Transatlantic — Merger or Acquisition (December 2011)
40 slides from Transatlantic's merger presentation, Dec 1, 2011
Slide 1: Filed by Alleghany Corporation Pursuant to Rule 425
Filed by Alleghany Corporation 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 Holdings, Inc. Commission File No.: 1-10545 Alleghany Corporation (“Alleghany”) is filing the attache
Slide 2: Investor Presentation December 2011
Investor Presentation December 2011
Slide 3: Cautionary Note Regarding Forward-Looking Statements
Safe Cautionary U.S. financial similar about statements capital currency, uncertainties assurance these ability consummation investment markets, reserves; nor Additional In also READ WILL Alleghany Holdings, Newaddition connection Transatlantic constitutes Harbor Securities York forward-looking the
Slide 4: Additional Information and Participants in Solicitation
Safe Alleghany respect Stockholders. information statement/prospectus it This would requirements Additional On directors Statement”) revocation available, Transatlantic Transatlantic, solicitation. Preliminary dated becomes November Harbor document March be ofand unlawful and the and statement, Info
Slide 5: I. Transaction Overview
I. Transaction Overview
Slide 6: Key Deal Terms and Pro Forma Ownership
KeyForma Merger Consideration1 Deal Pro Board Weston Michael Robert Approvals Investor Expected (1) 4 Terms Value1 of F. of Based M. C. Support Directors Orlich Closing Transatlantic Stockholder Ownership Hicks Sapnar Total on 0.145 –Alleghany’s Alleghany –First deal Senior –14 President President s
Slide 7: Combination Creates Value Opportunity
Combination Transatlantic Top Best-in-class malpractice Business Gross Complementary Leading value (1) 5 10creation Premiums global Last franchise reinsurer twelve Alleghany D&O, of reinsurer opportunity Leading Leader Written: across months E&O Distinctive inSpecialty specialty $1.1bn1 and specialt
Slide 8: Enhancing Alleghany's Reinsurance Platform
Enhancing Standalone Current Constant capital A 6 balanced atmacro sources pressure attractive the Reinsurer portfolio Reinsurance environment expected toMore manage ofReinsurance (re)insurance tooptions provide Platform heightens and for Compatible in access use arisks Reinsurance Portfolio ofwhen
Slide 9: The New Alleghany Financial Strategy
The New Financial Specialty Consistent Superior Returns reward Strategy Investment Strategic approachunderwriting Own Maintain Risk focus Alleghany Goal Specialty core well Adjusted =on tenets Grow aglobal capitalized Reinsurance strong profits that BVPS reinsurance, drive balance and at our Insuran
Slide 10: II. Recognized Global Specialty Reinsurer
II. Recognized Global Specialty Reinsurer
Slide 11: Recognized Global Reinsurance Footprint
Recognized Global Footprint Reinsurance Risk Strong Efficient Reward Leader Track 9 Financial record Underwriting Strength Best inCost Specialty Property Global in Large ofStructure Class generating Ratings Reinsurance Base Specialty In-depth 30+ Balanced double-digit Years Risk Reinsurer Management
Slide 12: Large Global Reinsurer with Local Presence
Large Top 24 and Long-standing 2010 Munich One Source: (1) insurance (3) primary locations Reinsurance Hannover Surplus: 10 ofP&C Global the global Company Re insurance mix few Reinsurance $with $4.0bn 19,044 P&C Re P&C of Presence truly premiums writes gross local filings; operations Reinsurer… rei
Slide 13: Major Markets and Local Underwriters
(1) …With Major 3% and 5% 52% underwriters 50% North 35% Local opportunities Canada Global 9% Asia Built Flexibility 10% or Europe Total: Network 11 through 1% Latin US Latin of 50% 35% direct advantage American $3,882mm 171 presence multi (excl. US Australia North Distinct of America America to bro
Slide 14: Long-Standing Broker and Direct Relationships
…and Percentage By Domestic 9% 18% 51% 12% International <5 10% 29% >20 6–10 45% 11–15 13% 16–20 17% 15% A Note: (1) 12competitive yr Region 7% yr 52% 13% >20 16–20 9% yr <5 Domestic Long-Standing yr >20 17% Measures 16% yr 26% 16–20 11–15 yr Broker 11–15 By of yr yr 20% Direct 2011 advantage Channe
Slide 15: Leader in Professional Liability and Medical Malpractice
Leader Market 30 35 24.7 26.1 20 16.3 10 0 Professional #1 2 13006 /(2) 28.6 18.7 9.7 #1 Creates (1) 25 (%) 2007 #1 Non-Life9.6 in Leader 1the 28.1 Med Claims 14.8 #1 Represents Based 1Specialty 5/2008 on1ability #1 Liability2 Malpractice 2Other by Flaspöhler Made U.S.)2009 Share toClasses annual. L
Slide 16: Medical Malpractice and Professional Liability Expertise
…withadvantage Medical Mostly Typically E&O 90%+ coverage typically Expertise 14 written Superior XOL Malpractice at for write and Maximum indemnification An leadership onwithin in Risk industry claims-made underwriting Professional Selection the limits leads leader first of payments basis to $5mm $
Slide 17: Strong Comprehensive Catastrophe Risk Management
Strong Comprehensive Modeled 25.0 24.6 25.6 20.0 1-in-250 (%) 13.8 of 10.0 Limit as Never Equity 18.0 order 15.0 12.0 8.4 and Florida 0.0 3.0 A Source: Note: 15 merger balanced stockholders’ %8.0 thrived 15.0 17.6 7.1 16.1 13.4 10.7 of to Cumulative loss: out Catastrophe Wind surplus SNL pay 7.1 yea
Slide 18: Strong Underwriting Results and Reserve Development
5 Strong Ultimate (2002-2010) 150.0 Average 2002 50.0 75.0 100.0 TRH % 10 0.4Impact (5) 7.2 0 PRE 2003 Accident 2.2 63.0% Accident of Consistently Source: Note: 16 (2.4) Peer PTP 2004 Loss TRH Company (2.1) RE 64.1% medianYear 2005 Reserve PRE strong (2.6)YearLoss 2006 65.4% filingsPTP Loss includes
Slide 19: Highly Efficient Operating Platform
Highly High 7.0 8.3 (7.5 4.3 0.0 TRH Transatlantic …further (1) in 17(%) reinsurance Represents 9.0PTP 6.1 7.2 2.3 0.0NPW 3.0 6.0 5.0 3.9 Efficient 2.8 enhanced PRE 8.1 6.0 2.2 / Employee Peer (2) 5.3 6.6 2.0 total AHL and Based Median 4.0 3.0 by net ALTE Superior 5.8 3.2 superior ($mm)¹ premiums on
Slide 20: Consistent Book Value Creation
Consistent Major 1990s 80 60 .6% Hurricanes Financial )AG $ 68.83 20 3/31/1990 Successfully Note: 1838.86 ( 39.30 77.13 12 40 Book 69.67 3.43 Soft Headwinds 2.99 Hurricane 38.60 Crisis 1999 and Cycle 2.62 Ike value 30.14 growing and Long 36.24 C 2000 33.31 and During 53.42 30.23 Gustav Andrew Term 3
Slide 21: III. Premier U.S. Specialty Insurance Franchise
III. Premier U.S. Specialty Insurance Franchise
Slide 22: A Premier Wholesale Specialty Insurance Franchise
A Premier Dedicated Wholesale Market Superior Combined Leading $1 Ratio Strong Disciplined billion Underwriting Position Balanced position Diversified of to U.S. surety Product underwriting underwriting wholesale Specialty Portfolio in Superior commercial product Culture distribution through Insuran
Slide 23: Leading Market Position in Wholesale Specialty
Leading Market RSUI, Alleghany’s R. Atlanta 8 9 21Lloyd’s Berkley 4.8% Change RSUI Source:its inSurplus Characteristics 71974 CNA Underwrites Industry Deeper Offers 100.0 More in Despite continues 0.0 1 QBE Position roots Markel 5,789,000 20.0Group marketlargest restrictive Growth to operates Best’s
Slide 24: Balanced Product Portfolio
Balanced 20+ transactional solutions All Comm. Surety Business 2010 18.4% Focus (1) 22 Other years NPW: on Fire 10th Multi 31% Offers specialty Product Prod. experience $571mm largest commercial Peril Liab products, Portfolio lines Other E&S 3% in 2010 the of Other carrier liability Liability both b
Slide 25: Distribution: Wholesale Only
Distribution “Wholesale basis respond Conducts 30 Focused Implementing DPW A 23countrywide managing Expertise quickly on insurance emphasizing only” Strength general new distribution and and distributor- agency technical business effectively agents andvisibility Breadth appointments platform through
Slide 26: Strong Underwriting Culture and Combined Ratio
Strong2004 Experienced underwriting 120.0% 100.0% 91.7% 88.8% 90.0% 90.2% 81.7% 83.5% 80.0% 70.0% 2003 60.0% 71.3% Alleghany Underwriting (1) (2) 24 98.8% 89.0% 83.5% 92.6% 90.1% 84.7% 83.0% 72.5% Culture Includes 115.3% 98.8% GAAP Peer 2005 Peer underwriters profits profitability 90.3% 85.7% of Gro
Slide 27: RSUI Financial Performance vs. Peers
a80.0 & financial 20.0 102.9 RSUI Source: (1) ndA.M. (2) Offshore 19.0 15.7 Performance has vs. HCC is Year Company aBest’s leverage P&C Specialty 120.0 delivered leading 16.4 WRB end Peers Industry 95.1 common ACE player (10-25%) filings, vs. Peers—Combined Loss peeracomposite 15.3 14.2% Peers AXS
Slide 28: IV. Total Return Investment Strategy
IV. Total Return Investment Strategy
Slide 29: Total Return Investment Strategy
Total Return Conservative Fixed Portfolio returns risk-adjusted Alleghany Concentration 27 Income Proprietary Concentrated Acquisitions Investment fixed Public on best private income Equities ideas equity &Strategy Investments investment portfolio expected positions tocapability Enhanced drive outpe
Slide 30: Conservative Pro Forma Fixed Income Portfolio
Conservative Pro Increase AA 18% Foreign States U.S. 13% 3% Obligations Other 7% Cash 2% 1% High 28 Diversified, 3% Investments Minimal Forma average Government Bonds in quality Short-Term Invested &MBS Top Bonds in Muni Investment investment 40% 5credit 2% fixed and Investment states No Common high
Slide 31: Proven Public Equity Investment Performance
Proven Alleghany Fair Value(1) $mm 2005 2006 2007 Demonstrated Between of 29 October Large 770 873 1,176 (%) Equity Alleghany 2004 35.3 8.5 (%) Public exposure 31, 19.2 15.8 (% track and Investment 4.9 2011 5.5 pts) Equity 30.3 (7.3) 2011, S&P record 13.7 tocounterbalance energy 3Portfolio approxima
Slide 32: Alleghany Capital and Partner Investments
Alleghany Partner growth Experienced Business without Representative Portfolio Complementary 30 initiatives with the ORX operations Acquisitions need motivated management Article Exploration, private for andfocused leverage recapitalizations One managers & capital Investments Partners, an on Scalabl
Slide 33: V. Combined Company Strengths
V. Combined Company Strengths
Slide 34: Diversified Combined Company Portfolio
Diversified The By 6% Catastrophe 17% Insurance 20% NPW: Combined Source: (1) 32 Product 13% combination (Short-tail $4.6bn Short-tail SNL 10% Traditional Insurance: company Operating By Specialty Financial, NPW: Domestic Geography Casualty)¹ provides casualty is $4.6bn 16% Casualty Portfolio Reinsu
Slide 35: Strong Combined Balance Sheet
Strong 7% ($mm, Cash Book Greater Note: (1) up (3) fee Alleghany accretive and Value As and unless Combined Transatlantic’s financial of Investments1,2 transaction September per to otherwise standalone Share BVPS flexibility Balance $327.86 costs, to adjusted 30, noted) Alleghany 4,760 adjusted Shee
Slide 36: Strong Historical Parent Company Liquidity
Strong Historical 2008: 2006: $1,400 ~$300mm $200 $- Parent Maintains (1) 34 0%$428 Sold Darwin 2003 TRH Parent 50% Unrestricted Alleghany high 5% 55% 2004 Liquid $1,216 Company IPO holding 2003: 2005 stake Assets 45% cash Parent Acquired 2006 company Liquidity in $1,200 and /Darwin Common Company 2
Slide 37: Combined Catastrophe Exposure Within Tolerance
Combined Transatlantic 25 17 13 15 10 7 5 T 0 (1) 35 16 9(%) (2) Catastrophe ransatlantic Florida PML Note: (2) AIR Represents cushion 1-in-250 Alleghany Transatlantic Wind PML over US year Exposure peak Combined U.S.internal management WindWind peak zone targets PML Will PML Remain exposures estima
Slide 38: Improved Earnings and Dividend Diversity
Improved Transatlantic 2010) TRC $618mm Capitol 100% Earnings (2006 RSUI Statutory $1,651mm Well-diversified 64% TRC 32% 61% RSUI Capitol 4%2010) $395mm 82% 90% Diversity $938mm Dividends 10% Alleghany Transatlantic 32% portfolio TRC$1,013mm of $2,589mm - -Cash Combined of Flows underlying 18% 7% an
Slide 39: Major Broad-Based Specialty Player
Major Broad >$5bn Partner ACE A+ XL HCC RLI AXIS Allied Endurance P A Montpelier Validus 2000 Ariel A- Maintains Source: Note: 37latinum W.R. Group and Bubble Arch U.S. Industry World $3–5bn Re A.M. Berkley Transatlantic Prior financial Argo Everest Flagstone Market Alterra size Best, $1.5–3bn Class
Slide 40: A Winning Combination
A Winning Leading Combines More Flexibility diversified franchise disciplined to Combination allocate pool across capital underwriting of underwriting specialty to highest insurance with risk, risk-adjusted successful byand product reinsurance investing return and geography opportunities, Increased
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