DealBook: Two Specialty Insurers to Merge in $3.2 Billion Deal

Two insurers, Transatlantic Holdings and Allied World Assurance, said on Sunday that they plan to combine in a $3.2 billion merger that will create a big provider of specialty insurance and reinsurance. 

The deal will give Transatlantic, previously a reinsurance unit of the American International Group, more exposure to international business and specialty products like product and environmental liability policies.

Under the terms of the deal, Transatlantic shareholders will receive .88 Allied shares for each of their holdings, or about $51.10 at Friday’s closing price. That represents a nearly 16 percent premium. 

The combined company will be called TransAllied Group Holdings, but will sell products through the Transatlantic and Allied World Insurance brands. 

Though billed as a merger of equals, Transatlantic shareholders will own about 58 percent of the combined company. 

Scott Carmilani, Allied’s chairman and chief executive, will become TransAllied’s chief executive and will gain a seat on the 11-member board. Richard Press, Transatlantic’s nonexecutive chairman, will become the nonexecutive chairman of TransAllied for a year after the deal closes, while Transatlantic’s chief executive, Robert Orlich, will retire. 

Mike Sapnar, Transatlantic’s chief operating officer, will become president and the chief executive of TransAllied’s global reinsurance operations, and will also become a director. 

The deal is expected to close in the fourth quarter this year, pending approval by the shareholders of both companies. 

Founded in 1986 as Preinco Holdings, Transatlantic gained its full independence when A.I.G. divested its remaining stake in the reinsurer to help pay for its government bailout. Transatlantic is based in New York City and has 640 employees.

Shares in the company have fallen about 3 percent over the last 12 months.

Founded in 2001, Allied is based in Zug, Switzerland and has 686 employees. Its share price has risen 31 percent over the last 12 months.

Transatlantic was advised by Goldman Sachs, Moelis Company and the law firms Gibson Dunn Crutcher and Lenz Staehelin. Allied was advised by Deutsche Bank and the law firms Willkie Farr Gallagher and Baker McKenzie. 

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