Transatlantic Holdings, Inc. and Allied World Assurance Co. Holdings, AG on Sunday signed a merger agreement that will create a leading, global specialty insurance and reinsurance company. The combined entity will have total invested assets of $21 billion, total shareholders’ equity of nearly $7 billion, and total capital of $8.5 billion.
The combined company will operate under a holding company structure with the corporate name TransAllied Group Holdings, AG, offering specialty insurance and reinsurance products and services via two distinct brands – Transatlantic Reinsurance and Allied World Insurance.
The transaction is structured as a merger of equals, with shareholders of Transatlantic receiving 0.88 Allied World common shares for each Transatlantic common share held. Following the merger, Transatlantic shareholders will own approximately 58 percent of the combined company on a fully diluted basis, with Allied World shareholders owning approximately 42 percent.
A.M. Best said the two firms’ ratings remain unchanged and assigned a stable outlook. The ratings firm said that the merged firm will likely benefit from an “improved competitive position.”
Upon completion of the merger, Scott Carmilani, chairman, president and chief executive officer of Allied World Assurance Co. Holdings AG, will serve as the president and CEO of the new company, with overall responsibility for the global organization.
Mike Sapnar, executive vice president and chief operating officer of Transatlantic, will serve as president and CEO, Global Reinsurance.
Both Carmilani and Sapnar will serve on the combined company’s board of directors, which will have 11 seats, six appointed by Transatlantic and five by Allied World.
Richard Press, Transatlantic’s non‐executive chairman, will serve as the non‐executive chairman for the combined company for the first year following the closing of the merger
Robert Orlich, president and CEO of Transatlantic, will retire upon the closing of the transaction.
Orlich said that for Transatlantic the transaction delivers primary insurance operations, a Lloyd’s presence and a bigger capital base outside the U.S., allowing for greater capital allocation flexibility.
Carmilani said both companies’ operations will benefit from a “significant” global footprint with access to distribution channels within all major markets as well as “attractive geographic and product diversity.”
The combined company will have 39 offices located throughout 18 countries worldwide.
Both companies’ boards of directors have unanimously approved the transaction. Closing is estimated for the fourth quarter of 2011, subject to approval by the shareholders of the respective companies, receipt of regulatory approvals and notices, and other customary closing conditions.
Ratings analysts at A.M. Best Co. said that the ratings of the subsidiaries of Allied World Assurance Company Holdings, AG as well as Transatlantic Holdings, Inc. and its subsidiaries are unchanged following the announcement of the merger pact.
All of the rated operating companies of both organizations maintain financial strength ratings of A (Excellent) and issuer credit ratings of “a”, and all ratings have a stable outlook.
A.M. Best said that this transaction brings two complementary organizations together, with Allied World being predominately a primary writer and Transatlantic a pure reinsurer, and the merged entity is “expected to enjoy an enhanced business profile that will likely inure benefits in the form of an improved competitive position.”
A.M. Best also said the merged entity should also benefit from broader distribution channels, broader product diversity and a significant global presence.
Transatlantic Holdings, Inc. is an international reinsurance organization headquartered in New York, with operations worldwide. TRH’s subsidiaries, Transatlantic Reinsurance Co., Trans Re Zurich Reinsurance Co. Ltd and Putnam Reinsurance Co. (Putnam), offer reinsurance capacity on both a treaty and facultative basis, structuring programs for a full range of property /casualty products, with an emphasis on specialty risks.
Allied World Assurance Co. Holdings, headquartered in Switzerland, has offices in Atlanta, Bermuda, Boston, Chicago, Costa Mesa, Dallas, Dublin, Farmington (Conn.), Hong Kong, London, Los Angeles, New York, San Francisco, Singapore and Zug.