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Validus CEO: Transatlantic Board 'Case Study In Poor Governance'

By Brett Philbin Of DOW JONES NEWSWIRES NEW YORK -(Dow Jones)- Validus Holdings Ltd. (VR) Chief Executive Edward Noonan ramped up the pressure on Transatlantic Holdings Inc. (TRH) to accept a hostile takeover bid, saying the board's rejection is a "case study in poor governance." On a conference call early Monday for Transatlantic shareholders, Noonan and Chief Financial Officer Joseph Consolino outlined a series of reasons why they believe Validus's offer for Transatlantic is superior to that of Allied World Assurance Co. Holdings Ltd. (AWH), which Transatlantic previously accepted. Noonan said Transatlantic's board is "ill-serving its shareholders" in the proposed Allied World transaction, again criticizing what he called Allied's "ever-increasing reserve releases for earnings." A representative for Allied World didn't immediately respond to a request for comment. The call followed a statement Sunday in which Validus attacked the proposed deal, saying Allied World has weak long-term prospects. On the call, Noonan claimed that Allied's expense structure has "ballooned" since it separated from American International Group Inc. (AIG), adding that the company's gross premiums written grew by 2.4% annually, while its general administrative expenses grew by 25% a year. Noonan also said Allied World's high accident year loss ratio and low interest rates make it "extremely challenging" for the company to reach its own stated goal of a five-year average 9% return on average equity. Noonan reiterated that Validus is open to a "consensual transaction," and said he believed that in the end, Transatlantic's shareholders and not its board will decide the outcome of the competing offers. The Validus offer to Transatlantic investors would give them 1.56 Validus shares and $8 in cash for each Transatlantic share. The offer valued the company at about $3.5 billion based on stock prices the day the bid was announced in June. Allied, meanwhile, would exchange 0.88 shares for each Transatlantic share in a deal valued at $3.2 billion based on prices at the time. -By Brett Philbin, Dow Jones Newswires; 212-416-2173;

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