S&P affirms Alleghany, Transatlantic on merger

Standard & Poor's said it affirmed the BBB long-term counterparty credit rating on Alleghany Corp., along with the BBB+ long-term counterparty credit rating on Transatlantic Holdings Inc.

The outlook is stable.

These actions follow news by Alleghany and Transatlantic that they have entered into a definitive agreement to merge with a stock-for-stock exchange and cash, S&P said.

Specifically, Transatlantic common shares will be exchanged for 0.145 Alleghany common shares and $14.22 in cash.

Based on Alleghany's closing stock price of $314.26 as of Nov. 18, the $3.4 billion transaction will be funded with $816 million in cash, which is held in the form of marketable securities on Alleghany's parent company's balance sheet, and $2.6 billion in stock, the agency said.

S&P said it does not expect any upcoming debt issuances to fund the transaction.

The merger will create a significantly larger insurance and reinsurance group, although the agency said it believes it will still operate as largely separate platforms.

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