Transatlantic Holdings, Inc. (



Q2 2011 Earnings Conference Call

July 28, 2011 11:00 ET


Tom Cholnoky – Senior Vice President, Investor Relations

Bob Orlich – President and Chief Executive Officer

Mike Sapnar – Chief Operating Officer

Steve Skalicky – our Chief Financial Officer


Cliff Gallant – KBW



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Good morning and welcome to the Second Quarter of 2011 Transatlantic Holdings, Inc Earnings Conference Call and Webcast. All participants will be in listen-only mode. (Operator Instructions) After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded.

I would now like to turn the conference over to Tom Cholnoky, Senior Vice President of Investor Relations. Mr. Cholnoky, please go ahead.

Tom Cholnoky

Senior Vice President, Investor Relations

Good morning and welcome to Transatlantic Holdings earnings conference call to discuss results for the second quarter ended June 30, 2011. You can access a copy of our press release and accompanying financial supplement on the Investor Information page of our corporate website at

Leading today’s call will be Bob Orlich, President and Chief Executive Officer; Mike Sapnar, Chief Operating Officer and Steve Skalicky, our Chief Financial Officer. After prepared comments, we will open the call for questions.

Before we begin, I note that we will refer to certain non-GAAP financial and operating measures on today's call. We provide reconciliations of those figures to their most directly comparable GAAP measures in our press release and supplement. In addition, comments made on today's call may contain forward-looking statements. These forward-looking statements are based on current assumptions and opinions concerning a variety of known and unknown risks. Actual results may differ materially from those contained in or suggested by such forward-looking statements. Transatlantic's filings with the Securities and Exchange Commission contain a description of the business environment in which Transatlantic operates and the important factors risks and uncertainties that may affect its business and financial results.

Finally, pleased to note that the following communication is not an offer to sell, or solicitation of any offer to buy any securities, or a solicitation of any vote or approval.

We urge investors and security holders to read the registration statement on Form S-4, which was filed by Allied World on July 7, 2011, including the joint proxy statement/prospectus and all other relevant documents filed with the SEC are sent to stockholders as they become available because they will contain important information about the proposed merger with Allied World.

We also urge investors and security holders to read our solicitation/recommendation statement on scheduled 14D-9, which we filed this morning. As it contains important information about the exchange offer commenced by an analysts. In addition, Transatlantic, Allied World and their respective directors and executive officers maybe deemed to be participants in any solicitation of proxies in connection with the proposed merger with Allied World.

Information regarding the interest of these participants can be found in Transatlantic and Allied World’s most recent proxy statements filed with the SEC and in the joint proxy statement or prospectus.

With that, I will turn the call over to Bob Orlich.

Bob Orlich – President and Chief Executive Officer

Thanks, Tom, and good morning everyone. Before I review our second quarter results I would like to first take a moment to briefly address some of the recent M&A activity involving our company.

Early of this morning we filed the schedule 14D-9 and issued a press release announcing that our board unanimously recommends the stockholders reject Validus’ unsolicited offer and not exchange any of their shares. I encourage everyone to read the information we filed this morning for details, but I would like to briefly touch on a few key considerations that led the board to make this determination.

First and most importantly the Validus exchange offer economically disadvantageous Transatlantic’s stockholders. It does so by setting terms that do not adequately reflect Transatlantic’s contributions to a combined company and also by reducing the value offered to our shareholders via the proposed reserve adjustment. The Validus offer also results in lower book value per share both compared to Transatlantic on a standalone basis as well as in comparison for the Transatlantic-Allied World merger.

Second the Validus proposal offers inferior long-term value creation potential for Transatlantic’s stockholders and the Transatlantic-Allied World merger, Transatlantic’s stockholders will participate in approximately 58% of the long-term value creation, where as in the Validus proposal Transatlantic’s stockholders will participate in approximately 48% of the long-term value creation.

Third, the exchange offers presents significant uncertainty with respects to our rating outcome. Transatlantic’s strong ratings are competitive advantage for us given the business we write and in a combination with Allied World those ratings would be maintained. The Validus exchange offer also presents a high level of conditionality, resulting in substantial uncertainty for Transatlantic stockholders as to whether it will be completed and if completed, when and what cost.

Because Validus refuses to execute the necessary confidentiality agreement required to conduct mutual due diligence, we are unable to review and analyze Validus’ synergy estimates, the risk profile of the combined company and many other important aspects of Validus’ business. The confidentiality agreement that we asked Validus to sign, contains substantially the same terms and conditions that Allied World agree to, including the standstill and we believe it is reasonable and appropriate.

In contract, Validus sent us a draft confidentiality agreement without a standstill and that would have allowed Validus to use and publicly disclose Transatlantic confidential information for its own purposes.

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