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Transatlantic And Allied World Mutually Terminate Merger Agreement

Thank you for your support.



Richard S. Press, Chairman, on behalf of the Board of Directors


1. Claim:  "…we see this as essentially a book for book value exchange at parity to each party"(6)
  • Fact:  Validus never conducted due diligence of non-public information.  One cannot realistically arrive at a book value to book value transaction by arbitrarily adjusting downward Transatlantic's book value.

2. Claim:  Reserves are inadequate, necessitating a $500 million writedown of our net worth.
  • Fact:  Four external parties, including two independent actuarial firms, evaluated Transatlantic's reserves over the last 12 months.  All of these parties were comfortable with the adequacy of our reserves.
  • Fact:  Validus never conducted due diligence of non-public information.

3. Claim:  "Rating agency commentary indicates Validus and Transatlantic would be 'strong partners.'"(7)
  • Fact:  Moody's states that the combination would be "credit negative" for Transatlantic. ( 8)
  • Fact:  Higher ratings are better than lower ratings.

4. Claim:  Pro forma debt to capitalization of a combined Validus and Transatlantic would be 20.1%.(9)
  • Fact:  This claim is based on the assumption of including Validus' junior subordinated debentures as 100% equity.  The Validus S-4 discloses a pro forma total debt to capitalization ratio of 23.4%, which we believe to be more reflective of rating agencies' views.(10)

5. Claim:  Validus has better catastrophe risk management experience.(11)
  • Fact:  Validus' claim is based solely on one event and on a flawed comparison of Transatlantic's Japanese loss to its Florida PML .  
  • Fact:  Transatlantic has consistently outperformed Validus when measuring after-tax cat losses as a percentage of cumulative property catastrophe premiums written, even when comparing Transatlantic's net losses to net premiums to Validus' net losses to gross premiums .  Between January 1, 2008-June 30, 2011 after-tax cat losses prior to any reinstatement premiums as a percentage of gross property catastrophe premiums written were 52% for Validus. For Transatlantic, for the same period, the ratio of after-tax cat losses prior to any reinstatement premiums as a percentage of net property catastrophe premiums written was only 44%.(12)
  • Fact:  Transatlantic has been writing cat business for 25 years compared with less than six years for Validus.

6. Claim:  Validus is balanced between insurance and reinsurance," with 40% of premiums coming from insurance underwriting. ( 13)
  • Fact:  Validus' Lloyd's syndicate's (Talbot's) premium appears to be more than 50% reinsurance, which would bring the parent company business mix to about an 80/20 split of reinsurance to insurance.(14)

7. Claim:  Lloyd's syndicate (Talbot) "easily satisfies Transatlantic's stated strategic objectives" of establishing U.S. primary insurance operations.(15)
  • Fact:  Talbot is subject to Lloyd's restrictions and requirements and is not an effective substitute for U.S. primary insurance operations for Transatlantic.

8. Claim:  "EU passport through Validus Re Europe Limited, Funded as Appropriate"(15)
  • Fact:  Validus Re Europe has only $6 million of capital and Transatlantic Re writes more than $1 billion of European premium.  

9. Claim:  "We also see very clear benefit to Transatlantic to be able to diversify their business more broadly, both in class and geography" ( 16)
  • Fact:  No line of business comprises more than 16% of Transatlantic's premium and 50% of its premium is written outside the U.S.  We do not need to merge with Validus to achieve diversification.  If anybody needs a deal to "diversify," it is Validus.

10. Claim:  "Historically, Transatlantic did not develop operations in Bermuda or at Lloyd's, which are natural extensions of Transatlantic's worldwide reinsurance franchise"(17)
  • Fact:  Transatlantic wrote more than $200 million of premium in 2010 from Bermuda-based cedants.
  • Fact:  Lloyd's as a composite represents $215 million of Transatlantic's premium and is one of our top 5 reinsurance clients.
  • Fact:  Transatlantic writes nearly as much property cat premium as Validus – you do not need a substantial Bermuda-based operation to write cat business.

Goldman, Sachs & Co. and Moelis & Co. LLC are acting as financial advisors and Gibson, Dunn & Crutcher LLP and Richards, Layton & Finger, P.A. are acting as legal counsel to Transatlantic.

About Transatlantic Holdings, Inc.

Transatlantic Holdings, Inc. is a leading international reinsurance organization headquartered in New York, with operations on six continents. Its subsidiaries, Transatlantic Reinsurance Company®, Trans Re Zurich Reinsurance Company Ltd. and Putnam Reinsurance Company, offer reinsurance capacity on both a treaty and facultative basis -- structuring programs for a full range of property and casualty products, with an emphasis on specialty risks.

Visit – – for additional information about Transatlantic.

Cautionary Note Regarding Forward-Looking Statements

This communication contains forward-looking statements that involve a number of risks and uncertainties, including expectations regarding the aggregate net impact on Transatlantic from recent catastrophe losses.  Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Such statements involve risks and uncertainties, which may cause actual results to differ materially from those set forth in these statements. For example, these forward-looking statements could be affected by risks that the terminated merger agreement disrupts current plans and operations; risks that the unsolicited Validus exchange offer, consent solicitation and/or National Indemnity proposal disrupts current plans and operations; the ability to retain key personnel; pricing and policy term trends; increased competition; the impact of acts of terrorism and acts of war; greater frequency or severity of unpredictable catastrophic events; negative rating agency actions; the adequacy of loss reserves; changes in regulations or tax laws; changes in the availability, cost or quality of reinsurance or retrocessional coverage; adverse general economic conditions; and judicial, legislative, political and other governmental developments, as well as management's response to these factors; and other risks detailed in the "Cautionary Statement Regarding Forward-Looking Information," "Risk Factors" and other sections of Transatlantic's Form 10-K and other filings with the Securities and Exchange Commission. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. Transatlantic is under no obligation (and expressly disclaims any such obligation) to update or revise any forward-looking statement that may be made from time to time, whether as a result of new information, future developments or otherwise, except as required by law.

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