ZUG, Switzerland (AM BestWire) — Shareholders of Paris Re Holdings Ltd. approved a series of proposals that would set the table for Paris Re's merger with Bermuda-based PartnerRe Ltd.

According to Paris Re, shareholders representing 71.99 percent of the company's outstanding shares approved five proposals from the board of directors at an extraordinary general meeting on August 11.

Among the measures, shareholders approved the election of Emmanuel Clarke, Bruno Meyenhofer, Albert Benchimol, Costas Miranthis, Tad Walker and William Babcock as new members of the Paris Re board.

Mr. Benchimol, Mr. Miranthis, Mr. Walker and Mr. Babcock are members of PartnerRe's executive committee. Mr. Clarke is head of global specialty lines for PartnerRe.

The new directors replace five current members of Paris Re's board.

Other approved measures include two that involve the reduction of share capital, a measure than reduces the minimum number of Paris Re board members to six from 10, and the deletion of a requirement in Paris Re's articles of incorporation that requires anyone with more than one-third of the company's voting rights to make a cash takeover bid to the remaining shareholders.

Partner Re expects to complete the $2 billion voluntary exchange offer in the fourth quarter of this year. Once it achieves 90 percent ownership of Paris Re it will snap up any remaining shares through a compulsory merger under Swiss law.

It anticipates closure of the exchange offer and the formal merger of the two companies in the first quarter of 2010.

According to Paris Re, the long time frame for the deal is because the merger itself will require approval from a number of different regulatory authorities around the world where various entities of the companies do business.

Pro forma ownership of the combined entity will be divided on the lines of 69 percent by existing Partner Re shareholders and 31 percent by existing Paris Re shareholders. Paris Re was created in 2006 when it was formed by a group of investors. Shortly after, it absorbed the reinsurance business of Axa (BestWire, June 6, 2006). Earlier this week, Paris Re reported its second-quarter net income fell sharply on revenue falls in credit and surety and Gulf of Mexico wind risks, along with catastrophe losses in Europe.

Second-quarter net income fell to $2.4 million (1.7 million euros) from $103.9 million a year earlier.

For the first six months of the year, net income was $121 million, compared with a net loss of $25.6 million a year earlier.

The Switzerland-based reinsurer said net operating income for the second quarter was $59.4 million, down 26.7 percent from the previous year. Paris Re said its loss ratio for the first half was 66, compared with 59.5 a year earlier. The increase was partly due to Windstorm Klaus in Europe, which generated a pretax loss of $18.6 million, representing 3.7 points of loss ratio.