As scheduled earlier, RenaissanceRe Holdings Ltd. RNR completed the acquisition of Platinum Underwriters Holdings, Ltd. However, this news failed to infuse any spark in share price movement due to broader market dynamics. Post the closing of the deal Platinum Underwriters that traded under the ticker symbol PTP in the New York Stock Exchange has stopped trading.
The deal was initially announced in November last year whence the purchase consideration was announced at $1.9 billion. The aggregate consideration comprised cash and stock components worth $1.16 billion and $0.76 billion, respectively. The deal received pending regulatory approvals and nodding from Platinum’s shareholders in Feb 2015.
Per the terms of the agreement signed earlier, shareholders of Platinum Underwriters were to receive $76.00 per share in stock and cash, and a $10.00 per share special pre-closing dividend at the culmination of the deal. Shareholders could choose to receive the remaining consideration as $66.00 per share in cash, 0.6504 RenaissanceRe shares per Platinum Underwriters share or as a combination of $35.96 in cash and 0.2960 RenaissanceRe shares per Platinum Underwriters share.
As for the financial benefits, management of RenaissanceRe expects the deal to enhance book value per share and earnings per share, and boost the long-term value of the business for its stakeholders. On the operational front, the closing of the deal has not only made its portfolio lucrative to its existing and potential clients through the expansion of its underwriting, product and capital solutions capabilities but also bolstered the market presence of the company.
Since Platinum Underwriters is a well-run company, we believe its integration with RenaissanceRe will form an entity that will create a vast product portfolio and broker relationships, thereby benefiting the existing clients of both companies. Moreover, being a leading name in casualty reinsurance, the acquisition is expected to help RenaissanceRe strengthen its U.S. specialty and casualty reinsurance platform. Particularly the strong underwriting and risk management business of Platinum Underwriters should complement the risk management framework of RenaissanceRe.
RenaisanceRe currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the property and casualty space include Allied World Assurance Company Holdings, AG AWH, Endurance Specialty Holdings Ltd. ENH and Arch Capital Group Ltd. ACGL. All three stocks sport a Zacks Rank #1 (Strong Buy).
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