What's going on?

With its once-trusty money-spinners coming up short, Covea is done umming and ahhing: the French insurer announced on Monday it�s in talks to buy reinsurer PartnerRe for a reported $9 billion.

What does this mean?

When insurance firms insure people and companies, they�re taking on a lot of risk � so much so, in fact, that they take out their own insurance with reinsurers. That way, if an insurer has a high number of hefty payouts to manage after, say, a natural disaster, the reinsurer will cover some of it for them.

One such reinsurer is PartnerRe, which is owned by Italian holding company Exor. But perhaps not for much longer: Covea has its eye on PartnerRe, and it�s apparently willing to pay $9 billion to take it off Exor�s hands. That’d be the holding company�s second huge deal in recent months.

Why should I care?

For markets: Merge and turn.
Investors seemed keen on the big PartnerRe payout, and Exor�s stock shot up 5% on the news. That could be because the holding company now has a bit of extra cash to spend on its more glamorous businesses: namely sportscar brand Ferrari, and swish soccer club Juventus.

The bigger picture: Spread your wings.
Funnily enough, insurers often make a loss on selling insurance policies. They actually make most of their money from investing the money those policies bring in. It makes sense: a customer might not claim on a policy for years, which gives the insurer plenty of time to make a return on it elsewhere. But with interest rates so low at the moment, those firms aren’t making as much on relatively safe investments (like bonds) as they used to. That means their profits are coming under pressure � which might explain why firms like Covea are trying to grow and diversify.