SCHEDULE 14A INFORMATION
           Proxy Statement Pursuant to Section 14(a) of the Securities
                    Exchange Act of 1934 (Amendment No. ____)

Filed by the Registrant [X]
Filed by a Party other than the Registrant [  ]

Check the appropriate box:

[ ]    Preliminary Proxy Statement
[ ]    Confidential, for Use of the Commission Only (as permitted by Rule
        14a-6(e)(2))
[ ]    Definitive Proxy Statement
[ ]    Definitive Additional Materials
[X]    Soliciting Material Pursuant to ss. 240.14a-12

                        CAPITOL TRANSAMERICA CORPORATION
                (Name of Registrant as Specified in its Charter)

                          -----------------------------
     (Name of Person(s) Filing Proxy Statement if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[x]     No fee required.

[ ]     Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

        1)   Title of each class of securities to which transaction applies:

        2)   Aggregate number of securities to which transaction applies:

        3)   Per unit price or other underlying value of transaction computed
             pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
             the filing fee is calculated and state how it was determined):

        4)   Proposed maximum aggregate value of transaction:

        5)   Total fee paid:

[  ]    Fee paid previously with preliminary materials.

[  ]    Check box if any part of the fee is offset as provided by Exchange
        Act Rule 0-11(a)(2) and identify the filing for which the offsetting
        fee was paid previously. Identify the previous filing by registration
        statement number, or the Form or Schedule and the date of its filing.

        1)   Amount Previously Paid:

        2)   Form, Schedule or Registration Statement No.:

        3)   Filing Party:

        4)   Date Filed:




         On July 20, 2001, the Registrant distributed a press release to the
following effect which the Registrant is filing as soliciting material pursuant
to Rule 14a-12:

                                     Soliciting Material Pursuant to Rule 14a-12


                           [Capitol Transamerica Logo]


FOR IMMEDIATE RELEASE                                     Contact:George A. Fait
                                                                 (608) 231-4456


                   CAPITOL TRANSAMERICA CORPORATION ANNOUNCES
                   MERGER AGREEMENT WITH ALLEGHANY CORPORATION


      Madison, Wisconsin, July 20, 2001 - Capitol Transamerica Corporation
(Nasdaq: CATA) today announced the signing of a definitive merger agreement
under which Alleghany Corporation (NYSE: Y) will acquire Capitol Transamerica at
a price of $16.50 per share in cash.

      Capitol Transamerica is an insurance holding company, based in Madison,
WI, that writes specialty lines of property and casualty insurance as well as
fidelity and surety coverages, primarily through its subsidiary, Capitol
Indemnity Corporation ("CIC"). CIC operates in 37 states with a geographic
concentration in the Midwestern and Plains States. CIC conducts business through
independent and general insurance agents located throughout the United States.
The Capitol Transamerica Group is rated A+ (Superior) by A.M. Best Company,
Inc., an independent organization that analyzes the insurance industry.

      Alleghany Corporation is engaged through its subsidiaries, Alleghany
Underwriting Holdings Ltd, World Minerals Inc. and Heads & Threads International
LLC, in the businesses of global insurance and reinsurance, industrial minerals
and industrial fasteners.

      The transaction, valued at approximately $182 million, has been approved
by the Board of Directors of both Capitol Transamerica and Alleghany Corporation
and is subject to closing conditions, including the approval of holders of
two-thirds of Capitol Transamerica's outstanding shares of common stock and
certain regulatory approvals. The parties expect that a closing will occur by
the end of the year.

      As reported under generally accepted accounting principles, Capitol
Transamerica's consolidated assets and stockholders' equity as of March 31, 2001
were $283.0 million and $144.5 million, respectively, and its net income was
$14.5 million on revenues of $109.5 million in 2000 and $1.9 million on revenues
of $23.6 million in the first quarter of 2001. As of March 31, 2001, Capitol
Transamerica's insurance subsidiaries reported total statutory surplus of $113.7
million.

      George A. Fait, Chairman and President of Capitol Transamerica, said, "We
are fortunate to have found a partner in Alleghany that will enable us to
continue our operations in Madison. We look forward to contributing to the
growth and prosperity of the company and to




further encourage our agents to increase production with us. Alleghany's support
of Capitol Transamerica is gratifying and we intend to expand our operations by
offering a wider range of products. The long-term investors in Capitol
Transamerica have been rewarded in the past and this sale enables them to
realize a cash benefit for the faith they have had in the company, its
management and employees."

      John J. Burns, Jr., President and Chief Executive Officer of Alleghany,
said, "This acquisition reinforces our commitment to building shareholder value
through the ownership of profitable operating companies. Capitol Transamerica
has achieved a record of growth and profitability while building its quality
specialty insurance franchise throughout the Midwest. We intend to support the
continued growth of Capitol Transamerica and we look forward to welcoming
Capitol Transamerica into the Alleghany family of companies."

      Capitol Transamerica was advised by Lazard and Alleghany was advised by
Merrill Lynch.

      Capitol Transamerica intends to call a special meeting of its shareholders
as soon as practicable to seek shareholder approval of the merger. The proxy
statement for that meeting will include a complete description of the
transaction. Capitol Transamerica shareholders are urged to read the proxy
statement when it becomes available because it will contain important
information. Capitol Transamerica will file the proxy statement with the
Securities and Exchange Commission ("SEC"). Capitol Transamerica shareholders
may obtain (when available) a free copy of the proxy statement and other
documents filed with the SEC at its Web site at www.sec.gov. The proxy statement
and these other documents may also be obtained (when available) from Capitol
Transamerica Corporation, 4610 University Avenue, Madison, Wisconsin 53705.
Detailed information regarding the identity and interests of individuals who may
be deemed participants in the solicitation of proxies relating to the
shareholder meeting is available in the soliciting materials on Schedule 14A
that Capitol Transamerica filed with the SEC on July 20, 2001, which investors
can obtain free of charge at the SEC's Web site at www.sec.gov or from Capitol
Transamerica upon written request.

      This press release contains forward-looking statements with respect to the
anticipated effects of the merger and the expected time of the closing of the
transaction. The actual results and timing of the transaction could be
significantly different, depending, among other things, on the timing of
regulatory matters associated with the transaction. Although forward-looking
statements help to provide complete information about future prospects, readers
should keep in mind that forward-looking statements are much less reliable than
historical information.



                       INFORMATION REGARDING PARTICIPANTS

      Capitol Transamerica Corporation and its executive officers and directors
may be deemed to be participants in the solicitation of proxies from Capitol
Transamerica Corporation's shareholders with respect to the transactions
contemplated by the Merger Agreement by and among Capitol Transamerica
Corporation, Alleghany Corporation and ABC Acquisition Corp, dated as of July
20, 2001, to which the above press release refers. Information regarding such
officers and directors, including certain interests they have relating to
Capitol Transamerica Corporation, is included in Capitol Transamerica
Corporation's proxy statement for its 2001 Annual Meeting of Shareholders filed
with the SEC on April 25, 2001. Capitol Transamerica Corporation's shareholders
may obtain additional information regarding the interests of Capitol
Transamerica Corporation's executive officers and directors by reading the proxy
statement regarding the proposed merger when it becomes available. Capitol
Transamerica Corporation's shareholders may obtain copies of these documents
(when available) free of charge at the SEC's web site at www.sec.gov and from
Capitol Transamerica Corporation, 4610 University Avenue, Madison, Wisconsin
53705.