According to PartnerRe, this acquisition is expected to add $1.7 billion in new shareholders' equity to the company.

Separately, Paris Re is expected to distribute $310 million (net of amount due on existing treasury shares held by Paris Re) in cash as a return of capital to its shareholders, leading to a total transaction value of approximately $2 billion.

Upon successful completion of the various steps of this transaction, Paris Re, together with its operating subsidiaries, will be fully integrated into PartnerRe's existing operating structure.

In the first step of the transaction, PartnerRe, which recently acquired approximately 6% of Paris Re's outstanding common shares in a stock-for-stock transaction at the 0.30 exchange ratio, will acquire an additional 57% of Paris Re's outstanding common shares at the same exchange ratio.

The closing of that block purchase is expected to occur in the fourth quarter of 2009, subject to certain conditions including approval of certain insurance and competition regulatory authorities, PartnerRe's shareholder approval and Paris Re's shareholder approval to remove the provisions of its articles of association purporting to require a cash takeover bid for any acquisition of more than one-third of the voting rights of Paris Re. The sellers in the block purchase have agreed to vote in favor of such removal.

In the coming weeks, PartnerRe may enter into agreements to purchase additional Paris Re's shares from certain other shareholders who were shareholders of Paris Re prior to its initial public offering and their private transferees.

Following the closing of the block purchase, PartnerRe intends to commence a voluntary exchange offer for all remaining Paris Re's common shares at the same 0.30 exchange ratio.

The exchange offer would be subject to certain conditions including the approval of the Autorite des Marches Financiers (the French listing authority), an independent expert's report and the listing of PartnerRe shares on Euronext Paris.

While the terms of the exchange offer will provide Paris Re's shareholders with only the right to receive PartnerRe's shares at the same 0.30 exchange ratio, PartnerRe will seek to provide facilities to enhance shareholders' access to liquidity including through the New York Stock Exchange.

Shareholders holding approximately 6% of Paris Re's outstanding shares have agreed to tender into the offer. The exchange offer is expected to close in the first quarter of 2010.

Once PartnerRe owns at least 90% of Parios Re's outstanding shares, it intends to acquire any remaining shares through a compulsory merger under Swiss law at the same 0.30 exchange ratio.

Greenhill & Company and UBS Investment Bank served as financial advisors and Davis Polk & Wardwell provided legal counsel to PartnerRe.

Patrick Thiele, PartnerRe's president and CEO, said: "This is an important acquisition for PartnerRe and provides us the opportunity to enhance our already successful franchise. The greater market presence, risk diversification, capital strength and scale that is created will provide more balance and stability to our company in the face of uncertain and volatile financial and reinsurance markets.

"This acquisition strengthens PartnerRe's balance sheet and financial flexibility and allows us to leverage our infrastructure and capabilities over a broader base for the benefit of key stakeholders of both companies: clients, shareholders and employees."

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