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Reinsurance Company PartnerRE to Delist Preferred

In another action that hurts investors PartnerRE has announced they will delist and deregister their PRE-J 4.875% non cumulative preferred. The reason given is the cost of administration is too high–this is balony of course.

So the preferred is off over $6/share today–current yield around 9%.

PartnerRE was purchased in 2016 by Pillar LTD and this there has been no parent trading since that time.

Thanks to J for posting their press release earlier today.

22 thoughts on “Reinsurance Company PartnerRE to Delist Preferred”

  1. I saw a couple of large prints in this of 150,000 and 600,000 total if memory serves, last Thursday. Those could be an ETF cleanup but PFFF still holds this.
    Does anyone know if PFFF is required to sell?

  2. This is why I no longer buy a preferred stock where an underlying common stock is not listed on an exchange, or does not pay a dividend.

    It’s like someone pointing a gun at you, while assuring you they won’t pull the trigger.

    If that means missing out on an attractive issue, so be it.

  3. Regarding PartnerRe Ltd., yesterday @Kid Twist wrote:
    _____
    Thanks for feedback. I don’t think PFF has even started selling its PRE+J position yet. The robots who run that big, dumb ETF still may not even know about the going dark status.

    I’m holding out for $12.50 and 9.75% yield. This is likely to be one wild ride between now and 7/19/24. Hold onto your britches!

    https://innovativeincomeinvestor.com/reader-initiated-alerts/comment-page-13/#comment-121274
    ____
    This may be obvious to many of you, but PFF has not in fact begun selling its PRE-J shares. As of yesterday, they still owned 785,556 shares. Since PFF follows its underlying index PHGY (the “ICE Exchange-Listed Preferred & Hybrid Securities Index”), it will not begin selling until July 31st at the earliest, when under the ICE rules PHGY will remove PRE-J from its August, 2024 index (the ICE rules for PHGY state that it can only hold NASDAQ- or NYSE-listed preferred shares).

    PFF has gotten a lot better about offloading shares it can no longer hold, but I’d be waiting until the end of July or even August before I even thought about putting in a lowball offer for the soon-to-be-dark issue.

    The nearest similar situation I can think of off the top of my head is with HMLPF. Hoegh announced its delisting on December 5, 2022. Form 25 delisting HMLPF was filed on December 23, 2022. PHGY removed HMLPF from its index on February 1, 2023. PFF got rid of over 530,000 HMLPF shares on January 30th, 2023 and the stock closed at $18.00 that day (it did a good job offloading the shares, and the stock didn’t crater during the month). But one retail US brokerage (Schwab) didn’t remove HMLPF to its restricted “sell-only” list until late March, 2022 – when shares traded in the low $11 range.

    So if someone were bound and determined to own PRE-J as a dark, expert matter holding, patience would seem to be a virtue.

    1. But…..if it goes unlisted/dark on July 19th, will us retail customers be able to buy it after that?

    2. As of July 2nd PFF has 785,382 shares of PRE+J, so no notable selling yet. Even if PRE+J goes dark it would seem to be a good long term hold when it goes sub 12 and the yield gets over 10%.

  4. Open question on this. According to quantum online

    How does the rating agency language below effect it things?

    Also any chance they stop declaring dividends or do they have other downsides associated with that?

    This security is possibly subject to an early call as a result of an amalgamation or merger at $26.00 (104%) of their principal amount plus declared and unpaid dividends. (see the prospectus for further information). The Company may redeem the preferred stock before 03/15/2026 at $25 (100%) of their principal amount plus declared and unpaid dividends, if a regulatory capital event occurs; before 03/15/2026 at $25.50 (102%) of their principal amount plus declared and unpaid dividends if a rating agency event occurs. (see prospectus for further information).

    This security was rated as Baa2 by Moody’s and BBB by S&P at the date of its IPO. In regard to the payment of dividends and upon liquidation, the preferred shares rank junior to the company’s senior debt, equally with other preferreds of the company, and senior to the common shares of the company. See the IPO prospectus for further information on the preferred stock by clicking on the ‘Link to IPO Prospectus’ provided below.

  5. If it came out to the public as a registered security then it must be maintained that way or call it. You want to take it private then perform instead of poisoning the process of transparency (which is SUCH a big bs lie by fact). Where’s the SEC? Oh yeah, learned from a real pro in the era of Geithner the Bailout Saint.
    “Let them eat cake!”

    1. “If it came out to the public as a registered security then it must be maintained that way or call it”

      I see nothing in the prospectus requiring this and based on my knowledge of securities law, if you are saying it must remain listed or be called, I do not believe this is correct.

  6. Tim, it looks like a risk with all these private insurers. Aspen included? I wonder if they will try to buy them back on the open market on the cheap! The insurer needs the rating to acquire/issue the insurance, obvious no rating on the preferred’s.

  7. They have floater trading now ~ 89 or current yield of 8.90% Floats at 258 over 3m sofr cusip 70212JAA3 Need about 12 pps on J to get a 10% current… fwiw

    1. The question is whether they will continue to pay S&P to maintain a credit rating. Presumably they would want continued access to public debt markets but maybe they have alternative financing.

      S&P last reviewed them Jan 2024 so they’ve paid to keep a rating so far.

  8. This is surprising and bad for holders of PRE-J. PRE is an insurance company that was taken private a few years ago. At the time, they treated preferred shareholders very well giving their high coupon prefs a fresh set of call protection for no reason other than the kindness of their heart. Eventually they called them and refinanced with PRE-J. Now out of the blue they are delisting them. It’s a strong insurance company and these prefs are comfortably IG but the yield wasn’t amazing even if they continued being listed. As a pref that will get De-Listed and move to the expert market, I wouldn’t want to own it.

    I think I see what happened here. PRE was taken private by Exor back in 2016. That’s when Exor treated preferred shareholders unusually well by giving them a fresh set of call protection. They called them and then issued PRE-J in 2021, likely with the intention of keeping it listed. PRE was then sold to Covea in 2022. Looks like new ownership is not as preferred shareholder friendly. Exor is a publicly traded company and it appears Covea is privately held and that probably played into it.

    1. Landlord:

      Thanks for your feedback. I must reiterate that you are one of the finest commenters on this site and I always consider your posts as “must reads”.

    2. Might this be the old Blackstone 2-step?
      1: They announce the de-listing.
      2: After the price gets torched in reaction to the announcement, they come in with a tender offer above the diminished price, but still well below the price before the announcement.
      A cheaper way to retire at least some of the preferred shares.

    1. Derek, the dividend is not going to disappear. But they no longer have to report financials. It will be difficult to track. I tried to follow the trail this morning and looked them up on quantum and saw where Pillar had bought them and a Dutch company owned Pillar now looking at the Internet it seems like Pillar is partly owned by a PE ( private equity) group. But I’m no expert
      PE ownership and listed in Bermuda and changes in ownership over 8 or 10 years would require more research before I would own

      1. Thanks. Was being only slightly sarcastic. But it is non-cumulative, so what would stop them? Couldn’t they just retain capital and earnings within the PartnerRe insurer subsidiary without paying further dividends to the parent (or preferred holders) and then cash out when then they sell it on to the next guy?

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