NEW YORK—Berkshire Hathaway Inc.'s entry into the takeover battle for Transatlantic Holdings Inc. signals that reinsurance industry insiders think the New York-based reinsurer is a bargain, according to analysts.

Omaha, Neb.-based Berkshire's main reinsurance unit, National Indemnity Co., offered to buy Transatlantic for about $3.2 billion, Transatlantic said on Sunday.

The offer comes after two rival reinsurers, Allied World Assurance Co. Holdings A.G. and Validus Holdings Ltd., made separate offers for Transatlantic, which is the former reinsurance affiliate of American International Group Inc.

Zug, Switzerland-based Allied World's all-stock merger agreement with Transatlantic was valued at $3.2 billion when it was announced in June, and Bermuda-based Validus' cash-and-stock offer was valued at about $3.5 billion when it was made in July. Both offers declined in value, however, after equity markets swooned in recent weeks. Validus' offer is now valued at $44.575 per share, and Allied World's is valued at $43.58 per share.

Berkshire said in an Aug. 5 letter to Transatlantic's president and CEO Robert Orlich that its offer is subject to a formal response no later than the close of business on Monday.

Transatlantic said in a statement Sunday that its board “will carefully consider and evaluate the proposal from National Indemnity and will inform Transatlantic stockholders of the board's position.” It advised stockholders to await its recommendation. A company spokesman did not return phone calls.

Berkshire offered $52 a share “under customary terms for a stock purchase agreement of a publicly traded company to be agreed (but not subject to any due diligence review or financing condition of any nature),” the letter said.

In contrast, Allied World's offer was worth around $44.47 a share in intraday trading on Monday, while Validus' was around $45.88 a share.

“Evidently Berkshire sees this as an attractive price for a well established reinsurer,” said Bruce Ballentine, an analyst in New York at Moody's Investor Services. “The pattern of Berkshire is to buy assets that seem undervalued.”

If Transatlantic accepts the offer, Berkshire would get the company at 78% of book value, taking into account the $115 million break-up fee that Transatlantic agreed to pay Allied World in such an event.

“It's amazing that they're comfortable doing this without due diligence, but I think at 78% of book value they have a good margin of safety,” said Paul Howard, director of research at Solstice Investment Research L.L.C. in Glastonbury, Conn.

Berkshire's offer “validates Validus' theory that the commercial reinsurance space is likely to turn around for the positive sometime next year,” said Michael G. Paisan, a New York-based analyst for financial services firm Stifel, Nicolaus & Co. Inc., which makes a market in the securities of Validus.

Validus and Allied World fired back at Berkshire.

Validus said in a statement Sunday that while its offer declined from $55.95 per share as of July 12, it still provides Transatlantic stockholders the opportunity to participate in the combined company's potential to improve its value in the future.

Allied World had offered to give Transatlantic shareholders a 58% stake in the combined entity, while Validus had offered 48% ownership, according to a filing with the Securities and Exchange Commission.

“While the National Indemnity offer acknowledges the value of the Transatlantic franchise, it fails to provide Transatlantic stockholders with any participation in the upside of the combined company,” said Validus chairman and CEO Ed Noonan in the statement.

Allied World's president and CEO Scott Carmilani said his offer allows shareholders to participate in the combined company's upside potential. “In contrast, National Indemnity's proposal is, at best, opportunistic and seeks to acquire Transatlantic for cash at a significant discount to book value, leaving Transatlantic shareholders no upside potential,” he said in a statement Sunday.

Berkshire declined to comment.

It's not the first time that Berkshire has joined into a bidding war involving Validus. After Validus made an unsolicited bid for IPC Holdings Ltd. in 2009, Berkshire reportedly made an all-cash offer for the Bermudian property catastrophe reinsurer. But Validus ended up completing the deal in July 2009 for $1.65 billion cash and stock.