NU Online News Service, Aug. 15, 1:37 p.m.EDT

Transatlantic Holdings Inc. says it has entered into aconfidentiality agreement with Berkshire Hathaway's NationalIndemnity Co. and has entered into discussions with the WarrenBuffett-owned company.

It is the latest chapter in the battle to acquire New York-basedinternational reinsurer Transatlantic, which has had a merger agreement in place with Allied World Assurance Co. sinceJune.

The new enterprise is to be called TransAllied.

However, Validus swung in with an unsolicited offer in July and, most recently, NationalIndemnity says it would pay $52 per share for all of the outstanding shares ofTransatlantic.

Transatlantic told National Indemnity its $52 per share offer isnot a “superior proposal,” but it has the potential to lead toone.

Validus and Transatlantic have since traded lawsuits, as Transatlantic rejected Validus' mergeroffer. Negotiations have broken down over differences in opinionabout a “standstill provision” within the confidentialityagreement.

Transatlantic says its confidentiality pact with NationalIndemnity includes the standstill provision.

In a presentation to shareholders, Transatlantic says its mergerwith specialty insurer Allied World creates a diversified globalcompany. Shareholders retain a majority (58 percent) ofownership.

Shareholders maintain 48 percent ownership in the Validus offerand an overlap in operations could mean loss of jobs, according toTransatlantic's presentation.