DOW JONES NEWSWIRES 
 
 

A fight between two suitors over reinsurer IPC Holdings Ltd. (IPCR) has escalated, as the dueling companies point to different accounting conventions to assert which deal is more desirable to shareholders.

In its latest letter to IPC's board, Validus Holdings Ltd. (VR) said Monday it disagreed with Max Capital Group Ltd.'s (MXGL) basis for valuation, alleging it modified its description of its calculation of pro forma book value per share.

Validus claims that Max Capital's calculation described what an IPC shareholder would receive on a standalone basis from either Validus or Max Capital, rather than its own approach of a comparison of what an IPC shareholder would own as a result of either transaction.

Last week, Validus made an unsolicited offer to buy IPC, a proposal it claims is better for IPC shareholders than that company's merger agreement with Max Capital. IPC, which was formed by former American International Group Inc. (AIG) Chairman Maurice "Hank" Greenberg in 1993 and has been public since 1996, now finds itself in a triangle of reinsurance companies looking to pair up in an operating environment that puts a premium on the greater capital cushion and cost savings that scale provides.

Earlier Monday, Max Capital stood by its calculations on the book value of IPC's shares, saying its figures were "true and correct," as it consulted with financial advisers and Securities and Exchange Commission counsel.

Max Capital said its offer allows IPC shareholders to compare the value received under each transaction on an "apples-to-apples" basis.

"Since Validus initially made its below-book value, unsolicited takeover offer for IPC, it has demonstrated a lack of understanding of what is important to the shareholders of IPC in allowing them to assess the relative value being delivered by Max versus Validus," said Max Capital Chairman and Chief Executive W. Marston "Marty" Becker on Monday morning.

Last month, Max Capital, which writes property and casualty business, accepted IPC's $16.34-a-share offer to acquire it, less than the $16.50 closing price the day before the deal was announced. That deal would value Max Capital at $912 million. IPC shareholders would own 59% of the combined company, though it would retain the Max Capital name and be run by Becker.

Validus is seeking to disrupt the deal with its own offer to exchange 1.2037 Validus common shares for each IPC share. Based on its closing prices on March 30, the day before the offer was made public, the offer valued IPC's common equity at $1.68 billion, or $29.98 a share, and represents an 18% premium.

Validus' shares were unmoved in after-hours trading Monday at $23.18, while IPC's shares were even at $26.40 and Max Capital's were at $16.76.

   -By John Kell, Dow Jones Newswires, 201-938-5285, john.kell@dowjones.com