Rating Agencies See No Downside to Validus Bid for Transatlantic

NU Online News Service, July 15, 2:21 p.m. EDT

Two rating agencies say the unsolicited bid by Validus Holdings Ltd. to acquire Transatlantic Reinsurance Co. does not affect Validus’ rating.

A.M. Best rates Validus financial strength at “A-minus (Excellent)” and S&P gives the company a “Triple-B/Stable” rating.

“While A.M. Best believes the proposed transaction would be material to Validus, there are no rating implications at this time resulting from the offer itself,” says A.M. Best.

For its part, Standard & Poor’s says, “Although we don’t plan an immediate rating action on any of these companies as a result of Validus’ offer, we will continue to monitor developments and could place our ratings on both Validus and Transatlantic on CreditWatch if the offer succeeds.”

In June, New York-based Transatlantic and specialty insurer Allied World Assurance Co, Holdings AG announced a $3.2 billion merger. When completed, Transatlantic shareholders would own 58 percent of the new company to be renamed TransAllied Group Holdings AG.

The two companies describe the transaction as “a merger of equals.”

Under Validus’ $3.5 billion offer, the Bermuda-based company would be the majority stockholder with 52 percent of the company.

In response to the offer, Transatlantic issued a statement saying it was presenting the offer to its board to “carefully consider and evaluate” it. It requested that shareholders take no action at this time and await the board’s recommendation.