Insurer Allied World in $3.2-bn all-stock merger deal with Transatlantic

Swiss specialty insurer and reinsurer Allied World Assurance Co Holdings has signed a deal to merge with Transatlantic Holdings, once majority-owned by American International Group (AIG), in a $3.2-billion stock deal in order to create a global insurance and reinsurance company.

The merged company will operate under the corporate name TransAllied Group Holdings and have an 11-member board, six from Transatlantic and five from Allied World.

Allied World will pay shareholders of New York-based Transatlantic 0.88 Allied World share each, or $51.10 per share, representing a premium of 16.1 per cent over Transatlantic's stock closing on 11 June.

Under the deal, structured as a merger of equals, Transatlantic will own 58 per cent of the merged company, valuing itself at around $3.2 billion based on its 62.5 million outstanding shares, while Allied World shareholders will own the rest.

The merged company will have a market value of about $5.1 billion, invested assets of $21 billion, shareholders' equity of nearly $7 billion and capital of $8.5 billion.

AIG sold its entire 60 per cent stake in Transatlantic in 2009 in order to repay the US government loans during the global financial crisis.