Allied World Assurance Company Holdings, AG
) recently announced a strategic partnership between its subsidiary
Allied World Financial Services Company, Inc. and MatlinPatterson,
whereby it will purchase a minority ownership stake in the
The capital provided by Allied World will be used to develop the
asset management business of MatlinPatterson. In return,
MatlinPatterson will employ various liquid credit strategies to
manage about $500 million worth of portfolio of Allied World.
Expansion of the asset management business was the primary
reason for this strategic alliance by Allied World. Management
believes that it will also boost the strength and flexibility of
Moreover, Allied World has had an extended business relationship
with a co-founder of MatlinPatterson, who was once a part of Allied
World's board and contributed to the growth of the company. Thus,
the partnership is expected to be strong and enduring. Considering
the present investment scenario, both companies believe that this
collaboration is the most appropriate investment approach.
Allied World has been trying to diversify its earning sources by
forming business associations that are complementary to its core
business of property and casualty insurance and can boost
shareholder value. Toward this aim, the company also launched its
Financial Services Company recently.
The new company endeavors to boost the expertise and earnings of
Allied World by purchasing ownership stakes in renowned companies
dealing with investment management and various other
Allied World carries a Zacks #3 Rank, which translates into a
short-term Hold rating. We maintain a long-term Neutral
recommendation on the stock.
Endurance Specialty Holdings Ltd.
), which closely compete with Allied World, also carry Zacks #3
Ranks (short term Hold) and long-term Neutral recommendations.
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