NU Online News Service, Aug. 12, 3:13 p.m.EDT

Validus Group's ongoing hostile takeover bid with TransatlanticHoldings took on heightened acrimony this week as Validus says itwould open its books to Transatlantic and sued the carrier forbreach of fiduciary duty.

In a letter to the chief executives of Transatlantic, Validus'Chairman and Chief Executive Officer Edward J. Noonan wrote on Aug.10 that the company would open its books to settle any questionsthe company has about its operations and risk exposure.

At the same time, Noonan says Transatlantic cannot refuse toconsider Validus' “superior offer” on the pretext that there is nostandstill agreement.

In a Securities and Exchange Commission filing, Transatlanticsays it would not consider Validus' offer because of its “refusalto sign a standard confidentiality agreement that includes astandstill provision.” That provision, which would prevent Validusfrom acquiring additional shares of Transatlantic, is in the AlliedWorld agreement, the company contends.

In his letter, Noonan says Validus filed suit in DelawareChancery Court against Transatlantic and the board for breach offiduciary duty, seeking a declaratory judgment that the absence ofstandstill agreement is not sufficient reason for not consideringthe company's offer.

Allied World Assurance Co. and Transatlantic entered into amerger agreement back in June.

In a letter dated Aug. 9, Scott Carmilani, president, CEO andChairman of Allied World told Transatlantic that it remainedcommitted to the merger “and we are on target to close in thefourth quarter.”

On the same day, Transatlantic sent a letter to its shareholdersletting them know it remained committed to the Allied Worldmerger.

While all of this was going on, one of Berkshire Hathaway'ssubsidiaries, National Indemnity Co., entered the bidding game, seeking Transatlantic for $3.25 billion.Transatlantic rejected the bid, with the provision that it feltNational Indemnity could make a better offer.

The Allied World—Transatlantic deal is valued at $3.2 billionand would make Transatlantic the senior partner.

The Validus offer is valued at $3.5 billion, but would makeTransatlantic a subsidiary.