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Platinum Underwriters (PTP) to be Acquired by RenaissanceRe Holdings in $1.9B Deal

By: , dated November 24th, 2014

Shares of Platinum Underwriters Holdings Ltd. (PTP) were up +11.98 or +19.55 percent to $73.25 per share in Monday premarket trading, after news that the company had entered into a definitive agreement to be taken over by RenaissanceRe Holdings Ltd (RNR). Platinum Underwriters’ stock closed at $61.27, up +0.01 or +0.02 percent in Friday’s regular trading session.

Hamilton, Bermuda based Platinum Underwriters Holdings Ltd is a global provider of casualty, finite risk and property reinsurance coverages. The company extends reinsurance coverage through principal subsidiaries in Bermuda and the United States. Platinum’s Property and Marine division offers reinsurance coverage for property damage, damage to crops and marine and offshore energy installations. The Casualty division covers liability, workmen’s compensation, political risk and accident and health, while the Finite Risk division offers reinsurance coverage for large corporations.

Also based in Bermuda, RenaissanceRe Holdings Ltd provides reinsurance services and other related services through its many companies: DaVinci Reinsurance Ltd., Renaissance Reinsurance Ltd., Renaissance Reinsurance of Europe, Top Layer Reinsurance Ltd., RenaissanceRe Syndicate 1458, RenaissanceRe Specialty Risks Ltd. RenaissanceRe Underwriting Managers U.S. LLC and RenaissanceRe Specialty U.S. Ltd.

The deal, which will be a combination of stock and cash, will have RenaissanceRe pay approximately $76 per Platinum share. The aggregate consideration for the transaction will have RenaissanceRe offer 7.5 million of its shares, worth about $0.76 billion and a cash payment of $1.16 billion. The cash portion of the transaction will be funded through a pre-closing dividend paid by RenaissanceRe with the company’s available funds and through issuing additional new senior debt.

Michael D. Price, Platinum Underwriter’s President and Chief Executive Officer said that, “We are pleased to have entered into the definitive merger agreement with RenaissanceRe. RenaissanceRe supported our formation and initial public offering in 2002 and has a demonstrated track record of underwriting excellence. We firmly believe this transaction is in the best interests of our shareholders and beneficial to our clients and brokers.”

Kevin J. O’Donnell, President and Chief Executive Officer of RenaissanceRe, stated that, “We are very pleased to have entered into the definitive agreement to acquire Platinum. It is a well-run company and its integration with RenaissanceRe will benefit our combined companies’ clients through an expanded product offering and broker relationships. It will also accelerate the growth of our U.S. specialty and casualty reinsurance platform and as a result, create enhanced value for our shareholders.”

The $76.00 per share acquisition price represents a premium of 24 percent over Platinum’s closing price on Friday. At the closing of the transaction, Platinum shareholders will receive a $10.00 per share special pre-closing dividend, with each shareholder entitled to receive for each of their Platinum shares either $66.00 in cash or 0.6504 of one RenaissanceRe common share or 0.2960 RenaissanceRe common share and $35.96 in cash. After the close of the transaction, Platinum shareholders will own approximately 16 percent of RenaissanceRe shares outstanding.

Investors are showing their confidence in the deal this morning, with both stocks up significantly in the premarket. Nevertheless, Platinum Holdings stock could be in play while the transaction gains approval from shareholders and regulators. The deal is expected to close by the first half of 2015.

Other News About Platinum Underwriters
Platinum Underwriters Misses on Q3 Earnings & Revenues
3Q earnings fell -3.7 percent short of expectations.
Platinum Underwriters Holdings, Ltd. Declares A Quarterly Dividend On Its Common Shares
$0.08 dividend to be paid to shareholders of record on December 1st.

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Jay Hawk Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

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