerRe and AXIS			(6,929	)
(e)    Adjustments to Reinsurance recoverable on unpaid and paid losses:
To reclassify prepaid reinsurance to conform presentation			(69,709	)
To eliminate intercompany transactions between PartnerRe and AXIS			(208,603	)
(f)     Adjustments to Deferred acquisition costs:
To align written premium methodologies to conform accounting policies			368,452
To eliminate PartnerRe’s deferred acquisition cost asset			(1,075,231	)
(g)    Adjustment to record Value of business acquired:
To record the fair value of PartnerRe’s life business			348,100
(h)    Adjustments to Goodwill:
To eliminate PartnerRe’s carried goodwill			(456,380	)
To record goodwill created by the amalgamation			602,370
(i)     Adjustments to Intangible assets:
To record finite-lived intangible assets acquired (non-life customer and broker relationships and brand)			189,996
To record finite-lived intangible assets acquired (life renewal rights)			20,000
To record an indefinite-lived intangible asset acquired (U.S. licenses)			7,350
To eliminate PartnerRe’s carried intangible assets			(152,836	)
(j)     Adjustments to Other assets:
To reclassify receivables for securities sold, derivative assets and prepaid reinsurance to conform presentation			245,937
To record deferred tax impact on pro forma adjustments			58,045
To eliminate intercompany transactions between PartnerRe and AXIS			(30,946	)
Total adjustments to Assets		$	937,909

 

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		Increase (decrease) as of March 31, 2015
Liabilities:
(k)    Adjustments to Reserve for losses and loss expenses:
To record unpaid losses and loss adjustment expenses at fair value, reflecting an increase for a market based risk margin partially offset by a discount used to present value of the unpaid losses and loss adjustment expenses		$	69,251
To eliminate intercompany transactions between PartnerRe and AXIS			(208,603	)
(l)     Adjustment to Policy benefits for life and annuity contracts:
To reflect policy benefits for life and annuity contracts at fair value			160,000
(m)   Adjustments to Unearned premiums:
To record the fair value of profit within PartnerRe’s non-life unearned premiums, adjusted for a risk factor			(1,011,667	)
To align written premium methodologies to conform accounting policies			1,422,593
To eliminate intercompany transactions between PartnerRe and AXIS			(30,946	)
(n)    Adjustment to Debt:
To reflect PartnerRe’s debt at fair value			120,772
(o)    Adjustments to Other liabilities:
To record the accrual for the payment of a one-time special dividend			560,686
To reflect AXIS and PartnerRe estimated transaction costs and cash-settled share-based compensation costs related to the amalgamation			86,107
To reclassify receivables for securities sold and derivative liabilities to conform presentation			209,012
To eliminate intercompany transactions between PartnerRe and AXIS			(6,929	)
Total adjustments to Liabilities		$	1,370,276
Shareholders’ Equity:
(p)    Adjustment to Preferred shares:
To align presentation of preferred shares		$	819,600
(q)    Adjustments to Common shares:
To reflect issuance of amalgamated company shares			1,346
To eliminate PartnerRe’s common shares			(87,237	)
(r)     Adjustments to Additional paid-in capital:
To reflect issuance of amalgamated company shares			5,950,788
To align presentation of preferred shares			(819,600	)
To eliminate PartnerRe’s additional paid-in capital			(3,139,865	)
To record AXIS’ estimated share-based compensation costs related to the amalgamation			12,997
(s)    Adjustment to Accumulated other comprehensive loss:
To eliminate PartnerRe’s accumulated other comprehensive loss			37,240
(t)     Adjustments to Retained earnings:
To record AXIS’ estimated share-based compensation costs related to the amalgamation			(24,103	)
To record AXIS’ estimated amalgamation transaction costs			(30,000	)
To eliminate PartnerRe’s retained earnings			(6,442,442	)
(u)    Adjustment to Treasury shares:
To eliminate PartnerRe’s treasury shares			3,288,909
Total adjustments to Shareholders’ Equity		$	(432,367	)
(v)    Adjustments to Common shares outstanding (in thousands of shares):
To reflect elimination of PartnerRe’s common shares outstanding, issuance of amalgamated company shares to PartnerRe’s shareholders and the vesting of PartnerRe and AXIS share-based compensation awards due to the amalgamation			58,553

 

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Statement of Income

 

		Increase (decrease) for the Three Months Ended March 31, 2015				Increase (decrease) for Year Ended December 31, 2014
Revenues:
(a)    Adjustments to Net premiums earned:
To align written and earned premium methodologies to conform accounting policies		$	77,800			$	(25,880	)
To eliminate intercompany transactions between PartnerRe and AXIS			(14,014	)			(60,600	)
(b)    Adjustments to Net realized investment (losses) gains:
To reclassify presentation of foreign exchange on realized gains and losses on investments			(60	)			52,364
To reclassify unrealized gains and losses on investments to conform accounting policies			(79,329	)			(230,719	)
Total adjustments to Revenues			(15,603	)			(264,835	)
Expenses:
(c)    Adjustments to Net losses and loss expenses and life policy benefits:
To record amortization of the adjustment resulting from the difference between the estimated fair value and the historical carrying value of PartnerRe’s net losses and loss expenses and life and annuity policy benefits			(6,233	)			(37,106	)
To align earned premium methodologies to conform accounting policies			45,810				(18,060	)
To eliminate intercompany transactions between PartnerRe and AXIS			(8,226	)			(40,100	)
(d)    Adjustments to Acquisition costs:
To amortize the fair value of profit within PartnerRe’s unearned premiums adjusted for a risk factor, non-life			28,074				859,917
To reduce acquisition costs following the write-off of the deferred acquisition cost asset			(27,883	)			(768,666	)
To amortize the fair value of PartnerRe’s life business			6,543				27,267
To align earned premium methodologies to conform accounting policies			22,080				(5,420	)
To eliminate intercompany transactions between PartnerRe and AXIS			(4,105	)			(16,800	)
(e)    Adjustments to Foreign exchange gains:
To align presentation of foreign exchange on realized gains and losses on investments			(60	)			52,364
To align unrealized foreign exchange gains and losses on investments to conform accounting policies			(128,632	)			(181,323	)
(f)     Adjustments to Amortization of intangibles:
To record amortization of intangible assets resulting from the amalgamation			6,637				26,546
To eliminate PartnerRe’s historical amortization expense related to intangible assets			(6,768	)			(27,486	)
(g)    Adjustment to Interest expense and financing costs:
To record reduction of interest expense related to the amortization of the fair value adjustment on PartnerRe’s debt			(8,080	)			(32,770	)
Total adjustments to Expenses			(80,843	)			(161,637	)
Income taxes:
(h)    Adjustment to Income tax (benefit) expense:
To record income tax on pro forma adjustments			11,987				(1,355	)
Total adjustments to Net Income		$	53,253			$	(101,843	)

 

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Estimated amortization charges relating to the fair value adjustments

The estimated useful lives of the identified finite-life intangible assets range from five to twenty years.

The following table shows the estimated annual pre-tax amortization expenses (income) of the fair value adjustments for the first five years following the acquisition (dollars in millions):

 

		Year following the acquisition
		1				2				3				4				5
Reduction in net loss and loss expenses and life and annuity policy benefits		$	(37	)		$	(25	)		$	(20	)		$	(17	)		$	(15	)
Amortization of the fair value of PartnerRe’s life business and profit within PartnerRe’s non-life unearned premium, offset by reduction in acquisition costs due to the write-off of the deferred acquisition costs asset			119				27				18				12				11
Total included in underwriting result			82				2				(2	)			(5	)			(4	)
Estimated amortization expenses			27				27				27				27				27
Reduction in interest expenses			(33	)			(33	)			(27	)			(17	)			(11	)
Total included in other expenses			(6	)			(6	)			—				10				16
Total		$	76			$	(4	)		$	(2	)		$	5			$	12

Note 5—Preliminary Unaudited Pro Forma Net Income Per Share

Preliminary unaudited pro forma net income per share for the three months ended March 31, 2015 and the year ended December 31, 2014 have been calculated using AXIS’s historic weighted average common shares outstanding plus the common shares assumed to be issued to PartnerRe shareholders per the amalgamation agreement.

The following table sets forth the calculation of basic and diluted preliminary unaudited pro forma net income per share for the three months ended March 31, 2015 and the year ended December 31, 2014 (dollars in thousands, except per share amounts):

 

		Three Months Ended March 31, 2015								Year Ended December 31, 2014
		Basic				Diluted				Basic				Diluted
Preliminary pro forma net income available to common shareholders		$	440,789			$	440,789			$	1,667,053			$	1,667,053
Weighted average common shares outstanding:
AXIS historical			99,910				101,139				104,368				105,713
AXIS share issuance to PartnerRe’s shareholders			107,653				107,653				107,653				107,653
AXIS restricted stock units and other share-based compensation expected to vest upon the completion of the amalgamation			430				48				430				95
Preliminary pro forma adjusted weighted average common shares outstanding			207,993				208,840				212,451				213,461
Preliminary pro forma net income per share		$	2.12			$	2.11			$	7.85			$	7.81

 

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Note 6—Preliminary Unaudited Pro Forma Debt

The historical and preliminary unaudited pro forma debt of AXIS and PartnerRe is summarized as follows (dollars in millions):

 

		As of March 31, 2015
		Historical AXIS				Historical PartnerRe				Pro Forma Adjustments (1)				Pro Forma
2.65% Senior Notes due April 1, 2019		$	248.3			$	—			$	—			$	248.3
5.875% Senior Notes due June 1, 2020			496.6				—				—				496.6
5.15% Senior Notes due April 1, 2045			246.2				—				—				246.2
6.875% Senior Notes due June 1, 2018			—				250.0				43.2				293.2
5.5% Senior Notes due June 1, 2020			—				500.0				77.3				577.3
6.440% Capital Efficient Notes due December 1, 2066			—				71.0				0.2				71.2
		$	991.1			$	821.0			$	120.7			$	1,932.8

 

(1)	Adjustment to reflect PartnerRe’s debt at fair value.

 

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COMPARATIVE PER SHARE DATA

The historical earnings per share, dividends and book values of PartnerRe and AXIS shown in the tables below are derived from their respective unaudited consolidated financial statements as of and for the three months ended March 31, 2015 and the audited consolidated financial statements as of and for the year ended December 31, 2014. The unaudited pro forma comparative basic and diluted earnings per share data give effect to the acquisition method of accounting as if the amalgamation had been completed on January 1, 2014. The unaudited pro forma book value per share information was computed as if the amalgamation had been completed on March 31, 2015.

You should read this information in conjunction with the historical financial information of PartnerRe and AXIS included or incorporated elsewhere into this joint proxy statement/prospectus, including PartnerRe’s and AXIS’ respective financial statements and related notes thereto. The unaudited pro forma per share data is not necessarily indicative of either actual results had the amalgamation occurred as of the dates or during the periods indicated or of the future operations of PartnerRe or AXIS.

This unaudited pro forma per share financial data does not give consideration to the impact of possible revenue enhancements, potential loss of business, expense efficiencies, synergies, strategy modifications, asset dispositions or other actions. This pro forma per share data is subject to risks and uncertainties, including those discussed in the section of this joint proxy statement/prospectus titled “Risk Factors.”

Per share data as of and for the three months ended March 31, 2015:

 

		AXIS Historical				PartnerRe Historical				Unaudited Pro Forma
Book value per common share		$	53.38			$	133.08			$	54.06
Diluted book value per common share		$	51.97			$	129.86			$	53.54
Diluted tangible book value per common share (1)		$	51.11			$	118.4			$	49.35
Dividends declared per common share		$	0.29			$	0.70			$	0.29
Net income available to common shareholders per common share—basic		$	1.56			$	4.88			$	2.12
Net income available to common shareholders per common share—diluted		$	1.54			$	4.76			$	2.11
Operating income available to common shareholders per common share—diluted (1)		$	1.35			$	3.09			$	1.42

 

(1)	Diluted tangible book value per common share and operating income are “non-GAAP financial measures” as defined by Regulation G.

Per share data for the year ended December 31, 2014:

 

		AXIS Historical				PartnerRe Historical				Unaudited Pro Forma
Dividends declared per common share		$	1.10			$	2.68			$	1.16
Net income available to common shareholders per common share—basic		$	7.38			$	19.96			$	7.85
Net income available to common shareholders per common share—diluted		$	7.29			$	19.51			$	7.81
Operating income available to common shareholders per common share—diluted (1)		$	5.32			$	14.76			$	5.90

 

n/a—not applicable

(1)	Operating income is a “non-GAAP financial measure” as defined by Regulation G.

 

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Diluted tangible book value per common share is calculated using common shareholders’ equity attributable to controlling interests (total shareholders’ equity less noncontrolling interests and aggregate liquidation value of preferred shares) less goodwill and intangible assets, net of tax, divided by the diluted common shares outstanding (assuming exercise of all share-based awards and other dilutive securities). We believe that this measure, in combination with diluted book value per common share, is useful in assessing value generated for our common shareholders. A reconciliation of diluted tangible book value per common share to the most directly comparable GAAP financial measure is provided below:

 

		As of March 31, 2015
		AXIS Historical				PartnerRe Historical				Unaudited Pro Forma
Total shareholders’ equity		$	6,046,235			$	7,254,828			$	12,868,696
Less:
Preferred shares, aggregate liquidation value			627,843				853,750				1,481,593
Noncontrolling interests			69,072				57,683				126,755
Common shareholders’ equity attributable to controlling interests			5,349,320				6,343,395				11,260,348
Less:
Goodwill			47,148				456,380				649,518
Intangible assets, net of tax			41,360				103,276				232,203
Tangible book value attributable to common shareholders		$	5,260,812			$	5,783,739			$	10,378,627
Diluted common shares outstanding			102,924				48,850				210,327
Diluted tangible book value per common share		$	51.11			$	118.40			$	49.35

Operating income represents after-tax operational results without consideration of after-tax net realized investment (losses) gains, foreign exchange gains (losses), interest in (losses) earnings of equity method investments and withholding tax on inter-company dividends. Diluted operating earnings per common share is derived from this non-GAAP operating income measure. For a further explanation of this measure, see PartnerRe’s and AXIS’ Quarterly Reports on Form 10-Q for the three months ended March 31, 2015 and PartnerRe’s and AXIS’ Annual Reports on Form 10-K for the year ended December 31, 2014. A reconciliation of diluted operating earnings per common share to the most directly comparable GAAP financial measure is provided below:

 

		Three Months Ended March 31, 2015
		AXIS Historical				PartnerRe Historical				Unaudited Pro Forma
Net income available to common shareholders		$	155,803			$	231,733			$	440,789
Less:
Net realized investment (losses) gains, net of tax			(41,994	)			100,311				(10,210	)
Net foreign exchange gains (losses), net of tax			61,726				(15,801	)			157,004
Interest in losses of equity method investments, net of tax			—				(3,313	)			(3,313	)
Operating income available to common shareholders		$	136,071			$	150,536			$	297,308
Weighted average number of common shares outstanding—diluted			101,139				48,710				208,840
Operating income available to common shareholders per common share—diluted		$	1.35			$	3.09			$	1.42

 

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		Year ended December 31, 2014
		AXIS Historical				PartnerRe Historical				Unaudited Pro Forma
Net income available to common shareholders		$	770,657			$	998,239			$	1,667,053
Less:
Net realized investment gains, net of tax			106,196				286,252				247,778
Net foreign exchange gains (losses), net of tax			101,586				(45,883	)			158,174
Interest in earnings of equity method investments, net of tax			—				8,577				8,577
Withholding tax on inter-company dividends, net of tax			—				(6,125	)			(6,125	)
Operating income available to common shareholders		$	562,875			$	755,418			$	1,258,649
Weighted average number of common shares outstanding - diluted			105,713				51,174				213,461
Operating income available to common shareholders per common share - diluted		$	5.32			$	14.76			$	5.90

 

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MARKET PRICE AND DIVIDEND INFORMATION

PartnerRe

PartnerRe common shares are quoted on the NYSE under the ticker symbol “PRE.” The following table shows the intraday high and low prices for the PartnerRe common shares and cash dividends per share, for the periods indicated as reported by the NYSE. These prices do not necessarily represent actual transactions.

 

						PartnerRe
		High				Low				Dividend
Year ending December 31, 2015
First quarter		$	122.45			$	110.06			$	0.70
Second quarter (through May 18, 2015)		$	136.18			$	113.68			$	0.70	(1)
Year ended December 31, 2014
Fourth quarter		$	118.47			$	107.57			$	0.67
Third quarter		$	113.35			$	103.57			$	0.67
Second quarter		$	109.73			$	99.99			$	0.67
First quarter		$	104.95			$	94.50			$	0.67
Year ended December 31, 2013
Fourth quarter		$	105.90			$	90.48			$	0.64
Third quarter		$	93.44			$	85.98			$	0.64
Second quarter		$	96.41			$	86.13			$	0.64
First quarter		$	94.26			$	80.50			$	0.64

 

(1)	The dividend will be payable on June 1, 2015, to common shareholders of record on May 18, 2015.

On January 23, 2015, the last business day before the public announcement of the amalgamation agreement, and May 29, 2015, the last reported sales price of PartnerRe common shares, as reported by the NYSE, was $114.14 and $131.43, respectively. PartnerRe shareholders and AXIS shareholders are encouraged to obtain current market quotations for PartnerRe common shares before making any decision with respect to the amalgamation. No assurance can be given concerning the market price for PartnerRe common shares before or after the date on which the amalgamation will close. The market price for PartnerRe common shares will fluctuate between the date of this joint proxy statement/prospectus and the date on which the amalgamation closes and thereafter.

As of May 1, 2015, there were approximately 38 holders of record of PartnerRe common shares. This does not represent the actual number of beneficial owners of PartnerRe common shares because shares are frequently held in “street names” by securities dealers and others for the benefit of beneficial owners who may vote shares.

AXIS

AXIS common shares are quoted on the NYSE under the ticker symbol “AXS.” The following table shows the intraday high and low prices for the AXIS common shares and cash dividends per share, for the periods indicated as reported by NYSE. These prices do not necessarily represent actual transactions.

 

						AXIS
		High				Low				Dividend
Year ending December 31, 2015
First quarter		$	53.02			$	47.65			$	0.29
Second quarter (through May 18, 2015)		$	57.94			$	50.81			$	0.29	(1)
Year ended December 31, 2014
Fourth quarter		$	52.21			$	44.94			$	0.29
Third quarter		$	48.66			$	43.00			$	0.27
Second quarter		$	47.34			$	43.91			$	0.27
First quarter		$	47.41			$	41.82			$	0.27
Year ended December 31, 2013
Fourth quarter		$	49.75			$	43.43			$	0.27
Third quarter		$	48.39			$	41.87			$	0.25
Second quarter		$	46.88			$	41.29			$	0.25
First quarter		$	41.98			$	34.95			$	0.25

 

(1)	Dividend declared May 8, 2015 and payable July 15, 2015.

 

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On January 23, 2015, the business day before the public announcement of the amalgamation agreement, and May 29, 2015, the last reported sales price of AXIS common shares, as reported by the NYSE, was $49.33 and $55.04, respectively. AXIS shareholders and PartnerRe shareholders are encouraged to obtain current market quotations for AXIS common shares before making any decision with respect to the amalgamation. No assurance can be given concerning the market price for AXIS common shares before or after the date on which the amalgamation will close. The market price for AXIS common shares will fluctuate between the date of this joint proxy statement/prospectus and the date on which the amalgamation closes and thereafter.

As of May 1, 2015, there were 23 holders of record of AXIS common shares. This does not represent the actual number of beneficial owners of AXIS common shares because shares are frequently held in “street names” by securities dealers and others for the benefit of beneficial owners who may vote shares.

PartnerRe Security Ownership of Certain Beneficial Owners, Management and Directors of PartnerRe

The following table sets forth information as of May 1, 2015 with respect to the beneficial ownership of issued and outstanding common shares by (i) PartnerRe’s Chief Executive Officer, PartnerRe’s Chief Financial Officer, and each of the three remaining most highly compensated executive officers during the 2014 fiscal year (collectively, “Named Executive Officers” or “NEOs”); (ii) each of PartnerRe’s directors; (iii) all of PartnerRe’s executive officers and directors as a group; and (iv) each person known by us to beneficially own 5% or more of the issued and outstanding PartnerRe common shares. As defined by the SEC, a person is deemed to “beneficially own” shares if such person directly or indirectly (i) has or shares the power to vote or dispose of such shares, regardless of whether such person has any pecuniary interest in the shares; or (ii) has the right to acquire the power to vote or dispose of such shares within 60 days, including through the exercise of any option, warrant, or right. Pursuant to Rule 13d-4 under the Securities Exchange Act of 1934, as amended, the statements concerning voting and dispositive power concerning PartnerRe common shares included in the footnotes to this table shall not be construed as confirmation that such persons are the beneficial owners of such common shares.

As of May 1, 2015, the common shares owned by all directors and executive officers as a group (including Costas Miranthis, PartnerRe’s former President and Chief Executive Officer) constitute approximately 1.82% of the issued and outstanding common shares, net of treasury shares. The shares detailed in the table below are not necessarily owned by the entity named but may be owned by accounts over which it exercises discretionary investment authority.

 

Name of Beneficial Owner		Common Shares				Exercisable Options/SSARs				Amount of Beneficial Ownership				Percentage of Issued and Outstanding Common Shares
David Zwiener			5,587				25,621				31,208				0.07	%
William Babcock			9,659				100,317				109,976				0.23	%
Emmanuel Clarke			23,357				106,329				129,686				0.27	%
Laurie Desmet			10,517				65,987				76,504				0.16	%
Theodore C. Walker			8,809				209,460				218,269				0.46	%
Costas Miranthis			64,706				—				64,706				0.14	%
Jean-Paul L. Montupet			10,166				38,627				48,793				0.10	%
Judith Hanratty			1,039				6,683				7,722				0.02	%
Jan H. Holsboer			20,086				66,062				86,148				0.18	%
Roberto Mendoza			2,194				23,170				25,364				0.05	%
Debra J. Perry			—				—				—				—
Rémy Sautter			11,149				17,451				28,600				0.06	%
Greg F. H. Seow			—				—				—				—
Kevin M. Twomey			2,674				34,765				37,439				0.08	%
Egbert Willam			—				3,899				3,899				0.01	%
All directors and executive officers (15 total)											868,314				1.82	%
Other Beneficial Owners (1)
The Vanguard Group, Inc. (2) 100 Vanguard Blvd. Malvern, PA 19355			3,803,996				—				3,803,996				7.8	%

 

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*	Denotes beneficial ownership of less than 1%

(1)	The information contained in Other Beneficial Owners is based solely on reports on Schedules 13G/A filed with the SEC; PartnerRe has not independently verified the data.

(2)

As of December 31, 2014, based on a report on Schedule 13G filed on February 11, 2015, The Vanguard Group, Inc. beneficially owns and has sole voting power over 45,694 common shares, sole dispositive power over 3,762,002 common shares and shared dispositive power over 41,994 common shares. Vanguard Fiduciary Trust Company a wholly-owned subsidiary of the Vanguard Group, Inc is the beneficially owner of 28,894 common shares. Vanguard Investments Australia, Ltd., a wholly-owned subsidiary of The Vanguard Group, Inc. is the beneficial owner of 29,900 common shares. The ownership percentage is based on the assumption that The Vanguard Group, Inc. continues to own the number of common shares reflected in the table above as of February 17, 2015.

There are no arrangements, known to PartnerRe, including any pledge by any person of securities of PartnerRe, the operation of which may at a subsequent date result in a change in control of PartnerRe, other than the amalgamation agreement between PartnerRe and AXIS (see “Business—General” in Item 1 of Part I of PartnerRe’s Annual Report on Form 10-K for the year ended December 31, 2014).

 

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AXIS Security Ownership of Certain Beneficial Owners, Management and Directors of AXIS

The following table sets forth information as of May 1, 2015 with respect to the beneficial ownership of issued and outstanding common shares by (i) AXIS’ Chief Executive Officer, AXIS’ Chief Financial Officer, and each of the three remaining most highly compensated executive officers during the 2014 fiscal year (collectively, “Named Executive Officers” or “NEOs”); (ii) each of AXIS’ directors; (iii) all of AXIS’ executive officers and directors as a group; and (iv) each person known by us to beneficially own 5% or more of the issued and outstanding AXIS common shares. As defined by the SEC, a person is deemed to “beneficially own” shares if such person directly or indirectly (i) has or shares the power to vote or dispose of such shares, regardless of whether such person has any pecuniary interest in the shares; or (ii) has the right to acquire the power to vote or dispose of such shares within 60 days, including through the exercise of any option, warrant, or right. Pursuant to Rule 13d-4 under the Securities Exchange Act of 1934, as amended, the statements concerning voting and dispositive power concerning AXIS common shares included in the footnotes to this table shall not be construed as confirmation that such persons are the beneficial owners of such common shares.

 

Directors and Executive Officers		Number of Common Shares (1)				Percent of Outstanding Common Shares (1)
Named Executive Officers
Albert A. Benchimol (2)			508,237				*
Christopher N. DiSipio			56,913				*
John W. Gressier			105,941				*
Joseph C. Henry			23,759				*
John D. Nichols			79,081				*
Peter W. Wilson			5,994				*
Non-Employee Directors
Geoffrey Bell			13,454				*
Jane Boisseau			6,971				*
Michael A. Butt			1,215,956				1.2	%
Charles A. Davis			—				*
Robert L. Friedman			47,183				*
Christopher V. Greetham			24,949				*
Maurice A. Keane			95,880				*
Sir Andrew Large			9,711				*
Cheryl-Ann Lister			23,716				*
Thomas C. Ramey			12,276				*
Henry B. Smith			38,309				*
Alice Young			2,177				*
Wilhelm Zeller			12,527				*
All directors, executive officers and Named Executive Officers as a group (19 persons)			2,283,034				2.3	%
Other Shareholders
FMR LLC and related entities (3)			9,777,217				9.56	%
Pzena Investment Management, LLC (4)			7,078,975				6.93	%
The Vanguard Group (5)			7,742,888				7.57	%
BlackRock, Inc. (6)			5,205,588				5.1	%

 

*	Less than 1%

(1)

Unless otherwise indicated, the number of common shares beneficially owned and percentage ownership are based on 100,934,283 common shares issued and outstanding as of May 1, 2015 adjusted as required by rules promulgated by the SEC. Beneficial ownership is determined in accordance with the rules of the SEC and includes sole or shared voting or investment power with respect to such shares. Except as indicated in the footnotes to the table, based on information provided by the persons named in the table, such persons

 

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have sole voting and investment power with respect to all common shares shown as beneficially owned by them. Our bye-laws reduce the total voting power of any shareholder owning 9.5% or more of our common shares to less than 9.5% of the voting power of our issued share capital, but only in the event that a U.S. Shareholder, as defined in our bye-laws, owning 9.5% or more of our common shares is first determined to exist.

(2)

The number of common shares beneficially owned by Mr. Benchimol includes 250,000 restricted shares that Mr. Benchimol forfeited on May 7, 2015 as a result of a determination by the compensation committee of the AXIS board of directors that the performance vesting criteria applicable to such restricted shares were not satisfied. The number of common shares beneficially owned by Mr. Benchimol does not include the grant of 89,268 restricted stock units that Mr. Benchimol received on May 18, 2015. 44,634 of the restricted stock units granted to Mr. Benchimol on May 18, 2015 are time-vesting and 44,634 of the restricted stock units are performance-vesting. The time-vesting restricted stock units will vest in four equal annual installments beginning on the first anniversary of the date of grant and the performance-vesting restricted stock units are eligible to vest in a range of 10% to 200% of 50% of the award amount, with a guaranteed minimum award of 10%, in a single installment on the third anniversary of the date of grant, depending on AXIS’ three-year growth in diluted book value per share as compared to AXIS’ peers. The vesting terms of Mr. Benchimol’s restricted stock units are consistent with the equity grants provided to AXIS’ other senior executive officers as part of AXIS’ annual equity grant process.

(3)

The number of common shares beneficially owned and the information set forth below is based solely on information contained in Amendment No. 11 to the Schedule 13G/A filed on February 13, 2015 by FMR LLC, 245 Summer Street, Boston Massachusetts, 02210, and includes common shares beneficially owned as of December 31, 2014. FMR LLC has sole voting power over 528,665 common shares and sole dispositive power over 9,777,217 common shares; Edward C. Johnson 3d is a Director and the Chairman of FMR LLC and has sole dispositive power over 9,777,217 common shares; Abigail P. Johnson is a Director, the Vice Chairman, the Chief Executive Officer and the President of FMR LLC and has sole dispositive power over 9,777,217 common shares; Fidelity Low-Priced Stock Fund has sole voting power over 7,484,300 common shares. Neither FMR LLC nor Edward C. Johnson 3d nor Abigail P. Johnson has the sole power to vote or direct the voting of the shares owned directly by the various investment companies registered under the Investment Company Act (“Fidelity Funds”) advised by Fidelity Management & Research Company, a wholly owned subsidiary of FMR LLC, which power resides with the Fidelity Funds’ Boards of Trustees. Fidelity Management & Research Company carries out the voting of the shares under written guidelines established by the Fidelity Funds’ Boards of Trustees.

(4)

The number of common shares beneficially owned and the information set forth below is based solely on information contained in Schedule 13G filed on January 29, 2015 by Pzena Investment Management, LLC (“Pzena”), 120 West 45th Street, 20th Floor, New York, NY 10036, and includes common shares beneficially owned as of December 31, 2014. Pzena has sole voting power over 3,862,876 common shares and sole dispositive power over 7,078,975 common shares.

(5)

The number of common shares beneficially owned and the information set forth below is based solely on information contained in Schedule 13G filed on February 10, 2015 by The Vanguard Group (“Vanguard”), 100 Vanguard Blvd., Malvern, PA 19355, and includes common shares beneficially owned as of December 31, 2014. Vanguard has sole voting power over 100,257 common shares and sole dispositive power over 7,658,702 common shares.

(6)

The number of common shares beneficially owned and the information set forth below is based solely on information contained in Schedule 13G filed on February 3, 2015 by BlackRock, Inc. (“BlackRock”), 55 East 52nd Street, New York, NY 10022, and includes common shares beneficially owned as of December 31, 2014. BlackRock has sole voting power over 4,429,021 common shares and sole dispositive power over 5,205,588 common shares.

 

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THE AMALGAMATION

Effects of the Amalgamation

As of the effective time, subject to the terms and conditions of the amalgamation agreement and the statutory amalgamation agreement, AXIS and PartnerRe will be amalgamated and the amalgamated company will continue after the amalgamation. The parties have acknowledged and agreed that for the purposes of Bermuda law: (i) the amalgamation will be effected so as to constitute an “amalgamation” in accordance with section 104 of the Companies Act; and (ii) PartnerRe AXIS Capital Limited will be deemed to be an “amalgamated company” as such term is understood under the Companies Act. Under the Companies Act, from and after the effective time: (i) the amalgamation of AXIS and PartnerRe and their continuance as one company will become effective; (ii) the property of each of AXIS and PartnerRe will become the property of the amalgamated company; (iii) the amalgamated company will continue to be liable for the obligations and liabilities of each of AXIS and PartnerRe; (iv) any existing cause of action, claim or liability to prosecution will be unaffected; (v) any civil, criminal or administrative action or proceeding pending by or against AXIS or PartnerRe may continue to be prosecuted by or against the amalgamated company; and (vi) a conviction against, or ruling, order or judgment in favor of or against AXIS or PartnerRe may be enforced by or against the amalgamated company.

At the effective time: (i) each PartnerRe common share issued and outstanding immediately prior to the effective time will be converted into the right to receive 2.18 PartnerRe AXIS Capital Limited common shares, together with any cash payable in lieu of any fractional PartnerRe AXIS Capital Limited common share, and (ii) each AXIS common share issued and outstanding immediately prior to the effective time will be converted into the right to receive one PartnerRe AXIS Capital Limited common share. In addition, each holder of PartnerRe common shares issued and outstanding immediately prior to the effective time shall be entitled to receive the special dividend. The declaration of the special dividend will occur prior to the effective time and is subject to compliance with the Companies Act 1981 of Bermuda and will be contingent upon the submission of the formal application to the Registrar of Companies for the amalgamation to be registered with payment conditional on, and such payment date following, the consummation of the amalgamation by the issuance of the certificate of amalgamation by the Registrar of Companies. For the avoidance of doubt, the special dividend will not have been effectively declared and, therefore, will not be payable if the formal application to register the amalgamation is not submitted to the Registrar of Companies.

At the effective time, each PartnerRe preferred share and each AXIS preferred share issued and outstanding immediately prior to the effective time will continue as a preferred share of the amalgamated company and will be entitled to the same dividend and other relative rights, preferences, limitations and restrictions as are now provided by the respective certificate of designation, preferences and rights of such PartnerRe preferred shares or AXIS preferred shares, respectively.

Background of the Amalgamation

The PartnerRe board of directors and senior management periodically review the company’s operations, financial condition and performance, and long-term strategic plan and objectives, as well as industry conditions, regulatory developments and their respective impact on PartnerRe’s long-term strategic plan and objectives. Over the past two years, the PartnerRe board of directors has reviewed and considered the current and future industry trends and risks to PartnerRe’s ability to execute its strategic plan as a stand-alone entity, including the impact of continuing consolidation in the reinsurance industry, and increasing competitive pricing from, among other things, consolidation of brokers and increasing participation in catastrophe markets by alternative sources of capital. The PartnerRe board of directors also reviewed the full range of strategic alternatives to continuing to execute its business plan as a stand-alone entity and concluded that continuing as a stand-alone entity and seeking to reposition the company in response to changing market conditions would be the most actionable alternative, and the most attractive alternative, for the shareholders of PartnerRe.

 

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The PartnerRe board of directors identified four key factors that it believed would drive PartnerRe’s operational, financial and business growth as a stand-alone entity in the face of changing industry and market conditions. These factors were: (i) size and scale in both insurance and reinsurance markets; (ii) capabilities in the primary insurance market and the ability to dynamically deploy capital; (iii) ability to leverage third party capital in catastrophe and non-catastrophe markets; and (iv) pursuit of opportunistic acquisitions that would be accretive.

In September 2013, the senior management of PartnerRe presented a possible strategic acquisition candidate to the PartnerRe board of directors. The PartnerRe board of directors reviewed the merits and challenges of completing the possible acquisition proposed by the senior management, and after preliminary analysis and discussions with the senior management, the PartnerRe board of directors determined that it would be worthwhile exploring that acquisition further. In this regard, the PartnerRe board of directors established a transaction committee of the PartnerRe board of directors (the “PartnerRe Transaction Committee”) to further evaluate the possibility of proceeding with the transaction. The PartnerRe Transaction Committee was composed of Mr. Jean-Paul Montupet, Chairman of the PartnerRe board of directors, Mr. Costas Miranthis, the then-Chief Executive Officer of PartnerRe and a member of the PartnerRe board of directors, and Messrs. Roberto Mendoza and David Zwiener, each a member of the PartnerRe board of directors. After preliminary discussions, the PartnerRe Transaction Committee, while working with the senior management of PartnerRe, determined that the transaction with the counterparty was not actionable.

In early 2014, Mr. Miranthis had preliminary discussions with another counterparty in connection with a potential strategic transaction. Mr. Miranthis further discussed this matter with the PartnerRe Chairman, followed by members of the senior management of PartnerRe and representatives from Davis Polk & Wardwell LLP (“Davis Polk”), PartnerRe’s regular U.S. outside counsel, and Credit Suisse, with whom PartnerRe had a preexisting retainer agreement, which was later modified to cover the amalgamation with AXIS. In February 2014, Mr. Miranthis reported to the PartnerRe board of directors on the preliminary discussions he had had with the counterparty in connection with the potential strategic transaction. In his report, Mr. Miranthis identified potential synergies and strategic benefits of the possible transaction to the PartnerRe board of directors. After discussions with the senior management, the PartnerRe board of directors unanimously supported further dialogue with the counterparty. The PartnerRe board of directors authorized the PartnerRe Transaction Committee to evaluate the possible transaction and oversee discussions with the counterparty and directed the PartnerRe Transaction Committee to report back to the PartnerRe board of directors with respect to its findings.

After the February 2014 meeting of the PartnerRe board of directors, the PartnerRe Transaction Committee, with the assistance of senior management and advisors, explored and evaluated the terms of the potential transaction that it would be willing to pursue. The PartnerRe board of directors was subsequently briefed by the PartnerRe Transaction Committee and members of the senior management on the further preliminary discussions with such counterparty and unanimously authorized the PartnerRe Transaction Committee to explore, evaluate and negotiate the terms of a possible transaction with the identified counterparty, and any other strategic transaction that it would deem to be in the best interests of PartnerRe and its shareholders, and to recommend such transaction to the PartnerRe board of directors. In June 2014, after further discussions with the counterparty, the PartnerRe Transaction Committee concluded that no actionable transaction would be possible on such terms, and the PartnerRe Transaction Committee terminated discussions with such counterparty.

Following the termination of discussions, the PartnerRe board of directors directed senior management to consider other possible responses to the trends in the industry, including potential acquisitions and strategic options and to report their findings to the PartnerRe board of directors.

During the September and November 2014 meetings of the PartnerRe board of directors, the PartnerRe board of directors considered various strategic options to respond to changing industry trends presented by senior management, including potential transactions with a variety of primary insurance companies or participating in the consolidation of the reinsurance sector. At these meetings, members of the senior management gave an

 

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overview of certain challenges faced by the reinsurance industry and the strategic landscape, including a review of several potential candidates, which included AXIS. The PartnerRe board of directors then generally concluded that a transaction involving a company in the primary insurance market would be the logical next strategic step for PartnerRe because such a transaction, in comparison to a transaction with a pure-play reinsurance company, likely would lead to higher levels of value creation for PartnerRe’s shareholders by allowing PartnerRe to expand its business platforms and enter the primary insurance market. However, the PartnerRe board of directors discussed the fact that the primary insurance targets that PartnerRe believed it could viably acquire did not have sufficient market presence to enable PartnerRe to enter the primary insurance market in a meaningful manner. Furthermore, since primary insurance companies had at that time and in the past few years traded at higher multiples than reinsurance companies, the premium required for the acquisition of a primary insurance target likely would be dilutive to PartnerRe’s earnings per share. The PartnerRe board of directors considered that AXIS, with its roughly even split of reinsurance and insurance business, could be a merger partner that offered PartnerRe’s shareholders the opportunity to be invested in an entity with a primary insurance business and with an ability to consolidate in the reinsurance market while achieving significant financial and operational synergies, creating a combined company that would be well-positioned as a leader in the broker-based reinsurance distribution channel. The PartnerRe board of directors also considered that a strategic transaction between PartnerRe and AXIS would result in a combined company that would be in a significantly stronger financial and operational position. In light of these considerations, the PartnerRe board of directors thought that AXIS was an attractive strategic candidate that could accomplish all of PartnerRe’s strategic goals, provided a transaction could be negotiated on the terms and conditions acceptable to PartnerRe and its shareholders.

Following the November 2014 meeting of the PartnerRe board of directors, the non-executive members of the PartnerRe Transaction Committee further discussed the strategic alternatives potentially available to PartnerRe at that time. The non-executive members of the PartnerRe Transaction Committee discussed their belief that a combination with AXIS represented the most likely opportunity for PartnerRe to accomplish all of PartnerRe’s strategic goals, but they would need to explore whether such a transaction was actionable in the form of a merger of equals. Given the rapidly growing trend of consolidation in the reinsurance market and in light of discussions at the November 2014 PartnerRe board of directors meeting, the non-executive members of the PartnerRe Transaction Committee determined that it was necessary to quickly understand whether AXIS would be receptive to a strategic transaction with PartnerRe. The non-executive members of the PartnerRe Transaction Committee also determined that, since any merger of equals transaction with AXIS would raise questions about the leadership of the combined company, initial discussions regarding a proposed transaction with AXIS should be at the Chairman to Chairman level.

The AXIS board of directors and AXIS’ senior management regularly review and evaluate their strategic plan and competitive positioning in the global insurance and reinsurance markets and regulatory developments with the goal of maximizing shareholder value. As part of their review process, the AXIS board of directors routinely analyzes the competitive landscape, including the trading price of its common shares, and the current environment in the industries in which AXIS operates. As part of this ongoing process the AXIS board of directors and senior management of AXIS from time to time consider a variety of potential alternatives including possible acquisitions and business combinations.

In June 2014, AXIS received an informal oral communication regarding a potential transaction. After consideration of all relevant factors by the AXIS board of directors and the senior management, the AXIS board of directors determined that it would be preferable for AXIS to continue to pursue its strategy as an independent company.

As part of its annual strategy session during its September 2014 meetings, the AXIS board of directors and senior management evaluated industry trends, AXIS’ position in the insurance and reinsurance markets and various strategic options that may be available to AXIS. The evaluation included discussions of certain potential transactions in the insurance and reinsurance sectors. At these meetings, members of the senior management of AXIS also gave an overview of the strengths and challenges faced by the industry and the strategic landscape for

 

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AXIS’ businesses. These topics were discussed in detail by the AXIS board of directors at the September 2014 board meetings and again at a meeting on December 5, 2014 in connection with the board of directors’ annual review of the AXIS’ business plans for the upcoming year.

In the first week of December 2014, Mr. Mendoza contacted Mr. Michael Butt, the Chairman of AXIS, whom Mr. Mendoza had known professionally for several years, and invited Mr. Butt to have an introductory meeting with Mr. Montupet regarding a business proposal. As a result of years of business interactions, PartnerRe and AXIS were familiar with each other’s respective reinsurance businesses. Mr. Butt reported his conversation with Mr. Mendoza to Mr. Albert Benchimol, the Chief Executive Officer of AXIS, and to some other members of the AXIS board of directors at a board dinner that evening.

On December 10, 2014, Mr. Montupet had an introductory telephone conversation with Mr. Butt. Messrs. Montupet and Butt discussed, among other things, the challenges facing the reinsurance industry and the high level of M&A activity and consolidation in the industry. In this context, Mr. Montupet suggested that it could be in the best interests of the two companies and their respective shareholders to explore a potential merger of equals between PartnerRe and AXIS. Mr. Butt advised Mr. Montupet that the AXIS board of directors had approved AXIS’ strategic plan at its September board meeting and its 2015 business plan at its December board meeting and was confident in AXIS’ ability to move forward as an independent company. However, Mr. Butt indicated that the possibility of a merger of equals transaction with PartnerRe could be of interest and that he would review the matter with the Executive Committee of the AXIS board of directors (the “Executive Committee”) and get back to him. After the call, Mr. Butt called Mr. Benchimol and advised him of his call with Mr. Montupet.

On December 11, 2014, Messrs. Butt and Benchimol had a lengthy meeting to discuss the potential transaction with PartnerRe. They also met with the AXIS Lead Independent Director, Mr. Henry Smith. The members of the Executive Committee, Messrs. Butt, Benchimol, Smith and Charles A. Davis, then met by phone and discussed the inquiry Mr. Butt had received from Mr. Montupet. The Executive Committee discussed the advantages and disadvantages associated with the PartnerRe proposal as compared to the stand-alone prospects of AXIS as well as the potential for alternative transactions that might offer greater value to AXIS’ shareholders. The consensus of the Executive Committee was that while AXIS was comfortable with its current strategy as an independent company, given the parties’ respective reinsurance businesses and the environment for transactions in the reinsurance market, they may be interested in further exploring a merger of equals with PartnerRe. The directors also discussed in detail the potential composition of the board of directors and management of a combined entity and Messrs. Butt, Smith and Davis expressed the desire that Mr. Benchimol assume the role of Chief Executive Officer of the combined company because, among other reasons, of his familiarity with both companies. The directors also noted that Mr. Benchimol’s future role was a necessary condition to be resolved before AXIS would agree to a meeting with the representatives of PartnerRe. Mr. Butt also discussed with two other directors whether they would support exploratory talks with PartnerRe on the basis outlined by the Executive Committee. Both of the other directors supported such talks. They, along with the Executive Committee, recommended that this matter should be discussed with the full AXIS board of directors at an early opportunity.

On December 12, 2014, Mr. Butt called Mr. Montupet and indicated that AXIS was interested in exploring a potential merger of equals with PartnerRe, but noted that its willingness to do so was conditioned on Mr. Benchimol being appointed as the Chief Executive Officer of the combined company. Mr. Butt indicated that, consistent with a merger of equals structure, PartnerRe could appoint Mr. Montupet as the Chairman of the board of the combined company, with the key members of the management of the combined company coming from both parties. Mr. Montupet told Mr. Butt that PartnerRe would consider this proposal and revert to Mr. Butt in a few days.

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shareholders to continue exploratory discussions with AXIS. The non-executive members of the PartnerRe Transaction Committee also discussed AXIS’ requirement that Mr. Benchimol be appointed the Chief Executive Officer of the combined company in the event of a transaction. The PartnerRe Transaction Committee concluded that Mr. Benchimol would be the more suitable candidate to lead the combined company and would be well-placed to position the combined company for success and achieve the potential synergies afforded by the proposed transaction because he had extensive experience in managing primary insurance business due to his employment at AXIS and was already familiar with the PartnerRe business and to the senior management of PartnerRe and the PartnerRe board of directors given his past employment with PartnerRe, including 10 years as the Executive Vice President and Chief Financial Officer (including his position as the Chief Executive Officer of the Capital Markets Group during his last three years at PartnerRe), during which time he had earned the confidence of and developed strong working relationships with the members of the PartnerRe board of directors.

On December 15, 2014, Mr. Montupet informed Mr. Butt that, subject to final approval by the PartnerRe board of directors, the non-executive members of the PartnerRe Transaction Committee were amenable to AXIS’ proposal that Mr. Benchimol be appointed the Chief Executive Officer of the combined business if the other key terms of a proposed transaction could be agreed. Mr. Butt reaffirmed that Mr. Montupet could be appointed as the Chairman of the board of the combined company and proposed that the board of the combined company have equal representation from both companies. On the same call, Messrs. Montupet and Butt agreed to an in-person meeting between the non-executive members of the PartnerRe Transaction Committee and representatives of AXIS, which meeting was subsequently scheduled for January 6, 2015, and agreed that it would be determined at a later date which PartnerRe and AXIS senior officers would be senior officers of the combined company. Later that day, representatives of AXIS began due diligence of publicly available information regarding PartnerRe.

The AXIS board of directors had a telephonic meeting on December 16, 2014 in which management described the PartnerRe business, discussed the benefits and challenges of a potential strategic transaction with PartnerRe and considered the various financial, structural, process related, legal, timing and other relevant aspects of such a transaction. The AXIS board of directors also evaluated the value to AXIS’ shareholders of the consolidated companies versus the current business plan. It also considered the industry market conditions and challenges and the potential impact of future industry consolidation. A further discussion ensued regarding Mr. Benchimol’s appointment as Chief Executive Officer of the amalgamated company and the next steps associated with a response to PartnerRe regarding their proposal. Following these discussions, the AXIS board of directors authorized Messrs. Butt and Benchimol to have more detailed discussions with the representatives of PartnerRe.

Between December 19 and 22, 2014, Mr. Montupet individually called each of the non-executive members of the PartnerRe board of directors and informed them of the recent developments with AXIS regarding a potential no-premium merger of equals. All non-executive PartnerRe board of directors members were supportive of continuing discussions with AXIS, including proceeding on the basis that Mr. Benchimol be appointed the Chief Executive Officer of the combined company.

On January 6, 2015, the planned meeting between the non-executive members of the PartnerRe Transaction Committee and Messrs. Butt and Benchimol took place. At the meeting, Mr. Benchimol presented an analysis that he and AXIS senior management had prepared utilizing publicly available information of both companies that summarize his vision for the combined business, including how to achieve the benefits of increased size and scale, as well as estimates for potential synergies that could be achieved by a strategic transaction. The participants discussed the potential business and strategic benefits that could result from a strategic transaction. AXIS proposed that the respective ownership percentages of the combined company of each party be set at 50/50 and that the initial board of the combined company comprise 13 members, six to be designated by PartnerRe and AXIS each with the last member being the Chief Executive Officer of the combined company. PartnerRe made a counter-proposal that the respective ownership percentages of the combined company of the shareholders of each party should reflect each party’s respective current market capitalizations and relative tangible book value and that, consistent with the past discussions between Messrs. Butt and

 

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Montupet, the initial board of the combined company should have equal representation from both parties, further proposing that the initial board should comprise 12 members, with six to be designated by PartnerRe and AXIS each. The parties also started discussions on potential senior officers of the combined company. The parties did not reach agreement on the respective ownership percentages of the combined company of each party or the board composition of the combined company. Later that day, Messrs. Montupet and Butt further discussed the issue of the basis on which the respective board representation and ownership percentage of the combined company of each party should be determined in the context of the proposed transaction.

Following the meeting, the non-executive members of the PartnerRe Transaction Committee discussed Mr. Benchimol’s vision for the combined company, including the strategic benefits of a merger of equals with AXIS and determined that it was in the best interests of PartnerRe and its shareholders to continue discussions with AXIS. The non-executive members of the PartnerRe Transaction Committee further discussed AXIS’ proposal on the respective ownership percentages of the combined company of each party, the board composition of the combined company and a counter-proposal on these issues that Mr. Montupet would deliver to AXIS.

On January 7, 2015, Mr. Montupet had a telephone conversation with Mr. Butt. On this call, Mr. Montupet stated that the non-executive members of the PartnerRe Transaction Committee would be willing to recommend to the PartnerRe board of directors an ownership split of the combined company taking into consideration each party’s current relative tangible book value and respective market capitalizations resulting in a proposed ownership split of the combined company of 51.6% and 48.4% for PartnerRe and AXIS, respectively. During the same call, Mr. Butt proposed that the combined company have an initial board of 14 directors, seven to be designated by PartnerRe (including Mr. Montupet, who would be appointed as the Chairman of the board of the combined company) and seven to be designated by AXIS (including Mr. Benchimol, who would be appointed as the Chief Executive Officer of the combined company). Mr. Montupet responded to the proposal by stating that the non-executive members of the PartnerRe Transaction Committee would be willing to recommend Mr. Butt’s proposal on the board composition if AXIS agreed to the PartnerRe proposal on ownership percentages. Mr. Butt agreed to discuss these positions regarding the respective ownership split of the combined company and board composition with the AXIS board of directors at a telephonic meeting of the AXIS board of directors scheduled for later the same day, and revert to Mr. Montupet with the decision of the AXIS board of directors.

Later that day the AXIS board of directors had a telephonic meeting to discuss the status of negotiations. The board of directors of AXIS discussed the proposed valuation and considered whether the potential transaction was in the best interests of its shareholders. Mr. Benchimol reviewed the potential senior management roster and discussed potential financial advisors should the transaction move forward. The AXIS board of directors continued to express interest in a potential strategic transaction with PartnerRe and authorized Mr. Butt to proceed on the basis of the proposed ownership split of the combined company of 51.6%/48.4%, the proposal that AXIS and PartnerRe each designate seven members of the combined entity’s initial board of directors and that Mr. Benchimol be the Chief Executive Officer and Mr. Montupet the Chairman of the board of the combined company. Later the same day, following the AXIS board of directors meeting, Mr. Butt informed Mr. Montupet of the decisions made by the AXIS board of directors at its meeting earlier that day. They then discussed the next steps in pursuing the potential transaction, which included more detailed analysis of the transaction, mutual due diligence, refining the estimates of synergies and negotiation of definitive transaction documents.

Between January 7, 2015 and January 15, 2015, progress continued on several work streams. Mr. Montupet discussed with Mr. Miranthis the status of negotiations with AXIS and his role in the potential transaction, including whether it would be in PartnerRe’s and his mutual best interest for him to continue to serve as the Chief Executive Officer of PartnerRe until closing of the proposed transaction, or separate from PartnerRe at signing so he could explore other opportunities. Mr. Montupet discussed with Mr. Zwiener his willingness to serve as the interim Chief Executive Officer of PartnerRe between signing and closing given his extensive experience, including senior management experience, in the insurance and other financial industries that would make him a well-qualified candidate for the position. AXIS and PartnerRe also negotiated a mutual confidentiality agreement containing a customary, mutual one-year standstill provision. The parties also

 

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continued to explore and refine their understanding of key issues, including the structure of the proposed transaction, other terms that needed to be negotiated, and composition of the board committees, and made preparations for detailed due diligence.

On January 14, 2015, Mr. Montupet contacted Mr. Butt and proposed to have a meeting of the PartnerRe Transaction Committee and Messrs. Butt and Benchimol on January 21, 2015 to further discuss the potential strategic transaction. Mr. Butt agreed to have a meeting, subject to confirming the date with Mr. Benchimol.

On January 16, 2015, Messrs. Montupet and Benchimol discussed the proposed agenda for the scheduled January 21 meeting.

Also on January 16, 2015, the PartnerRe board of directors held a special meeting by telephone, during which the non-executive members of the PartnerRe Transaction Committee reported on the recent developments in connection with the proposed transaction between PartnerRe and AXIS. A representative of Davis Polk also joined the meeting. Among other things, the PartnerRe board of directors discussed the potential business and strategic benefits of such transaction, possible deal structures, due diligence matters and cultural issues. The PartnerRe board of directors supported the PartnerRe Transaction Committee’s recommendation to accept, subject to completion of due diligence and satisfactory negotiation of open items, a split of ownership of the combined company of 51.6% and 48.4%, the proposal that AXIS and PartnerRe each designate seven members of the combined entity’s initial board of directors and AXIS’ precondition that Mr. Benchimol be the Chief Executive Officer of the combined company.

At the same meeting, the PartnerRe board of directors also discussed the leadership of PartnerRe in the event of entering into definitive transaction documents with AXIS and discussed the possibility of a leadership change, including the possibility of Mr. Zwiener being appointed as the interim Chief Executive Officer.

On January 17, 2015, the non-executive members of the PartnerRe Transaction Committee met with the representatives of Davis Polk and Credit Suisse to plan the next steps in the proposed transaction with AXIS, including the expected signing timeline, structure of the transaction, minimizing the transaction execution risk, planning for the possibility of a leak, and due diligence approach. Given AXIS’ and PartnerRe’s significant, preexisting understanding of each other’s respective businesses and operations and the availability of substantially final financial information for the most recently completed fiscal year, representatives of AXIS and PartnerRe discussed with their advisors that there was an opportunity for an efficient due diligence process. In order to minimize the risks to the potential transaction posed by a possible leak, the non-executive members of the PartnerRe Transaction Committee determined to explore with AXIS the possibility of completing due diligence and negotiating definitive transaction documents expeditiously, tentatively targeting the announcement of the transaction prior to January 26, 2015. Later that day, Mr. Montupet and Mr. Benchimol met to discuss the timing of the potential transaction and agreed to proceed towards signing by January 26, 2015, provided that it was possible to complete satisfactory due diligence and finalize definitive transaction documents. Mr. Benchimol contacted Mr. Butt and discussed with him the outcome of his meeting with Mr. Montupet, and Mr. Butt concurred with the action plan that had been discussed during the meeting. Mr. Benchimol and Mr. Butt agreed that it would be appropriate to retain Goldman Sachs as the financial advisor to the AXIS board of directors, due to its extensive experience advising companies in the insurance and reinsurance industries in which AXIS and PartnerRe operate. Later the same day, Mr. Benchimol reached out to formally engage Goldman Sachs as AXIS’ financial advisor, having initially contacted Goldman Sachs earlier in the week.

On January 18, 2015, the PartnerRe Transaction Committee met with the senior management of PartnerRe to plan due diligence and the next phases of the proposed transaction with AXIS. Also on January 18 members of senior management of AXIS met with representatives of Simpson Thacher & Bartlett LLP (“Simpson Thacher”), regular outside legal counsel to AXIS, and Goldman Sachs to discuss the key financial elements of the proposed transaction with PartnerRe, significant details relating to the proposed transaction structure and the diligence procedure, timeline and milestones that would need to be met to ensure that the negotiation and execution of definitive transaction agreements proceeded as expeditiously as possible.

 

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On January 19, 2015, a meeting of the board of directors of AXIS took place. Mr. Butt began with an update by noting that he and Mr. Montupet had agreed on several material matters, including that the respective ownership percentages of PartnerRe and AXIS shareholders in the amalgamated company would be 51.6% and 48.4%, respectively, that the initial board of directors of the amalgamated company would be comprised equally of PartnerRe and AXIS appointed directors and that Messrs. Benchimol and Montupet would be the Chief Executive Officer and the Chairman of the board of the amalgamated company, respectively. Mr. Butt also noted that a due diligence work plan was established after Mr. Butt, members of the AXIS management and AXIS’ legal and financial advisors met with the PartnerRe management and PartnerRe’s advisors on January 18, 2015. Mr. Benchimol then reported on the details of the due diligence work plan and the management’s preliminary due diligence findings in respect of PartnerRe. The AXIS board of directors discussed certain governance matters of the amalgamated company, including their support for Mr. Benchimol to assume the Chief Executive Officer position of the amalgamated company.

From January 19 to January 24, 2015, representatives from PartnerRe and AXIS, along with their financial and legal advisors, engaged in extensive confidential due diligence of each other’s financial, actuarial, accounting, operational, regulatory, legal, human resources, information technology and business profiles. Over the course of this time, representatives from PartnerRe and AXIS participated in various detailed in-person meetings and conference calls to discuss their areas of respective expertise and identify the potential risks and merits of the proposed strategic transaction. As needed, additional meetings and conference calls were scheduled to address follow-up diligence requests and questions. These meetings and calls were attended by a large number of representatives of both parties, including members of their senior management. Both parties provided each other access to electronic data rooms with substantial nonpublic information for due diligence purposes. In addition to the information gathered during in-person meetings, the senior management of both companies and their respective advisors continued to review both public and nonpublic information made available in the data rooms to supplement their in-person due diligence activities. The non-executive members of the PartnerRe Transaction Committee and representatives from AXIS, including Messrs. Butt and Benchimol and their respective advisors also further discussed issues related to due diligence, composition of the board committees and management of the combined company and requirements related to the appointment and removal of the Chief Executive Officer and the Chairman of the board of the directors of the combined company. In addition, representatives from Davis Polk and Simpson Thacher began discussing structuring alternatives for combining the companies and the terms of a transaction agreement. During this period, at the end of each day, each of AXIS and PartnerRe would also convene with their respective representatives to deliberate on the most significant findings that were emerging from their ongoing evaluation and analyses, the status of the due diligence process, and the next steps to be taken in the transaction process.

In the early hours of January 20, 2015, Simpson Thacher sent its initial draft of the Agreement and Plan of Amalgamation (as subsequently revised by the parties prior to execution of the definitive agreement, the “Draft Agreement”) to Davis Polk.

On January 20, 2015, the PartnerRe board of directors received an in-person detailed briefing (with one director participating by audio conference and another director participating by video conference) from the senior management, non-executive members of the PartnerRe Transaction Committee and representatives from Davis Polk and Credit Suisse on interim due diligence findings, the merits of, and risks associated with, the proposed transaction, the status of negotiations on the terms of the deal and proposed timeline to signing. Mr. Miranthis also expressed his support for the proposed transaction and explained its merits to the PartnerRe board of directors. The PartnerRe board of directors supported the senior management team and the non-executive members of the PartnerRe Transaction Committee continuing to pursue the proposed transaction with AXIS, complete due diligence and finalize the definitive transaction documents.

Between January 20 and January 25, 2015, the parties completed the due diligence and negotiated the definitive transaction documents. Representatives from Davis Polk, Credit Suisse, senior management of PartnerRe and the non-executive members of the PartnerRe Transaction Committee negotiated the terms of the

 

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Draft Agreement with the representatives from Simpson Thacher, AXIS and Goldman Sachs. Representatives from Simpson Thacher gave daily briefings regarding the status of legal due diligence to AXIS management during this period. The key issues negotiated among the parties included, among other things, termination rights, termination fees, other deal protection provisions, conditions to closing, transaction structure, retention arrangements for employees and treatment of options and awards in the proposed transaction.

The AXIS board of directors had a telephonic meeting on January 22, 2015 to discuss the status of due diligence and negotiations on the material terms of the transaction and certain open terms of the proposed transaction. Senior members of the AXIS management team briefed the AXIS board of directors on their preliminary business and operational due diligence findings. Representatives of Goldman Sachs reviewed its preliminary financial analysis of the proposed transaction, while representatives of Simpson Thacher briefed the AXIS board of directors on certain open points in the negotiation of the definitive transaction agreement. During their deliberations, members of the AXIS board of directors asked and received answers to a number of questions of senior management, Goldman Sachs and Simpson Thacher. In addition, the AXIS board of directors discussed strategic rationales for the transaction, the key financial assumptions of the proposed transaction as well as potential negative considerations. The AXIS board of directors also examined other potential acquisition or merger partners for each of AXIS and PartnerRe. The AXIS board of directors and the senior management team at AXIS also discussed the expectation as to which individuals would fill certain key management positions at the combined company.

On January 23, 2015 the parties agreed to an exchange ratio of 2.18 common shares of the combined company for each common share of PartnerRe and 1 common share for each common share of AXIS to achieve the previously agreed split of ownership of 51.6% and 48.4%.

On January 25, 2015, the PartnerRe board of directors held an in-person meeting (with two directors participating by audio conference), which was also attended by the senior management of PartnerRe and representatives from Credit Suisse, Davis Polk and Appleby (Bermuda) Limited (“Appleby”). Prior to the meeting, the members of PartnerRe’s board of directors had been provided with a set of meeting materials, including a summary of the fiduciary duties of the PartnerRe board of directors under applicable law and other Bermuda law aspects of the proposed transaction prepared by Appleby, a summary of the key terms and conditions of the Draft Agreement prepared by Davis Polk, certain financial analyses prepared by Credit Suisse, as further described below under “The Amalgamation—Opinion of PartnerRe’s Financial Advisor”, and a summary of the key findings of the due diligence of AXIS’ business prepared by PartnerRe’s senior management and review of the strategic rationale and risks associated with the transaction. At the meeting, Mr. Montupet reviewed the course of negotiations with AXIS since the last board meeting. Members of PartnerRe’s senior management reported that they had completed the due diligence of financial, operational, legal and business aspects of AXIS, and discussed in detail, among other things, the strategic, operational and financial rationale of the proposed transaction, key considerations for the PartnerRe board of directors in connection with the proposed transaction, key findings from their due diligence of AXIS, estimated cost synergies and capital efficiencies and the effect of the proposed transaction on enhancing the combined company’s ability to effectively channel third party capital. A representative of Credit Suisse presented to the PartnerRe board of directors various financial analyses prepared by Credit Suisse, as further described below under “The Amalgamation—Opinion of PartnerRe’s Financial Advisor”, in connection with the proposed transaction. In connection with the deliberations of the PartnerRe board of directors, Credit Suisse then delivered to the PartnerRe board of directors its oral opinion, which was confirmed by delivery of a written opinion dated January 25, 2015, to the effect that, as of such date and based upon and subject to the assumptions, procedures, factors, qualifications and limitations set forth in such opinion, the exchange ratio pursuant to the Draft Agreement was fair, from a financial point of view, to PartnerRe and its common shareholders, as more fully described below under “The Amalgamation—Opinion of PartnerRe’s Financial Advisor”. A representative of Davis Polk summarized the proposed transaction structure, governance matters, key terms of the definitive transaction documents and the expected closing timeline for the benefit of the PartnerRe board of directors. A representative of Appleby also reviewed with the PartnerRe board of directors the fiduciary duties of the directors under Bermuda law and other Bermuda law

 

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aspects of the proposed transaction. After considering the proposed terms of the Draft Agreement and the transactions contemplated thereby and the various presentations of its legal and financial advisors and senior management team of PartnerRe, and taking into consideration the matters discussed during that meeting and prior meetings and briefings of the PartnerRe board of directors, the PartnerRe Transaction Committee and prior discussions with PartnerRe’s senior management, including the factors (other than those relating to EXOR and its subsequently proposed transactions) described under “The Amalgamation—PartnerRe’s Reasons for the Amalgamation and Recommendation of PartnerRe’s Board of Directors” below, the PartnerRe board of directors unanimously resolved that the proposed amalgamation, on the terms and conditions set forth in the Draft Agreement, was in the best interest of PartnerRe and its shareholders and approved the proposed amalgamation, recommended adoption of the Draft Agreement by PartnerRe’s shareholders and authorized PartnerRe to enter into the Draft Agreement.

At the same meeting, the PartnerRe board of directors approved the appointment of Mr. Zwiener, effective immediately, as interim Chief Executive Officer of PartnerRe as well as a separation agreement with Mr. Miranthis.

Also, on January 25, 2015, the AXIS board of directors met (with three directors participating by video or audio conference) with members of management and representatives of Goldman Sachs, Simpson Thacher and AXIS’ Bermuda counsel, Conyers Dill & Pearman Limited (“Conyers”). Prior to the meeting, members of the AXIS board of directors had received a set of meeting materials from the AXIS management and AXIS’ financial and legal advisors, including certain financial analyses of the proposed transaction prepared by Goldman Sachs, a summary of material conditions and terms of the proposed amalgamation agreement prepared by Simpson Thacher and a summary of the fiduciary duties of the AXIS board of directors under Bermuda law prepared by Conyers. Members of AXIS management discussed their due diligence findings and their determination of potential cost synergies from the transaction and responded to questions from the directors with respect thereto. Representatives of Goldman Sachs reviewed its financial analysis of the proposed transaction and answered questions from the meeting participants in connection therewith. The directors discussed the reasons for the transaction and challenges of the transaction, reexamined the key financial assumptions made, the potential for regulatory or other material impediments to closing. Simpson Thacher addressed and responded to questions from the directors regarding the summary of deal terms previously provided to the AXIS board of directors. Representatives of Conyers reviewed with the AXIS board of directors its fiduciary duties in connection with the proposed transaction under Bermuda law. A representative of Goldman Sachs then delivered to the AXIS board of directors its oral opinion, which was confirmed by delivery of a written opinion dated January 25, 2015, as of that date and based upon and subject to the assumptions made, procedures followed, matters considered and limitations stated therein the AXIS exchange ratio pursuant to the Draft Agreement was fair, from a financial point of view, to the holders (other than PartnerRe and its affiliates) of AXIS common shares. At the meeting the AXIS board of directors also reviewed the expected senior leadership team of the amalgamated company which included, in addition to Mr. Benchimol, Messrs. Joseph Henry as Chief Financial Officer (currently Chief Financial Officer of AXIS), William Babcock, currently Chief Financial Officer of PartnerRe, as Deputy Chief Financial Officer of the amalgamated company and Lead Integration Officer and who would assume the role of Chief Financial Officer of the amalgamated company upon the retirement of Mr. Henry in July 2016, Peter Wilson as Chief Executive Officer of Insurance (currently Chief Executive Officer of AXIS Insurance), Chris DiSipio as Chief Executive Officer of Life, Accident and Health (currently Chief Executive Officer of AXIS Accident and Health), Emmanuel Clarke as Chief Executive Officer of Reinsurance (currently Chief Executive Officer of PartnerRe Global) and John (Jay) Nichols as Executive Vice President of Strategic Business Development and Capital Solutions (currently Chief Executive Officer of AXIS Re). Following a discussion of the proposed transaction, which included the factors described under “The Amalgamation—AXIS’ Reasons for the Amalgamation and Recommendation of AXIS’ Board of Directors” below, the AXIS board of directors unanimously voted to approve the Draft Agreement and the transactions contemplated thereby and authorized management of AXIS to take action designed to accomplish the transactions contemplated thereby.

 

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Later the same day, the Draft Agreement was executed and the merger of equals was announced through a joint press release.

Between January 25, 2015 and April 13, 2015, PartnerRe and AXIS undertook substantial work to prepare for the consummation of the transactions contemplated by the amalgamation agreement, including the preparation and submission of the filings for regulatory approvals, integration planning, preparations for shareholder approvals and outreach to the investors. The parties also discussed the possibility of, but had not agreed to, a special dividend to PartnerRe shareholders in response to feedback from investors and analysts.

On April 13, 2015, a representative of BDT & Company, LLC (“BDT”) contacted Mr. Montupet to schedule a call to discuss a business proposal from a BDT client, without providing any specificity as to the subject matter of the proposal or whether it related to PartnerRe.

On April 14, 2015, at the agreed upon time, Mr. Montupet received a call from Mr. John Elkann, Chairman and CEO of EXOR S.p.A. (“EXOR”). Mr. Elkann told Mr. Montupet that later that day, EXOR would publicly announce a proposal to acquire 100% of the common shares of PartnerRe on a fully-diluted basis for $130.00 in cash per share (the “EXOR Proposal”). Mr. Elkann added that a formal written proposal would be sent to Mr. Montupet shortly after the call. Representatives of Davis Polk and Credit Suisse also received calls from representatives of Paul, Weiss, Rifkind, Wharton & Garrison LLP (“Paul Weiss”), legal advisor to EXOR, and BDT and Morgan Stanley & Co. LLC (“MS”), financial advisors to EXOR, respectively, informing PartnerRe’s advisors that EXOR would be a making a public announcement to acquire PartnerRe later that day. On the call between Davis Polk and Paul Weiss, in response to an inquiry from a representative of Davis Polk on the subject, a representative of Paul Weiss confirmed that EXOR had engaged Bermuda counsel but had not otherwise engaged any insurance regulatory counsel at that time and committed to providing a list setting out the scope of the due diligence that was contemplated by the confirmatory due diligence request referred to in the EXOR Proposal. Promptly following his call with Mr. Elkann, Mr. Montupet contacted the other members of the PartnerRe Transaction Committee and representatives of Davis Polk and Credit Suisse to update them on his conversation with Mr. Elkann. Later the same day, Mr. Elkann sent the formal written proposal to Mr. Montupet and EXOR publicly announced the EXOR Proposal. Paul Weiss and BDT and MS forwarded the same written proposal to Davis Polk and Credit Suisse, respectively.

The full text of EXOR’s April 14, 2015 letter, setting forth the EXOR Proposal, is provided below.

* * * * *

April 14, 2015

Board of Directors

PartnerRe Ltd.

90 Pitts Bay Road

Pembroke HM 08

Bermuda

Attention: Jean-Paul Montupet, Chairman of the Board

Ladies and Gentlemen:

On behalf of EXOR S.p.A. (“EXOR”), I would like to submit our proposal to acquire PartnerRe Ltd. (“PartnerRe”). We strongly believe our offer presents a compelling opportunity for your shareholders, particularly as compared to your Amalgamation Agreement (“AXIS Agreement”) with AXIS Capital Holdings Limited (“AXIS”), and we are eager to move forward swiftly to complete this transaction.

 

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We propose to acquire 100% of the common shares of PartnerRe on a fully-diluted basis for $130.00 per share in cash, on the terms and conditions described below. This all-cash offer represents a premium of 16% to the implied per share value for PartnerRe, under the AXIS Agreement, of $112.53 (based on the average of AXIS’ closing prices for the ten days ending on April 13, 2015). We are confident that your shareholders will enthusiastically support our proposal, and, accordingly, we kindly request your active and immediate cooperation, consistent with the requirements of the AXIS Agreement, to complete the transaction outlined in this letter.

In this letter, we provide you with: (a) a brief overview of EXOR; (b) the strategic rationale for the transaction and our vision for the business going forward; (c) the key terms of our proposal; (d) our view of why our proposal offers superior value to PartnerRe’s shareholders; and (e) next steps.

A. Overview of EXOR

EXOR is one of Europe’s leading, listed investment companies and is controlled by the Agnelli family. We have a market capitalization of approximately $11 billion and a net asset value of approximately $14 billion, including over $2 billion of cash and cash equivalents. We are committed to maintaining a conservative, investment-grade capital structure. Our entrepreneurial history spans over a century of successful, long-term investments. Over the years, we have been involved in very complex transactions, including the acquisition of Chrysler by Fiat, which led to the formation of the seventh-largest car producer in the world. In addition, we oversaw the merger between CNH, the second-largest agricultural equipment manufacturer in the world, and Fiat Industrial, which created the fourth­largest capital goods company globally. Since 2009, EXOR’s net asset value and its share price have grown at compounded annual growth rates of 27.9% and 38.7%, respectively.

We primarily invest in global companies. Today we are the controlling shareholder of: (i) Fiat Chrysler Automobiles, with a market capitalization of approximately $21 billion; (ii) CNH Industrial, with a market capitalization of approximately $11 billion; and (iii) Cushman & Wakefield, the third-largest global real estate service firm and the largest under private ownership. Our holdings include, among others, The Economist and Juventus Football Club, which represents the longest continuous ownership of any sports franchise globally (nearly 100 years). Previously, EXOR has successfully invested in the insurance and reinsurance industries, and we were one of the founding investors in PartnerRe in 1993.

We are focused on building profitable global companies, which benefit from our long-term investment horizon, network of international relationships, permanent capital base and ability to deploy additional resources to accelerate their growth. EXOR provides management teams with operational autonomy that enables them to build world-class organizations over time, with EXOR retaining responsibility for capital allocation and major investment decisions.

B. Strategic Rationale and Vision for PartnerRe

We have a deep knowledge of the insurance and reinsurance industries and believe that EXOR is an ideal partner for PartnerRe. We admire PartnerRe’s high-quality reinsurance franchise, which possesses true scale, broad diversification, a global footprint, a respected brand, deep underwriting expertise and enduring financial strength.

While PartnerRe is a formidable competitor on its own, we believe its business would be further enhanced under the private ownership of EXOR. Importantly, PartnerRe would be better positioned to manage the volatility of the reinsurance cycle in a disciplined manner without public market pressure. We would also remain committed to maintaining PartnerRe’s existing financial strength and capital structure. Preserving PartnerRe’s unique culture and values would be an important objective under EXOR’s stewardship of the business. Furthermore, we see significant value in the PartnerRe brand, which we plan to utilize after the closing of our proposed transaction.

 

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We view PartnerRe as a long-term investment for EXOR and are excited by the prospect of building one of the best reinsurance companies in the world. Despite the significant challenges the reinsurance industry is currently facing, we have a strong belief that a reinsurance-focused business model will better serve the needs of PartnerRe’s clients by avoiding conflicts of interest, while delivering adequate shareholder returns over an entire reinsurance cycle. Our conviction in completing this transaction is absolute, as is our commitment to growing the PartnerRe franchise for years to come.

C. Key Terms of the Proposal

We are pleased to outline the details of our proposal to acquire PartnerRe below:

 

1.

Purchase Price: We propose to acquire 100% of the common shares of PartnerRe for $130.00 per share in cash, representing a total equity value of $6.4 billion based on an estimated 49.1 million fully-diluted shares outstanding.

 

2.

Valuation: Our proposal delivers an immediate, premium valuation to PartnerRe’s shareholders, representing:

 

•

16% premium to the implied per share value for PartnerRe, under the AXIS Agreement, of $112.53 (based on the average of AXIS’ closing prices for the ten days ending on April 13, 2015)

 

•

1.l3x PartnerRe’s fully-diluted tangible book value per share as of December 31, 2014

 

•

14.1 x 2016 consensus earnings estimates for PartnerRe

 

3.

Financing Certainty: Our all-cash proposal is fully financed. The acquisition will be funded through cash on hand as well as a committed, investment-grade bridge facility and term loan to EXOR from Citibank, N.A., London Branch and Morgan Stanley Bank International Limited for up to $4.75 billion. No capital increase by EXOR is required. EXOR’s longer-term capital structure, following the completion of the transaction with PartnerRe, will remain consistent with its current investment-grade ratings. Furthermore, as EXOR will be funding the acquisition, there will be no impact on the existing financial strength or capital structure of PartnerRe. Please feel free to contact our financial advisors (details below) if you should have any questions with respect to transaction financing.

 

4.

Amalgamation Agreement: We are attaching a copy of the proposed amalgamation agreement that we would be willing to enter into with PartnerRe, which is substantially similar to the AXIS Agreement, except for changes dictated by the fact that the transaction is for cash and not shares (the “EXOR Agreement”).

 

5.

Due Diligence: We would seek to complete limited confirmatory due diligence and are prepared to commence this immediately. Based on the materials you have previously prepared in your discussions with AXIS, our advisors should be able to efficiently and effectively complete a swift due diligence process.

 

6.

Approvals and Timing: Our proposal has been unanimously approved by the EXOR board of directors and requires no approval by our shareholders. It is subject only to the completion of the aforementioned confirmatory due diligence review and execution of mutually acceptable definitive agreements, conditioned upon termination of your agreement with AXIS. We foresee a normal course regulatory review process, similar to your process with AXIS. We are highly confident in our ability to consummate a transaction quickly and anticipate it would close in 2015.

 

7.

Management and Employees: We have great respect for PartnerRe and the accomplishments of your management team and employees, and we are excited by the prospects of jointly building the franchise on your strong foundation. We envision that PartnerRe’s current senior management team will remain in place and continue to hold important roles in the business

 

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following our proposed transaction. Under EXOR’s ownership, we would empower the current PartnerRe management team to continue to operate the business with autonomy, guided by our entrepreneurial mindset and long-term vision for the franchise.

 

8.

Advisors: We have engaged BDT & Company, LLC and Morgan Stanley & Co. LLC as our financial advisors and Paul, Weiss, Rifkind, Wharton & Garrison LLP in New York and Cox Hallett Wilkinson Limited in Bermuda as our legal advisors. They are prepared to begin work immediately to assist us in completing our confirmatory due diligence review and to finalize an agreed transaction promptly.

D. Superior Proposal

Our all-cash proposal provides superior value and greater certainty for PartnerRe’s shareholders compared to the AXIS Agreement. We are placing no financing risk on your shareholders. Our purchase price of $130.00 per share is clearly more favorable, from a financial point of view, for PartnerRe’s shareholders than the value of 2.18 shares of the combined AXIS/PartnerRe entity for which each PartnerRe share would be exchanged under the AXIS Agreement. The implied per share value for PartnerRe, under the AXIS Agreement, would only be $112.53 (based on the average of AXIS’ closing prices for the ten days ending on April 13, 2015). Even at AXIS’ all-time high share price of $53.02, the implied per share value for PartnerRe would only be $115.58, substantially below our all­ cash offer price of $130.00.

Our proposal clearly constitutes a Superior Proposal as defined in the AXIS Agreement. Accordingly, we believe that the PartnerRe board of directors can and must, consistent with its fiduciary duties and its obligations under Section 5.8 of the AXIS Agreement, make a determination that our proposed transaction is a Superior Proposal and authorize PartnerRe to enter into an Acceptable Confidentiality Agreement (as defined in the AXIS Agreement) with us as soon as possible. Thereafter, again consistent with the AXIS Agreement, we are seeking constructive and prompt negotiations to complete a successful transaction with EXOR.

In light of the PartnerRe shareholders meeting to be scheduled to consider the transaction with AXIS, we believe it is in the best interests of all parties to begin discussions immediately, so your shareholders will be able to take full advantage of the value represented by our proposal.

Since EXOR is a public company in Italy, we are required to issue a press release describing our proposal today. A copy of our press release is enclosed for your reference.

E. Next Steps

We want to emphasize to you the seriousness of this proposal and our commitment to completing a transaction with you. We are prepared to engage immediately: our financing is fully in place, our advisors stand ready to commence work, our confirmatory due diligence will be brief and limited, and the EXOR Agreement is substantially similar to the AXIS Agreement.

Please note that this letter is not meant to, and does not, create or constitute any legally binding obligation, liability or commitment by us concerning a proposed transaction, and, other than any confidentiality agreement we may enter into with you, there will be no legally binding agreement between us regarding the proposed transaction unless and until we finalize the terms and enter into the EXOR Agreement.

We are pleased to be able to offer this Superior Proposal to your company, which we believe will benefit your shareholders and your employees. We are confident that our proposal presents a compelling opportunity for both our companies and look forward to your response. We would appreciate your response by Monday, April 20, 2015.

 

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If you have any questions or would like to clarify any aspect of our proposal, please do not hesitate to call Dan Jester of BDT & Company, LLC at (312) 660-7300, Eric Bischof of Morgan Stanley & Co. LLC at (212) 761-4000, or Toby Myerson of Paul, Weiss, Rifkind, Wharton & Garrison LLP at (212) 373-3000.

Sincerely,

/s/ John Elkann

John Elkann

Chairman and Chief Executive Officer

EXOR S.p.A.

* * * * *

The written proposal was accompanied by a proposed amalgamation agreement, which reflected the terms on which EXOR would be willing to execute the EXOR Proposal, as well as a press release which was released publicly the same day. No financing documentation was provided with the written proposal. No information was provided regarding EXOR’s controlling shareholder and its ownership of EXOR in order to evaluate the insurance and antitrust regulatory filings required and the feasibility of obtaining those approvals. Additionally, no information was provided on whether and how EXOR would protect PartnerRe and its shareholders from a withdrawal of the EXOR Proposal during the potentially protracted period provided for in the amalgamation agreement beginning with PartnerRe commencing the process to change its recommendation through any termination of the amalgamation agreement as required by the EXOR Proposal.

As required under the terms of the amalgamation agreement with AXIS and in light of the impending public announcement of the EXOR Proposal, Messrs. Montupet and Zwiener promptly contacted Messrs. Butt and Benchimol respectively and informed them of Mr. Montupet’s conversation with Mr. Elkann regarding the EXOR Proposal. AXIS was thereafter provided with a copy of the written EXOR Proposal as well as all documents and other material written communications to or from EXOR as required by the amalgamation agreement with AXIS.

Between April 14, 2015 and April 17, 2015, members of the PartnerRe Transaction Committee, representatives from Davis Polk and Credit Suisse and certain senior executives of PartnerRe had a series of detailed discussions on the EXOR Proposal in order for the committee to make a recommendation to the PartnerRe board of directors. Among the issues discussed and evaluated were, the price offered by EXOR, the non-price terms of the EXOR Proposal, EXOR’s proposed financing and available sources of funding, the regulatory approvals required by the EXOR Proposal and the possible requirements of the applicable regulators, the likely timeline for a transaction with EXOR, the contractual commitments of PartnerRe under the amalgamation agreement and the timeline and risks to PartnerRe in satisfying EXOR’s requirement that the amalgamation agreement with AXIS be terminated prior to entering into a definitive agreement with EXOR. PartnerRe also commenced preparation of a data room for EXOR based upon the information made available to AXIS during its due diligence prior to entering into the amalgamation agreement along with updates thereto reflecting subsequent developments. During the same time period, Mr. Montupet told Messrs. Butt and Benchimol that the PartnerRe board of directors would review and discuss the EXOR Proposal in accordance with its fiduciary duties and make a decision in the best interests of PartnerRe and its constituents. Also, Mr. Montupet had several discussions with Messrs. Butt and Benchimol in which Mr. Montupet asked if AXIS could improve the financial terms of the amalgamation for the benefit of the PartnerRe shareholders.

On April 16, 2015, EXOR’s legal advisors informed representatives of Davis Polk that EXOR had engaged Sutherland Asbill & Brennan LLP (“Sutherland”) as its U.S. insurance regulatory counsel and also provided EXOR’s documentary due diligence request list.

 

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Under the terms of the amalgamation agreement, PartnerRe was not permitted to engage with EXOR without either a waiver of the applicable provisions of the amalgamation agreement or the PartnerRe board of directors first having made the determination, in consultation with its legal counsel and financial advisors, that the EXOR Proposal would reasonably be likely to result in a superior proposal and that failure to engage with EXOR in negotiations or provide non-public information to EXOR would violate the fiduciary duties of the members of the PartnerRe board of directors. In this regard, on April 17, 2015, Mr. Montupet called Messrs. Butt and Benchimol to request a waiver from AXIS to engage with EXOR and its advisors in order to explore the price, terms, certainty, risks and timeline of the EXOR Proposal. Messrs. Butt and Benchimol agreed to grant such waiver to PartnerRe, but only on the condition that PartnerRe would not provide any non-public information to EXOR and that the waiver be for a limited period. Later the same day, PartnerRe and AXIS executed a limited waiver allowing PartnerRe to engage with EXOR through April 24, 2015, but without sharing any non-public information of PartnerRe with EXOR (the “AXIS Waiver”).

The same day, the AXIS board of directors met to discuss the EXOR Proposal, AXIS’ rights under the amalgamation agreement and to discuss with representatives of Goldman Sachs the EXOR Proposal as compared to the terms of the amalgamation. Later that day, ahead of the PartnerRe board of directors’ meeting on April 18, 2015, Mr. Butt sent the following letter to the PartnerRe board of directors.

* * * * *

 

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CONFIDENTIAL

AXIS Capital Holdings Limited

92 Pitts Bay Road

Pembroke, Bermuda HM 08

April 17, 2015

The Board of Directors of PartnerRe Ltd.

c/o Jean-Paul Montupet, Chairman of the Board

PartnerRe Ltd.

90 Pitts Bay Road

Pembroke, Bermuda HM 08

Dear Members of the Board:

We are writing regarding the public proposal by EXOR S.p.A. (“Exor”) to acquire PartnerRe Ltd. (“PartnerRe”) in lieu of the pending PartnerRe amalgamation with AXIS Capital Holdings Limited (“AXIS”).

On January 25, 2015, we committed to each other to amalgamate and create a diversified global insurance and reinsurance company with the scale, capital and enhanced market presence to deliver superior and sustainable value to your and our shareholders. The strategic, operational and financial merits of a united PartnerRe and AXIS are significant and deliver more value to PartnerRe shareholders than the Exor proposal, particularly given the operating and capital synergies that can be realized by joining our two businesses.

The combination of our two companies will significantly benefit our respective shareholders, employees and clients. Our amalgamation will preserve the strengths of each organization while leveraging the greater resources of the combined company. Acceptance of the Exor proposal would deprive your shareholders of the opportunity to participate in the substantial value creation and synergies we have both calculated will result from our amalgamation.

For the reasons set forth below, we do not agree with Exor that its proposal represents a “Superior Proposal” (as defined in our amalgamation agreement). Instead, the Exor proposal offers your shareholders inferior value, is inferior to our amalgamation, does not meet PartnerRe’s stated strategic objectives and has significant execution risks when compared with our amalgamation.

Comparing the Exor Proposal to the Signed Deal

 

•

It would not be appropriate to take a snapshot today and say that $130 per PartnerRe share in cash represents greater value than our exchange ratio. You and we expect the value of the amalgamated company’s stock will increase while the amount of cash is forever fixed. As each of PartnerRe and AXIS generates earnings the value of the stock will grow and the value of the amalgamated company’s stock will significantly exceed $130 per share. A sale for cash deprives the PartnerRe shareholders of the significant value of the synergies and growth opportunities the amalgamated company will have, while $130 in cash will always be $130.

Inferior Valuation

The Exor proposal undervalues PartnerRe in a sale transaction.

 

•

As you know, recent control transactions in the insurance industry have been executed at valuations of 1.16x to 1.60x tangible book value. By contrast, the Exor proposal of $130 per PartnerRe share represents a discount to PartnerRe’s own projected book value per share of $135.141 and an inferior multiple of 1.06x2 to projected tangible book value per share, each measured as of the end of 2015 (which is the likely time of closing of the Exor proposal).

 

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•

Exor states that its $130.00 all-cash offer is “14.1x consensus 2016 earnings estimates for PartnerRe,” while ignoring the multiple of 2016 earnings projection provided by PartnerRe in the S-4 as of March 13, 2015. In fact, Exor’s $6.4 billion all-cash offer is only 12.6x PartnerRe’s 2016 earnings of $508 million as disclosed in the S-4 as of March 13, 2015.

 

•

Furthermore, the Exor proposal represents only a 14% premium to PartnerRe’s undisturbed share price of $114.14 on January 23, 2015, the business day prior to the announcement of our amalgamation. In contrast, the median premium for all cash-only transactions with U.S. targets over the past 10 years is in excess of 30%, and for insurance transactions the median premium is almost 30%. Catlin was recently acquired by XL at a 24% premium, Montpelier was acquired at a 19% premium,3 Brit was acquired at a 19% premium, Platinum was acquired at a 24% premium and when Endurance sought to acquire Aspen in 2014, at higher multiples and premium than Exor’s proposal, Aspen’s board rejected that offer.

 

•

The Exor CEO has acknowledged that he has been seeking an acquisition that does not require a significant investment in order to grow while also producing sustainable dividends to Exor. While the opportunistic acquisition of PartnerRe may represent a great investment for Exor, your shareholders are being asked to relinquish both the future stream of cash flows generated by PartnerRe and the opportunity to receive an adequate control premium for their shares in the future. In contrast, our amalgamation enhances PartnerRe’s profitability and ability to generate cash, while preserving a control premium for PartnerRe shareholders in the future as further detailed below.

Inferior Offer

Exor’s proposal is inferior to the terms of the amalgamation.

 

•

As we have jointly estimated, the amalgamated company will enjoy annual run-rate synergies of at least $200 million4. The value of this to PartnerRe shareholders equates to $860 million5, or $17.536 per PartnerRe share (after giving effect to $164 million7 in post-tax costs to achieve such synergies), which is well in excess of the $15.86 premium offered by Exor (which premium over time will become unattractive as the value of the amalgamated company’s stock grows as we expect).

 

•

The amalgamated company is also expected to have a return on equity of approximately 10.5% in 20178. Based on today’s relatively low valuations, that would suggest a multiple of book value at the closing of the amalgamation of 1.18x9, translating to value for PartnerRe’s shareholders of approximately $6.9 billion10, again exceeding the $6.4 billion offered by the Exor proposal.

 

•

The Exor proposal is fully taxable to PartnerRe’s shareholders, whereas our amalgamation does not trigger any capital gain tax. For example, a PartnerRe shareholder with a tax basis of $108.15, representing PartnerRe’s average trading price in the 12 months ended April 13, 2015, would have a taxable capital gain of $21.85 in the Exor proposal, as compared to none in our tax- free amalgamation.

The Exor Proposal Does Not Meet PartnerRe’s Strategic Objectives

The Exor proposal is inconsistent with PartnerRe’s stated strategic objectives.

 

•

PartnerRe did not put itself up for sale, is not for sale and does not have to engage in a sale process.

 

•

PartnerRe’s board, in the exercise of its fiduciary duties, has determined that it is in PartnerRe’s best interest to amalgamate with AXIS, after having reviewed and analyzed PartnerRe’s ability to execute its strategic plan as a stand-alone entity, the impact of continuing consolidation in the reinsurance industry, increasingly competitive pricing from the consolidation of brokers and greater participation in catastrophe markets by alternative sources of capital.

 

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•

The Exor proposal does not address any of PartnerRe’s previously stated objectives in entering into our amalgamation or your objective of maximizing shareholder value. The amalgamated company, on the other hand, will:

 

•

enjoy leading positions in three distinct markets and have the ability to compete globally and successfully despite the rapid consolidation of the reinsurance industry,

 

•

have unique access to opportunities as a major global player, and

 

•

have a superior ability to generate capital, due to the complementary nature of AXIS’ and PartnerRe’s businesses, with this benefit accruing to all of the amalgamated company’s shareholders.

 

•

A sale of PartnerRe will hinder its ability to compete in the global market place and will provide substantially diminished career opportunities for your executives and staff.

Pursuing the Exor Proposal Has Execution Risks

Pursuing the Exor proposal creates significant execution risks for PartnerRe.

 

•

Exor intends to borrow up to $4.75 billion to finance its proposal, and currently has equity of approximately $8.5 billion and debt of $1.8 billion11. On a pro forma basis, including PartnerRe’s existing debt, Exor, which would be an insurance holding company, would have a total financial leverage ratio in excess of 49%,12 thereby significantly jeopardizing PartnerRe’s A+ S&P rating. Indeed, S&P placed Exor’s BBB+ rating on negative “watch” following Exor’s announcement. To put this into perspective, the debt that Exor intends to incur is approximately 9x PartnerRe’s average projected earnings for 2015 through 2017 of $520 million. Also, within a day of the disclosure of the Exor proposal, Fitch noted that it would expect to keep PartnerRe’s ratings on “negative watch” were it to accept the Exor proposal given the uncertainty surrounding Exor’s strategic plan for PartnerRe and the need for an in-depth credit analysis of Exor. As a result, Exor may well be faced with the choice of either walking away from the Exor proposal or having itself and/or PartnerRe downgraded. As Exor’s CEO has admitted “we expect this transaction to keep for Exor our investment grade rating.” Even if Exor remains “investment grade,” this could mean a two-notch downgrade. It remains unclear whether Exor will choose to complete the transaction if faced with an adverse reaction from the rating agencies. Regardless of the outcome of the agencies’ consideration of the Exor proposal, any uncertainty regarding PartnerRe’s ratings will likely affect mid-year renewals and possibly year end renewals. By comparison, Fitch also said it would confirm PartnerRe’s ratings in the amalgamation.

 

•

PartnerRe must put the amalgamation to a vote of its stockholders unless the amalgamation agreement is terminated. Therefore, Exor cannot even begin the regulatory process until after our shareholder meetings. By contrast, we are ready to file the proxy and have made all required insurance regulatory and antitrust filings. As you know, we have both received very positive feedback from customers and brokers in support of the amalgamation. Delaying the closing of the amalgamation may well erode that support and cause confusion in the market and compromise our joint integration efforts, well into the critical mid-year renewals and possibly into year-end renewals.

We believe that the facts regarding the Exor proposal make it clear that Exor has not presented a Superior Proposal. We believe Exor’s proposal inadequately values PartnerRe, is inferior to the value created for shareholders by the amalgamation even in the relatively short term, deprives PartnerRe’s stockholders of the continued value creation that both of our boards have acknowledged will be achieved in the amalgamation, does not meet PartnerRe’s stated strategic goals and creates both deal uncertainty and market risk.

AXIS remains both steadfast in its commitment and excited to complete its planned amalgamation with PartnerRe and is greatly encouraged by the tremendous progress that has been made towards that goal to date. We would like to engage in an ongoing dialogue with the PartnerRe board concerning all

 

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aspects of our amalgamation. In particular, we would like to discuss the analyses we have conducted and share our conviction that our amalgamation would create one of the strongest companies in the insurance and reinsurance industries, and one well positioned to engage in global competition. Albert Benchimol and I would appreciate the opportunity to speak with you and the full board at your next meeting (regardless of whether it is in telephone or in person) to present our analyses and our conviction regarding the superior value of our amalgamation compared to the Exor proposal.

Very truly yours,

/s/ Michael A. Butt

Michael A. Butt

Chairman of the Board

AXIS Capital Holdings Limited

Notes

 

1

Year-End 2015 book value calculated as Year-End 2014 Partner common equity plus 2015 Net Income (as per S-4) less dividends paid (constant DPS from 2014). Quantity divided by 49.087mm PartnerRe Shares assuming no buybacks or issuance occurs during 2015

2

Assumes goodwill of $456mm and intangibles of $159.6mm at PartnerRe

3

Relative to the undisturbed price per share as of December 10, 2014

4

As per S-4, page 60

5

Using a multiple of 11.2x, based on peers including ACE, LX, RE, AWH, AHL, RNR, VR, LRE, and applying an implied effective tax rate of 17.9% as per (note h) on page 38 of S-4, based on PartnerRe shareholders’ 51.6% pro forma ownership of the combined company

6

Assumes 49.087mm PRE shares as per S-4 page 37

7

Costs to achieve assumed to be 100% of one-year fully phased synergies, and applying an implied effective tax rate of 17.9% as per (note h) on page 38 of S-4

8

As per Net Income and Book Value adjustments in S-4, pages 41-44 and Net Income projections on pages 71-72

9

Based upon regression of current peer price to YE2014 book value multiples against FY2 Returns on Equity as per IBES median estimates

10

Calculated as 51.6% of pro forma book value at YE2015 (assumed date of closing)

11

Per Exor press release as of April 14, 2015, equity attributable to owners of the parent company was EUR7,995mm as of 12/31/2014 and debt of EUR1,671mm as of 12/31/2014. The Euro to dollar conversion ratio used is 1.064.

12

Per Exor press release as of April 14, 2015, equity attributable to owners of the parent company was EUR7,995mm as of 12/31/2014 and debt of EUR1,671mm as of 12/31/2014. Assumes USD $4.75bn of incremental Exor debt and PartnerRe’s existing debt of USD$1,675mm. The Euro to dollar conversion ratio used is 1.064.

* * * * *

The PartnerRe board of directors had a telephonic meeting on April 18, 2015 to discuss the EXOR Proposal. After Mr. Montupet briefed the PartnerRe board of directors on his conversation with Mr. Elkann on April 14, 2015, the members of the PartnerRe board of directors discussed the price and key aspects of the EXOR Proposal, the status of the merger of equals with AXIS, AXIS’ response to the EXOR Proposal and the responses of other constituents, including rating agencies, shareholders, the management team and PartnerRe employees, to the EXOR Proposal. Representatives of Davis Polk then briefed the PartnerRe board of directors on PartnerRe’s contractual commitments under the amalgamation agreement with respect to the EXOR Proposal, alternatives for terminating the amalgamation agreement as required by the EXOR Proposal, and the timelines and risks associated with each such alternative and the key areas to be further explored with EXOR—including certainty and conditionality of EXOR’s financing and funding arrangements, EXOR’s approach to obtaining regulatory approvals, the scope and duration of EXOR’s due diligence and the timeline to closing of their proposed

 

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transaction. Representatives of Appleby summarized the fiduciary obligations of the PartnerRe board of directors in connection with the consideration and evaluation of the EXOR Proposal. At the same meeting, representatives of Credit Suisse discussed their preliminary financial analysis of the EXOR Proposal. The members of the PartnerRe board of directors unanimously agreed with the PartnerRe Transaction Committee’s recommendation to engage with EXOR to explore the improvements EXOR may be prepared to make to the price, terms, timeline, certainty and risks of the EXOR Proposal.

After the meeting of the PartnerRe board of directors, the members of the PartnerRe Transaction Committee had a meeting with the representatives of Davis Polk and Credit Suisse and certain members of PartnerRe’s senior management team to discuss PartnerRe’s specific response to EXOR. Having discussed the contents of his proposed message with the fellow members of the PartnerRe Transaction Committee and PartnerRe’s advisors, Mr. Montupet sent the following email to Mr. Elkann.

* * * * *

Dear Mr. Elkann:

I wanted to get back to you following our board’s consideration of your proposal.

While your proposed price and terms are not a basis on which we would be willing to proceed, my board has authorized me to meet with you to explore further your interest in PartnerRe. We have obtained a limited waiver from AXIS Capital through next Friday, April 24, to allow us to engage in exploratory discussions with EXOR.

I am available tomorrow afternoon after 3 p.m.in New York for a meeting. I propose that the two of us meet without advisors. Please let me know if that works for you and I will get back to you with the venue.

We do not intend to publicly disclose our meeting or the AXIS waiver and I would appreciate your confirmation in advance that EXOR similarly does not intend to disclose our meeting. Of course, we recognize that at some point you, we or AXIS Capital may need make such disclosures.

Best Regards,

Jean-Paul.

* * * * *

Having received no response from Mr. Elkann for several hours, representatives of Davis Polk contacted representatives of Paul Weiss to follow up on Mr. Montupet’s request of Mr. Elkann for an in-person meeting. Representatives of Paul Weiss informed representatives of Davis Polk that Mr. Elkann was on a flight to Tokyo, Japan and that he would likely not be able to meet with Mr. Montupet on April 19, 2015. After learning about Mr. Elkann’s travel plans, Mr. Montupet emailed Mr. Elkann proposing two new dates for an in-person meeting—April 20 and April 22, 2015. When Mr. Elkann landed in Tokyo, he emailed Mr. Montupet asking for a call with him the following morning.

Messrs. Montupet and Elkann had a call on April 19, 2015 during which Mr. Montupet informed Mr. Elkann that the PartnerRe board of directors had authorized him to further discuss potential improvements to the price and non-price terms of the EXOR Proposal with EXOR. Mr. Elkann told Mr. Montupet that if the purpose of the meeting was to negotiate EXOR’s price, there would be no use in having such meeting because EXOR had no flexibility in relation to its proposed price. After further discussion, Mr. Elkann agreed to entertain the possibility of a meeting subject to seeing a proposed agenda for the meeting.

Later that day, members of the PartnerRe Transaction Committee and representatives of Davis Polk and Credit Suisse had further discussions on developments regarding the EXOR Proposal. After extensive deliberations, the participants agreed on the detailed agenda for a meeting between Mr. Montupet and

 

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Mr. Elkann. The agenda included: valuation, EXOR’s vision for PartnerRe (including expected business model, capital structure and access to additional capital support in the future to provide scale and financial flexibility), plans for the management and employees, the conditionality, duration and due diligence requirements relating to EXOR’s financing, the implications of leverage resulting from such financing, including its impact on the ratings profile of EXOR and PartnerRe, timing of and ability to obtain regulatory approvals, scope and duration of due diligence and the deal protection provisions in the EXOR markup of the amalgamation agreement. Later that day, Mr. Montupet sent the detailed agenda to Mr. Elkann and requested an in-person meeting to discuss the items on the agenda. In response, Mr. Elkann recommended that the advisors on both sides engage with each other to discuss the items on the agenda sent by Mr. Montupet in advance of an in-person meeting between Messrs. Montupet and Elkann. Mr. Elkann proposed that he could be available for an in-person meeting with Mr. Montupet in Tokyo on April 23, 2015 or in the United States on April 26, 2015. A meeting was later scheduled to take place in New York on April 26, 2015. The AXIS Waiver was subsequently extended through April 28, 2015 to permit the meeting of Messrs. Montupet and Elkann on April 26, 2015.

On April 21, 2015, AXIS engaged in conference calls with its counsel and advisors to discuss its response to the EXOR Proposal.

On April 21, 2015, the advisors of PartnerRe and EXOR met to discuss the EXOR Proposal. Representatives of Davis Polk, Credit Suisse, Paul Weiss, BDT and MS were present in person, and representatives of Sutherland and Cox Hallett Wilkinson Limited, EXOR’s Bermuda counsel, joined via teleconference. Certain members of the senior management of PartnerRe also joined via teleconference for parts of the discussion. The participants carefully discussed each of the items, other than valuation, set forth on the agenda sent by Mr. Montupet to Mr. Elkann. At the meetings, EXOR’s representatives noted that EXOR had engaged Milliman Inc. (“Milliman”) to conduct actuarial due diligence, which was expected to take no less than three weeks. EXOR’s advisors told PartnerRe’s advisors that EXOR had not engaged any insurance regulatory counsel outside the United States and Bermuda at that time, in response to which PartnerRe’s advisors identified the jurisdictions outside the United States and Bermuda where EXOR would likely need insurance regulatory counsel. PartnerRe’s representatives confirmed that the data room that was prepared for AXIS during its due diligence of PartnerRe would be made available to EXOR, and they discussed the scope of any updates to the data room, if EXOR were to be permitted to conduct due diligence on PartnerRe.

After the in-person advisors meeting, the members of the PartnerRe Transaction Committee had a call with the representatives of Davis Polk and Credit Suisse and certain members of PartnerRe’s senior management team to discuss the additional information gathered by PartnerRe’s advisors during the in-person meetings. Later the same day, at a meeting that Mr. Montupet had previously scheduled with Mr. Benchimol, Mr. Montupet asked Mr. Benchimol if AXIS would consider revising the exchange ratio in favor of PartnerRe shareholders or the possibility of a special dividend for PartnerRe shareholders. Mr. Benchimol indicated that AXIS would not be willing to change the economic terms of the amalgamation and reaffirmed his commitment to the transaction. Mr. Benchimol expressed his view that the EXOR Proposal was inferior to the terms of the amalgamation.

Between April 21, 2015 and April 23, 2015, advisors for EXOR and PartnerRe further discussed specific areas of the EXOR Proposal:

 

•

Financing: EXOR provided drafts of its financing mandate letter and related fee letters, which the PartnerRe advisors reviewed.

 

•

After careful consideration of these documents, PartnerRe’s advisors provided detailed feedback to EXOR’s advisors, particularly in relation to the conditionality of the financing arrangements, the availability of the required funding and the need for specificity around the limitations of the lenders on the commitments EXOR or its controlling shareholders could make to insurance regulators in connection with obtaining the required regulatory approvals.

 

•

Certain key provisions in the financing documents, including in relation to conditionality, remained subject to negotiation in the full form of a facility agreement. In order to be able to

 

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evaluate the certainty of the financing arrangements, representatives of Davis Polk provided a set of follow-up questions to Paul Weiss (including whether EXOR was prepared to commit to escrow the cash required beyond the financing and not use it for competing purposes) and requested fully negotiated drafts of the documents, but EXOR and its advisors denied such request, unless EXOR was given access to due diligence.

 

•

Due Diligence: Two calls were held with representatives from Milliman and legal and financial advisors of EXOR and PartnerRe and senior employees of PartnerRe to discuss the scope of actuarial due diligence and understand the availability of information for due diligence purposes. EXOR also submitted documentary diligence requests in connection with its proposed actuarial diligence. Based on the responses of PartnerRe’s representatives on these calls, Milliman reduced its estimated timeline for actuarial due diligence from three to two weeks.

 

•

Regulatory: After the in-person advisors meeting, EXOR engaged a team of insurance regulatory counsel in multiple jurisdictions to develop an initial understanding of the requirements for obtaining the insurance regulatory approvals required to consummate a potential transaction with PartnerRe. EXOR’s newly engaged regulatory counsel, senior members of the PartnerRe regulatory team and representatives of Davis Polk had a conference call on April 23, 2015 to discuss the filings and approvals needed in each relevant jurisdiction. Among other things, the participants discussed the volume and nature of information required by regulators, the expected timeline of review and approvals, potential undertakings that regulators might require from EXOR and its controlling shareholders to approve the transaction, and EXOR’s ability and willingness to do or commit to doing everything necessary to obtain the regulatory approvals. EXOR’s advisors declined to provide specificity on the extent to which EXOR’s controlling shareholders would be required to make or participate in regulatory filings or approvals or the limit beyond which EXOR and its controlling shareholders (and, in light of approval rights provided for in the financing mandate letter, EXOR’s lenders) would not be prepared to make or permit commitments or give undertakings to regulators in order to obtain regulatory approvals and EXOR’s advisors were not prepared to discuss whether EXOR would agree to a “hell or high water” standard to obtain such approvals, which would require EXOR and its controlling shareholders to take or agree to take all actions necessary to obtain the required regulatory approvals.

 

•

Permanent Capital: A separate call was held among representatives of Davis Polk, Credit Suisse, BDT and MS to discuss EXOR’s plan for its permanent capital financing (in lieu of the proposed bridge financing) and related deleveraging in order to achieve rating agency objectives.

 

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Amalgamation Agreement: Representatives of Davis Polk and Paul Weiss had separate calls to discuss issues related to tax structuring and the mechanics of EXOR’s irrevocable binding offer pursuant to which EXOR would make an irrevocable offer to PartnerRe to acquire the common shares of PartnerRe that would stay open through a limited period of time after the termination of the amalgamation agreement. Representatives of Davis Polk provided initial feedback on certain issues in EXOR’s proposed amalgamation agreement, especially in relation to a proposed ratings downgrade condition. Representatives of Paul Weiss indicated that they would prefer to discuss all issues on their proposed amalgamation agreement together, rather than on an individual basis. In response to Paul Weiss’ request, on April 23, 2015, representatives of Davis Polk provided feedback on significant issues on EXOR’s markup of the amalgamation agreement including deal certainty and conditionality, deal protection provisions, identity of post-closing officers, continuation of employee benefits and the need for EXOR and its controlling shareholders (in addition to the lower tier shell subsidiaries EXOR proposed be parties to the amalgamation agreement) to undertake contractual commitments in furtherance of the proposed transaction, and requested that Paul Weiss provide a revised draft of the agreement reflecting their positions on the feedback provided by Davis Polk. The representatives of Paul Weiss subsequently stated that EXOR would not negotiate any terms of the amalgamation agreement before the commencement of due diligence and that EXOR envisaged for due diligence and negotiation of definitive documents to proceed on parallel paths. On the same call, representatives of

 

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Paul Weiss stated that unless PartnerRe were to sign a confidentiality agreement with EXOR and proceed to due diligence, EXOR would not provide any additional information or documents to PartnerRe or respond to any outstanding questions related to financing and regulatory approvals other than drafts of (i) a revised amalgamation agreement, reflecting only a change of transaction structure from amalgamation to merger, (ii) an estimated timeline from signing to closing of a transaction with EXOR and (iii) an initial draft form of an irrevocable binding offer.

Beginning on April 22, 2015, AXIS management and its advisors began extensive discussions of the terms and conditions under which it could possibly increase the amalgamation consideration payable to the PartnerRe shareholders.

On April 23, 2015, Messrs. Montupet and Benchimol had a conversation during which Mr. Benchimol reaffirmed his commitment to the merger of equals. Mr. Montupet mentioned that PartnerRe’s advisors had had several meetings with EXOR’s advisors and that the PartnerRe Transaction Committee continued to consider and evaluate the EXOR Proposal. Mr. Montupet also discussed with Mr. Benchimol his view that PartnerRe shareholders should receive a special dividend as part of the amalgamation with AXIS. Mr. Benchimol stated that AXIS was not in a position to accommodate such an adjustment to the already agreed upon terms of the merger of equals.

On April 24, 2015, members of the PartnerRe Transaction Committee, representatives of Davis Polk and Credit Suisse and certain members of the senior management of PartnerRe discussed EXOR’s feedback received through Paul Weiss that EXOR was insistent upon proceeding on parallel paths, and that EXOR would not be willing to negotiate any substantive terms of the EXOR Proposal before the commencement of its due diligence on PartnerRe. Later that evening, Paul Weiss provided drafts of (i) a revised agreement, reflecting only a change of transaction structure from amalgamation to merger, (ii) a high-level estimated timeline from signing to closing of a transaction with EXOR (but without any specificity on how that timeline would be met) and (iii) a draft irrevocable binding offer.

The same day, the Executive Committee of AXIS’ board of directors had a conference call to discuss the status of the EXOR Proposal, the status of AXIS’ discussions with PartnerRe and the terms and conditions under which AXIS could increase the amalgamation consideration payable to the PartnerRe shareholders.

On April 25, 2015, representatives of Paul Weiss notified the representatives of Davis Polk that EXOR would not be providing any further information related to its financing arrangements or negotiate any substantive terms related thereto prior to the commencement of due diligence.

On April 26, 2015, members of the PartnerRe Transaction Committee had an in-person meeting (with Mr. Mendoza joining via teleconference) with the representatives of Davis Polk and Credit Suisse and certain members of the senior management of PartnerRe to prepare and discuss the agenda for Mr. Montupet’s meeting with Mr. Elkann, scheduled for later the same afternoon. Among other things, the participants also discussed the areas of the EXOR Proposal that still needed further clarity.

Later that same day, Messrs. Montupet and Elkann had an in-person meeting to discuss the price and non-price terms of the EXOR Proposal. Mr. Montupet told Mr. Elkann that the offered price of $130.00 per share significantly undervalued PartnerRe and that the offered price did not take into account the strength of PartnerRe’s balance sheet, expected growth of tangible book value per share between December 31, 2014 and the closing of a potential transaction with EXOR. Mr. Montupet further elaborated that the offered price did not include any control premium or value for the PartnerRe franchise. Mr. Montupet emphasized that the transaction contemplated by the EXOR Proposal, an all-cash change of control transaction, was very different from a no-premium merger of equals with AXIS because such a transaction would terminate the PartnerRe’s shareholders’ ongoing equity interest, and if this upside opportunity were to be removed, the cash price needed to be increased to compensate the PartnerRe shareholders accordingly. In response, Mr. Elkann portrayed EXOR’s $130.00 per share proposal as a best and final price over which EXOR had no flexibility. (As described below in EXOR’s May 21, 2015 letter, EXOR has since stated that Mr. Elkann never said that the $130.00 per share proposal was

 

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EXOR’s best and final offer.) Mr. Montupet also asked Mr. Elkann if EXOR would consider acquiring an ownership stake in the amalgamated company, and Mr. Elkann responded that EXOR was not interested in such a transaction. Upon Mr. Elkann’s mention that EXOR’s candidate for the PartnerRe CEO could possibly come from the existing management of PartnerRe, Mr. Montupet indicated that he believed that Mr. Zwiener could possibly extend his interim role for a few months beyond closing if this could help in the process of selecting an internal candidate. At the end of the meeting, Mr. Montupet told Mr. Elkann that based on the price of $130.00 per share, he and his fellow members of the PartnerRe Transaction Committee would likely not recommend the PartnerRe board of directors proceed with EXOR, but that it would ultimately be up to the PartnerRe board of directors to make the final determination on the EXOR Proposal.

During the course of the meeting, Mr. Elkann requested on numerous occasions that if PartnerRe rejected the EXOR Proposal it do so publicly on the basis of price alone and without identifying the significant execution risks in the EXOR Proposal which had been identified by PartnerRe. At the end of the meeting, Mr. Elkann repeated this request, and Mr. Montupet indicated that he understood the request and would take it into consideration.

Following their meeting, Mr. Elkann sent Mr. Montupet the following letter.

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April 26, 2015

Mr. Jean-Paul Montupet Chairman of the Board PartnerRe Ltd.

90 Pitts Bay Road

Pembroke HM 08

Bermuda

Dear Mr. Montupet,

I enjoyed meeting you earlier today. My impression is that our meeting was constructive and I remain hopeful that we can find common ground to reach an agreement that implements EXOR’s proposal, which is clearly superior to your proposed transaction with AXIS.

As set out below, we have made, in good faith, considerable efforts over the past week to deal with all reasonable requests relating to our proposal. However, those requests keep coming and we are now being asked to improve our contract terms significantly over the terms of your deal with AXIS, before we are allowed to perform due diligence. This is, of course, highly unusual and inappropriate under the circumstances.

Given the superior value of EXOR’s all-cash, $130 per share proposal, the terms of our draft transaction agreement and the supplemental information we have provided, it should be straightforward for the PartnerRe Board to conclude now that the EXOR proposal is “reasonably likely to be superior” under the terms of your agreement with AXIS, and allow us to proceed with confirmatory due diligence.

I would like to summarize briefly the considerable efforts we have made over the last several days to move forward with our transaction.

Our counsel at Paul, Weiss and our financial advisors from BDT & Company and Morgan Stanley have met in person with your counsel from Davis Polk and your financial advisors from Credit Suisse. There have been numerous follow up calls among our respective legal, financial and insurance regulatory advisors. All of these discussions have been facilitated by a waiver of the “no shop” provision in the PartnerRe/AXIS Amalgamation Agreement, which you referred to in an email to me. Davis Polk advised Paul, Weiss that the waiver allows PartnerRe to request information from us and to negotiate with us, but apparently it does not allow you to permit us to conduct due diligence. I believe it is time to remove that impediment and move forward.