Sunday’s Post 12.11.11 –  Transatlantic Holdings Inc., after cancelling merger deal with Allied World Assurance Corporation in September, has now decided to be absorbed by Alleghany Corp. The  deal worth  nearly three and a half billion would end a month-long discussion. Last November, Transatlantic was valued at just about $60.00 per share.. The companies announced that the deal creates the industries largest U.S. excess and surplus lines and global specialty reinsurance company. The deal will be completed during the first quarter of 2012. According to the announcement, Transatlantic will change into an independent stand-alone subsidiary of Alleghany after the deal. The companies are anticipating Transatlantic to keep current financial strength ratings of “A+” from Standard & Poor’s and “A” from A.M. Best.

The CEO of Alleghany,  is delighted by the deal as he claims it would be an outstanding opportunity to create significant value for Alleghany and Transatlantic stockholders, because the uniqueness and power of our leading specialty insurance and reinsurance platforms has the ability to “provide all the ingredients necessary for superior performance. The Chairman of Transatlantic adds that the board directors believe that partnering with Alleghany provides “immediate value to our stockholders” while it also provides an opportunity to create long-term value through the incorporation of the strength of Transatlantic franchise and the balance sheet with Alleghany’s leading U.S. specialty insurance platform and superior investment track record.The former chief executive of Berkshire Hathaway’s General Re, will be the president of Alleghany Insurance Holdings and Executive Vice President of the parent company Alleghany. Furthermore, he will correspondingly be board chairman of Transatlantic. Brandon, who formerly contended Warren Buffett at Berkshire Hathaway, is working with Morgan Stanley on a potential buyout bid for Transatlantic, according to the media. Three months ago, Transatlantic and Switzerland-based Allied World Assurance called off their merger deal. The two companies didn’t mention a specific reason besides that the call-off was mutual. A number of companies have expressed their interest in acquiring Transatlantic—including Validus Holdings and National Indemnity Corporation which is part of Berkshire Hathaway.

-Mike

Michael E. Dortch
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