Transatlantic, Allied World Assurance to merge  In a move that illustrates the push for business cost reductions in the healthcare industry, two insurers announced this week that they plan to merge to more aggressively pursue business within the specialty and reinsurance sectors.

According to The New York Times' Deal Book, Transatlantic Holdings and Allied World Assurance announced Sunday they would merge in a deal worth a reported $3.2 billion. Transatlantic, which was previously a reinsurance component of American International Group (AIG) prior to its collapse, will gain more exposure to international business and specialty products through the deal.

The newly formed entity will be called TransAllied Group Holdings, but it will continue to sell products and services through the Transatlantic and Allied World Insurance namebrands, the companies said in a statement. Transatlantic shareholders will own a nearly 60 percent stake in the new company.

Current Transatlantic chief executive Robert Orlich, who will retire when the deal is closed, said that the deal was strategic and would benefit both companies.

"Transatlantic and Allied World make great merger partners in every sense of the term," he said. "For Transatlantic in particular, the transaction delivers strategic and financial benefits, including primary insurance operations, a Lloyd’s presence and a bigger capital base outside the U.S., allowing for greater capital allocation flexibility."
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