NU Online News Service, May 18, 3:05 p.m.EDT

Continuing in its effort to beat out Max Capital with a rivalbid for Bermuda-based IPC Holdings, Validus Holdings has upped itsoffer to shareholders of the targeted property-catastrophereinsurer.

Validus announced today that it delivered its increased offer tothe board of directors of IPC, offering $3 in cash and 1.1234Validus voting common shares for each IPC common share.

Responding to the new offer from Validus, IPC said its board"urges IPC's shareholders to take no action regarding the Validusoffer until the Board has made its recommendation."

Validus had previously offered 1.2037 Validus shares for eachIPC share on March 31. At the time, based on March 30 closingmarket prices ($24.91 for Validus and $25.41 for IPC), the Validusoffer represented $29.98 per IPC share--an 18 percent premium toIPC's March 30 closing stock price.

Based on May 15 closing prices ($24.16 for Validus and $26.63for IPC), the previous Validus offer represented $29.08 per IPCshare, while the stock part of the new deal amounts to $27.14 perIPC share. The addition of $3 in cash per share brings the totalconsideration to $30.14 per share--a 13.2 percent premium to IPC'sclosing price on May 15 and a 21.9 percent premium based on IPC'sand Validus' closing prices on March 30.

In a statement today, Ed Noonan, Validus' chairman and chiefexecutive officer, said, "This increase underscores our strongcommitment to the acquisition of IPC and reinforces the clearsuperiority of our offer over IPC's proposed amalgamation with MaxCapital."

"In addition, by adjusting our exchange ratio, we are able toprovide the IPC shareholders with a meaningful cash component, arequest we have heard repeatedly from IPC shareholders whom we'vetalked to extensively over the last few weeks, along with thecontinued opportunity to benefit from being part of a leadingBermuda carrier in the short-tail reinsurance and insurancemarket."

"The combined company will have a global underwriting platform,quality diversification into profitable business lines withsuperior growth opportunities, a strong balance sheet and a provenmanagement team."

Mr. Noonan continued, "Following numerous meetings with IPCshareholders, we believe there is widespread support for ouracquisition of IPC, and in light of our increased offer, we urgethe IPC board of directors to determine that our new proposal issuperior to the transaction with Max and to withdraw its supportfor the Max amalgamation, which provides no consideration to IPCshareholders and significantly increases their exposure to riskyassets and underperforming business lines."

According to the joint statement released by Max Capital and IPCin early March, terms of the amalgamation agreement, which theirrespective boards approved, had Max stockholders receiving 0.6429IPC shares for each Max share. The deal value exceeded $900 millionfor the more than 56 million outstanding Max shares.

Under terms of the alternative Max-IPC proposed amalgamation,IPC shareholders would own the majority of the resultingcompany--approximately 58 percent, with Max shareholders owningabout 42 percent.

The Validus offer has Validus shareholders owning a greaterportion of the combined company.

Laying out the merits of their respective deals in earlierannouncements, Validus has said that a combination between IPC andValidus is superior to one with Max because an IPC-Validuscombination would create a market-leading carrier in Bermuda'sshort-tail reinsurance and insurance markets.

Max says it offers more diversification to IPC's monolineproperty-catastrophe reinsurance operation by adding long-tailliability business to the mix.

Validus continues to pursue two other avenues to take overIPC--taking the same exchange offer directly to shareholders shouldthe IPC board continue to reject Validus' offer, and petitioningthe Supreme Court of Bermuda to approve a "scheme of arrangement"under Bermuda law.

According to Validus, this alternative would allow Validus toacquire IPC under the same economic terms, if 75 percent ofshareholders vote in favor of the deal at a court-ordered meeting,and then IPC shareholders call for a second meeting to be held "ifthe IPC board continues to be uncooperative." At that secondmeeting, shareholders would require IPC to approve and be bound bythe Validus arrangement and to terminate the IPC-Max deal.

Following the two meetings and approval by the Supreme Court ofBermuda, the scheme would become effective, according toValidus.

The exchange offer is set to expire on June 26, unlessextended.