UPDATE: Transatlantic to Combine with Alleghany in $3.4 Billion Transaction

Alleghany Corporation (NYSE: Y) and Transatlantic Holdings, Inc. (NYSE: TRH) announced today that the companies have entered into a definitive agreement under which Transatlantic will combine with Alleghany. Under the terms of the transaction, the stockholders of Transatlantic will receive aggregate consideration currently valued at $59.79 per share in stock and cash, or approximately $3.4 billion.

Under the terms of the agreement, Transatlantic common shares will be exchanged for per-share consideration consisting of 0.145 Alleghany common shares and $14.22 in cash. Transatlantic stockholders may elect to receive cash or stock consideration, subject to proration in the event of oversubscription. The stock consideration is expected to be tax free to Transatlantic stockholders.

Based on closing market prices on Friday, November 18, 2011, the transaction represents a 36% premium to Transatlantic's closing stock price on June 10, 2011, the last trading day before public announcement of the since-terminated merger agreement with Allied World Assurance Company Holdings, AG, and a premium of 10% to the Transatlantic closing stock price on November 18, 2011. The transaction values Transatlantic at 86% of book value per share at September 30, 2011. After adjusting for subsequent share repurchases, the transaction is accretive to Alleghany's September 30, 2011 book value per share by approximately 7% and tangible book value per share by approximately 10%.

Following completion of the transaction, Transatlantic will become an independent stand-alone subsidiary of Alleghany. The companies expect that Transatlantic will maintain its current financial strength ratings of “A+” from Standard & Poor's and “A” from A.M. Best, which will help Transatlantic preserve its franchise.