One of the biggest shareholders in Bermuda-based reinsurance firm PartnerRe has backed a $6.4 billion rival bid for the company.

PartnerRe had agreed a deal to merge with rival Bermuda firm Axis — but a surprise bid by Italian investment firm Exor has opened up a race for control of the firm.

Franklin Mutual Advisers, the third biggest shareholder in PartnerRe with a 4.6 per cent holding at the end of last year, according to Yahoo Finance, backed the bid by Exor, controlled by the billionaire Agnelli family, over the Axis deal.

Franklin Mutual Advisers chief executive Peter Langerman said the Exor all-cash bid by Exor was “much superior” to the all-share deal PartnerRe agreed with Axis in January.

And Mr Langerman revealed that his company had expressed concern over the PartnerRe/Axis merger after it was announced in January.

He told Reuters: “We weren’t happy with the terms of the deal and we expressed that to the company.”

The merger proposal was challenged this week when Exor, run by the family behind the massive Fiat Chrysler car group, announced its rival proposition.

The Exor bid amounts to $130 a share — a 16 per cent premium on the PartnerRe/Axis all-share transaction.

Mr Langerman said PartnerRe should engage not only Exor but “any and all interested parties” to explore whether it can find a better offer.

Exor chairman and chief executive John Elkann said his firm intended to keep the existing PartnerRe management and staff and run the company as a stand-alone enterprise.

He added that taking the firm private meant it would no longer have to satisfy shareholders looking for quick profits and offer long-term stability.

The deal with Axis, however, would be likely to lead to job losses across both firms, who employ around 130 between them in adjoining offices in Pitts Bay Road in Pembroke, as the new joint operation looked to save $200 million a year in costs.

Exor’s interests include controlling interests in Fiat Chrysler, luxury sports car maker Ferrari and top flight Italian football team Juventus.

Axis chief executive Albert Benchimol said on Tuesday the firm remained “fully committed” to the merger.

The PartnerRe board said it would examine the competing bid by Exor “to determine the course of action that it believes is in the best interests of PartnerRe and its shareholders” and announce its decision later.

If PartnerRe walks away from the Axis deal, it would be subject to a $250 million penalty under the terms of the merger agreement.