Validus took its offer directly to Transatlantic shareholders when talk with the New York-based reinsurer ended. The companies have since traded lawsuits.

Transatlantic adopted a “poison pill” to thwart negotiations with Validus, the Bermuda-based reinsurer and insurer says. The companies have differences of opinion about a “standstill provision” within the confidentiality agreement. Transatlantic has also amended corporate bylaws to give its board more power over stockholders, Validus alleges.

Added together Transatlantic's actions “demonstrate the clear need for replacement of the current Transatlantic board,” Validus says in a statement.

Transatlantic says it has no comment.

“Validus believes the Transatlantic board has repeatedly failed to take the necessary steps to secure greater value for Transatlantic stockholders and that Validus' superior proposal is a better alternative for Transatlantic stockholders,” says Edward J. Noonan, chairman and CEO of Validus. “…we believe that Transatlantic stockholders should elect a board that will act to do so.”

Validus proposes the following directors:

• Raymond C. Groth, an adjunct professor of business administration at The Fuqua School of Business at Duke University. Groth served as a director of Specialty Underwriters' Alliance, Inc. from May 2004 until it was acquired by Tower Group, Inc. in November 2009.
• Paul G. Haggis, chairman of Alberta Enterprise Corp. Haggis was president and CEO of the Ontario Municipal Employees Retirement System from September 2003 to May 2007.
• Thomas C. Wajnert, a senior managing director of The Alta Group, a global consulting organization that provides advisory services to the financial services industry. Wajnert has served on the board of directors of companies including Reynolds America, Inc., UDR, Inc., FGIC, Inc., JLG Industries, Inc., and NYFIX, Inc.

A report from proxy voting and advisory firm Institutional Shareholder Services (ISS) has recommended shareholders of Transatlantic vote against its proposed merger with Allied World, but says Allied World shareholders should vote in favor of the proposal to form the new company to be called TransAllied.

ISS says Transatlantic shareholders have “a better chance of maximizing the value of their investment by voting down the [Transatlantic-Allied World] transaction.”

Davis Selected Advisers Ltd., the largest shareholder of Transatlantic Holdings Inc., has also opposed the company's acquisition by Allied World.

Shareholders are scheduled to vote Sept. 20.

Berkshire Hathaway's National Indemnity Co. has also put in a competing cash bid for Transatlantic.