NU Online News Service, Oct. 27, 10:04 a.m.EDT

Transatlantic Holdings Inc. says third-quarter net income wasdown nearly 50 percent due to $71 million in catastrophe losses and$57 million in costs mostly related to the termination of its merger agreement with Allied World AssuranceCo. Holdings.

Net income for the third quarter was $68 million compared with$134 million for the 2010 third quarter.

Part of the $57 million in costs is for “strategicreview activities,” the New York-based international reinsurersays in a statement.

Transatlantic paid $48 million in termination fees and expensereimbursements to Allied World.

Robert F. Orlich, chief executive officer, says Transatlantic“continues to assess strategic opportunities for their ability tooffer stockholders full and fair value.”

The company has entered into talks with companies and Orlich offers no guarantees. In themeantime, Transatlantic believes “strongly in our standaloneprospects, given our financial strength, risk-managementorientation and industry-leading global franchise, and we areproceeding to execute our long-term strategic growth plan, whichincludes an aggressive share-buyback program,” Orlich says.

Looking at January 1 renewals, Orlich says catastrophe ratescontinue to rise, “particularly in loss-affected areas.”

“Casualty market conditions are mixed, but we are beginning tosee some modest rate improvement in certain domestic generalcasualty classes,” he says, adding that the specialty business is“solid.”

Orlich is retiring. The company appointed Michael C. Sapner aspresident and chief executive officer.

The pretax catastrophe losses for the quarter consist of $33million from floods in Denmark and Hurricane Irene in the U.S. plus$34 million related to changes in estimates for events earlier thisyear.

Transatlantic says net income benefitted from a $29 million itreceived as part of a settlement with several insurers to enddisputes over certain assumed reinsurance contracts related tosubprime mortgages and credit default insurance.

Net premiums written were down 6.6 percent to $956 millionduring the third quarter. Transatlantic posted a third-quartercombined ratio of 94.3, nearly flat compared with the same period ayear ago.