Validus Appeal To Transatlantic Shareholders

Bermuda re/insurer Validus today [Nov.8] mailed a letter to stockholders of Transatlantic Holdings, Inc. urging them to preserve their right to obtain greater value for their Transatlantic shares and make their views known to the Transatlantic board.

Validus has been embroiled in a long-running effort o buy New York insurer Transatlantic, with chairman and CEO Edward J. Noonan [pictured] saying this week, “Despite months of deliberation, the Transatlantic board still fails to act to maximize value for Transatlantic stockholders by entering into a premium transaction with Validus.

“As we have said since the beginning of this process, we believe that the Transatlantic board should act in the best interests of its stockholders and we are fully committed to making our increased offer directly available to Transatlantic stockholders.”

Mr. Noonan said the Transatlantic board makes has “a number of inaccurate statements regarding Validus’ increased offer” for the company, made last week.

“Validus believes that Transatlantic’s track record of statements on ratings, capital structure, reserve development, measure of ‘risk-adjusted’ returns and integration risk call into question the credibility of the Transatlantic board,” the company said.

Validus argues that in its deal, investors get a combined company “led by a board and management team with deep industry knowledge and hundreds of millions invested who are committed to maximizing shareholder value.”

Along with Mr. Noonan’s letter, the Par-La-Ville Road company has mailed Transatlantic stockholders consent solicitation materials, “including a BLUE consent card, which will contain important information as to why Validus believes Transatlantic stockholders need to replace the Transatlantic board with Validus’ highly qualified and independent nominees.”

Mr. Noonan’s Letter To Transatlantic Appears In Full Below:

November 8, 2011

Dear Transatlantic stockholder,

Last week, Validus announced that it significantly increased its offer for Transatlantic. Our increased offer is currently valued at $57.67 based on Validus’ closing share price on November 7, 2011.

Our increased offer is comprised of:

•  1.5564 Validus common shares per Transatlantic share;
• $11.00 in cash per Transatlantic share, an increase of $3.00 per share from Validus’ initial offer, through a pre-closing dividend financed from new borrowings; and
• An additional $1.75 in cash per Transatlantic share through a pre-closing dividend funded from available cash on hand at Transatlantic, subject to the impact of additional Transatlantic share repurchases described below.

As the Transatlantic board continues to repurchase Transatlantic shares from selling stockholders, the Transatlantic board is causing the aggregate amount available for the initially offered $2.00 cash per share pre-closing dividend, which would be paid to all Transatlantic stockholders in the Validus transaction, to be reduced on a dollar-for-dollar basis. Transatlantic’s share repurchases after October 31, 2011 through November 3, 2011 (based on publicly available information as of November 7, 2011), have already reduced the initially offered $2.00 additional dividend to $1.75.

Validus’ increased offer, including the full amount of the additional cash dividend of $1.75 per share, represented a 5.5%(1) premium to Transatlantic’s closing share price on November 7, 2011, and a 31.0%(2) premium to Transatlantic’s unaffected closing share price on June 10, 2011. Given the compelling value that our increased offer would deliver to Transatlantic’s stockholders, we question the Transatlantic board’s motivations in rejecting our offer.

Future upside potential through significant equity interest, and large cash component

Validus’ cash-and-stock offer would provide you with a significant equity interest in the combined company, allowing you to share in the future upside potential of a larger and more attractively positioned business. We would also be able to provide Transatlantic stockholders with a tax-free transaction for the Validus share consideration, if the Transatlantic board were to cooperate with us.

In addition, we believe that Validus’ increased offer clearly satisfies Transatlantic’s stated strategic objectives while a “go it alone” approach does not.

Validus offers compelling value and strong capital management

In a strong show of support for the transaction, the Validus board has approved an increase in the current Validus share repurchase authorization to an aggregate of $1.0 billion, contingent upon the consummation of the acquisition of Transatlantic.

Transatlantic stockholders, not the Transatlantic board, will decide the outcome

Despite months of deliberation, the Transatlantic board has still failed to maximize value for Transatlantic stockholders by entering into a premium transaction with Validus. Given that Transatlantic’s board has rejected the compelling value of our increased offer, we believe that you, the owners of Transatlantic, should have the right to determine the future of your investment and obtain the value of our increased offer. To that end, Validus is taking its offer directly to Transatlantic’s stockholders through its Consent Solicitation to replace the Transatlantic board with three highly qualified and independent director candidates.

We have also prepared an investor presentation, which provides additional detail on our increased offer and the path to completing the transaction. The presentation can be found at www.transactioninfo.com/validus or on the “Investor Relations” section of Validus’ website, located at www.validusholdings.com . We encourage you to read the investor presentation.

We will soon be mailing to you our consent materials, including a BLUE consent card, which will contain important information as to why we believe you need to replace the Transatlantic board with our highly qualified and independent director candidates.

We look forward to communicating further with you in the near future with respect to our compelling increased offer.

Yours sincerely,

Edward J. Noonan
Chairman and Chief Executive Officer
Validus Holdings, Ltd.

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