Filed by PartnerRe
Ltd
Pursuant to Rule
425
Under the
Securities Act of 1933
Subject
Company: PARIS RE Holdings Ltd
Commission File
No.: 021-98562
 |
Filed by PartnerRe Ltd
Pursuant to Rule 425
Under the Securities Act of 1933
Subject Company: PARIS RE Holdings Ltd
Commission File No.: 021-98562
PartnerRe
Proposed PartnerRe Acquisition of PARIS RE
July 6, 2009
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Proposed PartnerRe Acquisition of PARIS RE
July 6, 2009
Safe Harbor Disclosure
This document includes "forward-looking statements" within the meaning of the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. These forward-looking statements are based on PartnerRe's and PARIS RE's
assumptions and expectations concerning future events and financial performance,
in each case, as they relate to PartnerRe, PARIS RE or the combined company.
Such statements are subject to significant business, economic and competitive
risks and uncertainties that could cause actual results to differ materially
from those reflected in the forward-looking statements. These forward-looking
statements could be affected by numerous foreseeable and unforeseeable events
and developments such as exposure to catastrophe, or other large property and
casualty losses, adequacy of reserves, risks associated with implementing
business strategies and integrating new acquisitions, levels and pricing of new
and renewal business achieved, credit, interest, currency and other risks
associated with the PartnerRe's, PARIS RE's or the combined company's investment
portfolio, changes in accounting policies, the risk that a condition to closing
of the proposed transaction may not be satisfied, the risk that a regulatory
approval that may be required for the proposed transaction is not obtained or is
obtained subject to conditions that are not anticipated, failure to consummate
or delay in consummating the proposed transaction for other reasons, and other
factors identified in PartnerRe's filings with the United States Securities and
Exchange Commission and in the documents PARIS RE files with the Autorite des
Marches Financiers (French securities regulator) and which are also available in
English on PARIS RE's web site (www.paris-re.com). In light of the significant
uncertainties inherent in the forward-looking information contained herein,
readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the dates on which they are made. Each of
PartnerRe or PARIS RE disclaims any obligation to publicly update or revise any
forward-looking information or statements.
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Proposed PartnerRe Acquisition of PARIS RE
July 6, 2009 3
Strategic Objective
To enhance PartnerRe's ability to achieve its long- term strategic and financial
goals in an uncertain and volatile world
o 13%+ operating return on equity
o 10%+ growth in GAAP book value per share
o Consistent dividend growth
o Well-managed company
Within a Disciplined and Consistent Risk Framework
PartnerRe
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Proposed PartnerRe Acquisition of PARIS RE
July 6, 2009 4
Transaction Overview
Structure Stock-for-stock acquisition
Block purchase for majority stake (approximately 57%)
Exchange offer for remaining shares
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Pre Close Capital Pre-closing capital distribution equivalent to $3.85 per
Distribution share, or approximately $310 million (net) to PARIS RE
shareholders
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Exchange Ratio 0.30 PartnerRe common shares for each PARIS RE
common share
0.167 PartnerRe common shares for each PARIS RE
warrant
Fixed exchange ratio (adjusted under certain conditions)
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Deal Value Total value of approximately $2.0 billion
Approximately $1.7 billion PartnerRe common equity to be
issued to PARIS RE shareholders (26 million shares)
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Pro Forma Ownership 69% by existing PartnerRe shareholders
(Fully Diluted) 31% by existing PARIS RE shareholders
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Approvals PartnerRe shareholder approval
Customary regulatory approvals
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Expected Closing Q4 2009 close block purchase
Q1 2010 full merger
PartnerRe
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Proposed PartnerRe Acquisition of PARIS RE
July 6, 2009 5
Multi-Step Transaction
Block purchase
o Purchase of all shares of PARIS RE's stock held by selected investment
funds (mainly private equity funds)
o Block represents 57% stake in PARIS RE
o Achieves immediate control through majority of Board of Directors
o Financial consolidation in PartnerRe financial reports after
settlement of Block Purchase
Exchange Offer
o Following close of the Block Purchase, a voluntary Exchange Offer for the
remaining outstanding shares
o Same terms as Block Purchase
o Potential adjustment to compensate for any PartnerRe dividends
declared between Block Purchase and completion of Exchange Offer
Mandatory Merger
o Effective under Swiss law once 90% ownership attained
o Full integration of operations and financial flexibility for transfer of
assets and liabilities between PartnerRe subsidiaries
NOTE: PartnerRe acquired 6% of PARIS RE common shares outstanding prior to
announcement; an additional 6% of PARIS RE shares committed to tender
PartnerRe
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Proposed PartnerRe Acquisition of PARIS RE
July 6, 2009 6
PartnerRe Acquisition Objectives
To increase PartnerRe's capital base and financial flexibility
To improve portfolio diversification and balance
To reduce strategic risk
Considerations:
Appropriate valuation at or below economic value
Problem-free balance sheet
Limited or no primary business
Limited integration risk
Accretive to earnings and book value over time
PartnerRe
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Proposed PartnerRe Acquisition of PARIS RE
July 6, 2009 7
PARIS RE At A Glance
Originally AXA Group's reinsurance activities, sold to a consortium of private
equity investors in 2006
Mid-sized diversified reinsurer
Approx. 400 employees in 7 offices
Predominantly short-tail Non-life
Financial highlights
o Shareholders Equity: $2.0 billion
o Total Assets: $6.8 billion
o Gross Premiums: $1.4 billion
o 3 year Operating return on tangible equity: 13.2%
o 3 year Combined Ratio: 89.9%
PartnerRe
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Proposed PartnerRe Acquisition of PARIS RE
July 6, 2009 8
PARIS RE Meets PartnerRe's Acquisition Criteria
Right size and culture
o $2B capital, $1.4B premium, <400
employees
o manageable integration with low to Low Financial Risk
moderate risk Low Operational Risk
o enhances rather than transforms Creates Opportunities
o compatible cultures
Enhances financial strength and flexibility
o reduced leverage - no debt
o pre-2006 reserves guaranteed by AXA
o high quality, liquid asset
portfolio
Enhances our diversification
o generally short tail book
o large facultative book
o high concentration of
non-proportional business
o meaningful business in emerging
markets
Reinsurance only - we know this business
Transaction creates value for shareholders and other stakeholders
Intelligent acquisition to enhance already successful PartnerRe franchise
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Proposed PartnerRe Acquisition of PARIS RE
July 6, 2009 9
Enhanced Diversification Increases Stability
o Facultative book enhances Specialty capabilities
o Controllable integration of Catastrophe book
o Strong Global book, including Emerging Markets
o More short tail business in the near term
Business Lines
Catastrophe [GRAPHIC OMITTED]
US Property
US Casualty
US Specialty
Global P&C
Global Specialty
Life
Source: Company filings
Note: Based on gross premiums written, based on 12/31/08 figures
All pro forma data is for illustrative purposes only
PartnerRe
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Proposed PartnerRe Acquisition of PARIS RE
July 6, 2009 10
Enhanced Diversification Increases Stability
[GRAPHIC OMITTED]
Source: Company filings
Note: Based on gross premiums written, based on 12/31/08
figures
All pro forma data is for illustrative purposes only
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Proposed PartnerRe Acquisition of PARIS RE
July 6, 2009 11
High Quality Investment Portfolio
[GRAPHIC OMITTED]
Asset Type
AAA
AA
A
BBB
Equity & Other
Cash & Short-Term Investments
Asset Allocation
Corp Bonds
Gov Bonds
Agency Bonds
Cash, Cash Equivalents &
Short-term Inv.
Mortgage/ABS
Other
Source: Company filings
Note: Equity & Other includes below investment grade bonds. Data as of 12/31/08
All pro forma data is for illustrative purposes only
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Proposed PartnerRe Acquisition of PARIS RE
July 6, 2009 12
Enhanced Financial Strength and Flexibility
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As Reported As Reported
PartnerRe Paris RE * Pre-close Increase/
03/31/09 03/31/09 Dividend Total (Decrease)
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Investments, cash and cash equivalents 11,402 2,724 (310) 13,816
Funds held by reinsured companies 753 2,330 - 3,083
Other reinsurance balances 2,287 1,243 - 3,530
Goodwill and intangibles 430 194 - 624
Other assets 1,403 244 - 1,647
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Total Assets 16,275 6,735 (310) 22,700 39%
============================================================
Unpaid losses and loss expenses and policy benefits 8,815 3,222 - 12,037
Other reinsurance balances 1,924 1,149 - 3,073
Debt 521 - - 521
Other liabilities 733 319 - 1,052
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Total Liabilities 11,993 4,690 - 16,683 39%
Preferred equity 520 - - 520
Common equity 3,762 2,045 (310) 5,497 46%
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Total Shareholders' Equity 4,282 2,045 (310) 6,017 41%
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Total Liabilities & Shareholders' Equity 16,275 6,735 (310) 22,700 39%
============================================================
Total Capital 4,795 2,045 (310) 6,530 36%
============================================================
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Debt Leverage 11% 8%
Financial Leverage 22% 16%
Permanent Capital/Total Capital 89% 92%
Common Equity/Total Capital 78% 84%
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* Reflects conforming reclassifications
All pro forma data is for illustrative purposes only; excludes purchase GAAP
adjustments
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Proposed PartnerRe Acquisition of PARIS RE
July 6, 2009 13
Combined Company will be a Leading Global Reinsurer
Book Total AM
Value Capital(1) Best S&P Moody's Fitch
----- ---------- ---- --- ------- -----
Rank Group (most recent quarter) (most recent quarter)
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1 Berkshire Hathaway(2) 51,000 51,000 A++ AAA Aa1 AAA
2 Munich Re 28,741 36,845 A+ AA- Aa3 AA-
3 Swiss Re(3) 18,822 26,099 A A+ A1 na
Pro Forma 5,497 6,530 A+ AA- Aa3 AA
4 Hannover Re 3,934 6,605 A AA- na na
5 Everest Re 5,040 6,058 A+ A+ Aa3 AA-
6 SCOR 4,740 6,049 A- A A2 A
7 Axis Capital 3,993 4,992 A A+ A2 na
9 Arch Capital 3,305 4,030 A A A2 A+
10 Transatlantic 3,321 4,018 A A+ Aa3 na
PARIS RE 2,045 2,045 A- A- na na
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1 Includes preferred equity and total debt
2 Per Company filings, statutory surplus of Berkshire Hathaway's insurance
businesses was approximately $51 billion at December 31, 2008
3 Includes announced sale of CHF3.0 billion in convertible perpetual capital
instruments to Berkshire Hathaway
All pro forma data is for illustrative purposes only; excludes purchase GAAP
adjustments
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Proposed PartnerRe Acquisition of PARIS RE
July 6, 2009 14
Combined Exposures Within Current Risk Parameters
------------------------------------------------------------------------
PartnerRe Proforma
------------------------------------------------------------------------
2009 Q1 Limit as % of 2009 Q1 Limit as % of
Actual Economic Actual Economic
Capital Capital
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Catastrophe Unlikely 7% 12% 9% 12%
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Remote 20% 24% 23% 24%
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Casualty Unlikely 9% 12% 8% 12%
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Remote 12% 18% 11% 18%
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Equity Unlikely 4% 15% 3% 15%
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Remote 6% 18% 4% 18%
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Catastrophe data is Net of Retro and assumes 100% correlation between
portfolios
All pro forma data is for illustrative purposes only
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Proposed PartnerRe Acquisition of PARIS RE
July 6, 2009 15
Transaction Impact: Enhanced Risk-Adjusted Returns
o Enhanced strategic and financial
o Positions PartnerRe at the top end of mid-sized global reinsurers
o Opportunities for growth in a limited growth environment: increased
line sizes and limits
o Creates $1.7 billion shareholders' equity
o Additional debt capacity
o Significant diversification benefits
o Broader product spread: facultative & non-peak cat
o Incremental scale in emerging markets
o Increased size and balance = greater opportunity to add risks
intelligently as and when conditions improve (casualty, capital
markets) o
o Enhanced shareholder value
o Low to moderate integration risk
o Compatible cultures
o Extensive due diligence and analysis performed
o PartnerRe successful track record of integrating European
acquisitions
PartnerRe will be Larger & Stronger; NOT Different
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Proposed PartnerRe Acquisition of PARIS RE
July 6, 2009 16
Conclusion: PartnerRe Strategy Remains the Same
Diversify risk across products and geographies
Maintain risk appetite moderately above the market
Actively manage capital across the portfolio and over the cycle
Add value through underwriting/transactional excellence
Achieve superior returns on invested assets in the context of a disciplined
risk framework
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Proposed PartnerRe Acquisition of PARIS RE
July 6, 2009 17
Conclusion: PartnerRe Goals Remain the Same
Maintain the same return goals within risk parameters
o Average 13%+ operating ROE; range of 6-20% 9 out of 10 years
o Grow book value by average of 10%+ per year
o Grow dividend consistently
Product of value; unquestioned ability to pay claims
o Expertise and advice on risk transfer
o Financial conservatism
Well managed company
o Driven by economic value
o Motivated employees
o Good decision making
o Transparency
o Risk control processes
o Risk management framework
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Proposed PartnerRe Acquisition of PARIS RE
July 6, 2009 18
What Will Change
o Larger and stronger capital base
o Improved diversification
o Lower risk, reduced volatility
o Enhanced ability to execute strategy and improved strategic flexibility
o Enhanced ability to meet long-term financial goals
o Improved global presence in all major markets and lines of business
What Won't Change
o Strategy, Philosophy and Culture
o Stability in Executive Management
o Risk Management Culture and Excellent ERM Framework
o Focus on Economic Value and Economic Value at Risk
o Underwriting discipline Business Unit operating structure
o Long-term financial goals
o Reserving philosophy
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Proposed PartnerRe Acquisition of PARIS RE
July 6, 2009 19
Additional Information and Where to Find It
PartnerRe will file a proxy statement and, if required by applicable laws and
regulations, will file an exchange offer prospectus with the United States
Securities and Exchange Commission (the "SEC") in connection with the proposed
transaction. PartnerRe and PARIS RE urge investors and shareholders to read
such documents when they become available and any other relevant documents
filed with the SEC because they will contain important information. If these
documents are filed, investors and shareholders will be able to obtain these
documents free of charge at the website maintained by the SEC at www.sec.gov.
In addition, documents filed with the SEC by PartnerRe are available free of
charge by contacting Investor Relations, PartnerRe Ltd., 90 Pitts Bay Road,
Pembroke, Bermuda HM 08, (441) 292-0888 or on the investor relations portion of
the PartnerRe website at www.partnerre.com.
PartnerRe and its Directors, Executive Officers and other members of management
may be deemed to be participants in the solicitation of proxies from
PartnerRe's shareholders in connection with the proposed transaction.
Information regarding PartnerRe's Directors and Executive Officers is set forth
in the proxy statement for PartnerRe's 2009 annual meeting, which was filed
with the SEC on April 9, 2009. If and to the extent that PartnerRe's Directors
and Executive Officers will receive any additional benefits in connection with
the transaction that are unknown as of the date of this filing, the details of
those benefits will be described in the proxy statement and the exchange offer
prospectus. Investors and shareholders can obtain additional information
regarding the direct and indirect interests of PartnerRe's directors and
executive officers in the transaction by reading the proxy statement and the
exchange offer prospectus when they become available.
Important Information for Investors and Shareholders
This document shall not constitute an offer to sell or the solicitation of an
offer to buy any securities, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such
jurisdiction.
Subject to satisfaction of certain conditions precedent, PartnerRe will file an
exchange offer for PARIS RE shares and warrants to purchase such shares. A
detailed information document (a prospectus) will be filed with the Autorite
des Marches Financiers (AMF) in France and will be accessible on the websites
of the AMF (www.amf-france.org) and PartnerRe (www.partnerre.com) and may be
obtained free of charge from PartnerRe.
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Proposed PartnerRe Acquisition of PARIS RE
July 6, 2009 20
PartnerRe
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