TRH - Transatlantic Holdings

[Alekbaylee]

I agree with management : why sell at such a huge discount when you can just wait and have an improved offer close to BV in a few weeks/months.

 

Now, back to square one... ::)

[twacowfca]

UPDATE: Allied World, Transatlantic Terminate Planned Merger      09/16 08:57 AM

 

DOW JONES NEWSWIRES

Allied World Assurance Co. Holdings (AWH:$53.4700,$0.0000,0.00%) and Transatlantic Holdings Inc. (TRH:$49.5500,$0.3000,0.61%) have mutually agreed to terminate Allied World's planned takeover of the reinsurance company, a deal that had looked increasingly in doubt in recent weeks.

Shares of Transatlantic were down 2.4% to $48.35 in premarket trading, while Allied World's were unchanged at $53.47.

As part of the termination, Allied World will receive a termination fee of $35 million plus $13.3 million of merger-related expenses. Transatlantic will also be obligated to pay Allied World an additional $66.7 million if it enters into or recommends a competing transaction within the next year.

"Although disappointed we were unable to complete the proposed merger with Transatlantic, Allied World's core business strategy remains intact," said Allied World Chief Executive Scott Carmilani.

In commenting on the move on Friday, Transatlantic also announced that current Chief Operating Officer Michael C. Sapnar would step into the chief executive officer role effective Jan. 1. Current CEO Robert F. Orlich, whose retirement was previously announced, will remain on the board of directors.

The all-stock deal had sought to exchange 0.88 of an Allied World share, valued at about $47.05 based on Thursday's closing price, for each Transatlantic share.

The approval of the deal had begun to look increasingly unlikely after three shareholder advisory firms urged Transatlantic investors to reject the deal and Transatlantic's largest investor said it was voting against it.

Transatlantic said the company's largest investor, Davis Selected Advisors, offered support for the move on Friday. Davis held a roughly 24% stake in the company as of late last month.

"Davis Advisors applauds Transatlantic's efforts to create value for shareholders with an intelligent capital management plan while at the same time remaining open to other strategic alternatives," the firm said in a release.

Standard & Poor's earlier this week said it was no longer considering an upgrade of the credit ratings of Transatlantic and Allied World as there was less than a 50% chance that Transatlantic shareholders would approve the deal.

Meanwhile, Transatlantic said no further talks are scheduled with National Indemnity Co., a unit of Berkshire Hathaway Inc. (BRK/A:$106,300.00,00$1,900.00,001.80%) (BRKA, BRKB). The conglomerate run by Warren Buffett in August formally offered to buy Transatlantic for $52 a share.

Interest from National Indemnity, Transatlantic said, has been in conducting only "very limited" due diligence with a sole focus on Transatlantic's Zurich subsidiary.

"National Indemnity has conveyed to Transatlantic that it is unwilling to increase the terms of its proposal and is only interested in an acquisition at or below $52 per share. The Transatlantic board of directors has concluded that selling Transatlantic for cash at such a substantial discount to book value would not deliver fair value to stockholders," Transatlantic said.

Transatlantic said it remains under a confidentiality agreement with National Indemnity.

Insurance and reinsurance company Validus Holdings Ltd. (VR:$25.8700,$0.4300,1.69%) has also been angling for Transatlantic, and earlier this week launched an effort to replace the company's board of directors. Validus in July took a $3.5-billion tender offer directly to Transatlantic's shareholders after the two companies failed to agree on provisions in a confidentiality agreement that would have allowed negotiations to progress.

The Validus offer would give 1.56 Validus shares and $8 in cash -- together amounting to about $48.35 based on Thursday's closing price -- for each Transatlantic share.

Transatlantic on Friday also estimated third-quarter per-share earnings to range between 85 cents to $1.15, below the $1.25 profit projected by analysts surveyed by Thomson Reuters. The company said preliminary pretax net catastrophe costs were between $55 million to $65 million, which includes costs related to storms in Denmark and Hurricane Irene.

Transatlantic's board increased the company's stock buyback authorization by $ 455 million, bringing the total allowed under the plan to $600 million. The company expects to complete the buybacks in 2012, with half planned for the rest of this year.

As a result of the terminated deal, Transatlantic said it canceled a special meeting for shareholders called for next week.

-By Mia Lamar, Dow Jones Newswires; 212-416-3207; mia.lamar@dowjones.com

[beerbaron]

it was expected the deal would fail. Why did they not let the vote go on and avoid the breakup fees?

 

BeerBaron

[biaggio]

it was expected the deal would fail. Why did they not let the vote go on and avoid the breakup fees?

 

BeerBaron

 

would they not still have to pay the fees still if voted down?

 

Maybe there was pressure from Davis to make sure

[shalab]

"National Indemnity has conveyed to Transatlantic that it is unwilling to increase the terms of its proposal and is only interested in an acquisition at or below $52 per share. The Transatlantic board of directors has concluded that selling Transatlantic for cash at such a substantial discount to book value would not deliver fair value to stockholders," Transatlantic said.

Transatlantic said it remains under a confidentiality agreement with National Indemnity.

[beerbaron]

NI was making a contingency bet that the markets would continue to fall and $52 of cash would look might good with trh potentially trading under $45. this was a no lose offer from NI, buying the company for under book.

 

It seems unikely, their bid was valid for 24 hours. If they wanted to bet the market downfall they would have made an offer with a decent timeline.

 

BeerBaron

[tombgrt]

NI was making a contingency bet that the markets would continue to fall and $52 of cash would look might good with trh potentially trading under $45. this was a no lose offer from NI, buying the company for under book.

 

It seems unikely, their bid was valid for 24 hours. If they wanted to bet the market downfall they would have made an offer with a decent timeline.

 

BeerBaron

 

funny that 24 hour bid is now back on a day the market is down 2%. funny how that happens.

 

The second offer dates from the 16th and was valid for 3 days?

[twacowfca]

We sold our TRH stock today for a buck or two less than we paid for it a few weeks ago after NICO withdrew their offer.  Glad to get out and move on with a slight trim and not a big haircut.  :)

[Rabbitisrich]

We sold our TRH stock today for a buck or two less than we paid for it a few weeks ago after NICO withdrew their offer.  Glad to get out and move on with a slight trim and not a big haircut.  :)

 

Didn't you write that you expected the deal to dissolve in anticipation of renewed bidding from AWH and VR? Did Berkshire's departure change your thesis?

[twacowfca]

We sold our TRH stock today for a buck or two less than we paid for it a few weeks ago after NICO withdrew their offer.  Glad to get out and move on with a slight trim and not a big haircut.  :)

 

Didn't you write that you expected the deal to dissolve in anticipation of renewed bidding from AWH and VR? Did Berkshire's departure change your thesis?

 

No.  There was a rumor that AWH might sweeten their bid, but it became apparant soon that they would not.  I expected the deal with AWH to dissolve as happened.  What I didn't expect was that NICO pulled out.  In post mortem, I think the wild card was that the market meltdown has presented other, more compelling opportunities for BRK.

 

WEB is traveling to Europe to explore possibilities for investment.  Could this be a new hunt for the elephant that got away?  Or a sackfull of smaller game?

[S2S]

The plot thickens:

Transatlantic Holdings, Inc. announced that it has entered into a confidentiality agreement and commenced discussions with a third party regarding potential strategic alternatives. There can be no assurance that these discussions will result in a proposal or a transaction. Transatlantic does not intend to comment further regarding its discussions unless and until required by law or NYSE regulations. Transatlantic noted that the confidentiality agreement announced today is in addition to the previously announced confidentiality agreements with Validus Holdings, Ltd. and National Indemnity Company, a member of the group of insurance companies of Berkshire Hathaway Inc. Goldman, Sachs & Co. and Moelis & Company LLC are acting as financial advisors and Gibson, Dunn & Crutcher LLP is acting as legal counsel to Transatlantic.

[beerbaron]

Too complicated for me, took out my chips today for a breakeven result.

 

BeerBron

[twacowfca]

We sold our TRH stock today for a buck or two less than we paid for it a few weeks ago after NICO withdrew their offer.  Glad to get out and move on with a slight trim and not a big haircut.  :)

 

Didn't you write that you expected the deal to dissolve in anticipation of renewed bidding from AWH and VR? Did Berkshire's departure change your thesis?

 

No.  There was a rumor that AWH might sweeten their bid, but it became apparant soon that they would not.  I expected the deal with AWH to dissolve as happened.  What I didn't expect was that NICO pulled out.  In post mortem, I think the wild card was that the market meltdown has presented other, more compelling opportunities for BRK.

 

WEB is traveling to Europe to explore possibilities for investment.  Could this be a new hunt for the elephant that got away?  Or a sackfull of smaller game?

 

Guess what?  The elephant was in the kitchen right under our noses all along.  I'll take the perpetual free put at a 10% premium to book value that WEB gave his shareholders today.  BRK likely will grow nicely over the years, and the strike price of the free put will increase along with the annual gain in BV. 

 

It doesn't get any better than this.  We put a big slug of our large cash pile into BRK today.  :)

[twacowfca]

We sold our TRH stock today for a buck or two less than we paid for it a few weeks ago after NICO withdrew their offer.  Glad to get out and move on with a slight trim and not a big haircut.  :)

 

Didn't you write that you expected the deal to dissolve in anticipation of renewed bidding from AWH and VR? Did Berkshire's departure change your thesis?

 

No.  There was a rumor that AWH might sweeten their bid, but it became apparant soon that they would not.  I expected the deal with AWH to dissolve as happened.  What I didn't expect was that NICO pulled out.  In post mortem, I think the wild card was that the market meltdown has presented other, more compelling opportunities for BRK.

 

WEB is traveling to Europe to explore possibilities for investment.  Could this be a new hunt for the elephant that got away?  Or a sackfull of smaller game?

 

Guess what?  The elephant was in the kitchen right under our noses all along.  I'll take the perpetual free put at a 10% premium to book value that WEB gave his shareholders today.  BRK likely will grow nicely over the years, and the strike price of the free put will increase along with the annual gain in BV. 

 

It doesn't get any better than this.  We put a big slug of our large cash pile into BRK today.  :)

 

really? you think he bought today? I sure don't.

 

No, I don't.  WEB probably gave his shareholders time to digest the big news.  The point is that if someone wanted to buy a perpetual put on BRK At BV with a strike price that increases on average each quarter, the value of that put would be at least 1/3 the value of the stock. 

 

The importance for shareholders  is that BRK has now become something close to a riskless investment, not only with solid businesses that continue to increase in IV with the passage of time, but now with great protection against a possible decline in market price. 

 

If WEB announced tomorrow that he was retiring, the price of BRK within a few days would probably be higher -- not lower because of the buying power behind this enormous free cash flow generating machine.

 

Now, there is no logical reason for the price of BRK to be discounted because of the prospect of Warren's retirement.  Of course, Mr. Market isn't always rational, but long term investors now need have no fear of a sharp or extended decline in the stock below the current price.

[Alekbaylee]

The saga continues...

http://www.thestreet.com/story/11261510/1/aig-berkshire-pros-join-forces-deals-to-watch.html

[SFValue]

More action

 

Reinsurer Transatlantic Holdings (TRH) said today it has entered into a confidentiality agreement and commenced discussions with an unnamed additional party regarding potential strategic alternatives. The confidentiality agreement is in addition to the previously announced confidentiality agreements the company entered into with Validus Holdings (VR), Berkshire Hathaway's (BRKa, BRKb) National Indemnity Company, and an additional undisclosed third party

 

so 4 parties looking at TRH now. sale process in full swing.

[twacowfca]

More action

 

Reinsurer Transatlantic Holdings (TRH) said today it has entered into a confidentiality agreement and commenced discussions with an unnamed additional party regarding potential strategic alternatives. The confidentiality agreement is in addition to the previously announced confidentiality agreements the company entered into with Validus Holdings (VR), Berkshire Hathaway's (BRKa, BRKb) National Indemnity Company, and an additional undisclosed third party

 

so 4 parties looking at TRH now. sale process in full swing.

 

There should eventually be a deal worth more than the current TRH stock price, but the premium may not be more than 15% to 20% because only one of the rumored bidders is strategic, and none seems likely to overpay.

[gfp]

http://bernews.com/2011/10/enstar-is-new-transatlantic-suitor/

[twacowfca]

An interesting nonevent happened at this week's reinsurance conference in Bermuda.  Transatlantic's CEO and Validus CEO were both scheduled to speak on different discussion panels, and both withdrew at the last minute.  ::)

[twacowfca]

Insurance Insider reported after the market closed Friday that Transatlantic has received a $60/share cash offer from a new consortium that includes Allied World, Chris Flowers, Stone Point and Endstar.  Endstar will run off their legacy book And Allied will Manage their ongoing business with very few cuts in TRH's staff.  :)

[gfp]

And this:

http://www.bloomberg.com/news/2011-11-21/alleghany-said-to-be-talking-with-transatlantic.html

[twacowfca]

And this:

http://www.bloomberg.com/news/2011-11-21/alleghany-said-to-be-talking-with-transatlantic.html

 

According to Reactions, Davis Select Advisors backs the Alleghany bid, presumably because the offer includes Joe Brandon as the new CEO since the reported bid brokered by Morgan Stanley  that included Brandon as CEO fell through.

 

This latest rumor is the most interesting because having Brandon as their new CEO would deserve a nice premium to a competing all cash offer rather than a discount to a cash offer as would be expected with an enhanced stock plus cash offer from Validus.

 

Insurance Insider says this morning that the reported amount of the Stone Point Consortium cash bid is now in excess of $60/SH.  Friday, the reported amount of the bid was $59 to $60/SH.  They also report that Brandon is tight with Davis, lending support to the idea that that deal may be preferred.  This would also be consistent with NICO's surprisingly quick loss of interest in staying in the running.  They also report that time pressure from the Tuesday deadline for Validus to go hostile in a solicitation to attempt to replace the TRH BOD may mean acceptance of an offer today. 

 

 

 

[twacowfca]

TRH announced today acceptance of the Alleghany offer: .145 Alleghany share plus $14.22 cash. 

[link01]

And this:

http://www.bloomberg.com/news/2011-11-21/alleghany-said-to-be-talking-with-transatlantic.html

 

According to Reactions, Davis Select Advisors backs the Alleghany bid, presumably because the offer includes Joe Brandon as the new CEO since the reported bid brokered by Morgan Stanley  that included Brandon as CEO fell through.

 

This latest rumor is the most interesting because having Brandon as their new CEO would deserve a nice premium to a competing all cash offer rather than a discount to a cash offer as would be expected with an enhanced stock plus cash offer from Validus.

 

 

wow, if brandon becomes the new ceo i will def revisit alleghany again. i was a shareholder back in the john burns era, a very savvy ceo. i havent been favorably impressed by his successor weston hicks, so they've fell off my radar for a while.

 

i always thought brandon was made a scapegoat & thrown out with the dirty bath water during gen re's fall from grace

[link01]

i believe my earleir impression of weston hicks was rash. i dont quite remember what it was specifically that led me to it, but it was probably a combination of the initial poor returns on their investment in rsui, capital america, & then pacificomp. rsui had really large catastrophe exposures that were only addressed in hindsight after hurricane katrina. disappointingly, at the time, i thought it was reactive, & not anticipatory enough for my liking. but in the yrs since i see it has truly performed nicely. with capitol america they underwent 3 or 4 yrs of losses & fine tuning/restructuring. but there again, looking back now from a more objective distance it looks like they've genuinely fixed it. its done steadily well since 2005. with pacificomp they still have their work cut out for them tho. they purchased it in 2007 for 198mln, gave it a capital infusion of 50mln, & touted its low cost direct distribution model. fast forward to the end of 2010: the direct distribution model has been discarded in favor of an independent agency one, it continues to have outsized losses & reserve shorfalls, 50mln of goodwill has been written off, & shareholders equity has dwindled to 150mln. but knowing what i know now- including the fact that workers comp insurance has been a beast for just about everyone, esp the CA market-  i have more confidence in mngts ability to turn pacificomp around ultimately.

 

and there's this, the most interesting, potentially most transformative part, aside from the immediate increase to alleghany's book val & investible portfolio assets along with Y's skilled investment team:

 

"Following the closing, Joseph P. Brandon, former chief executive of Berkshire Hathaway’s General Re Corporation, will serve as President of Alleghany Insurance Holdings LLC (“AIHL”), Executive Vice President of Alleghany, AIHL’s parent company, and Chairman of Transatlantic’s Board. Michael C.

Sapnar will retain his current role as Transatlantic’s President and will become CEO effective January 1, 2012. Robert F. Orlich, who will retire as Transatlantic’s CEO at the end of 2011, will continue to serve as a Director and Senior Advisor to Transatlantic."

 

but my quandary is this: insurance co's make up bout 20% of my portfolio currently, & about 40% of my equity holdings. how comfortable can i get increasing my exposure to insurance from here? as of now its been another 2% but i'm darned if i dont find this deal attractive enough to bump it more, maybe significatntly so, in spite of my concerns. i'm not sure about the risk control aspect of that kind of industry concentration tho. and i dont want to sell my current insurance co's. dither, dither, & fiddlesticks!