Validus Makes Competing $3.5B Offer for Transatlantic

In the meantime, Validus says its pitch is a "superior proposal" and it would expect Transatlantic's board to promptly discuss the proposal. Validus' offer "delivers significantly higher value to Transatlantic stockholders than does the proposed acquisition of Transatlantic by Allied World," the Bermuda-based reinsurer and insurer says in a letter to Transatlantic, of New York.

"Our proposal represents a compelling strategic combination that will generate superior value for both Validus and Transatlantic shareholders," says Ed Noonan, chairman and chief executive officer of Validus. "The combination of Validus' strong positions in Bermuda and London with Transatlantic's profile in the United States, continental Europe and Asia will produce a rare example of a complementary business fit with minimal overlap."

Merging Validus, a leader of the short tail reinsurance market with Transatlantic, a leader of the long tail market, will create a company "properly balanced to manage the reinsurance underwriting cycle," Noonan adds.

Transatlantic says it has received the offer and will meet with its legal and financial advisors to evaluate Validus' offer "in due course and will inform Transatlantic stockholders of its position."

In an editorial for National Underwriter Managing Editor Susanne Sclafane, puts Validus at the top of her list of potential buyers for Transatlantic after rumors about alternative buyers surfaced.

Sclafane says Validus is "no stranger to hostile deals, having ruined the party for Max Re when it wanted to merge with IPC Re two years ago. And then there was an odd comment from CEO Edward Noonan about wanting to move into the U.S. casualty space at some point that NU reported exclusively in March 2010."

American International Group owned a majority stake in Transatlantic until 2009, when AIG sold its stake for over $1 billion to help repay government bailout funds.