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A.M. Best Comments On Alleghany Corporation And Transatlantic Holdings, Inc.’s Merger

A.M. Best Co. has commented that the ratings of Alleghany Corporation (Alleghany) (Wilmington, DE) [NYSE: Y], its subsidiaries and Transatlantic Holdings, Inc. (Transatlantic) (New York, NY) [NYSE: TRH] and its subsidiaries are unchanged following the announcement of a definitive agreement under which Transatlantic will combine with Alleghany. All of the rated operating companies of both organizations maintain their respective financial strength ratings, issuer credit ratings and outlooks. (See A.M. Best’s press releases of June 10, 2011 and December 21, 2010.)

The transaction brings two complementary organizations together. Alleghany’s specialty insurance platform and Transatlantic’s reinsurance platform, combined with a shared philosophy of underwriting discipline, 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. The transaction is expected to be finalized in the first quarter of 2012, subject to customary regulatory and shareholder approvals.

The ratings of Alleghany and Transatlantic will continue to be actively monitored throughout the transaction period, and the ratings of the merged entity will be reviewed once the transaction is completed and A.M. Best has completed its analysis.

The principal methodology used in determining these ratings is Best’s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition , which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Rating Members of Insurance Groups”; “Understanding Universal BCAR”; “Understanding BCAR for Property/Casualty Insurers”; “Catastrophe Analysis in A.M. Best Ratings”; and “A.M. Best’s Ratings & the Treatment of Debt.” Methodologies can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2011 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.



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