Transatlantic Holdings, Inc. (NYSE: TRH) reported financial results for the quarter and nine months ended September 30, 2009. TRH’s net income for the third quarter of 2009 totaled $153 million, or $2.28 per common share (diluted), compared to a net loss of ($108) million, or ($1.62) per common share (diluted) in the third quarter of 2008.

TRH’s net operating income for the third quarter of 2009 was $149 million, or $2.22 per common share (diluted), compared to a net operating loss of ($5) million, or ($0.08) per common share (diluted), in the third quarter of 2008.

Book value per share increased 13.9% in the quarter, reaching a record high of $60.90 at September 30, 2009. Stockholders’ equity exceeded $4.0 billion at quarter-end.

Commenting on the quarter, Robert F. Orlich, President and Chief Executive Officer, said, “We are pleased to report record quarterly earnings. Our results reflect strong underwriting performance, which benefited from minimal catastrophe loss activity, and improved investment returns. As a result of robust earnings and significant unrealized investment gains due to stronger financial markets, our book value per share grew dramatically.

“As for market trends, we have seen significant price increases for property catastrophe-exposed accounts, particularly in peak zones, and for those that have had prior loss experience. These increases began to level off in the second half of the year. We continue to monitor casualty pricing closely, focusing our efforts on niche markets which show improvement from the first half of the year.

“As we approach the annual January 1 renewal season, we are well-positioned in the marketplace, with an enviable global franchise, and our financial condition is stronger than ever.”

Other highlights in the third quarter of 2009 include:

• GAAP basis annualized ROE of 16.1% based on third quarter results; Annualized operating ROE of 15.7%.
• Combined ratio of 91.9%, with strong performance in each segment. Pre-tax catastrophe costs were minimal in the current quarter and $146 million in the year-ago period. Favorable loss reserve development amounted to $7 million in the 2009 third quarter compared to adverse development of $1 million in the prior year period.
• Net operating cash flow of $301 million.
• Net premiums written of $973 million, declining 9%, excluding the impact of foreign exchange, from record quarterly premiums reported in the same 2008 quarter. For the nine month periods, net premiums written increased 2% from a year ago, excluding foreign exchange. Premium volume for the current year reflects TRH’s exit from certain accounts where margins were inadequate.
• Net investment income of $123 million, an increase of 12% year over year, resulting from an increase in income from other invested assets.
• Realized net capital gains of $7 million, which are net of ($16) million of other-than-temporary impairments charged to earnings. In the third quarter of 2008, realized net capital losses totaled ($158) million, which includes other-than-temporary impairments charged to earnings of ($124) million.
• Net loss and loss adjustment expense reserves increased $74 million (including $29 million due to foreign exchange) during the quarter, bringing the amount of such reserves to $7.71 billion at September 30, 2009.
• At quarter end, consolidated investments and assets totaled $11.82 billion and $14.65 billion, respectively.

For the first nine months of 2009, net income totaled $341 million, or $5.10 per common share (diluted), compared to $98 million, or $1.47 per common share (diluted), for the first nine months of 2008. Net operating income for the first nine months of 2009 totaled $386 million, or $5.78 per common share (diluted), compared to $249 million, or $3.73 per common share (diluted), for the first nine months of 2008. The increase in net income for the nine month period was largely due to improved underwriting performance, reflecting de minimis catastrophe costs in 2009 compared to $144 million of pre-tax catastrophe costs a year ago, and a reduction in realized net capital losses. The calculation of net operating income excludes the impact of realized net capital gains (losses) and gain on early extinguishment of debt, each net of tax.

Caution concerning forward-looking statements:

This press release contains forward-looking statements, including management’s beliefs about financial, credit and industry market conditions and expectations regarding the aggregate net impact on TRH from recent catastrophe losses, within the meaning of the U.S. federal securities laws. These forward-looking statements are based on assumptions and opinions concerning a variety of known and unknown risks. Please refer to TRH’s Annual Report on Form 10-K for the year ended December 31, 2008 and TRH’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 as well as its other and future filings and reports filed with or furnished to the Securities and Exchange Commission for a description of the business environment in which TRH operates and the important factors, risks and uncertainties that may affect its business and financial results. If any assumptions or opinions prove incorrect, any forward-looking statements made on that basis may also prove materially incorrect. TRH is not under any obligation to (and expressly disclaims any such obligations to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise.

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TRH will host a conference call on Thursday, October 29, 2009 at 11:00 a.m. (ET) to discuss third quarter 2009 results. The call will be webcast live on the Internet ¯ available through the Investor Information-Earnings Information section of TRH’s website at www.transre.com. The live conference call can also be accessed by dialing 866-730-5771 (in the U.S.) or 857-350-1595 (International). The passcode for the conference call is 36524268.

Please refer to the Investor Information-Earnings Information section of TRH’s website at www.transre.com for a copy of the third quarter 2009 Financial Supplement which includes additional information on TRH’s financial performance.

After the completion of the call, an archived webcast will be available in the Investor Relations section of TRH’s website until mid-January 2010. A replay of the call will also be available until November 5, 2009 by dialing 888-286-8010 (in the U.S.) or 617-801-6888 (International). The passcode to access the replay is 74754014.

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Transatlantic Holdings, Inc. (TRH) is a leading international reinsurance organization headquartered in New York, with operations on six continents. Its subsidiaries, Transatlantic Reinsurance Company^®, Trans Re Zurich and Putnam Reinsurance Company, offer reinsurance capacity on both a treaty and facultative basis ¯ structuring programs for a full range of property and casualty products, with an emphasis on specialty risks.

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The financial information in this earnings release and the financial supplement that is posted on TRH’s website includes performance measures called Net Operating Income (Loss) (“NOI”), NOI Per Common Share (diluted) and Annualized Operating Return on Equity (“Annualized Operating ROE”) which are based on a methodology other than generally accepted accounting principles in the United States (“GAAP”). NOI is defined as GAAP net income (loss) excluding realized net capital gains (losses) and gain on early extinguishment of debt, each net of taxes. NOI Per Common Share (diluted) represents NOI divided by average common shares outstanding on a diluted basis. GAAP annualized return on equity is defined as GAAP net income divided by the average of beginning and ending stockholders’ equity for the period multiplied by four (for the three month periods) or four-thirds (for the nine month periods). Annualized Operating ROE is defined as NOI divided by the average of beginning and ending stockholders’ equity multiplied by four (for the three month periods) or four-thirds (for the nine month periods). TRH uses these measures in analyzing its performance as these measures focus on the core fundamentals of TRH’s operations. While TRH considers realized capital gains and losses and the gain on early extinguishment of debt as integral parts of its business and results, such items are not indicative of the core fundamentals of TRH’s operations. TRH believes these measures are of interest to the investment community because they provide additional meaningful methods of evaluating certain aspects of TRH’s operating performance from period to period on bases that are not otherwise apparent under GAAP. These non-GAAP measures, namely, NOI, NOI Per Common Share (diluted) and Annualized Operating ROE should not be viewed as substitutes for GAAP net income (loss), GAAP net income (loss) per common share and GAAP annualized return on equity, respectively. Reconciliations of NOI, NOI Per Common Share (diluted) and Annualized Operating ROE to GAAP net income (loss), GAAP net income (loss) per common share on a diluted basis and GAAP annualized return on equity, respectively, the most directly comparable GAAP measures, are included later in this press release.

TRH’s GAAP combined ratio and its components, for all periods in this press release, are now presented in accordance with the methodology commonly used by insurance industry analysts and TRH's peers. The property and casualty insurance and reinsurance industries use the combined ratio as a measure of underwriting profitability. The combined ratio represents the sum of the loss ratio and the underwriting expense ratio. The loss ratio represents net losses and LAE incurred expressed as a percentage of net premiums earned. The underwriting expense ratio represents the sum of the commission ratio and the other underwriting expense ratio. The commission ratio represents the sum of net commissions and the decrease (increase) in deferred acquisition costs expressed as a percentage of net premiums earned. The other underwriting expense ratio represents other underwriting expenses expressed as a percentage of net premiums earned. Prior to the third quarter of 2009, TRH’s combined ratio and its components were presented in accordance with principles prescribed or permitted by insurance regulatory authorities. The GAAP combined ratio presented differs from the previously presented statutory combined ratio in the commission ratio and the other underwriting expense ratio components. The commission ratio now includes changes in deferred acquisition costs in the numerator and replaces net premiums written with net premiums earned in the denominator. The other underwriting expense ratio now replaces net premiums written with net premiums earned in the denominator. TRH believes that, taken as a whole, the current presentation of the combined ratio is not materially different from the previously presented statutory combined ratio and that this change will provide consistency with how TRH’s peers report their combined ratios.

Net loss and loss adjustment expense reserves represent unpaid losses and loss adjustment expenses, net of related reinsurance recoverable, and are presented in accordance with principles prescribed or permitted by insurance regulatory authorities.