By Samuel Howard

Law360, New York (August 25, 2011, 1:05 PM ET) -- Transatlantic Holdings Inc.’s largest shareholder, Davis Selected Advisers LP, on Wednesday announced its opposition to a $3 billion merger with Allied World Assurance Co., potentially aiding rival bidders in the tug-of-war over the reinsurer.

Davis Advisors resolved to vote against the proposed merger with Allied, further jeopardizing a multibillion deal that has already drawn rival offers from Validus Holdings Ltd. and Berkshire Hathaway Inc.’s National Indemnity Co., according to a filing with the U.S. Securities and Exchange Commission.

“Davis Advisors believes that the current offer from...