PartnerRe Ltd. (PRE) Looks Poised to be Acquired by EXOR

We issued an updated research report on PartnerRe Ltd. PRE on Dec 11, 2015.

PartnerRe enjoys a diversified business model, both geographically and across its reinsurance portfolio.

PartnerRe has also expanded its horizon through strategic acquisitions that blend well with its core long-term growth goals. The recent alliances in France and Morocco will further drive growth in 2015 and beyond.

PartnerRe continues to return additional value to its shareholders through share buybacks and dividend payments.

Last month, the company’s shareholders voted to approve its proposed acquisition by EXOR. The acquisition of PartnerRe Ltd. by EXOR was originally announced on Aug 2, 2015.

The EXOR deal will help PartnerRe retain its management and brand name. EXOR's ownership will provide long-term stability to the company and will help it to become a vital player in the reinsurance business. On EXOR’s part, the deal has been unanimously approved by its board, which will enable swifter processing of the transaction.

Nevertheless, the ongoing market volatility caused by the after-effects of the global economic turmoil has hit PartnerRe’s prime reinsurance business. Higher competition, low demand, pricing pressure, and sluggish reinvestment yields on fixed income portfolio are further expected to restrict the earnings potential in the reinsurance business in the upcoming quarters.

During the last reported quarter the company recorded earnings of $4.42 per share that surpassed the Zacks Consensus Estimate of $2.68. With this, the company succeeded in maintaining its streak of positive earnings surprises in all of the last four quarters with an average beat of 28.5%.

PartnerRe currently carries a Zacks Rank #2 (Hold). Other stocks worth considering are Cincinnati Financial Corp. CINF, Hallmark Financial Services Inc. HALL and Heritage Insurance Holdings, Inc. HRTG. All three stocks sport a Zacks Rank #1 (Strong Buy).

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