IPC says RiskMetrics' report recommending against Max merger is flawed

By Lisa Kerner

Charlotte, N.C., June 10 - IPC Holdings, Ltd. said RiskMetrics Group/ISS erred in its Tuesday report, which recommended against the company's amalgamation with Max Capital Group Ltd., and failed to include the company's book value growth.

As a result of mathematical and analytical mistakes, RiskMetrics' recommendation against the deal is flawed, IPC said.

Max and IPC agreed to combine in a stock-for-stock transaction valued at approximately $912 million. They later amended their agreement to include the payment of two special cash dividends.

The first dividend of $1.50 per share will be payable to IPC shareholders of record as of June 15, and shareholders of the combined company will receive $1.00 per share in cash once the transaction is complete.

IPC announced on Tuesday that it rejected Validus Holdings, Ltd.'s revised proposal to acquire IPC for $3.75 cash plus 1.1234 Validus voting common shares per IPC share.

RiskMetrics, according to IPC, ignored the fact that the IPC/Max deal is ready to close as early as Tuesday, while the Validus offer carries "significant legal uncertainty."

Another proxy advisory firm, Glass, Lewis & Co., reviewed the June 4 revised IPC/Max deal and Validus' revised proposal and reiterated its recommendation that IPC shareholders vote for all proposals related to the IPC/Max amalgamation on Friday, an IPC news release said.

Max committed to IPC

"The IPC/Max deal, which we expect to close next week, offers more book value per share to IPC shareholders and a significant cash component," Max chairman and chief executive officer W. Marston (Marty) Becker said in a company news release.

"By any reasonable measure - including a corrected application of the RiskMetrics methodology as outlined by IPC this morning - the combined company will provide shareholders with superior long-term growth potential reflecting our diversification, capital efficiency and profitable growth," Becker said.

As previously reported, IPC rejected Validus' offer to acquire IPC for $3.00 in cash and 1.1234 Validus voting common shares for each IPC common share.

Despite the rejection, Validus began an exchange offer for IPC shares. The offer ends at 5 p.m. ET on June 26.

Based in Hamilton, Bermuda, Validus provides insurance coverage and reinsurance coverage in the property, marine and specialty lines markets.

IPC, located in Pembroke, Bermuda, provides property catastrophe reinsurance as well as aviation, property-per-risk excess and other short-tail reinsurance.

Specialty insurance and reinsurance provider Max is based in Hamilton, Bermuda.

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