NU Online News Service, Nov. 23, 12:00 p.m.EST

Insurance rating agency A.M. Best Co. says the ratings ofTransatlantic Holdings and Alleghany Corp. and their subsidiariesremain unchanged following the companies’ agreement to merge.

Transatlantic Holdings is to become an independent subsidiary ofproperty and liability insurer Alleghany Corp. under the terms of a cash-and-stock agreement valuing Transatlantic atabout $3.4 billion.

In a statement A.M. Best says the combined company will “bringgreater diversification of earnings, cash flow sources and businessby geography, product, and distribution to Alleghany.”

“Significant liquidity at the parent company level also isexpected to be maintained,” A.M. Best says, adding that it willcontinue to monitor the transaction, and review the ratings of thecombined company when the transaction is completed.

Transatlantic and Alleghany say they expect the deal to closeduring the 2012 first quarter. The companies’ boards have approvedthe agreement but regulatory and shareholder approvals areneeded.

Meanwhile, Bloomberg reports stockholders have sued Transatlantic over itsagreement to be taken over by Alleghany.

The suit, filed in New York State Supreme Court in Manhattan,claims the proposed deal undervalues Transatlantic.

In a presentation for shareholders, total capital of thecombined enterprise would be about $7.2 billion.

About 40 percent of the new company’s would be long-tailcasualty reinsurance. Overall, 84 percent would be reinsurance and16 percent would be insurance.

By risk, 40 percent would be specialty reinsurance and 21percent would be specialty insurance.

Of its net written premiums, about 42 percent would be come fromoverseas.