Allied World Assurance (NYSE:AWH) inked a deal on Monday to buy Transatlantic Holdings (NYSE:TRH) for $3.2 billion in stock, creating a leading specialty insurer and reinsurer with global reach.
Shareholders of Transatlantic, which used to be controlled by American International Group (NYSE:AIG), will receive 0.88 Allied share for each share owned, or $51.10. The offer represents a 16.1% premium over Transatlantics closing price on Friday.
Following the deals close, Transatlantic shareholders will own some 58% of the combined company, with Allied World holders owning about 42%.
The combined company, which will be called TransAllied Group, will have total invested assets of $21 billion, shareholders equity of about $7 billion and capital of $8.5 billion.
We are very excited about this strategic combination of two industry leading insurance and reinsurance franchises, said Allied CEO Scott Carmilani, who will serve as CEO of TransAllied.
With 39 offices in 18 countries, Carmilani, who will be responsible for its global organization, said both companies operations will benefit from a significant global footprint with access to distribution channels within all major markets.
Mike Sapner, currently chief operating officer of Transatlantic, will serve as CEO of global reinsurance. Both he and Carmilani will serve on the companys board of directors, which will have six seats appointed by Transatlantic and five by Allied World.
Richard Press, Transatlantics non-executive chairman, will serve as the boards chairman, while Robert Orlich, currently CEO of Transatlantic, will retire upon the transactions closing.
Both companies boards of directors have unanimously approved the transaction. The deal is expected to close in the fourth-quarter of this year, subject to shareholder approval and the receipt of regulatory approvals and other customary closing conditions.