Transatlantic’s Largest Shareholder Opposes Allied World Merger

The largest shareholder for the reinsurance firm Transatlantic Holdings Inc. is prepared to oppose a merger with Allied World Assurance Company Holdings, citing competing bids for the reinsurer.

The plans for the merger and creation of a global specialty insurance and reinsurance company were released June 12, but yesterday in a filing with the U.S. Securities and Exchanges Commission, Davis Selected Advisors outlined their disapproval of the deal.

According to the filing, Davis Advisors “has serious concerns about the proposed transaction; may oppose the proposed transaction; may encourage the Issuer's management to explore other strategic options to maximize shareholder value; and may have additional conversations with the Issuer and/or third parties regarding opportunities to maximize the Issuer's value including any of the actions or transactions.”

Davis Advisors owns 23.6 percent of Transatlantic Holdings stock, making them the company’s largest stockholder. However, according to the filing, an agreement with New York insurance regulators restricts the firm to voting freely with a 9.9 percent stake and has to vote its remaining shares in proportion to the votes of other shareholders.

On Monday, Allied World’s Board of Directors mailed all shareholders plans to meet September 20 to hold a vote on the merger—included in the letter from Board Chairman, President and CEO Scott Carmiliani were words of encouragement and requests for approval from shareholders.

Two competing bids from Validus and Berkshire Hathaway remain on the table, and at current market value, both are worth more than Allied World’s bid.