Transatlantic — Merger or Acquisition (November 2011)
28 slides from Transatlantic's merger presentation, Nov 10, 2011
Slide 1: Setting the Record Straight, Once Again: Validus' Compelling Increased Offer
Setting the Record Straight, Once Again November 7, 2011 Validus’ Compelling Increased Offer FILED BY VALIDUS HOLDINGS, LTD. PURSUANT TO RULE 425 UNDER THE SECURITIES ACT OF 1933 AND DEEMED FILED PURSUANT TO RULE 14a-12 UNDER THE SECURITIES EXCHANGE ACT OF 1934 SUBJECT COMPANY: TRANSATLANTIC HOLDING
Slide 2: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements 2 This presentation may include forward-looking statements, both with respect to Validus and its industry, that reflect Validus' current views with respect to future events and financial performance. Statements that include the words "expect," "in
Slide 3: Additional Information, Participants in the Solicitation & Non-GAAP Financial Measures
Additional Information, Participants in the Solicitation & Non-GAAP Financial Measures 3 Additional Information about the Proposed Transaction and Where to Find It: Validus has commenced an exchange offer to acquire all of the outstanding shares of common stock of Transatlantic. This presentation is
Slide 4: Validus' Increased Offer and Path to Completion
Validus’ Increased Offer and Path to Completion
Slide 5: The Transatlantic Board Rejected an Offer with a Total Value of $55.58 per Share
The Transatlantic Board Rejected an Offer with a Total Value of $55.58 per Transatlantic Share on October 31 that is Currently Valued at $57.34 Validus’ increased offer provides compelling value for Transatlantic stockholders However, every day the Transatlantic board continues its share repurchases
Slide 6: Overview of Validus' Increased Offer – Total Value of $57.34 per Transatlantic Share
Overview of Validus' Increased Offer – Total Value of $57.34 per Transatlantic Share as of November 4 6 Structure Exchange Offer with stock and cash consideration Tax-free for Transatlantic stockholders1 in consensual transaction Offer Components Fixed exchange ratio of 1.5564 Validus shares per Tra
Slide 7: Implied Value of Validus' Increased Offer Represented a Material Premium
The Implied Value of Validus’ Increased Offer Represented a Material Premium to Transatlantic’s Share Price and the AWAC Offer that its Board Accepted 7 Value per Share Value per Transatlantic Share1 1 2 Market value is the criteria on which to judge a transaction, not book value $42.50 $47.50 $52.5
Slide 8: The Transatlantic board's pattern of behavior inconsistent with maximizing value
The Transatlantic board’s pattern of behavior seems inconsistent with maximizing value for its stockholders: Agreed to a cozy, low-premium “merger of equals” with AWAC that ultimately terminated in the face of overwhelming Transatlantic stockholder opposition Refused to engage with Validus for prolo
Slide 9: Path to Completion – Consent Solicitation and Increased Exchange Offer
Path to Completion – Consent Solicitation and Increased Exchange Offer Given the Transatlantic board’s summary rejection of Validus’ increased offer, Validus is pursuing its consent solicitation to replace the Transatlantic board with three highly qualified and independent director candidates Raymon
Slide 10: Validus Plus Transatlantic – The Right Combination at the Right Time
Validus Plus Transatlantic – The Right Combination at the Right Time
Slide 11: Validus' Increased Offer Easily Satisfies Transatlantic's Stated Strategic Objectives
Validus’ Increased Offer Easily Satisfies Transatlantic’s Stated “Strategic Objectives”, While a “Go It Alone” Approach Does Not Shareholder Value No premium for Transatlantic stockholders No catalyst for trading multiple expansion No cash to Transatlantic stockholders 30.3% premium to June 10, 2011
Slide 12: Structural Flexibility, Insurance Operations, EU Passport, Ratings
12 Structural Flexibility Maintenance of status quo Capital trapped within U.S. Bermuda domicile vs. Transatlantic’s existing inefficient domicile Capital flexibility allows Validus to shift capital as needed to maximize returns Insurance Operations No insurance experience or track-record Top tier p
Slide 13: Validus Has an Established Record of Trading at a Book Value Premium
Validus Has an Established Record of Trading at a Book Value Premium to Transatlantic 13 Price / As-Reported Diluted Book Value1 Price / As-Reported Diluted Book Value 1 Validus and Transatlantic multiples impacted by proposed transaction process 1.02x 0.94x 0.87x 0.88x 0.90x 0.84x 0.83x 0.92x 0.95x
Slide 14: Credibility Matters: Transatlantic Continues to Make Irresponsible and Unsupported Statements
Credibility Matters: Transatlantic Continues to Make Irresponsible and Unsupported Statements
Slide 15: Financial Strength Ratings
15 Financial Strength Ratings “There's a lot still pending,” said John Andre, Group VP in the property/casualty rating area of the rating agency A.M. Best Co. Inc. in Oldwick, N.J. “We see both Validus and AWAC as strong partners for Transatlantic, however it works out.” - Business Insurance, July 1
Slide 16: Comparative Capital Structures
Comparative Capital Structures On a standalone basis, Validus has lower leverage than Transatlantic1 Over the past six years Transatlantic's year end debt-to-capital ratio has averaged approximately 20% and was 22.7% in 2005 As Transatlantic knows, a debt-to-capital ratio of 20-25% is within the ran
Slide 17: Transatlantic's Reserve Position
Transatlantic’s Reserve Position 17 What Transatlantic Claims: “Solid reserves”1 What Reality Looks Like: Transatlantic Net Reestimated Calendar Year Liability at 12/31/2010 For Each Year 2000 - 20092 Includes $61mm benefit from UGC settlement Became negative in 2010 Despite recent improvements in c
Slide 18: Transatlantic's Risk-Reward Analysis
18 In Transatlantic’s latest presentation, it resorts to a newly-created ‘concept’ in an apparent effort to confuse its stockholders as to the significant benefits of Validus’ increased offer Transatlantic’s Risk-Reward “Analysis” Transatlantic has created a new measure for “risk-adjusted returns” w
Slide 19: Transaction Integration
Transaction Integration Transatlantic's board tries to alarm investors by claiming a transaction with Validus has "integration/culture" risks Validus’ increased offer included a commitment on organizational structure: Mike Sapnar to be CEO of Transatlantic Re Retention of senior Transatlantic manage
Slide 20: Validus is the Superior Steward for Investors' Capital
Validus is the Superior Steward for Investors’ Capital
Slide 21: The Validus Board has Deep Industry Expertise
The Validus Board has Deep Industry Expertise and Hundreds of Millions Invested in the Success of the Company Validus Transatlantic Ten members, eight non-management (80% non-management directors) Seven members, five non-management (71% non-management directors) Average age of non-management directo
Slide 22: What Transatlantic Stockholders Get With Validus
What Transatlantic Stockholders Get With Validus Compelling increased offer Long-term upside potential Attractive currency, with strong stock price performance Board and management devoted to maximizing shareholder value Leading franchise positions in Bermuda and at Lloyd’s Deeply experienced manage
Slide 23: Endnotes
() VALIDUS GROUP Endnotes
Slide 24: End Notes
End Notes Page 5 1. As of October 31, 2011 the additional dividend was $2.00 – the aggregate amount available to pay the additional cash pre-closing dividend to all Transatlantic stockholders will be reduced on a dollar-for-dollar basis for any funds used by Transatlantic for share repurchases made
Slide 25: End Notes (cont'd)
End Notes (cont’d) Page 7 1. Increased Validus offer assuming additional cash dividend of $1.75 per share 2. AWAC offer consisted of fixed exchange ratio of 0.8800 AWAC shares per Transatlantic share Source: Company filings, SNL Page 11 1. Based on Transatlantic ($44.01) closing price on June 10, 20
Slide 26: End Notes (cont'd)
End Notes (cont’d) Page 16 1. Excluding Validus’ junior subordinated deferrable debentures from numerator, which are hybrid securities treated as equity by the rating agencies – included in capital (denominator) Source: Company filings, SNL Page 17 Note: All figures in $mm 1. From Transatlantic: “Re
Slide 27: Appendix: Reconciliation of Non-GAAP Diluted Book Value Per Share
Appendix Reconciliation of Non-GAAP Diluted Book Value Per Share
Slide 28: Diluted Book Value Per Share Reconciliation
Diluted Book Value Per Share Reconciliation 28
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