Rating agencies have reacted to the announcement that Markel has agreed to buy Alterra for $3.13bn, noting the scale the merged insurance and reinsurance firm would have.AM Best and Fitch have both affirmed Alterra and Markel’s ratings following announcement of a deal for Markel to acquire Alterra, noting the diversification, scale and presence the merged firm would enjoy.AM Best said it’s A (excellent) financial strength rating and “a” issuer credit ratings (ICR) of Alterra Bermuda Ltd and its operating companies remains unchanged, as well as the “bbb” issuer credit ratings of the holding company.“The ratings reflect the organisation’s historical solid financial performance and strong risk-adjusted capitalisation,” the firm said. “Post-merger, Alterra will be part of a larger organisation with more scale and reach while remaining a speciality underwriter. Risk-adjusted capitalisation is expected to remain strong.”AM Best also said the issuer credit rating and debt ratings of Markel and the financial strength rating and ICRs of its insurance subsidiaries are unchanged.Fitch Ratings also affirmed its ‘A’ insurer financial strength ratings of Markel’s seven principal property and casualty insurance subsidiaries. It also affirmed its ‘BBB+’ insurer default rating, ‘BBB’ senior unsecured notes rating and said the rating outlook is stable.“The affirmation and stable outlook reflects that Alterra’s IFS ratings are the same as Markel’s,” the agency said. “The affirmation also reflects Fitch’s view of the transaction as improving the business platform of the combined organisation, as well as the complementary and disciplined approach to risk management of the two companies. While the acquisition of Alterra creates some execution risk in integrating the two organisations, Fitch expects this risk to be manageable.”The closing of Markel’s acquisition of Alterra is expected to take place in the second quarter of 2013, subject to regulatory approval and customary closing conditions.