NU Online News Service, Nov. 23, 12:00 p.m. EST
Insurance rating agency A.M. Best Co. says the ratings of Transatlantic Holdings and Alleghany Corp. and their subsidiaries remain unchanged following the companies’ agreement to merge.
Transatlantic Holdings is to become an independent subsidiary of property and liability insurer Alleghany Corp. under the terms of a cash-and-stock agreement valuing Transatlantic at about $3.4 billion.
In a statement A.M. Best says the combined company will “bring greater diversification of earnings, cash flow sources and business by geography, product, and distribution to Alleghany.”
“Significant liquidity at the parent company level also is expected to be maintained,” A.M. Best says, adding that it will continue to monitor the transaction, and review the ratings of the combined company when the transaction is completed.
Transatlantic and Alleghany say they expect the deal to close during the 2012 first quarter. The companies’ boards have approved the agreement but regulatory and shareholder approvals are needed.
Meanwhile, Bloomberg reports stockholders have sued Transatlantic over its agreement to be taken over by Alleghany.
The suit, filed in New York State Supreme Court in Manhattan, claims the proposed deal undervalues Transatlantic.
In a presentation for shareholders, total capital of the combined enterprise would be about $7.2 billion.
About 40 percent of the new company’s would be long-tail casualty reinsurance. Overall, 84 percent would be reinsurance and 16 percent would be insurance.
By risk, 40 percent would be specialty reinsurance and 21 percent would be specialty insurance.
Of its net written premiums, about 42 percent would be come from overseas.
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