Conyers Bermuda Corporate Practice Group 2015 Year in Review

Insurance
Bermuda’s insurance industry experienced a year of milestones in 2015. In November, Bermuda received
full Solvency II equivalence – joining Switzerland as the only jurisdictions to receive such an endorsement.
The Island’s government and business community worked toward equivalency for over six years. This
achievement benefits the (re)insurance sector as it creates a level playing field for commercial insurers to
conduct business within the European Union. Further, it was a record year for M&A tie-ups in the insurance
industry. In all 21 transactions were completed, with our leading insurance team advising on the majority.
HIGHLIGHTED TRANSACTIONS
Fidelis Insurance forms in Bermuda – the largest new Class 4
Insurer in a decade
Conyers advised on the formation, licensing and capitalisation
(US$1.5 billion) of Fidelis Insurance Holdings Limited and its
wholly-owned subsidiary, Fidelis Insurance Bermuda Limited in
June. The transaction represents the largest new start-up Bermuda
Class 4 commercial reinsurer since 2005, and is the single largest
insurance capital raising transaction for 2015.
Issuance of the first Chinese-sponsored cat bond –
Panda Re Ltd.
The third quarter of 2015 saw the issuance of the first Chinesesponsored
cat bond, Panda Re, an indication of the everbroadening
acceptance of innovative structures – yet another
endorsement of Bermuda as the jurisdiction of choice.
Qatar Reinsurance Company Limited Redomiciles to Bermuda
Qatar Reinsurance Company Limited (“Qatar Re”), the established
reinsurance subsidiary of the US$4.3 billion Qatar Insurance
Company (“QIC”) group, completed its re-domicile to Bermuda,
and was licensed by the Bermuda Monetary Authority as a Class 4
reinsurer in December. Qatar Re cited Bermuda’s “decades of
proven reliability”, “uncontested best practices” and its anticipated
full Solvency II equivalence as being some of the regulatory drivers
for its move to Bermuda.
From a commercial perspective, Qatar Re also noted that the move
will allow the company to expand its client base through additional
products and underwriting expertise as well as an increased
market scope and presence, and that it will support its ability to
access and compete throughout the world’s markets in a credible
manner.
EXOR OUTBIDS AXIS FOR PARTNERRE
In late 2014 PartnerRe Ltd. (“PartnerRe”) identified AXIS Capital
Holdings Limited (“AXIS”) as an attractive candidate for its strategic
goals at that time. The two explored a potential merger of equals,
announcing their agreement to amalgamate on 25 January 2015 in a
US$11 billion shares-only deal which would have created the world’s
fifth-largest property-and-casualty reinsurer.
On 14 April 2015 EXOR S.p.A. (“EXOR”) announced a US$6.4 billion
cash offer for 100% of the common shares of PartnerRe, which it
represented as a 16% premium to the AXIS-PartnerRe deal. On 4 May
EXOR’s offer was rejected on the basis that it undervalued PartnerRe,
and on the same day PartnerRe and AXIS reaffirmed their deal which
now included a special dividend and termination fees increased by
US$30 million to US$280 million. EXOR responded by raising its offer
to US$6.8 billion, which it represented as a 10% premium to the
revised AXIS-PartnerRe deal. PartnerRe again turned down EXOR’s
offer on value and terms.
Following a further round of deal enhancements, PartnerRe
announced on 3 August that it had agreed to be acquired by EXOR
and would pay US$315 million to AXIS to terminate their agreement
to amalgamate. During the “go shop” period that followed no
alternative offers for PartnerRe were made and at its 19 November
special general meeting the merger with EXOR was approved with
the deal expected to close in February 2016.
Of interest from the Bermuda corporate law perspective is the fact
that the AXIS-PartnerRe agreement featured a “force the vote” deal
protection provision. Although that vote was never held, in connection
with the proxy contest beforehand EXOR sought an injunction
from the Supreme Court of Bermuda to compel PartnerRe to disclose
certain non-public information related to its beneficial owners;
however that injunction was denied.
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