NU Online News Service, July 21, 3:13 p.m.EDT

Transatlantic Holdings Inc. says the merger offer from ValidusHoldings is not a superior one to the agreed deal it has withAllied World Assurance Co. Holdings—at least, not yet.

Though Transatlantic’s board of directors, after meeting withfinancial and legal advisors, has determined Validus’ unsolicited $3.5 billion offer to Transatlantic is notbetter than the $3.2 billion merger agreement it has with Allied World, the NewYork-based international reinsurer says in a statement it iswilling to talk more with Validus.

The Validus proposal is “reasonably likely to lead to a superiorproposal,” and a failure to stop talks with Validus “would resultin a breach of [Transatlantic’s] fiduciary duty,” the companysays.

Transatlantic wants Validus to sign a confidentiality agreementbefore the companies talk more.

However, Transatlantic adds that it is “committed to the terms”of the Allied World merger agreement. The proposed newglobal-specialty insurer and reinsurer is to be called TransAlliedGroup Holdings.

“The Transatlantic board reaffirms its recommendations of, andits declaration of advisability with respect to, the Allied Worldmerger agreement,” the statement says.

Allied World, of Switzerland, says in a statement that it ispleased with Transatlantic’s conclusion that its offer is superiorto the offer from Validus. “We look forward to completing ourmerger of equals as early as possible in the fourth quarter,” saysScott Carmiliani, chairman, president and chief executiveofficer.

Validus also took Transatlantic’s statement as good news, sayingin a statement that it looks forward to speaking with Transatlanticabout its proposal.

The Bermuda-based company says it made a filing with the U.S.Securities and Exchange Commission to urge Transatlanticshareholders to vote against the Allied World deal.