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Transatlantic And Allied World Mutually Terminate Merger Agreement

On August 12, 2011, Transatlantic entered into a confidentiality agreement with National Indemnity Company ("National Indemnity"), a member of the group of insurance companies of Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B).  Although the two companies have engaged in discussions, National Indemnity has been interested in conducting only very limited due diligence, focused solely on Transatlantic's Zurich subsidiary.  National Indemnity has conveyed to Transatlantic that it is unwilling to increase the terms of its proposal and is only interested in an acquisition at or below $52 per share.  The Transatlantic Board of Directors has concluded that selling Transatlantic for cash at such a substantial discount to book value would not deliver fair value to stockholders.  Transatlantic and National Indemnity remain under a confidentiality agreement, and, while further talks may occur, no further talks are currently scheduled.


The Company also today announced preliminary financial results for the third quarter of 2011:

  • Diluted net income per common share for the quarter is expected to range between $0.85 and $1.15.
  • At quarter end, book value per common share is expected to range between $69.00 and $70.00.(2)
  • Net premiums written for the quarter are expected to range between $935 million and $990 million.
  • Net pre-tax investment income for the quarter is expected to range between $116 million and $122 million.

Preliminary financial data for the quarter include:

  • Preliminary pre-tax net catastrophe costs of $55 million to $65 million, which include costs related to storms in Denmark and Hurricane Irene, each of which occurred in the quarter, and modest increases in costs related to earlier 2011 events.    
  • A pre-tax benefit of $45 million resulting from a negotiated settlement of arbitration proceedings with United Guaranty Residential Insurance Company, United Guaranty Mortgage Indemnity Company, United Guaranty Credit Insurance Company and United Guaranty Residential Insurance Company of North Carolina involving disputes over certain assumed reinsurance contracts related to subprime mortgages and credit default insurance.  
  • Pre-tax merger related costs, including termination fees, of $55 million to $60 million.

The letter sent to Transatlantic stockholders follows:

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