Dear Fellow Stockholders:Executive Summary This executive summary briefly highlights the key themes of our full stockholder letter that follows. We hope you take the time to read the letter as much has happened, much has been written and much has been said in the last 90 days. The main points we would like you to consider are as follows:
- We have heard the concerns and opinions of our stockholders and have mutually terminated our merger agreement with Allied World.
- Transatlantic believes that the right strategic combination presents an attractive opportunity, but is not an imperative. We agreed to the merger only after talking to several other potential strategic partners, evaluating the merits of the merger and comparing it to the benefits and drawbacks offered by other potential partners.
- In our letter we remind you of the strategic path we identified prior to the Allied World merger agreement and we are prepared to continue on that course. We have increased our share buyback program to $600 million through 2012, half of which we commit to complete in 2011, to accelerate the delivery of value to stockholders as we execute on our strategic initiatives.
- We have been open to talks with Validus since our Board reviewed its proposal. We remain willing to engage in discussions with Validus or any other seriously interested party.
- We would not recommend the Validus proposal that is on the table. It does not provide Transatlantic stockholders full consideration of our book value and franchise on a relative or absolute basis. Additionally, the Validus proposal has numerous inadequacies, including the writedown of Transatlantic's net worth by $500 million, the compromising of Transatlantic's ratings, the shortcomings of Validus' domicile relative to some other potential partners, and Validus' lack of US insurance operations, among other factors.
- Validus' statements regarding its proposal, Transatlantic, and Transatlantic's Board of Directors are inaccurate and exaggerated in many instances, incomplete in others, severely biased in all respects and often just plain wrong. We have attached to the letter a fact sheet specifically addressing a number of Validus' inaccurate statements. We believe that Validus' unwarranted attacks on the integrity of the Transatlantic Board, and its initiation of a consent solicitation, are motivated by a desire to avoid paying full and fair value in a negotiated transaction.
- We believe National Indemnity remains interested at or below its first per share price indication. Given our track record of growing book value and our strong balance sheet, the Board has concluded that it will not recommend selling Transatlantic for cash at such a substantial discount to book value.
- The Board will continue to entertain and evaluate any serious proposal or opportunity to provide our stockholders with the fullest value, balancing the short and long-term opportunities and risks whether by strategic combinations or acquisitions.