(Bloomberg) -- Axis Capital Holdings Ltd. Chief ExecutiveOfficer Albert Benchimol, who’s working to complete a merger withPartnerRe Ltd., said his company can withstand a collapse of thedeal and that a termination fee would soften the blow.

“We intend to work on making it happen,” Benchimol said in aletter to employees, issued Wednesday in a filing. “But if itdoesn’t, we are still the same strong company we were before weannounced the merger, and if PartnerRe sells to another party weexpect to receive a $280 million breakup fee that would increaseour book value by approximately 5%.”

PartnerRe said Wednesday that it would negotiate with Italy’sExor SpA, a hostile bidder seeking to upset the merger. Axis andPartnerRe agreed in January to form the world’s fifth-largestproperty-and-casualty reinsurer in a deal that has since beensweetened to value PartnerRe at $126 a share, based onBermuda-based Axis’s closing price of $52.33 on May 1.

Exor’s $6.8 billion proposal, or $137.50 a share, was rejectedby PartnerRe as “unacceptable.” Jean-Paul Montupet, chairman ofBermuda-based PartnerRe, said in a statement that his company isworth materially more. PartnerRe has a waiver from Axis allowingfor direct engagement with Exor, according to the statement.

Under the Axis agreement, PartnerRe shareholders would beentitled to about 51.5% of a combined company. The revised Axisdeal, made after Exor began bidding, also provided for a specialdividend of $11.50 a share to PartnerRe investors.

“Whatever happens, Axis has a bright future,” Benchimol wrote.“We are a great company on our own, and were successfully pursuingour own standalone strategy when PartnerRe approached us with theproposed merger.”

--With assistance from Tommaso Ebhardt in Milan.

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