In a Securities and Exchange Commission filing, Transatlantic says it would not consider Validus' offer because of its “refusal to sign a standard confidentiality agreement that includes a standstill provision.” That provision, which would prevent Validus from acquiring additional shares of Transatlantic, is in the Allied World agreement, the company contends.

In his letter, Noonan says Validus filed suit in Delaware Chancery Court against Transatlantic and the board for breach of fiduciary duty, seeking a declaratory judgment that the absence of standstill agreement is not sufficient reason for not considering the company's offer.

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

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

On the same day, Transatlantic sent a letter to its shareholders letting them know it remained committed to the Allied World merger.

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

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

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