PREC14A
PRELIMINARY
PROXY STATEMENT SUBJECT TO COMPLETION, DATED
APRIL 9, 2009
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the
Registrant o
Filed by a Party other than the
Registrant þ
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box: o
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Preliminary Proxy Statement
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Confidential, For Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Materials Pursuant to
Section 240.14a-12
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IPC HOLDINGS, LTD.
(Name of Registrant as Specified
in its Charter)
VALIDUS HOLDINGS, LTD.
VALIDUS LTD.
(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
þ No
fee required.
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1)
and 0-11
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1.)
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Title of each class of securities to which the transaction
applies:
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Aggregate number of securities to which transaction applies:
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3.)
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
Rule 0-11
(set forth the amount on which the filing fee is calculated and
state how it was determined):
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4.)
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Proposed maximum aggregate value of transaction:
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paid previously with preliminary materials
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Check box if any part of the fee is offset as provided by
Exchange Act
Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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1.)
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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TABLE OF CONTENTS
PRELIMINARY
COPY SUBJECT TO COMPLETION, DATED APRIL 9,
2009
GENERAL
MEETING OF THE SHAREHOLDERS
OF
IPC HOLDINGS, LTD.
TO BE HELD
ON ,
2009
PROXY
STATEMENT
OF
VALIDUS HOLDINGS, LTD.
AND VALIDUS LTD.
SOLICITATION
OF PROXIES IN OPPOSITION TO THE PROPOSED AMALGAMATION OF IPC
HOLDINGS, LTD. AND MAX CAPITAL GROUP LTD.
This Proxy Statement (the Proxy Statement) and the
enclosed GOLD proxy card are furnished by Validus Holdings,
Ltd., a Bermuda exempted company (Validus), and
Validus Ltd., a Bermuda exempted company and a wholly-owned
subsidiary of Validus (Validus Ltd.) (for
convenience purposes, throughout this Proxy Statement, we
sometimes refer to Validus as the party soliciting proxies in
connection herewith), in connection with Validus
solicitation of proxies to be used at the annual general meeting
(the Annual General Meeting) of shareholders of IPC
Holdings, Ltd., a Bermuda exempted company (IPC or
the Company), to be held
on ,
2009,
at at
Atlantic Time, and at any adjournments, postponements or
reschedulings thereof. Pursuant to this Proxy Statement, Validus
is soliciting proxies from holders of common shares, par value
$0.01 per share (the Shares), of the Company, to
vote AGAINST the proposal to issue Company Shares in
connection with the Agreement and Plan of Amalgamation, dated as
of March 1, 2009, as amended by Amendment No. 1 to the
Agreement and Plan of Amalgamation dated March 5, 2009,
among Max Capital Group Ltd. (Max), the Company and
IPC Limited (as the same may be amended, the Max
Amalgamation Agreement) which would result in the
amalgamation of Max with and into IPC Limited, a wholly-owned
subsidiary of IPC that was formed for the purpose of the
amalgamation, with the amalgamated company remaining a
wholly-owned subsidiary of IPC and the name of IPC being changed
to Max Capital Group Ltd. (the Proposed Max
Amalgamation). The specific proposal we are soliciting
proxies to vote AGAINST is proposal #8
(Proposal #8) in the Joint Proxy
Statement/Prospectus included in the Registration Statement on
Form S-4
filed by IPC with the SEC on March 27, 2009 (the
IPC/Max
S-4).
With respect to the remaining proposals we will vote your Shares
as instructed by you, or if you fail to instruct us, as
indicated in this proxy statement. The Company has
set ,
2009 as the record date for determining those shareholders who
will be entitled to vote at the Annual General Meeting (the
Record Date). The registered offices of the Company
are located at American International Building, 29 Richmond
Road, Pembroke HM 08, Bermuda.
This Proxy Statement and the enclosed GOLD proxy card are first
being mailed to the Companys shareholders on or about
April , 2009.
WE ARE DISTRIBUTING THIS PROXY STATEMENT IN ORDER TO URGE THE
COMPANYS SHAREHOLDERS TO VOTE AGAINST THE
PROPOSED MAX AMALGAMATION. THE CONSIDERATION TO BE PAID TO THE
COMPANYS SHAREHOLDERS BY MAX IN THE PROPOSED MAX
AMALGAMATION IS INADEQUATE, AND WE BELIEVE THAT BETTER
ALTERNATIVES EXIST.
On March 31, 2009, Validus publicly announced that it had
delivered a binding offer to the Company presenting a proposal
(the Validus Offer) to the Company for the
amalgamation of Validus and IPC in an exchange of shares whereby
each IPC common share will be exchanged for 1.2037 Validus
common shares, par value $0.175 per share (the Validus
Shares). The Company announced on April 7, 2009 that
its board of directors (the Companys Board)
determined that the Validus Offer does not constitute a
superior proposal under the terms of the Max
Amalgamation Agreement and reaffirmed its support of the
Proposed Max Amalgamation. As of March 31, 2009 (based upon
closing market prices as of March 30, 2009), the Validus
Offer had a value of $29.98 per Share, or approximately
$1.68 billion in the aggregate, which represented an 18%
premium to the value of the Proposed Max Amalgamation as of such
date, and a 24% premium over $24.26, which was the average
closing price
of the Shares between March 2, 2009, the day the Company
and Max announced the Proposed Max Amalgamation, and
March 30, 2009, the last trading day before we announced
the Validus Offer.
WE ARE NOT ASKING YOU TO VOTE ON OR APPROVE THE VALIDUS OFFER
AT THIS TIME. HOWEVER, A VOTE
AGAINST THE ISSUANCE OF SHARES IN CONNECTION WITH
THE PROPOSED MAX AMALGAMATION WILL SEND A CLEAR MESSAGE TO THE
COMPANYS BOARD THAT IT SHOULD GIVE PROPER CONSIDERATION TO
ALL PROPOSALS WHICH IT RECEIVES, INCLUDING THE VALIDUS
OFFER.
EVEN IF YOU HAVE ALREADY SENT A PROXY CARD TO THE COMPANY, YOU
HAVE EVERY RIGHT TO CHANGE YOUR VOTE. ONLY YOUR LATEST-DATED
PROXY COUNTS. VOTE AGAINST THE PROPOSED MAX
AMALGAMATION BY VOTING AGAINST PROPOSAL #8,
SIGNING, DATING AND RETURNING THE ENCLOSED GOLD PROXY CARD IN
THE POSTAGE-PAID ENVELOPE PROVIDED. NO POSTAGE IS NECESSARY IF
YOUR PROXY CARD IS MAILED IN THE UNITED STATES. THEREFORE, WE
URGE YOU TO SIGN, DATE AND RETURN THE ENCLOSED GOLD PROXY CARD
TO US.
REASONS
TO VOTE AGAINST THE PROPOSED MAX
AMALGAMATION
Validus is soliciting proxies from the Companys
shareholders in opposition to the Proposed Max Amalgamation and
specifically AGAINST the proposal to issue the
Company Shares in connection with the Max Amalgamation
Agreement. Validus urges all of the Companys shareholders
to vote AGAINST the Proposed Max Amalgamation for
the following reasons:
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A vote AGAINST the Proposed Max Amalgamation
preserves your opportunity to receive the significant premium
for your Shares contemplated by our Offer which, if consummated,
provides significantly greater financial value than the Proposed
Max Amalgamation.
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The Max Amalgamation does not contemplate providing any premium
to the Companys shareholders, who would continue to hold
IPC common shares after the transaction. We believe that the
Validus Offer, if consummated, would be superior to the Proposed
Max Amalgamation because it would provide the Companys
shareholders with a significant premium for their Shares upon
consummation. Based upon closing prices as of March 30,
2009, the last trading day prior to its announcement, the
Validus Offer had a value of $29.98 per Share, or approximately
$1.68 billion in the aggregate, which represented an 18%
premium to the trading value of the Shares as of such date and a
24% premium over $24.26, which was the average closing price of
the Shares between March 2, 2009, the day the Company and
Max announced the Proposed Max Amalgamation, and March 30,
2009, the last trading day before we announced the Validus
Offer. Additionally, based upon the closing prices on
April 8, 2009, the last practicable date prior to the
filing of this Proxy Statement, the Validus Offer had a value of
$27.96 per Share, or $1.56 billion in the aggregate, which
represented a 5.7% premium to the closing price of the Shares as
of such date.
We are confident that the Companys shareholders recognize
that the Validus Offer is superior to the Proposed Max
Amalgamation. Information with respect to the range of closing
sale prices for the Shares for certain dates and periods is set
forth in the IPC/Max
S-4. Validus
urges shareholders to obtain a current market quotation for the
Shares.
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A vote AGAINST the Proposed Max Amalgamation
stops the Boards attempt to sell the Company for little or
no premium.
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The Company has entered into a purported merger of
equals with Max in which the Companys shareholders
will receive little or no premium for their Shares. Although the
Companys Board has stated its belief that the Proposed Max
Amalgamation is a strategic merger of equals, we believe that
its analysis is incorrect and we believe that the Proposed Max
Amalgamation is in fact a sale of the Company. Based upon the
expected roles to be played by the Companys existing
management in the combined company and the proposed name of
Max Capital Group Ltd. for the Company following the
Proposed Max Amalgamation and the retirement and consulting
agreement entered into by the Companys Chief Executive
Officer and President, we believe that the Proposed Max
Amalgamation looks much more like a sale of the Company to Max
than it does an equal combination of two public companies. In
any case, we believe that the Companys Board, in
evaluating any strategic transaction of this type, has an
obligation to consider available alternative transactions
beforehand, communicate these alternatives clearly to the
Companys shareholders
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and act to maximize value for its own shareholders, whether on a
long-term or short-term basis, and has failed to do so in this
case. On February 27, 2009, the trading date immediately
prior to when the Proposed Max Amalgamation was announced, the
Proposed Max Amalgamation represented a 1% premium to the
closing price of the Companys Shares (based on the closing
price of Maxs shares on that date multiplied by the
inverse of the 0.6429 exchange ratio in the Proposed Max
Amalgamation). Based upon the closing prices on April 8,
2009, the last practicable date prior to the filing of this
Proxy Statement, the Proposed Max Amalgamation represented a
1.6% discount to the closing price of the Companys Shares.
The Companys Board has apparently determined that the
benefit, if any, to be received by you from a combination of
your Company with Max will be based primarily upon the
speculative future performance of the combined entity and that
you are not entitled to any upfront premium. In this context of
growth, you should consider that, since July 24, 2007 (the
date of Validus initial public offering) through
March 30, 2009 (the last trading day prior to the
announcement of the Validus Offer), Maxs common shares
have declined 36.5% whereas our common shares have appreciated
13.2% over the same period.
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A vote AGAINST the Proposed Max Amalgamation
rejects a transaction which will materially impair the
Companys balance sheet to the detriment of
shareholders.
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Under the Proposed Max Amalgamation, the Company will be
assuming the entirety of Maxs assets and liabilities.
Despite statements by the Companys Board of its desire to
reduce earnings volatility through a business combination, it
has chosen a deal in which the Companys shareholders will
assume an investment portfolio with large concentrations of
risky assets, including alternative investments and non-agency
asset-backed securities, and inadequate property and casualty
and life and annuity reserves. According to Maxs most
recent
Form 10-K,
as of December 31, 2008, its holdings of alternative
investments and non-agency asset-backed securities totaled 99%
of its tangible equity, indicating a significant amount of
embedded risk. Also, according to the IPC/Max
S-4, the
Company will have to add $130 million to Maxs
property and casualty and life and annuity reserves, indicating
prior under-reserving.
In contrast, the Validus Offer brings with it no exposure to
alternative investments. Validus investment policy
specifically precludes it from making investments in those asset
classes, which we view as having excessive risk for our
policyholders and shareholders.
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A vote AGAINST the Proposed Max Amalgamation
rejects a transaction in which it will combine with an
unprofitable company in the guise of
diversification.
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Under the Proposed Max Amalgamation, the Companys Board
has chosen to combine with an entity that suffered a
comprehensive net loss of $200.4 million, or $3.10 per Max
diluted share, in 2008. Additionally, Maxs
U.S. Specialty segment, the centerpiece of its
diversified businesses, operated in 2008 with a
combined ratio of 138.5%. The Boards choice to combine
with a loss-making entity diversifies the Company
and its shareholders into businesses which have earned returns
below what IPC earned on a standalone basis in the same period.
In that context, we would urge you to consider that Validus
earned $45.3 million, or $0.61 per Validus diluted share,
in 2008.
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A vote AGAINST the Proposed Max Amalgamation
rejects a transaction which favors the Maxs senior
management over the Companys shareholders.
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Although the Companys shareholders will receive little or
no premium in the Proposed Max Amalgamation, the IPC/Max
S-4
discloses that the senior executives of Max will receive
accelerated vesting in 50% of their outstanding unvested equity
awards, even though they will be taking over senior management
positions of the Company after the Proposed Max Amalgamation.
Given that the Proposed Max Amalgamation is a so-called
merger of equals, why are Maxs senior
executives being compensated when you, as the Companys
shareholders, are not? We urge you to carefully read the section
of the IPC/Max
S-4 titled
The Merger Interests of Max Directors and
Executive Officers in the Amalgamation for the details on
these arrangements.
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A vote AGAINST the Proposed Max Amalgamation
encourages the Board to consider other alternatives for the
Company.
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The Section entitled The Amalgamation
Background of the Amalgamation in the IPC/Max
S-4
discloses that the Company contacted a selected list of
third parties who had been identified as potential
counterparties for a
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business combination prior to entering into the Max
Amalgamation Agreement. However, even though the Companys
Board apparently decided to put the Company up for sale, it
chose a deal with little or no premium and then justified its
decision by labeling the Proposed Max Amalgamation as a
merger of equals. Additionally, the Company and its
advisors specifically excluded parties (including Validus) from
its sale process who might have been extremely interested in
pursuing a business combination. The Validus Offer is evidence
that a premium would have been, and is, available for the
Companys shareholders had the Companys Board run a
bona fide sale process. The Companys Board announced on
April 7, 2009 that the Validus Offer does not constitute a
superior proposal under the terms of the Max Amalgamation
Agreement and IPC is not permitted to engage in negotiations or
discussions with us or any other potential bidder under the
terms of the Max Amalgamation Agreement. If the Proposed Max
Amalgamation is rejected, the Companys Board will be
encouraged to revisit its duty to find the best alternative for
shareholders and can enter into discussions with Validus or
other potential counterparties as it sees fit.
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A vote AGAINST the Proposed Max Amalgamation
clears the way for acceptance of the Validus Offer.
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Even though the Companys Board has made a determination
against our offer, we believe that the Validus Offer constitutes
a superior proposal to the Proposed Max Amalgamation. When our
proposal was announced on March 31, 2009, the closing price
of the Companys Shares increased by $1.63 (to $27.04 per
share), or 6.4%, over its $25.41 per share closing price on
March 30, 2009. Based upon trading prices of Maxs
common shares, the Proposed Max Amalgamation had a value to the
Companys shareholders of $26.38 per share after market
close on March 30, 2009.
In addition, the Validus Offer provides a number of significant
benefits for the Company and its shareholders, including:
(i) quality diversification into profitable business lines
that create value for the Companys shareholders;
(ii) a strong balance sheet with significantly less
exposure to alternative asset risk, none of which is contributed
by Validus, and lower financial leverage than a combination with
Max; (iii) a larger total GAAP capital base relative to a
combination with Max; (iv) leadership positions in
attractive, profitable business lines such as marine and energy;
(v) low transaction execution risk in the form of no due
diligence requirement and no required approvals from U.S.
insurance regulators; and (vi) a superior outcome for the
Bermuda community and the Companys clients in the form of
a greater commitment to the lines of business underwritten by
the Company.
RETURN YOUR GOLD PROXY CARD AND VOTE AGAINST THE
PROPOSED MAX AMALGAMATION AGREEMENT TODAY.
DO NOT RETURN ANY PROXY CARD THAT YOU RECEIVE FROM THE COMPANY.
EVEN IF YOU HAVE PREVIOUSLY SUBMITTED A PROXY CARD FURNISHED BY
THE COMPANY, IT IS NOT TOO LATE TO CHANGE YOUR VOTE BY SIMPLY
SIGNING, DATING AND RETURNING THE ENCLOSED GOLD PROXY CARD TODAY.
WE URGE YOU TO SEND THE COMPANYS BOARD A CLEAR MESSAGE
THAT A SALE TO MAX FOR LITTLE OR NO PREMIUM IS NOT A DESIRED
OUTCOME AND THAT THEY SHOULD TAKE ALL NECESSARY STEPS TO
CONSIDER ALL OTHER PROPOSALS INCLUDING THE VALIDUS OFFER.
VOTE AGAINST THE PROPOSED MAX AMALGAMATION.
BACKGROUND
OF THE SOLICITATION
On March 2, 2009, the Company and Max announced that they
had entered into the Max Amalgamation Agreement. The IPC/Max
S-4 provides
a summary of the events leading to Max and the Company entering
into the Max Amalgamation Agreement.
In the morning of March 31, 2009, Edward J. Noonan, the
Chief Executive Officer and Chairman of the Board of Validus,
placed a telephone call to James P. Bryce, the Chief Executive
Officer and President of the Company. Mr. Noonan spoke with
Mr. Bryce and explained that Validus intended to make an
offer to exchange each outstanding IPC common share for 1.2037
Validus common shares, subject to the termination of the Max
Amalgamation Agreement.
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Following this telephone call, in the morning of March 31,
2009, Validus delivered a proposal letter containing the Validus
Offer to the Companys Board in care of Mr. Bryce and
issued a press release announcing the Validus Offer. The letter
reads as follows:
March 31,
2009
The Board of Directors of IPC Holdings, Ltd.
c/o James
P. Bryce, President and Chief Executive Officer
American International Bldg.
29 Richmond Road
Pembroke, HM 08
Bermuda
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Re:
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Superior Amalgamation Proposal by Validus Holdings, Ltd.
(Validus) to
IPC Holdings, Ltd. (IPC)
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Dear Sirs:
On behalf of Validus, I am writing to submit a binding offer
pursuant to which Validus and IPC would amalgamate in a
share-for-share exchange valuing IPC shares at an 18.0% premium
to yesterdays closing market price. We believe that an
amalgamation of Validus and IPC would represent a compelling
combination and excellent strategic fit and create superior
value for our respective shareholders.
We unquestionably would have preferred to work cooperatively
with you to complete a negotiated transaction. However, it was
necessary to communicate our binding offer to you by letter
because of the provisions of the Agreement and Plan of
Amalgamation between IPC and Max Capital Group Ltd.
(Max), dated as of March 1, 2009, as amended on
March 5, 2009 (the Max Plan of Amalgamation).
We have reviewed the Max Plan of Amalgamation and see that it
contemplates your receipt of acquisition proposals. Given the
importance of our binding offer to our respective shareholders,
we have decided to make this letter public.
Our binding offer involves a share-for-share exchange valuing
IPC shares at an 18.0% premium to yesterdays closing
market price. Consistent with that, we are prepared to
amalgamate with IPC at a fixed exchange ratio of 1.2037 Validus
shares per IPC share.
Our board of directors has unanimously approved the submission
of our binding offer and delivery of the enclosed signed
amalgamation agreement, so that, upon termination of the Max
Plan of Amalgamation, you will be able to sign the enclosed
agreement with the certainty of an agreed transaction. Our offer
is structured as a tax-free share-for-share transaction and does
not require any external financing. It is not conditioned on due
diligence. The only conditions to our offer are those contained
in the enclosed executed amalgamation agreement.
Our binding offer is clearly superior to the Max transaction for
your shareholders and is a Superior Proposal as defined in
section 5.5(f) of the Max Plan of Amalgamation for the
reasons set forth below.
Superior Current Value. Our proposed
transaction will provide superior current value for your
shareholders. Our fixed exchange ratio of 1.2037 represents a
value of $29.98 per IPC share, which is a premium of 18.0% to
the closing price of IPCs common shares on March 30,
2009.
Superior Trading
Characteristics. Validus common shares
have superior trading characteristics to those of Max as noted
in the table below.
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Validus
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Max
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Share Price Change Since Validus IPO(1)
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+13.2%
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−36.5%
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Mkt. Cap as of 3/30/09
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$2.0 billion
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$0.9 billion
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Average Daily Trading Volume(2)
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$11.3 million
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$6.7 million
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Price / Book(3)
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1.05x
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0.76x
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Price / Tangible Book(3)
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1.13x
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0.77x
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Based on the closing prices on March 30, 2009 and
July 24, 2007. |
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Three months prior to March 2, 2009, date of announcement
of Max and IPC amalgamation. |
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Based on December 31, 2008 GAAP book value per diluted
share and diluted tangible GAAP book value per share using
closing prices on March 30, 2009. |
Less Balance Sheet Risk. The combined
investment portfolio of IPC/Validus is more stable than that of
IPC/Max. Pro forma for the proposed IPC/Max combination,
alternative investments represent 12% of investments
and 29% of shareholders equity. In contrast, Validus does
not invest in alternatives and pro forma for a
Validus/IPC combination, alternative investments
represent 3% of investments and 4% of shareholders equity,
providing greater safety for shareholders and clients.
Superior Long-term Prospects. A
combined Validus and IPC would be a superior company to IPC/Max
with greater growth prospects and synergies with:
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Superior size and scale, with pro forma December 31,
2008 shareholders equity of $3.7 billion and
total GAAP capitalization of $4.1 billion;
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Superior financial flexibility, with debt/total capitalization
of only 1.8% and total leverage including hybrid securities of
only 9.1%;
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A global platform, with offices and underwriting facilities in
Bermuda, at Lloyds in London, Dublin, Singapore, New York
and Miami;
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Superior diversified business mix, with lines of business
concentrated in short-tail lines where pricing momentum is
strongest; and
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An experienced, proven and stable management team with
substantial expertise operating in IPCs core lines of
business.
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Our superior growth prospects are evidenced by our historical
track record. Between December 31, 2005 and
December 31, 2008, Validus grew its book value per share
(including accumulated dividends) at a 13.2% compound annual
rate vs. Maxs 8.8% growth over the same period. In 2008,
we grew our book value per share (including accumulated
dividends) by 2.4% vs. Maxs 10.8% decline over the same
period.
Expedited Closing Process. We will be
able to close an amalgamation with IPC more quickly than Max
because we will not require the approval of U.S. insurance
regulators.
Substantially the Same Contractual Terms and
Conditions. Our proposed amalgamation
agreement contains substantially the same terms and conditions
as those in the Max Plan of Amalgamation, and for your
convenience we have included a markup of our amalgamation
agreement against the Max Plan of Amalgamation.
Superior Outcome for Bermuda
Community. The combination of Validus and IPC
creates a larger, stronger entity than a combination of Max and
IPC which will benefit the Bermuda community.
Superior Outcome for IPC
Clients. Validus has a greater commitment to
the lines of business underwritten by IPC and has superior
technical expertise and capacity to provide IPC customers with
continuing reinsurance coverage. Max has consistently stated its
intention to reduce its commitment to IPCs business.
Therefore, a combination with Validus will be less disruptive to
IPCs client base.
Our binding offer is clearly a Superior Proposal, within the
meaning of the Max Plan of Amalgamation. We and our financial
advisors, Greenhill & Co., LLC, and our legal
advisors, Cahill Gordon & Reindel LLP, are prepared to
move forward immediately. We believe that our offer presents a
compelling opportunity for both our companies and our respective
shareholders, and look forward to your prompt response. We
respectfully request that the Board of IPC reach a determination
by 5:00 p.m., Bermuda time, on Wednesday, April 15,
2009, that (i) our binding offer constitutes a Superior
Proposal, (ii) it is withdrawing its
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recommendation for the transaction contemplated by the Max Plan
of Amalgamation and (iii) it is making a recommendation for
the transaction contemplated by this binding offer.
We reserve the right to withdraw this offer if the Board of IPC
has not reached a determination (i) that our binding offer
constitutes a Superior Proposal, (ii) to withdraw its
recommendation for the transaction contemplated by the Max Plan
of Amalgamation and (iii) to make a recommendation for the
transaction contemplated by this binding offer by
5:00 p.m., Bermuda time, on Wednesday, April 15, 2009.
We further reserve the right to withdraw this binding offer if
you subsequently withdraw your recommendation in favor of our
offer or if you do not sign the enclosed amalgamation agreement
within two business days after the termination of the Max Plan
of Amalgamation.
We look forward to your prompt response.
Sincerely,
Edward J. Noonan
Chairman and Chief Executive Officer
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cc: |
Robert F. Greenhill
Greenhill & Co., LLC
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John J. Schuster
Cahill Gordon & Reindel LLP
In the afternoon on March 31, 2009, the Company issued a
press release acknowledging receipt of the letter from Validus
outlining the Validus Offer and indicating that the
Companys Board of Directors would review the terms of the
Validus Offer in a manner consistent with its obligations under
the Max Amalgamation Agreement and applicable Bermuda law.
Also in the afternoon on March 31, 2009, Max issued a press
release announcing that it had received from the Company a copy
of the letter from Validus outlining the Validus Offer.
In the morning on April 2, 2009, Max sent a letter to the
Companys Board of Directors purporting to outline the
relative advantages of the pending IPC/Max amalgamation as well
as the business and financial issues raised by the Validus Offer
and issued a press release announcing the letter. The letter
presented Maxs analysis of the Validus Offer asserting 12
purported advantages to the IPC/Max amalgamation and concluded
that Validus had not presented a Superior Proposal
or a proposal that could reasonably be expected to lead to a
Superior Proposal pursuant to the Max Amalgamation Agreement.
The text of the letter was filed by Max with the SEC.
-7-
In the afternoon on April 2, 2009, Validus sent a letter to
the Companys Board of Directors addressing the claims made
by Max in its letter to the Companys Board of Directors in
the morning on April 2, 2009. The text of our letter reads
as follows:
April 2,
2009
The Board of Directors of IPC Holdings, Ltd.
c/o James
P. Bryce, President and Chief Executive Officer
American International Bldg.
29 Richmond Road
Pembroke, HM 08
Bermuda
Dear Members of the Board:
We are writing to respond to the letter sent to you by
Mr. Becker of Max Capital Group Ltd. (Max)
dated April 2, 2009, regarding the purported benefits of
the proposed combination of IPC Holdings, Ltd. (IPC)
with Max (pursuant to an Amalgamation Agreement between Max and
IPC dated as of March 2, 2009 (the Amalgamation
Agreement)), as compared to the benefits presented by a
combination of IPC with Validus Holdings, Ltd.
(Validus) on the terms we proposed to you in our
letter dated March 31, 2009 (the Validus
Proposal).
First, we would like to reiterate our sincere belief that the
Validus Proposal is in every respect a Superior Proposal as
defined in the Amalgamation Agreement. In fact, as you have
undoubtedly seen, the markets have already endorsed our
proposal: the IPC share price has increased significantly since
the announcement of our proposal, in recognition of the fact
that our proposal delivers superior value to the IPC
shareholders an irrefutable fact. Our proposal
offers the IPC shareholders superior value (an 18% premium to
the value of the IPC stock on the date prior to our
announcement), a currency with superior trading characteristics
(Validus shares trade at a premium to book value, as opposed to
the Max shares, which trade at a discount to book value), less
balance sheet risk, and most importantly, superior long term
prospects.
Max suggests that the choice you are facing is between
(i) a combined company based on a shared vision in which
you, the IPC Board, can continue your stewardship, and
(ii) an entity which offers you few benefits over what you
have today, with no ability to continue your stewardship. We
view the choice quite differently: you can choose to combine
with a company which, on almost every metric, is a worse choice
for your shareholders, or ours, which delivers, immediately and
in the long term, superior value for your shareholders. To the
extent that you, the members of the IPC Board, have an interest
in continuing involvement in the affairs of the combined
company, we would be happy to discuss continued Board
representation with you.
Turning now to the assertions in the Max letter, we note that
Max has made a number of statements which distort the facts and
present an incomplete picture. We would like to respond to each
of these in turn.
1. A combination with Max delivers 29% more
tangible book value per share to IPC. Max
believes book value per share is a very important measure in our
industry, and we do not disagree. The relevant question for the
IPC Board, however, is not, as Max suggests, the relative
percentage of book value being delivered to IPC shareholders in
the two proposals, but the absolute value of the shares
themselves. On this measure, the Validus proposal is clearly
superior, as it offers IPC shareholders a significant premium
over the current value of their shares. Moreover, Max does not
explain in its letter why Maxs shares are trading at such
a deep discount to its book value. We can only guess that the
market assigns such a discount because of Maxs stewardship
of its business or because so much of Maxs investment
portfolio is tied up in risky alternative assets. Indeed, of
Maxs $1.2 billion of tangible common equity,
$754 million is in alternative assets, which in 2008
generated mark downs of $233 million, greater than the
entirety of Maxs underwriting income, and
$476 million is in non-agency asset/mortgage backed
securities. We believe it is a far better value proposition for
the IPC shareholders to receive Validus shares, a currency which
the market values at a premium to book.
2. The IPC/Max Plan creates significant value for
IPC shareholders. This statement is simply
incorrect. According to data calculated from the proxy statement
filed by IPC on March 27, 2009, IPCs book
-8-
value per share would decrease from $33.00 to $32.30, or 2.1% as
a result of the combination with Max (this obviously implies the
deal is accretive to Max at your expense). That can hardly be
described as the best opportunity to deliver shareholders
value. Moreover, while it is true that the Validus
proposal delivers an immediate premium for IPC shareholders, it
wrong of Max to suggest that such a premium will compromise
value creation for IPC shareholders in the longer term. We
believe that receiving a better currency, in a stronger, better
capitalized company, offers a more likely starting point for
long term value creation than retaining shares in IPC, whose
previously conservatively managed balance sheet will be
negatively impacted by assets of questionable value in the
IPC/Max combination.
3. Max is a truly diversified underwriting
platform. We think the relevant question
for IPC is not whether its merger partner has a diversified
platform, but rather the quality of that diversification. In
terms of the quality of diversification, Validus offers far
superior characteristics than Max, as evidenced by 2008 results
for Maxs diversified businesses. Maxs
2008 reported 91.9% property and casualty GAAP combined ratio
benefited from $107.0 million of prior-year reserve
releases. The true 2008 accident-year GAAP combined ratio was
103.4%. Maxs diversified businesses represent
diversification without profit. Maxs chief source of
diversifying growth, Max US Specialty, generated a 138.5%
combined ratio in 2008. Results such as those cannot create
value for shareholders. Max is not a leader in any category of
business, and moreover, it has chosen to focus on volatile lines
of business which yield low margins. In contrast, Validus is a
global leader in very profitable business lines, including
marine, energy and war and terrorism. Furthermore, Maxs
statement that Validus is constrained by its limited
underwriting platforms is demonstrably untrue. Validus has the
global licenses and other capabilities in place to write long
tail insurance if and when it believes doing so would be
profitable. In fact, today, Validus writes non-catastrophe
business in 143 countries around the world. And, as demonstrated
by Validus superior financial results and lower combined ratio,
Validus does so profitably.
4. Max has a proven, long-term, operating
history. Max may have a longer history than
Validus, but even a cursory look at the decline in Maxs
book value, its weak growth, volatile results and general
underperformance will quash any notion that the length of its
operating history trumps the superior abilities of the deeply
experienced Validus management team to generate best in class
performance.
By focusing on the net loss reported by Validus based on
hurricanes Ike and Gustav, Max is yet again ignoring the larger
benefit of Validus conservative risk management and
diversification. Validus assumed that the hurricane season in
2008 would generate a market loss of $18 to $21 billion,
and we set our reserve levels accordingly. IPC, by contrast,
assumed $14.5 billion of losses. Notwithstanding the
severity of the events of that hurricane season, Validus was
easily able to absorb the loss (yielding a combined ratio of
92.2%, with a corresponding combined ratio at Validus Re of
86.0%). As a result, Validus was profitable, notwithstanding the
losses associated with hurricanes Gustav and Ike. Its highly
touted diversification notwithstanding, Max sustained a loss for
the year in excess of $200 million, demonstrating beyond a
shadow of a doubt that its greater diversification
is not a guarantee of profitability.
We at Validus believe that our diversification is of a higher
quality, our underwriting decisions are made more carefully, our
risks are managed more prudently, and we exercise a more
conservative stewardship over our capital, all of which would
inure to the long term benefit of the IPC shareholders in our
proposed combination.
5. IPC and Max can complete an amalgamation more
quickly, with greater certainty. Max now
claims (contrary to the statements it made prior to the Validus
Proposal) that Max and IPC will be able to close their
amalgamation in June 2009. Max freely admits, however, that it
does not control the time table: the SEC must clear the proxy
statement/prospectus filed by IPC, it must clear the proxy
statement for Max, and the parties must obtain shareholders
approval (which we believe will be difficult to do while our
Superior Proposal is pending). Most importantly, the closing of
the IPC/Max transaction requires regulatory approvals from
several different state insurance departments in the United
States. Implicit in Maxs prediction of a closing date is a
presumption of the receipt of regulatory approvals, which simply
cannot be taken for granted given the likely timing of
regulatory review and the public hearing process. Thus there is
absolutely no guarantee that the IPC/Max deal can be consummated
in the second quarter. Finally, it is important for the IPC
Board not to lose
-9-
sight of the fact that the Amalgamation Agreement cedes to Max
the power to delay the closing of a Validus/IPC combination.
Max also tries to make an issue of the fact that IPC has not had
a chance to conduct due diligence on Validus. Validus would
welcome the opportunity to provide IPC with customary due
diligence information. Validus stands ready to respond to any
requests IPC may make on an expedited basis, and would be more
than happy to meet with IPC to answer any questions IPC may have
about Validus, its operations, its financial health or any other
matter relevant to the Board of IPC in considering Validus
Superior Proposal. We call upon Max to permit IPCs Board
to exercise its fiduciary duties by releasing IPC from the
extraordinarily restrictive prohibition in the Amalgamation
Agreement which prevents it from even talking to Validus
regarding the terms of its Superior Proposal.
6. Maxs business is complementary to
IPC. Maxs assertions that a
combination of Validus and IPC would result in a loss of
customers are without merit and are particularly surprising,
given that Max has publicly stated its intention to
significantly reduce IPCs core reinsurance activities. As
we are both aware, the current reinsurance market is in the
midst of a capacity shortage. As a result, we do not believe
that clients will actively seek to diversify their reinsurance
placements away from our combined company. In fact, our combined
financial strength and clout should only serve to make a
combined Validus/IPC a go-to player for reinsurance
placements.
7. Maxs complementary and
diversified platform is appreciated by our ratings
agencies. We have been in dialogue with our
ratings agencies with regard to our proposal. We encourage the
Board of IPC to focus its attention on what the ratings agencies
actually say, rather than on Maxs speculations.
8. Max maintains less underwriting volatility
through greater diversification in its portfolio of
risks. Due to the significant investment
losses Max sustained in 2008, it is unsurprising that Max is
attempting to focus on underwriting volatility alone.
Selectively focusing on underwriting volatility wholly ignores
the other various risks and uncertainties that IPCs
shareholders would be assuming by combining with Max and its
risky balance sheet. With respect to underwriting performance,
in 2008, Validus successfully weathered its exposures from
Hurricanes Ike and Gustav with a combined ratio of 92.2% and net
income of $63.9 million. This performance was generated
despite the fact that Validus reserved for those events more
conservatively than its industry peers, as discussed in
paragraph 4 above. Validus disclosures offer the
highest level of transparency with regard to its probable
maximum losses, zonal aggregates and realistic disaster
scenarios and we would challenge Max to provide the same level
of transparency to its shareholders before presumptuously
speculating on the impacts of various potential events.
9. Max has a proven, long term history of
successful acquisitions without incurring good
will. Validus has a proven track record of
acquiring a high quality premier business with a leading
position in its market. Maxs pointing to its acquisition
of Imagine Group (UK) Limited as an example of a successful
acquisition is ironic, especially relative to our successful
acquisition of Talbot. In that transaction, Validus acquired a
strong balance sheet with excess reserves at a multiple of 3.1x
earnings demonstrating Validus commitment to creating
value for our shareholders. When we acquired Talbot, Validus
booked $154 million of goodwill and intangible assets;
however, from acquisition closing until December 31, 2008,
we benefited from $105 million in reserve releases from the
Talbot business, emanating from periods prior to the
acquisition. Maxs acquisition history, on the other hand,
is that of acquiring subscale small businesses that
significantly lag the leaders in their respective markets.
10. Max has a diversified shareholder
base. Maxs attempt to characterize
our shareholder base as a liability is baseless. What is
relevant is the relative liquidity of Max and Validus shares. As
previously mentioned in our letter dated March 31, 2009,
Validus daily average trading volume was
$11.3 million vs. $6.7 million for Max for the three
months prior to announcement of the IPC/Max transaction.
Additionally, since our shareholder base is publicly disclosed,
if the market viewed it as an overhang, such
information would already be embedded in the market price of our
common shares. The combination of our trading volume and the
premium pricing of our shares compared to either Max or IPC
should put to rest any concerns IPC shareholders may have
regarding liquidity of the combined company.
-10-
11. IPC and Max have compatible
cultures. Max has mentioned that it has a
compatible culture with IPC. If that is in fact the case, we
find the paucity of IPC management that will continue in senior
roles at IPC/Max curious and an indication that such cultural
fit may be only skin deep. We have successfully integrated large
acquisitions in the past, and believe that experience is most
relevant in this regard.
12. Maxs higher asset leverage provides
greater investment income over
time. Maxs asset leverage has been a
significant liability given its risky investment strategy. This
leverage would similarly expose a combined IPC/Max to
significant volatility. Maxs alternative investments and
non-agency asset/mortgage backed securities alone comprise 99%
of its tangible equity, indicating a massive amount of embedded
risk. Maxs $233 million loss in 2008 on their
alternative investment portfolio is entirely indicative of that
risk. Its so-called outperformance in 6 of the last 8
quarters ignores the abject underperformance it
experienced in other periods. In 2007, when the global credit
crisis began, Maxs current management had the opportunity
to liquidate its alternative assets. Max chose to continue
holding those risky investments, which have led to massive
losses. Combined, we believe these factors highlight Maxs
poor history as stewards of shareholder capital.
* * *
In closing, I would like to reiterate that we have submitted to
you a proposal which we are confident the IPC Board will agree
is a Superior Proposal as defined in your
Amalgamation Agreement. We have submitted this proposal because
we deeply and honestly believe that the combination of IPC and
Validus will result in a far better value proposition for the
IPC shareholders than the combination of IPC and Max. Validus is
absolutely committed to our Superior Proposal and we simply do
not understand how Max can characterize our actions as
opportunistic. If Max truly believes its combination
with IPC is superior, we call upon Max to free the IPC Board
from the shackles that your Amalgamation Agreement has placed on
the ability of the members of the IPC Board to exercise their
fiduciary duties under Bermuda law, so as to create a level
playing field on which the shareholders of IPC will be able to
decide which of the two proposals is indeed superior.
Sincerely,
Edward J. Noonan
Chairman and Chief Executive Officer
-11-
In the afternoon on April 5, 2009, Validus sent a letter to
the Companys Board of Directors regarding an error that
Max had made in its calculation of pro forma tangible book value
under the terms of the Validus Offer. The text of our letter
reads as follows:
April 5,
2009
The Board of Directors of IPC Holdings, Ltd.
c/o James
P. Bryce, President and Chief Executive Officer
American International Bldg.
29 Richmond Road
Pembroke, HM 08
Bermuda
Dear Members of the Board:
We are writing to call to your attention an error contained in
the publicly disseminated letter sent to you by Mr. Becker
of Max Capital Group Ltd. (Max) dated April 2,
2009 and the accompanying presentation materials, regarding the
purported benefits of the proposed combination of IPC Holdings,
Ltd. (IPC) with Max (pursuant to an Amalgamation
Agreement between Max and IPC dated as of March 2, 2009
(the Amalgamation Agreement)), as compared to the
benefits presented by a combination of IPC with Validus
Holdings, Ltd. (Validus) on the terms we proposed to
you in our letter dated March 31, 2009 (the Validus
Proposal).
In his letter, Mr. Becker states (and he has been widely
quoted in the media stating) that [a] combination with
Max delivers 29% more tangible book value per share to
IPC. This is not correct. We, and our
financial advisors and SEC counsel, have reviewed this
calculation and we would like to provide you with the correct
figures. Specifically, Mr. Beckers calculation
understates the pro forma IPC share of Validus tangible book
value per share by $2.74, which results in overstating the
premium calculated on this basis quite significantly. We have
attached some materials that illustrate the correct calculation.
Our SEC counsel has advised us that this error is material and
that Max will be required to amend its SEC filings to correct
its error.
As we noted in our letter dated April 2, 2009, putting
aside this error, we believe that this measure is the wrong
framework on which to analyze whether the IPC/Max plan is
superior to the IPC/Validus plan, and refer you to the analysis
in our earlier letter. We remain confident that the IPC Board
will agree the Validus Proposal is a Superior
Proposal as defined in your Amalgamation Agreement.
We look forward to your response to the Validus Proposal.
Sincerely,
Edward J. Noonan
Chairman and Chief Executive Officer
cc: Marty Dolan, J.P. Morgan Securities, Inc.
In the afternoon on April 5, 2009, Validus also posted the
material referenced in the letter on its website.
On the morning of April 6, 2009, Max issued a press release
reaffirming its prior disclosure regarding the Validus Offer and
stating that it continued to believe that Validus had not
presented a Superior Proposal, nor one that can be reasonably
expected to lead to a Superior Proposal (as such term is defined
in the [Max Amalgamation Agreement]).
-12-
In the afternoon on April 6, 2009, Validus sent a letter to
the Companys Board of Directors regarding the Max press
release and issued a press release announcing the letter. The
text of our letter reads as follows:
April 6,
2009
The Board of Directors of IPC Holdings, Ltd.
c/o James
P. Bryce, President and Chief Executive Officer
American International Bldg.
29 Richmond Road
Pembroke, HM 08
Bermuda
Dear Members of the Board:
The difficulty of being unable to speak directly has lead to an
exchange of press releases, which is unfortunate. In this
context, we would like to respond to the Max statement issued
this morning by describing the analytical framework we believe
is appropriate.
In todays press release, Max modified its description of
its calculation of pro forma book value per share. In essence,
the Max calculation now describes what an IPC shareholder would
receive on a standalone basis from either Validus or Max. We
disagree with this basis for valuation. Our approach is focused
on a comparison of what an IPC shareholder would own as a result
of either transaction.
However, if we were to follow the Max approach, we would note
that there are a number of adjustments contemplated in the
proposed IPC/Max Amalgamation Agreement, which would reduce the
standalone value that Max delivers by $117.4 million. The
joint proxy statement/prospectus filed by IPC and Max
references, among other adjustments, the need to increase
Max loss reserves for annuity claims as well as property
and casualty claims by $130.0 million. As a result, the Max
book value delivered would be reduced by $2.06 per Max share,
resulting in a book value delivered of $20.40 per share, on the
basis of Maxs calculation of diluted book value.
I would also note that Validus and Max use differing accounting
conventions for calculating diluted book value per share. While
each is valid, on the basis upon which Validus calculates
diluted book value per share, the Max value delivered would be
$19.68 after a $1.81 per share reduction in book value.
We have provided the attached schedule of our calculations in an
effort to be as transparent as possible in our communication
with you.
Sincerely,
Edward J. Noonan
Chairman and Chief Executive Officer
cc: Marty Dolan, J.P. Morgan Securities, Inc.
-13-
Adjustments
to Max Book Value Upon Combination with IPC
|
|
|
|
|
(In millions, except per share values)
|
|
|
|
|
Net book value of net assets acquired prior to fair value
adjustments(1)
|
|
$
|
1,280.3
|
|
Preliminary adjustments for fair value
|
|
|
|
|
Adjustment to deferred acquisitions costs(2)
|
|
|
(51.3
|
)
|
Adjustment to goodwill and intangible assets(3)
|
|
|
(12.0
|
)
|
Adjustment to reserve for property and casualty losses and loss
adjustment expenses(4)
|
|
|
(60.0
|
)
|
Adjustment to life and annuity benefits(4)
|
|
|
(70.0
|
)
|
Adjustment to unearned property and casualty premiums(5)
|
|
|
51.3
|
|
Adjustment to senior notes(6)
|
|
|
24.6
|
|
|
|
|
|
|
Total adjustments
|
|
|
(117.4
|
)
|
|
|
|
|
|
Fair value of net assets acquired
|
|
$
|
1,162.9
|
|
Total adjustments
|
|
$
|
(117.4
|
)
|
Max diluted shares outstanding(7)
|
|
|
64.9
|
|
|
|
|
|
|
Adjustment per diluted share
|
|
$
|
(1.81
|
)
|
|
|
|
|
|
Source: Note 1 to unaudited pro forma consolidated
financial information of IPC in
Form S-4
filed
3/27/2009
(S-4).
Notes 1-6
are excerpts from the
S-4.
|
|
|
|
(1)
|
Represents historical net book value of Max.
|
|
|
(2)
|
Represents adjustment to reduce the deferred acquisition costs
of Max to their estimated fair value at December 31, 2008.
|
|
|
(3)
|
Represents adjustment to reduce goodwill and intangible assets
of Max to their estimated fair value at December 31, 2008.
|
|
|
(4)
|
The fair value of Maxs reserve for property and casualty
losses and loss adjustment expenses, life and annuity benefits,
and loss and loss adjustment expenses recoverable were estimated
based on the present value of the underlying cash flows of the
loss reserves and recoverables. In determining the fair value
estimate, IPCs management estimated a risk premium deemed
to be reasonable and consistent with expectations in the
marketplace given the nature and the related degree of
uncertainty of such reserves. Such risk premium exceeded the
discount IPCs management would use to determine the
present value of the underlying cash flows.
|
|
|
(5)
|
Represents the estimated fair value of the profit within
Maxs unearned property and casualty premiums. In
determining fair value, IPCs management estimated the
combined ratio associated with Maxs net unearned property
and casualty premiums.
|
|
|
(6)
|
Represents adjustment to record Maxs senior notes to their
estimated fair value at December 31, 2008.
|
|
|
(7)
|
Common shares outstanding plus the gross amount of all warrants,
options, restricted shares, RSUs, restricted common shares and
performance share units outstanding as of the
12/31/2008
balance sheet date (Source: Max 2008
Form 10-K)
|
-14-
In the afternoon on April 7, 2009, Kenneth L. Hammond,
Chairman of the Companys Board of Directors, sent a letter
to Mr. Noonan indicating that the Companys Board of
Directors had reaffirmed its recommendation to combine with Max.
The text of the letter reads as follows:
April 7,
2009
Edward J. Noonan
Chairman & Chief Executive Officer
Validus Holdings Ltd.
19 Par-La-Ville Road
Hamilton, HM 11
Bermuda
Dear Mr. Noonan:
I am writing to respond to your letter of March 31, 2009,
submitting an offer pursuant to which Validus would combine with
IPC.
IPCs board of directors, after careful consultation with
management and our financial and legal advisors, has unanimously
concluded that the Validus proposal does not constitute a
Superior Proposal as defined in the Agreement and Plan of
Amalgamation with Max Capital Group Ltd. dated March 1,
2009. Furthermore, IPCs board of directors has unanimously
reaffirmed its recommendation that IPC shareholders vote in
favor of the transaction with Max.
In reaching its decision, IPCs board of directors
considered several factors, including the following:
|
|
|
|
|
The Validus Offer Fails to Meet IPCs Diversification
Goals During 2008, IPCs board of directors
concluded that it would be in IPCs best interest to
diversify beyond its monoline property catastrophe business
model in order to reduce the volatility inherent in focusing on
catastrophe reinsurance and to spread our risk base across less
correlated risks. A key factor in our decision to choose Max
over other options is our belief that Maxs diversified
operations offer the best path to achieve this goal. The
decision was the result of a robust and thorough review of
strategic alternatives. A transaction with Validus would not
accomplish that strategic objective given Validuss
substantial correlated catastrophe exposure.
|
|
|
|
The Max Transaction Has Significant Value Creation Potential and
Upside for IPC Shareholders The combination with Max
has the potential to create significant value for IPC
shareholders, as detailed in the filed
S-4
registration statement dated March 27, 2009. It also
provides greater book value per share to IPC shareholders.
Furthermore, Maxs balance sheet has significantly lower
goodwill and intangibles, resulting in an even greater tangible
book value per share to IPCs shareholders. We are
concerned that Validuss proposal enables Validus to raise
capital at a discount to book value at the expense of IPC
shareholders, on the other hand, the combination with Max allows
deployment of capital under a combined business plan that
benefits IPCs shareholders. Maxs diversified book,
when combined with IPCs, has the potential to reduce
earnings volatility. Earnings volatility affects share price
volatility, ratings and other important financial measures. A
combination with Max carries less risk, as this combination is
less exposed to catastrophe events and other risk
concentrations. On the other hand, Validuss earnings and
share price are more affected by catastrophe losses. At the time
of the Validus offer, its share price was near the high end of
its 52-week trading range, resulting in an exchange ratio that
poses potential downside risk to IPC shareholders. In contrast,
we entered into the transaction with Max at an exchange ratio
determined at a time that Max was trading at 53% of its 52-week
high.
|
|
|
|
The Validus Amalgamation Proposal Is Less Certain, Is
Riskier for IPCs Shareholders and Would Take Longer to
Close We currently expect to be able to complete the
transaction with Max in June, with all regulatory approvals
obtained. In contrast, in our view, any transaction with Validus
likely could not be completed before September, right in the
middle of the wind season. Our transaction with Max would have
to be rejected by IPC shareholders before IPC would be able to
conduct due diligence on
|
-15-
|
|
|
|
|
and negotiate with Validus. There is no assurance IPC would, at
that time, choose to enter into a transaction with Validus. Even
if IPC were to proceed with Validus at that time, Validus and
IPC would both need to obtain consents under their credit
facilities before the deal could close, whereas no such
additional consents would be necessary to close the IPC/Max
transaction. Validus and IPC would also need to achieve
satisfactory indications from the ratings agencies regarding the
ratings outcomes of such a combination.
|
Given these considerations and others, the board of directors
unanimously determined that the Validus proposal does not
constitute a Superior Proposal as defined in our amalgamation
agreement with Max. IPC remains committed to completing our
transaction with Max, which we believe will create a diversified
and balanced platform for growth that should drive stronger
performance and value for shareholders for many years.
Sincerely,
Kenneth L. Hammond
Chairman of the Board of Directors
On Behalf of the IPC Holdings Board of Directors
-16-
In the afternoon on April 8, 2009, Validus sent a letter to
Mr. Hammond, the Chairman of the Companys Board of
Directors, regarding the IPC letter press release and letter and
issued a press release announcing the letter. The text of our
letter reads as follows:
April 8, 2009
Kenneth L. Hammond
Chairman
IPC Holdings, Ltd.
American International Bldg.
29 Richmond Road
Pembroke, HM 08
Bermuda
Dear Mr. Hammond,
I am writing in response to your letter of April 7, 2009,
in which you confirm the continuing support of the IPC board for
the Max takeover of IPCs operations.
I am disappointed with the Boards decision and
respectfully disagree with your assessment of our Superior
Proposal. I am confident that had your Amalgamation Agreement
with Max allowed you to engage in dialogue with us, you would
have instead supported the Validus Superior Proposal on behalf
of your shareholders. In particular, although you cite a
robust and thorough review of strategic
alternatives, I am greatly disappointed that you never invited
us to participate in that process, although you spoke with
numerous potential buyers. To the extent that Max will release
you from the restrictive terms of the Amalgamation Agreement, we
continue to stand ready to discuss your objectives and how our
business meets those objectives. Until you agree to discuss our
proposal with us, we have no choice except to communicate
directly with your shareholders. We believe the facts will
demonstrate that our proposal is truly a Superior Proposal.
We hereby advise the shareholders of IPC that:
1. We have retained Georgeson as our proxy solicitor. We
will shortly file proxy solicitation materials with the SEC and
those materials will contain, among other things, the many
reasons why we believe you should vote against the Max takeover.
Once the proxy is effective, Georgeson will be in touch with
IPCs shareholders to solicit their votes AGAINST the Max
takeover. If, as we expect, IPCs shareholders vote down
the Max takeover, you will be unencumbered by the restrictive
Amalgamation Agreement and free to execute the Validus Agreement.
2. In our capacity as an IPC shareholder, we object to the
punitive nature of the $50 million Max Termination Fee. The
Termination Fee is an unenforceable penalty under Bermuda law
and we are commencing litigation to reduce this penalty. If
successful, we will permit IPC to pay the amount by which such
penalty is reduced as a dividend to IPC shareholders, so that
IPC shareholders and not Max or Validus
shareholders will share in the value obtained.
-17-
I regret that the terms of the Max takeover preclude the
management teams of IPC and Validus from cooperating in
delivering a superior outcome for IPC shareholders, but we are
pleased to work directly with your shareholders to achieve the
same end. We remain fully committed to our proposal.
Sincerely,
Edward J. Noonan
Chairman and Chief Executive Officer
On April 9, 2009, Validus filed this preliminary proxy
statement with the SEC with respect to soliciting votes against
the approval of the Proposed Max Amalgamation.
-18-
CERTAIN
INFORMATION CONCERNING THE PROPOSED MAX AMALGAMATION
At the Annual General Meeting, the Companys shareholders
of record at the close of business on the Record Date will be
voting on, among other things, whether to approve the issuance
of Shares in connection with the Proposed Max Amalgamation.
According to the IPC/Max
S-4, under
the terms of the Max Amalgamation Agreement, each outstanding
Max common share (the Max Shares), other than Max
Shares held by Max as treasury shares, will be cancelled and
converted into the right to receive 0.6429 IPC common shares,
par value $0.01 per share (the IPC Shares) (together
with cash in lieu of fractional shares). IPC shareholders would
continue to retain their shares after the Proposed Max
Amalgamation. According to the IPC/Max
S-4, as a
result of the Proposed Max Amalgamation, the Companys
shareholders would end up owning approximately 58% of the
combined company. The conditions to the consummation of the
Proposed Max Amalgamation include the following:
(1) adoption of the Max Amalgamation Agreement and approval
of the Proposed Max Amalgamation by Maxs shareholders,
(2) approval by the Companys shareholders of
(i) the issuance of the Companys shares to
shareholders of Max on the terms and conditions set out in the
Max Amalgamation Agreement and (ii) certain amendments to
the Companys bye-laws, (3) receipt of all regulatory
approvals, (4) absence of any applicable law prohibiting
the Proposed Max Amalgamation, (5) effectiveness of the
registration statement registering the Company common shares to
be issued in the Proposed Max Amalgamation,
(6) authorization of the listing of such Company common
shares on Nasdaq, (7) the truth and correctness of the
representations and warranties of the Company and Max set forth
in the Max Amalgamation Agreement in all material respects,
(8) performance by the Company and Max of their respective
material obligations under the Max Amalgamation Agreement, and
(9) receipt by the Company and Max of opinions of their
respective legal counsel with respect to certain
U.S. federal income tax consequences of the Proposed Max
Amalgamation.
The Max Amalgamation Agreement also provides that the
termination of the Max Amalgamation Agreement by either party
under certain circumstances specified in the Max Amalgamation
Agreement, including the termination by Max if the
Companys Board withdraws or adversely modifies its
approval or recommendation to shareholders of the Proposed Max
Amalgamation, will require the Company to pay Max
$50 million as a termination fee.
The Max Amalgamation Agreement also provides for the payment by
the Company to Max of the $50 million termination fee if
the Max Amalgamation Agreement is terminated in the following
circumstances: (i) by Max if the Companys Board
withdraws, modifies or changes its recommendation of the
Proposed Max Amalgamation in a manner adverse to Max in
reference to a third party acquisition proposal or (ii) by
the Company or Max if (a)(x) the Max Amalgamation Agreement
has not been consummated by November 30, 2009 or
(y) the Companys shareholder approval for the
Proposed Max Amalgamation has not been obtained, (b) prior
to the Annual General Meeting a third party acquisition proposal
has been made or otherwise becomes publicly known or any person
has publicly announced an intention to make a third party
acquisition proposal and (c) within 12 months after
termination of the Max Amalgamation Agreement, the Company or
any of its subsidiaries enters into a contract or agreement with
respect to, or consummates, a third party acquisition proposal
with the person that made such acquisition proposal.
WE ARE DISTRIBUTING THIS PROXY STATEMENT IN ORDER TO URGE THE
COMPANYS SHAREHOLDERS TO VOTE AGAINST THE
PROPOSED MAX AMALGAMATION. THE CONSIDERATION TO BE PAID BY MAX
IN THE PROPOSED MAX AMALGAMATION IS INADEQUATE, AND WE BELIEVE
THAT BETTER ALTERNATIVES EXIST.
CERTAIN
INFORMATION CONCERNING VALIDUS AND VALIDUS LTD.
Validus is a Bermuda exempted company, with its principal
executive offices located at 19 Par-La-Ville Road Hamilton
HM11 Bermuda. The telephone number of Validus is
(441) 278-9000.
Validus is a global provider of short-tail lines of reinsurance,
including property catastrophe, property pro-rata and property
per risk, marine and energy, and other specialty lines. Validus
was formed in Bermuda in December 2005 following the significant
natural catastrophes of 2005 with an experienced management team
and an unencumbered capital base of approximately
$1 billion. Validus shares are traded on the NYSE
under the symbol VR and, as of the date preceding
the filing of this Proxy Statement, Validus had a market
capitalization of approximately $1.84 billion.
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Validus has approximately 280 employees. Validus acquired
100 Shares in the open market on April 8, 2009. As of
the date of the filing of this Proxy Statement with the SEC,
Validus owned of record 100 Shares, or less than 1% of the
outstanding Shares
Validus Ltd. is a recently formed Bermuda exempted company
organized in connection with the acquisition of the
Companys common shares and the Validus Offer and has not
carried on any activities other than in connection therewith.
The principal offices of Validus Ltd. are located at
19 Par-La-Ville Road Hamilton HM11 Bermuda. The telephone
number of Validus Ltd. is
(441) 278-9000.
Validus Ltd. is a wholly owned subsidiary of Validus.
Unless Validus Ltd. exchanges Shares on behalf of Validus
pursuant to the Validus Offer, it is not anticipated that
Validus Ltd. will have any significant assets or liabilities or
engage in activities other than those incidental to its
formation and capitalization and its purchase of Shares.
Validus intends to include in a separate proxy statement to be
filed with the SEC and directed to the holders of Validus common
shares, unaudited pro forma condensed consolidated financial
information for the year ended and as at December 31, 2008,
that combines the historical financial information of each of
IPC and Validus and gives effect to the consummation of the
Validus Offer as if it had been consummated on December 31,
2008.
Information for each of the directors and executive officers of
Validus and Validus Ltd. and other officers and employees of
Validus who are considered to be participants in this proxy
solicitation and certain other information is set forth in
Schedule I hereto. Other than as set forth herein, none of
Validus, Validus Ltd. or any of the participants set forth on
Schedule I hereto have any interest, direct or indirect, by
security holdings or otherwise, in the Proposed Max Amalgamation.
THE
PROPOSED VALIDUS AMALGAMATION
In connection with the delivery of the Validus Offer to the
Company, Validus delivered a signed amalgamation agreement that
would be binding on Validus upon countersignature by the
Company. The proposed Validus amalgamation agreement (the
Validus Agreement), and a description thereof, were
filed with the SEC on
Form 8-K
on March 31, 2009. For the full terms of the Validus
Agreement we refer you to that filing. Validus has reserved the
right to withdraw its offer if the Company has not signed the
Validus Agreement by 5 p.m. on the second business day
after the termination of the Max Amalgamation Agreement.
The Validus Offer is subject to a number of conditions,
including the termination of the Max Amalgamation Agreement,
receipt of regulatory approvals, receipt of amendments or
waivers under the Companys and Validus credit
facilities and the approval of the issuance of the necessary
Validus shares by our shareholders. As a result, the
Companys shareholders cannot be guaranteed that any
premium will be paid to them based solely on their rejection of
the Proposed Max Amalgamation. However, there are no assurances
that this timeframe will be met or that all of the conditions to
the Validus Offer will be satisfied. Shareholders should take
all of these factors into account when determining how to vote
their Shares.
The Companys shareholders should also consider the risks
that may be associated with an investment in our common shares
and with the transaction contemplated by the Validus Offer.
These factors are set forth in the Forward-Looking
Statements section of this proxy statement and are
described in more detail in the section entitled Risk
Factors in our Annual Report or
Form 10-K
for the year ended December 31, 2008, which has been filed
with the SEC and is available to the Companys
shareholders. The Companys shareholders may obtain a copy
of our annual report free of charge at the SECs website
(www.sec.gov) or by directing a request to Georgeson Inc. at
(888) 274-5119
or by email at validusIPC@georgeson.com.
OTHER MAX
AMALGAMATION PROPOSALS TO BE PRESENTED AT THE
ANNUAL GENERAL MEETING
In addition to soliciting proxies to approve Proposal #8 in
connection with the Proposed Max Amalgamation, the
Companys Board is also soliciting proxies for the Annual
General Meeting for certain other proposals in
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connection with the Proposed Max Amalgamation (the Other
Proposals). All of these proposals are seeking shareholder
approval of matters required by the Max Amalgamation Agreement.
The Companys Proposals #1 through #5 is a
request to approve amendments to IPCs bye-laws to be
effective as of the effective time, and are collectively
referred to as the IPC bye-law amendments.
Specifically, they are to: (1) increase the maximum number
of directors on the board of directors from nine to 12,
(2) modify the indemnity provisions, (3) add
provisions regarding advance notice of shareholder nominees for
director and other shareholder proposals, (4) remove
provisions regarding alternate directors and cumulative voting
in the election of directors, and (5) add certain
conditions to the conduct of director meetings.
The Companys Proposal #6 is a request to approve,
effective as of the effective time, the increase in the
Companys authorized share capital from $1,850,000 to
$2,350,000 by the creation of an additional 50,000,000 common
shares, par value $0.01 per share, ranking pari passu
with the existing Company common shares.
The Companys Proposal #7 is a request to approve,
effective as of the effective time, a change in IPCs name
to Max Capital Group Ltd.
The Companys Proposal #10 is a request to approve,
effective as of the effective time, a revised plan of
remuneration for the combined entitys board of directors.
Each of these proposals is more fully described in the IPC/Max
S-4. In
addition to soliciting the proxies discussed above, the
Companys Board is also soliciting proxies for the Annual
General Meeting for a proposal to approve any adjournment or
postponement of the Annual General Meeting, including if
necessary, to solicit additional proxies in favor of the
adoption of the Max Amalgamation Agreement and the approval of
the Proposed Max Amalgamation if there are not sufficient votes
for that proposal (the Adjournment Proposal).
Because Proposals #1 through #8 and #10 and the
Adjournment Proposal are designed to facilitate the approval of
the Proposed Max Amalgamation, Validus recommends voting
AGAINST these proposals.
YOU CAN CAST YOUR VOTE WITH RESPECT TO ALL PROPOSALS TO
BE CONSIDERED AT THE ANNUAL GENERAL MEETING ON OUR GOLD PROXY
CARD. THEREFORE, THERE IS NO NEED TO VOTE ON THE COMPANYS
PROXY CARD.
OTHER
PROPOSALS TO BE PRESENTED AT THE ANNUAL GENERAL
MEETING
In addition to soliciting proxies to approve matters related to
the Max Amalgamation, the Companys Board of Directors is
also soliciting proxies for the Annual General Meeting for a
proposal to elect directors and to appoint its independent
auditors. The Companys Proposal #9 is a request to
elect the directors of IPC and, at the effective time, of the
combined entity. Finally, the Companys Proposal #11
is a request to appoint KPMG as IPCs independent auditors
until the close of the next annual general meeting and to
authorize the audit committee of IPCs board of directors
to set the compensation of such independent auditors.
With respect to these Proposals, #9 and #11, we are
not making any recommendation as to how you should vote. If you
do not indicate your voting instructions for either of these
proposals we will vote to WITHHOLD with respect to
each of the nominees listed in Proposal #9 and to
ABSTAIN with respect to Proposal #11.
YOU CAN CAST YOUR VOTE WITH RESPECT TO ALL PROPOSALS TO
BE CONSIDERED AT THE ANNUAL GENERAL MEETING ON OUR GOLD PROXY
CARD. THEREFORE, THERE IS NO NEED TO VOTE ON THE COMPANYS
PROXY CARD.
Other than as set forth above, Validus is not currently aware of
any other proposals to be brought before the Annual General
Meeting. Should other proposals be brought before the Annual
General Meeting, the persons named on the GOLD proxy card will
abstain from voting on such proposals unless such proposals
adversely affect the interests of Validus as determined by
Validus in its sole discretion, in which event such persons will
vote on such proposals in their discretion.
-21-
VOTING
PROCEDURES
According to the IPC/Max
S-4, as of
the Record Date, there
were Shares
entitled to vote at the Annual General Meeting.
Under the Companys bye-laws, the presence, in person or by
proxy, of the holders of more than 50% of the Shares outstanding
as of the Record Date (without giving effect to the limitation
on voting rights of 10% shareholders) and entitled to vote at
the Annual General Meeting is necessary to constitute a quorum
at the Annual General Meeting. In accordance with Nasdaq rules,
brokers and nominees who hold Shares in street-name for
customers may not exercise their voting discretion with respect
to the Companys Proposals in connection with the Proposed
Max Amalgamation or the Adjournment Proposal related thereto.
Thus, these Shares will be counted for purposes of determining
whether a quorum is present. Brokers and nominees may vote such
Shares with respect to the Adjournment Proposal but may not vote
such Shares with respect to the Proposals related to the
Proposed Max Amalgamation.
Any Company shareholder giving a proxy may revoke it before its
exercise by providing the Companys Secretary with written
notice of revocation, by voting in person at the Companys
Annual General Meeting or by executing a later-dated proxy;
provided, however, that the action is taken in
sufficient time to permit the necessary examination and
tabulation of the subsequent proxy or revocation before the vote
is taken.
Abstentions and broker non-votes will be counted
toward the presence of a quorum at, but will not be considered
votes cast on any proposal brought before, the Company meeting.
Therefore, abstentions and broker non-votes will
have no effect on the outcome of any proposal.
A vote by a show of hands will be taken in the first instance on
all matters (other than the election of directors) properly
brought before the Annual General Meeting unless a poll is
requested in accordance with the Company bye-laws. On a vote by
show of hands, every Company shareholder present in person and
every person holding a valid proxy will be entitled to one vote,
regardless of the number of shares owned or represented by that
person. If a poll is requested, subject to the voting
restrictions set out in the Companys bye-laws, each
shareholder present who elects to vote in person and each person
holding a valid proxy is entitled to one vote for each share
owned or represented. Votes for the election of directors may be
cumulated, as described below.
The Shares currently vote cumulatively in the election of
directors, which means that each shareholder, including a
shareholder holding Controlled Shares (as defined in the
Companys bye-laws), is entitled to the number of votes
that equals the number of votes that such shareholder would be
entitled to cast for the election of directors with respect to
its Shares multiplied by the number of persons standing for
election as director, and all votes entitled to be cast may be
cast for one or more of the directors being elected. If the
proposal described above regarding an amendment to the
Companys bye-laws to remove cumulative voting is adopted
by shareholders, the election of directors in any general
meeting of shareholders after the closing date will be subject
to the affirmative vote of a majority of the votes cast at the
general meeting (without cumulative voting).
Shareholders may (but need not) indicate the distribution of
their votes among the nominees in the space provided on the IPC
proxy card. Unless otherwise indicated on the proxy card, the
IPC proxies will cumulate votes represented by such proxy in
their discretion, except to the extent that authority so to
cumulate votes is expressly withheld as to any one or more of
the nominees.
The Companys shareholders (i) may vote
AGAINST any or all of the proposals, other than
Proposal #9 in respect of which it may
WITHHOLD, (ii) may abstain from voting on any
or all of the proposals, other than Proposal #9 in respect
of which it may WITHHOLD or (iii) may vote for
any or all of the proposals by marking the proper box on the
GOLD proxy card and signing, dating and returning it promptly in
the enclosed postage-paid envelope. If a Company shareholder
returns a GOLD proxy card that is signed, dated and not marked
with respect to a Proposal, that shareholder will be deemed to
have voted AGAINST Proposals #1 through #5
(IPC bye-law amendments), Proposal #6 (authorized share
capital increase), Proposal #7 (name change),
Proposal #8 (Authorization of Share Issuance) and
Proposal #10 (director compensation plan) and the
Adjournment Proposal as these Proposals are related to the Max
Amalgamation which we oppose.
-22-
If a Company shareholder returns a GOLD proxy card that is
signed and dated but not marked with respect to Proposal #9
(election of directors) or Proposal #11 (appointment of
KPMG), we will vote to WITHHOLD with respect to each
of the nominees listed in Proposal #9 and to
ABSTAIN with respect to Proposal #11. Also, if
no instructions as to cumulation of votes are given, your votes
will not be cumulated and your shares will be voted for each of
the nominees.
Only the Companys shareholders (or their duly appointed
proxies) of record on the Record Date are eligible to vote in
person or submit a proxy.
YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO ITS EXERCISE BY
ATTENDING THE ANNUAL GENERAL MEETING AND VOTING IN PERSON, BY
SUBMITTING A DULY EXECUTED, LATER DATED PROXY BY ONE OF THE
METHODS PROVIDED ON YOUR PROXY CARD OR BY SUBMITTING A WRITTEN
NOTICE OF REVOCATION TO EITHER (A) VALIDUS, CARE OF
GEORGESON INC., 199 WATER STREET, 26TH FLOOR, NEW YORK, NEW YORK
10038, OR (B) THE PRINCIPAL EXECUTIVE OFFICES OF THE
COMPANY AT AMERICAN INTERNATIONAL BUILDING, 29 RICHMOND ROAD,
PEMBROKE HM 08, BERMUDA. A REVOCATION MAY BE IN ANY WRITTEN
FORM VALIDLY SIGNED BY THE RECORD HOLDER AS LONG AS IT
CLEARLY STATES THAT THE PROXY PREVIOUSLY GIVEN IS NO LONGER
EFFECTIVE. SHAREHOLDERS WHO HOLD THEIR SHARES IN A BANK OR
BROKERAGE ACCOUNT WILL NEED TO NOTIFY THE PERSON RESPONSIBLE FOR
THEIR ACCOUNT TO REVOKE OR WITHDRAW PREVIOUSLY GIVEN
INSTRUCTIONS. WE REQUEST THAT A COPY OF ANY REVOCATION SENT TO
THE COMPANY OR ANY REVOCATION NOTIFICATION SENT TO THE PERSON
RESPONSIBLE FOR A BANK OR BROKERAGE ACCOUNT ALSO BE SENT TO
VALIDUS, CARE OF GEORGESON INC., AT THE ADDRESS BELOW SO THAT
VALIDUS MAY MORE ACCURATELY DETERMINE IF AND WHEN PROXIES HAVE
BEEN RECEIVED FROM THE HOLDERS OF RECORD ON THE RECORD DATE OF A
MAJORITY OF THE COMPANYS SHARES THEN OUTSTANDING. UNLESS
REVOKED IN THE MANNER SET FORTH ABOVE, SUBJECT TO THE FOREGOING,
DULY EXECUTED PROXIES IN THE FORM ENCLOSED WILL BE VOTED AT
THE ANNUAL GENERAL MEETING AS SET FORTH ABOVE.
BY EXECUTING THE GOLD CARD YOU ARE AUTHORIZING THE PERSONS NAMED
AS PROXIES TO REVOKE ALL PRIOR PROXIES ON YOUR BEHALF.
If you have any questions or require any assistance in voting
your Shares, please contact:
199 Water Street
26th Floor
New York, New York 10038
Banks and Brokers should call:
(212) 440-9800
or
Toll Free: at
(888) 274-5119
Email: validusIPC@georgeson.com
DISSENTERS
RIGHTS
The Companys shareholders are not entitled to
dissenters appraisal rights in connection with the
Proposed Max Amalgamation.
-23-
SOLICITATION
OF PROXIES
Except as set forth below, Validus will not pay any fees or
commissions to any broker, dealer, commercial bank, trust
company or other nominee for the solicitation of proxies in
connection with this solicitation.
Proxies will be solicited by mail, telephone, facsimile,
telegraph, the internet,
e-mail,
newspapers and other publications of general distribution and in
person. Directors and the officers of Validus and Validus Ltd.
listed on Schedule I hereto may assist in the solicitation
of proxies without any additional remuneration (except as
otherwise set forth in this Proxy Statement).
Validus has retained Georgeson Inc. (Georgeson) for
solicitation and advisory services in connection with
solicitations relating to the Annual General Meeting, for which
Georgeson may receive a fee of up to $250,000 in connection with
the solicitation of proxies for the Annual General Meeting. Up
to
people may be employed by Georgeson in connection with the
solicitation of proxies for the Annual General Meeting. Validus
has also agreed to reimburse Georgeson for out-of-pocket
expenses and to indemnify Georgeson against certain liabilities
and expenses, including reasonable legal fees and related
charges. Georgeson will solicit proxies for the Annual General
Meeting from individuals, brokers, banks, bank nominees and
other institutional holders. Directors, officers and certain
employees of Validus and Validus Ltd. may assist in the
solicitation of proxies without any additional remuneration. The
entire expense of soliciting proxies for the Annual General
Meeting by or on behalf of Validus is being borne by Validus.
If you have any questions concerning this Proxy Statement or the
procedures to be followed to execute and deliver a proxy, please
contact Georgeson at the address or phone number specified above.
FORWARD-LOOKING
STATEMENTS
This Proxy Statement may include forward-looking statements,
both with respect to us and our industry, that reflect our
current views with respect to future events and financial
performance. Statements that include the words
expect, intend, plan,
believe, project,
anticipate, will, may and
similar statements of a future or forward-looking nature
identify forward-looking statements. All forward-looking
statements address matters that involve risks and uncertainties.
Accordingly, there are or will be important factors that could
cause actual results to differ materially from those indicated
in such statements and, therefore, you should not place undue
reliance on any such statements. We believe that these factors
include, but are not limited to, the following:
1) uncertainty as to whether IPC will enter into and
consummate the proposed amalgamation on the terms set forth in
our offer letter; 2) unpredictability and severity of
catastrophic events; 3) rating agency actions;
4) adequacy of our risk management and loss limitation
methods; 5) cyclicality of demand and pricing in the
insurance and reinsurance markets; 6) our limited operating
history; 7) our ability to successfully implement our
business strategy during soft as well as
hard markets; 8) adequacy of our loss reserves;
9) continued availability of capital and financing;
10) retention of key personnel; 11) competition;
12) potential loss of business from one or more major
insurance or reinsurance brokers; 13) our ability to
implement, successfully and on a timely basis, complex
infrastructure, distribution capabilities, systems, procedures
and internal controls, and to develop accurate actuarial data to
support the business and regulatory and reporting requirements;
14) general economic and market conditions (including
inflation, volatility in the credit and capital markets,
interest rates and foreign currency exchange rates);
15) the integration of Talbot or other businesses we may
acquire or new business ventures we may start; 16) the
effect on our investment portfolio of changing financial market
conditions including inflation, interest rates, liquidity and
other factors; 17) acts of terrorism or outbreak of war;
and 18) availability of reinsurance and retrocessional
coverage, as well as managements response to any of the
aforementioned factors.
The foregoing review of important factors should not be
construed as exhaustive and should be read in conjunction with
the other cautionary statements that are included herein and
elsewhere, including the Risk Factors included in our most
recent reports on
Form 10-K
and
Form 10-Q
and other documents on file with the SEC. Any forward-looking
statements made in this Proxy Statement are qualified by these
cautionary statements, and there can be no assurance that the
actual results or developments anticipated by us will be
realized or, even if substantially realized, that they will have
the expected consequences to, or effects on, us or our business
or operations. We
-24-
undertake no obligation to update publicly or revise any
forward-looking statement, whether as a result of new
information, future developments or otherwise.
OTHER
INFORMATION
The information concerning the Company and the Proposed Max
Amalgamation contained herein has been taken from, or is based
upon, publicly available documents on file with the SEC and
other publicly available information. Although Validus has no
knowledge that would indicate that statements relating to the
Company or the Max Amalgamation Agreement contained in this
Proxy Statement, in reliance upon publicly available
information, are inaccurate or incomplete, to date it has not
had access to the full books and records of the Company, was not
involved in the preparation of such information and statements
and is not in a position to verify any such information or
statements. Accordingly, Validus does not take any
responsibility for the accuracy or completeness of such
information or for any failure by the Company to disclose events
that may have occurred and may affect the significance or
accuracy of any such information.
Pursuant to
Rule 14a-5
promulgated under the Exchange Act, reference is made to the
joint proxy statement/prospectus included in the IPC/Max
S-4 for
information concerning the Max Amalgamation Agreement, the
Proposed Max Amalgamation, financial information regarding Max,
the Company and the proposed combination of Max and the Company,
the proposals to be voted upon at the Annual General Meeting,
the Shares, the beneficial ownership of Shares by the principal
holders thereof, other information concerning the Companys
management, the procedures for submitting proposals for
consideration at the next annual meeting of shareholders of the
Company and certain other matters regarding the Company and the
Annual General Meeting. See Schedule II for information
regarding persons who beneficially own more than 5% of the
Shares and the ownership of the Shares by the management of IPC
Holdings, Ltd. Validus assumes no responsibility for the
accuracy or completeness of any such information.
WE URGE YOU NOT TO RETURN ANY PROXY CARD YOU RECEIVE FROM THE
COMPANY. EVEN IF YOU PREVIOUSLY HAVE SUBMITTED A PROXY CARD
FURNISHED BY THE COMPANY, IT IS NOT TOO LATE TO CHANGE YOUR VOTE
BY SIMPLY SIGNING, DATING AND RETURNING THE ENCLOSED GOLD PROXY
CARD TODAY. THEREFORE, WE URGE YOU TO SIGN, DATE AND RETURN THE
ENCLOSED GOLD PROXY CARD TO US.
WHETHER OR NOT YOU INTEND TO ATTEND THE ANNUAL GENERAL MEETING,
YOUR PROMPT ACTION IS IMPORTANT. MAKE YOUR VIEWS CLEAR TO THE
COMPANYS BOARD BY VOTING AGAINST
PROPOSALS #1 THROUGH #8 AND #10 AND ANY
ADJOURNMENT PROPOSAL AND SIGNING, DATING AND RETURNING THE
ENCLOSED GOLD PROXY CARD TODAY.
IF A COMPANY SHAREHOLDER RETURNS A GOLD PROXY CARD THAT IS
SIGNED, DATED AND NOT MARKED WITH RESPECT TO A PROPOSAL, THAT
SHAREHOLDER WILL BE DEEMED TO HAVE VOTED AGAINST
PROPOSALS #1 THROUGH #5 (IPC BYE-LAW AMENDMENTS),
PROPOSAL #6 (AUTHORIZED SHARE CAPITAL INCREASE),
PROPOSAL #7 (NAME CHANGE), PROPOSAL #8 (AUTHORIZATION
OF SHARE ISSUANCE) AND PROPOSAL #10 (DIRECTOR COMPENSATION
PLAN) AND THE ADJOURNMENT PROPOSAL AS THESE
PROPOSALS ARE RELATED TO THE MAX AMALGAMATION WHICH WE
OPPOSE.
IF A COMPANY SHAREHOLDER RETURNS A GOLD PROXY CARD THAT IS
SIGNED AND DATED BUT NOT MARKED WITH RESPECT TO PROPOSAL #9
(ELECTION OF DIRECTORS) OR PROPOSAL #11 (APPOINTMENT OF
KPMG), WE WILL VOTE TO WITHHOLD WITH RESPECT TO EACH
OF THE NOMINEES LISTED IN PROPOSAL #9 AND TO
ABSTAIN WITH RESPECT TO PROPOSAL #11.
YOUR VOTE IS IMPORTANT, NO MATTER HOW MANY OR HOW FEW SHARES YOU
OWN.
VALIDUS HOLDINGS, LTD.
April 9, 2009
-25-
IMPORTANT
VOTING INFORMATION
1. If your Shares are held in your own name, please sign,
date and return the enclosed GOLD proxy card to Validus
Holdings, Ltd., care of Georgeson Inc., in the postage-paid
envelope provided.
2. If your Shares are held in street-name, only
your broker or bank can vote your Shares and only upon receipt
of your specific instructions. If your Shares are held in
street-name, deliver the enclosed GOLD proxy card to
your broker or bank or contact the person responsible for your
account to vote on your behalf and to ensure that a GOLD proxy
card is submitted on your behalf. We urge you to confirm in
writing your instructions to the person responsible for your
account and to provide a copy of those instructions to Validus
Holdings, Ltd., care of Georgeson Inc., 199 Water Street,
26th Floor, New York, New York 10038, at
(888) 274-5119,
so that Validus will be aware of all instructions given and can
attempt to ensure that such instructions are followed.
3. Do not sign or return any
[ ] proxy card you may receive
from the Company. If you have already submitted a
[ ] proxy card, it is not too
late to change your vote simply sign, date and
return the GOLD proxy card. Only your latest dated proxy will be
counted.
4. Only the Companys shareholders of record
on ,
2009 are entitled to vote at the Annual General Meeting. We urge
each shareholder to ensure that the holder of record of his or
her Share(s) signs, dates, and returns the enclosed GOLD proxy
card as soon as possible.
If you have any questions or require any assistance in voting
your Shares, please contact:
199 Water Street
26th Floor
New York, New York 10038
Banks and Brokers should call:
(212) 440-9800
or
Toll Free: at
(888) 274-5119
Email: validusIPC@georgeson.com
THE VALIDUS OFFER DESCRIBED IN THIS PROXY STATEMENT MAY BECOME
THE SUBJECT OF A REGISTRATION STATEMENT ON
FORM S-4
FILED WITH THE SEC. INVESTORS AND SECURITY HOLDERS ARE ADVISED
TO READ SUCH REGISTRATION STATEMENT, ALL OTHER APPLICABLE
DOCUMENTS AND ANY AMENDMENTS OR SUPPLEMENTS THERETO IF AND WHEN
THEY BECOME AVAILABLE BECAUSE EACH WILL CONTAIN IMPORTANT
INFORMATION. INVESTORS AND SECURITY HOLDERS MAY OBTAIN A FREE
COPY OF ANY DOCUMENTS FILED BY VALIDUS WITH THE SEC AT THE
SECS WEBSITE (www.sec.gov) OR BY DIRECTING SUCH REQUESTS
TO GEORGESON INC., 199 WATER STREET, 26TH FLOOR, NEW YORK, NEW
YORK 10038, AT
(888) 274-5119
OR BY EMAIL AT validusIPC@georgeson.com.
-26-
SCHEDULE I
INFORMATION
CONCERNING DIRECTORS, OFFICERS AND
OTHER PARTICIPANTS OF VALIDUS AND VALIDUS LTD.
|
|
1.
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Directors
and Participant Executive Officers of Validus.
|
The following table sets forth certain information with respect
to each director and Participant executive officer of Validus
and each other employee of Validus that is a Participant in the
solicitation. Unless otherwise indicated, the current business
address of each person is 19 Par-La-Ville Road Hamilton
HM11 Bermuda and the current business telephone number is
(441) 278-9000.
Unless otherwise indicated, each such person is a citizen of the
United States, and each occupation set forth opposite an
individuals name refers to employment with Validus.
DIRECTORS
|
|
|
|
|
Present Principal Occupation or Employment, Material
Positions
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Name and Current Business Address
|
|
Held During the Past Five Years and Business Address Thereof,
Citizenship
|
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Edward J. Noonan
|
|
Mr. Noonan has been Chairman of the Board and the Chief
Executive Officer of Validus since its formation. He has
27 years of experience in the insurance and reinsurance
industry, serving most recently as the acting chief executive
officer of United America Indemnity Ltd. (Nasdaq: INDM) from
February 2005 through October 2005 and as a member of the board
of directors from December 2003 to May 2007. Mr. Noonan
served as president and chief executive officer of American
Re-Insurance Company from 1997 to 2002, having joined American
Re in 1983. Mr. Noonan also served as chairman of
Inter-Ocean Reinsurance Holdings of Hamilton, Bermuda from 1997
to 2002. Prior to joining American Re, Mr. Noonan worked at
Swiss Reinsurance from 1979 to 1983.
|
Matthew J. Grayson
|
|
Mr. Grayson has been a Director of Validus since its
formation. He also serves as a senior principal of Aquiline.
Mr. Grayson has 24 years experience in the financial
services industry. In 1998, following a career in investment
banking, corporate finance and capital markets, Mr. Grayson
co-founded Venturion Capital, a private equity firm that
specialized in global financial services companies. In 2005,
Venturion Capitals professionals joined with Jeffrey W.
Greenberg, along with others, to form Aquiline.
Mr. Grayson serves on the board of Structured Credit
Holdings Plc and has served as Director of Tygris Commercial
Finance Group since May of 2008. In 2007, Structured Credit
Holdings successfully completed a scheme of arrangement in the
Irish High Court with its creditors.
|
Jeffrey W. Greenberg
|
|
Mr. Greenberg has been a Director of Validus since its
formation. He also serves as the managing principal of Aquiline,
which he founded in 2005. Mr. Greenberg served as chairman
and chief executive officer of Marsh & McLennan
Companies, Inc. from 2000 to 2004. From 1996 to 2004,
Mr. Greenberg was the chairman of MMC Capital, the manager
of the Trident Funds. He previously served as a director of Ace,
Inc. Previously, he served as a senior executive of AIG, where
he was employed from 1978 to 1995. Mr. Greenberg is also
Chairman of Group Ark Insurance Holdings Ltd., a Bermuda-based
underwriter of insurance and reinsurance risks in the
Lloyds market.
|
I-1
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|
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|
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Present Principal Occupation or Employment, Material
Positions
|
Name and Current Business Address
|
|
Held During the Past Five Years and Business Address Thereof,
Citizenship
|
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John J. Hendrickson
|
|
Mr. Hendrickson has been a Director of Validus since its
formation. He is also the Founder and Managing Partner of SFRi
LLC, an independent investment and advisory firm (formed in
2004) specializing in the insurance industry. From 1995 to
2004, Mr. Hendrickson held various positions with Swiss Re,
including as Member of the Executive Board, Head of Capital
Partners (Swiss Res Merchant Banking Division),
Co-Founding Partner of Securities Capital, a private equity
firm, and Managing Director of Fox-Pitt Kelton, Swiss Res
Investment Banking Subsidiary. From 1985 to 1995,
Mr. Hendrickson was with Smith Barney, the U.S. investment
banking firm, where he focused on serving the capital and
strategic needs of (re)insurance clients and private equity
investors active in the insurance sector. Mr. Hendrickson
has served as a director for several insurance and financial
services companies, and, in addition to Validus, currently
serves on the board of CX Reinsurance Company Limited and Tawa
PLC.
|
Sander M. Levy
|
|
Mr. Levy has been a Director of Validus since its
formation. He also serves as a Managing Director of Vestar
Capital Partners, a private equity investment firm based in New
York which manages over $7 billion of equity capital, and
was a founding partner of Vestar Capital Partners at its
inception in 1988. Mr. Levy is currently a member of the
board of directors of Symetra Financial Corporation, Wilton Re
Holdings Limited and Duff & Phelps, LLC.
|
Jean-Marie Nessi
|
|
Mr. Nessi has been a Director of Validus since its
formation. He has also served as a director of Matmut
Enterprises since 2007. Mr. Nessi also has served as the
head of Aon Global Risk Consulting at Aon France since October
2007. Mr. Nessi served as Chairman and CEO of NessPa
Holding from January 2006 to September 2007 and as the head of
the property and casualty business unit for PartnerRe Global, a
subsidiary of PartnerRe SA, from 2003 to January 2006. He was
appointed Chairman of PartnerRe SA in June of 2003. Prior to
PartnerRe, Mr. Nessi led AXA Corporate Solutions, the
successor company to AXA Ré and AXA Global Risk.
Mr. Nessi is a citizen of France.
|
Mandakini Puri
|
|
Ms. Puri has been a Director of Validus since its
formation. She also serves as a Senior Vice President with
Merrill Lynch Global Private Equity, where she is the Chief
Investment Officer. Ms. Puri has been part of Merrill
Lynchs private equity business since 1994, prior to which
she was a Director in the High Yield Finance &
Restructuring Group at Merrill. Ms. Puri joined Merrill
Lynch in 1986. Mr. Puri is a member of the board of
directors of PSi Technologies Holdings, Inc.
|
Sumit Rajpal
|
|
Mr. Rajpal has been a director of Validus since November
2008. He is also a managing director of Goldman,
Sachs & Co. He joined Goldman, Sachs & Co.
in 2000 and became a managing director in 2007. Mr. Rajpal
also serves as a director on the boards of HealthMarkets, Inc.,
USI Holdings Corporation, CSI Entertainment, Alliance Films
Holdings Inc., CW Media Holdings, Inc. and Dollar General
Corporation (where he is an observer on the board).
|
George P. Reeth
|
|
Mr. Reeth has been President and Deputy Chairman of Validus
since its formation and has senior operating and distribution
responsibilities. Mr. Reeth, who has 30 years
experience in the insurance and reinsurance industry, was a
senior executive with Willis Group Limited from 1992 to 2005 and
was chairman & chief executive officer of North
American Reinsurance Operations for Willis Re Inc. from 2000 to
2005. Prior to Willis, Mr. Reeth was executive vice
president at Wilcox, Inc. Prior to Wilcox, Mr. Reeth was a
senior professional with E.W. Payne Intermediaries from 1986 to
1988 and with Intere Intermediaries, Inc.
|
I-2
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|
|
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|
Present Principal Occupation or Employment, Material
Positions
|
Name and Current Business Address
|
|
Held During the Past Five Years and Business Address Thereof,
Citizenship
|
|
Alok Singh
|
|
Mr. Singh has been a Director of Validus since its
formation. He also serves as a Managing Director of New Mountain
Capital, a private equity investment firm based in New York
which manages over $7 billion of equity capital. Prior to
joining New Mountain Capital in 2002, Mr. Singh served as a
Partner and Managing Director of Bankers Trust from 1978 to
2001. In 2001 he established the Corporate Financial Advisory
Group for the Americas for Barclays Capital, and led the group
until 2002. Mr. Singh is non-executive chairman of Overland
Solutions, Inc. and a director of Apptis, Inc., Deltek, Inc, and
Ikaria Holdings, Inc.
|
Christopher E. Watson
|
|
Mr. Watson has been a Director of Validus since its
formation. He also serves as a senior principal of Aquiline,
which he joined in 2006. Mr. Watson has more than
33 years of experience in the financial services industry.
From 1987 to 2004, Mr. Watson served in a variety of
executive roles within the property & casualty
insurance businesses of Citigroup and its predecessor entities.
From 1995 to 2004, Mr. Watson was president and chief
executive officer of Gulf Insurance Group, one of the largest
surplus lines insurance companies in the world. Mr. Watson
served as a senior executive of AIG from 1974 to 1987.
Mr. Watson is also a director of Group Ark Insurance
Holdings Ltd., a Bermuda-based underwriter of insurance and
reinsurance risks in the Lloyds market.
|
PARTICIPANT
EXECUTIVE OFFICERS
|
|
|
|
|
Present Principal Occupation or Employment, Material
Positions
|
Name and Current Business Address
|
|
Held During the Past Five Years and Business Address Thereof,
Citizenship
|
|
Edward J. Noonan
|
|
Mr. Noonan has been Chairman of the Board and the Chief
Executive Officer of Validus since its formation. He has
27 years of experience in the insurance and reinsurance
industry, serving most recently as the acting chief executive
officer of United America Indemnity Ltd. (Nasdaq: INDM) from
February 2005 through October 2005 and as a member of the board
of directors from December 2003 to May 2007. Mr. Noonan
served as president and chief executive officer of American
Re-Insurance Company from 1997 to 2002, having joined American
Re in 1983. Mr. Noonan also served as chairman of
Inter-Ocean Reinsurance Holdings of Hamilton, Bermuda from 1997
to 2002. Prior to joining American Re, Mr. Noonan worked at
Swiss Reinsurance from 1979 to 1983.
|
Joseph E. (Jeff) Consolino
|
|
Mr. Consolino has been Executive Vice President and Chief
Financial Officer of Validus since March 2006. He has over
16 years of experience in the financial services industry,
specifically in providing investment banking services to the
insurance industry, and most recently served as a managing
director in Merrill Lynchs Financial Institutions Group
specializing in insurance company advisory and financing
transactions. He serves as a Director of National Interstate
Corporation, a property and casualty company based in Ohio and
of AmWINS Group, Inc., a wholesale insurance broker based in
North Carolina.
|
I-3
|
|
2.
|
Directors
and Participant Executive Officers of Validus Ltd.
|
The following table sets forth certain information with respect
to each director and each participant executive officer of
Validus Ltd.. Unless otherwise indicated, the current business
address of each person is 19 Par-La-Ville Road Hamilton
HM11 Bermuda and the current business telephone number is
(441) 278-9000.
Unless otherwise indicated, each such person is a citizen of the
United States.
DIRECTORS
|
|
|
|
|
Present Principal Occupation or Employment, Material
Positions
|
Name and Current Business Address
|
|
Held During the Past Five Years and Business Address Thereof,
Citizenship
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Stuart W. Mercer
|
|
Mr. Mercer has been a director of Validus Ltd. since its
formation. Mr. Mercers principal occupation is
executive vice president and chief risk officer of Validus.
Mr. Mercer has over 18 years of experience in the
financial industry focusing on structured derivatives, energy
finance and reinsurance. Previously, Mr. Mercer was a
senior advisor to DTE Energy Trading.
|
C. Jerome Dill
|
|
Mr. Dill has been a director of Validus Ltd. since its
formation. Mr. Dills principal occupation is
executive vice president and general counsel of Validus. Prior
to joining Validus, Mr. Dill was a partner with the law
firm of Appleby Hunter Bailhache, which he joined in 1986.
Mr. Dill serves on the Board of Directors of Bermuda
Commercial Bank.
|
Conan M. Ward
|
|
Mr. Ward has been a director of Validus Ltd. since its
formation. Mr. Wards principal occupation is
executive vice president and chief underwriting officer of
Validus. Mr. Ward has over 16 years of insurance
industry experience. Mr. Ward was executive vice president
of the Global Reinsurance division of Axis Capital Holdings,
Ltd. from November 2001 until November 2005, where he oversaw
the divisions worldwide property catastrophe, property per
risk, property pro rata portfolios. He is one of the founders of
Axis Specialty, Ltd and was a member of the Operating Board and
Senior Management Committee of Axis Capital. From July 2000 to
November 2001, Mr. Ward was a senior vice president at Guy
Carpenter & Co.
|
PARTICIPANT
EXECUTIVE OFFICERS
|
|
|
|
|
Present Principal Occupation or Employment, Material
Positions
|
Name and Current Business Address
|
|
Held During the Past Five Years and Business Address Thereof,
Citizenship
|
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Edward J. Noonan
|
|
Mr. Noonan has been Chief Executive Officer of Validus Ltd.
since its formation. Mr. Noonans principal occupation is
chief executive officer and chairman of Validus. For
biographical information, see 1. Directors and
Participant Executive Officers of Validus above.
|
Joseph E. (Jeff) Consolino
|
|
Mr. Consolino has been Chief Financial Officer and
Executive Vice President of Validus Ltd. since its formation.
Mr. Consolinos principal occupation is executive vice
president and chief financial officer of Validus. For
biographical information, see 1. Directors and
Participant Executive Officers of Validus above.
|
I-4
SCHEDULE II
THE
FOLLOWING TABLE IS REPRINTED FROM THE COMPANYS
REGISTRATION
STATEMENT ON
FORM S-4
FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION ON MARCH 27, 2009.
SECURITY
OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The table below sets forth certain information as of
March 26, 2009, (unless otherwise specified) with respect
to the beneficial ownership of Company common shares by each
person who is known to Company, based on filings made by such
person under Section 13(d) and Section 13(g) of the
Exchange Act, to own beneficially more than 5% of the
outstanding common shares, each person currently serving as a
director of Company, each nominee for director, the Chief
Executive Officer, the Chief Financial Officer, each of the two
most highly compensated executive officers of the Company other
than the Chief Executive Officer and Chief Financial Officer and
all directors and executive officers as a group.
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Amount and Nature
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of Beneficial
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Name and Address of Beneficial Owner
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Ownership(1)
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Percentage(2)
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FMR LLC
82 Devonshire Street
Boston, Massachusetts 02109
|
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4,965,479
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(3)
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8.9
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%
|
Franklin Resources, Inc.
One Franklin Parkway
San Mateo, California
94403-1906
|
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3,926,292
|
(4)
|
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7.0
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%
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Barclays Global Investors, NA.
400 Howard Street
San Francisco, California 94105
|
|
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2,811,789
|
(5)
|
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5.0
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%
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Mark R. Bridges
|
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891
|
(6)
|
|
|
|
*
|
James P. Bryce
|
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324,524
|
(7)
|
|
|
|
*
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Michael J. Cascio
|
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155
|
(6)
|
|
|
|
*
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Peter S. Christie
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891
|
(6)
|
|
|
|
*
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Kenneth L. Hammond
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891
|
(6)
|
|
|
|
*
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L. Anthony Joaquin
|
|
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891
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(6)
|
|
|
|
*
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Antony P.D. Lancaster
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891
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(6)
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|
|
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*
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Peter J.A. Cozens
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140,340
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(8)
|
|
|
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*
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Stephen F. Fallon
|
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144,669
|
(9)
|
|
|
|
*
|
John R. Weale
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161,047
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(10)
|
|
|
|
*
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All directors and executive officers as a group
|
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775,190
|
|
|
|
1.4
|
%
|
|
|
|
* |
|
Less than 1% of the outstanding common shares. |
|
(1) |
|
In accordance with the rules of the SEC, a person is deemed to
have beneficial ownership of common shares that such
person has the rights to acquire within 60 days. For
purposes of calculating percent ownership, each persons
holdings have been calculated assuming full exercise of
outstanding options currently exercisable or exercisable within
60 days by such person and by including such persons
restricted stock units and performance share units vesting
within 60 days, but not the exercise of options held by any
other person. All amounts listed represent sole investment and
voting power unless otherwise indicated. |
|
(2) |
|
Based on 55,948,821 common shares issued and outstanding at
March 26, 2009. |
|
(3) |
|
According to information in the Schedule 13G/A filed on
February 17, 2009, FMR LLC had the following dispositive
powers with respect to common shares: (a) sole voting
power: none; (b) shared voting power: none; (c) sole
dispositive power: 4,965,479; and (d) shared dispositive
power: none. |
II-1
|
|
|
(4) |
|
According to information reported in the Schedule 13G/A
filed on February 6, 2009, Franklin Resources, Inc. had the
following dispositive powers with respect to common shares:
(a) sole voting power: 3,862,492; (b) shared voting
power: none; (c) sole dispositive power: 3,926,292;
(d) shared dispositive power: none. |
|
(5) |
|
According to information reported in the Schedule 13G filed
on February 5, 2009, Barclays Global Investors, NA. had the
following dispositive powers with respect to common shares:
(a) sole voting power: 2,540,495; (b) shared voting
power: none; (c) sole dispositive power: 2,811,789;
(d) shared dispositive power: none. |
|
(6) |
|
Transfer-restricted common shares awarded as compensation for
his services as a Director. |
|
(7) |
|
Includes 581 common shares that are held by the IRA trustee for
Mr. Bryces wife, for which Mr. Bryce disclaims
beneficial ownership, 175,000 common shares issuable upon the
exercise of options and 7,429 transfer-restricted common shares. |
|
(8) |
|
Includes 81,250 common shares issuable upon the exercise of
options and 2,928 transfer-restricted common shares. |
|
(9) |
|
Includes 78,750 common shares issuable upon the exercise of
options and 2,556 transfer-restricted common shares. |
|
|
|
(10) |
|
Includes 115,750 common shares issuable upon the exercise of
options and 2,637 transfer-restricted common shares. |
II-2
IMPORTANT
If your Shares are held in your own name, please sign, date and
return the enclosed GOLD proxy card today. If your shares are
held in Street-Name, only your broker or bank can
vote your shares and only upon receipt of your specific
instructions. Please return the enclosed GOLD proxy card to your
broker or bank and contact the person responsible for your
account to ensure that a GOLD proxy card is voted on your behalf.
We urge you not to sign any proxy card you may receive from the
Company, even in protest.
If you have any questions or require any assistance in voting
your Shares, please contact:
199 Water Street
26th Floor
New York, New York 10038
Banks and Brokers should call:
(212) 440-9800
or
Toll Free: at
(888) 274-5119
Email: validusIPC@georgeson.com
[Preliminary
Copy Subject to Completion]
IMPORTANT:
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD
IN THE ENCLOSED ENVELOPE
SOLICITATION
BY VALIDUS HOLDINGS, LTD. AND VALIDUS LTD. (COLLECTIVELY,
VALIDUS)
IN OPPOSITION TO THE SOLICITATION BY THE BOARD OF DIRECTORS
OF
IPC HOLDINGS, LTD. (IPC OR THE COMPANY).
The undersigned, a holder of Common Shares (the
Shares) of IPC Holdings, Ltd. acknowledges receipt
of the Proxy Statement of Validus Holdings, Ltd.
dated ,
2009, and the undersigned revokes all prior proxies delivered in
connection with the Annual General Meeting of Shareholders of
the Company to issue Company Shares and certain other related
proposals in connection with the Agreement and Plan of
Amalgamation dated March 1, 2009, as amended by Amendment
No. 1 to the Agreement and Plan of Amalgamation dated
March 5, 2009, among Max Capital Group Ltd., the Company
and IPC Limited (as the same may be amended, the Max
Amalgamation Agreement) and
appoints ,
and
and/or each
of them, with full power of substitution, proxies for the
undersigned to vote all Shares of the Company which the
undersigned would be entitled to vote at the Annual General
Meeting and any adjournments, postponements or reschedulings
thereof, and instructs said proxies to vote as follows:
EXCEPT AS PROVIDED HEREIN, THIS PROXY WILL BE VOTED IN
ACCORDANCE WITH THE SPECIFICATIONS MADE. IF NO SPECIFICATIONS
ARE MADE AND YOU HAVE SIGNED THIS PROXY CARD, THIS PROXY WILL BE
VOTED (i) AGAINST EACH OF PROPOSALS #1
THROUGH #8, #10 AND #12, (ii) TO WITHHOLD
FOR EACH OF THE NOMINEES LISTED IN PROPOSAL #9,
(iii) TO ABSTAIN WITH RESPECT TO PROPOSAL #11 AND
(iv) IN THE DISCRETION OF THE NAMED PROXIES ON ANY OTHER
MATTER THAT MAY BE PRESENTED AT THE ANNUAL GENERAL MEETING.
THIS PROXY WILL REVOKE (OR BE USED BY THE PROXIES TO REVOKE)
ANY PRIOR PROXY DELIVERED IN CONNECTION WITH THE
PROPOSALS LISTED BELOW TO THE EXTENT IT IS VOTED AT THE
ANNUAL GENERAL MEETING AS STIPULATED ABOVE.
BY EXECUTING THE GOLD CARD YOU ARE AUTHORIZING THE PERSONS NAMED
AS PROXIES TO REVOKE ALL PRIOR PROXIES ON YOUR BEHALF.
(continued
and to be signed and dated on reverse)
VALIDUS
HOLDINGS, LTD.
PROXY VOTING INSTRUCTIONS
Your vote is important. Casting your vote in one of the three
ways described on this proxy card votes all Common Shares of IPC
Holdings, Ltd. that you are entitled to vote.
|
|
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Please mark your votes with an x as
shown in this example.
Please do not write outside the designated areas.
|
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x
|
Annual General Meeting Proxy Card
A. Proposals
Validus strongly recommends a vote AGAINST each of Proposals
number #1 through #8, #10 and #12. Validus
makes no recommendation with respect to (i) each of the
nominees listed in Proposal #9 and
(ii) Proposal #11.
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For
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Against
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Abstain
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For
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Against
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Abstain
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Proposal 1.
|
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To approve an amendment to IPCs bye-laws effective as of
the closing of the amalgamation to increase the maximum number
of directors on IPCs board of directors from nine to
twelve, pursuant to the amalgamation agreement.
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o
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o
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o
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Proposal 2.
|
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To approve an amendment to IPCs bye-laws effective as of
the closing of the amalgamation to modify the indemnity
provisions, pursuant to the amalgamation agreement.
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o
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o
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o
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For
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Against
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Abstain
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For
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Against
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Abstain
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Proposal 3.
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To approve an amendment to IPCs bye-laws effective as of
the closing of the amalgamation to add provisions regarding
advance notice of shareholder nominees for director and other
shareholder proposals, pursuant to the amalgamation agreement.
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o
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o
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o
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Proposal 4.
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To approve an amendment to IPCs bye-laws effective as of
the closing of the amalgamation to remove provisions for
alternate directors and to remove the provision permitting
cumulative voting in the election of directors, pursuant to the
amalgamation agreement.
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o
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o
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o
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For
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Against
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Abstain
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For
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Against
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Abstain
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Proposal 5.
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To approve an amendment to IPCs bye-laws effective as of
the closing of the amalgamation to add certain conditions to the
conduct of director meetings, pursuant to the amalgamation
agreement.
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o
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o
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o
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Proposal 6.
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To approve effective as of the closing of the amalgamation the
increase in IPCs authorized share capital from $1,850,000
to $2,350,000 by the creation of an additional 50,000,000 common
shares, par value $0.01 per share, ranking pari passu with the
existing common shares of IPC, pursuant to the amalgamation
agreement.
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o
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o
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o
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For
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Against
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Abstain
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For
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Against
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Abstain
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Proposal 7.
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To approve effective as of the closing of the amalgamation the
change of IPCs name to Max Capital Group Ltd.
pursuant to the amalgamation agreement.
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o
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o
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o
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Proposal 8.
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To approve the issuance of shares of IPC pursuant to the
amalgamation agreement.
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o
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o
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o
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Proposal 9.
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A. To elect directors of IPC Holdings, Ltd. (the
Company) to hold office until the Companys
next Annual General Meeting of Shareholders or until their
successors are elected or appointed or their office otherwise
vacated.
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For
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Withhold
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For
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Withhold
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01
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Kenneth L. Hammond
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o
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o
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02
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Mark R. Bridges
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o
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o
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2
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03
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Michael J. Cascio
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o
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o
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04
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Peter S. Christie
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o
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o
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05
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L. Anthony Joaquin
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o
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o
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06
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Antony P. D. Lancaster
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o
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o
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B. To elect the following nominees as post-closing
directors of the Company, effective as of the closing of the
amalgamation, pursuant to the amalgamation agreement.
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For
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Withhold
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For
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Withhold
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07
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W. Marston Becker
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o
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o
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08
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Gordon F. Cheesbrough
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o
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o
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09
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K. Bruce Connell
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o
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o
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10
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Willis T. King, Jr.
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o
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o
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11
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Mario P. Torsiello
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o
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o
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12
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James L. Zech
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o
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o
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To cumulate votes, place the number of votes for a director on
the line next to such directors name. If no instructions
as to cumulation of votes are given, your votes will not be
cumulated and your shares will be voted for each of the
nominees.
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For
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Against
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Abstain
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For
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Against
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Abstain
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Proposal 10.
|
|
To approve a revised plan of remuneration for IPCs board
of directors effective as of the closing of the amalgamation.
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|
o
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o
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o
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Proposal 11.
|
|
To appoint KPMG as IPCs independent auditors until the
close of the next annual general meeting and to authorize the
audit committee of IPCs board of directors to set the
compensation of such independent auditors.
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|
o
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o
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o
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For
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Against
|
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Abstain
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Proposal 12.
|
|
To approve the adjournment of the IPC meeting for the
solicitation of additional proxies, if necessary, in favor of
any of the above proposals.
|
|
o
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o
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o
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B. Authorized
Signatures This section must be completed for your
vote to be counted. Please sign and date below.
Please sign exactly as name(s) appears hereon. Joint owners
should each sign. When signing as attorney, executor,
administrator, corporate officer, trustee, guardian, or
custodian, please give full title. If a partnership, please sign
in partnership name by authorized person.
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Date (mm/dd/yyyy) Please print date below.
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Signature 1 Please keep signature within the box
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Signature 2 Please keep signature within the box
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Proxy Validus Holdings, Ltd.
3