Edgar Filing: VALIDUS HOLDINGS LTD

DEFM14A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

SCHEDULE 14A

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES

EXCHANGE ACT OF 1934

Filed by the Registrant þ

Filed by a Party other than the Registrant o

Check the appropriate box:

o Preliminary Proxy Statement

o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

þ Definitive Proxy Statement

o Definitive Additional Materials

o Soliciting Material Pursuant to § 240.14a-12

VALIDUS HOLDINGS, LTD.

(Name of Registrant as Specified in Its Charter)

Payment of Filing Fee (Check the appropriate box):

o No fee required.


o	Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.


	(1)	Title of each class of securities to which transaction applies:


	(2)	Aggregate number of securities to which transaction applies:


	(3)	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):


	(4)	Proposed maximum aggregate value of transaction:


	(5)	Total fee paid:


þ	Fee paid previously with preliminary materials.

o	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.


	(1)	Amount previously paid:


	(2)	Form, schedule or registration statement no.:


	(3)	Filing party:


	(4)	Date filed:

19 Par-La-Ville Road
Hamilton HM11
Bermuda

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

TO BE HELD ON JUNE 25, 2009

May 26, 2009

NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of Validus Holdings, Ltd. will be held at 19 Par-La-Ville Road, Hamilton HM11, Bermuda, on June 25, 2009, at 10:00 a.m., Atlantic Time, for the following purposes:


	•	to approve the issuance of Validus voting common shares, par value $0.175 per share, in connection with the acquisition of all of the outstanding common shares, par value $0.01 per share, of IPC Holdings, Ltd. pursuant to the Validus Amalgamation Agreement (as defined in the proxy statement on the following pages), the Scheme of Arrangement (as defined in the proxy statement on the following pages), the Exchange Offer (as defined in the proxy statement on the following pages) or otherwise; and

	•	to transact such further business, if any, as may be lawfully brought before the meeting, including to approve the adjournment of the meeting for the solicitation of additional proxies in favor of the above proposal.

For further information concerning matters to be acted upon at the Validus special meeting, you are urged to read the proxy statement on the following pages.

If you are a shareholder of record, please complete, sign, date and return the enclosed proxy in the return envelope furnished for that purpose, as promptly as possible, whether or not you plan to attend the meeting, or follow the instructions on the Validus proxy card to complete your proxy card on the Internet at the website indicated or by telephone. If you own your shares through a bank, broker, or other nominee, you will receive instructions from that institution on how to instruct them to vote your shares, including by completing a voting instruction form, or providing instructions by Internet or telephone. If you do not receive such instructions, you may contact that institution to request them. If you later desire to revoke your proxy for any reason, you may do so in the manner described in the attached proxy statement. Only shareholders of record as shown on the transfer books of Validus at the close of business on May 15, 2009 will be entitled to notice of, and to vote at, the Validus special meeting or any adjournments thereof. See The Validus Special Meeting beginning on page 95 in the proxy statement for more information.

By Order of the Board of Directors,

/s/ Lorraine Dean

Lorraine Dean
Secretary

19 Par-La-Ville Road
Hamilton HM11
Bermuda

SPECIAL MEETING OF SHAREHOLDERS
PROXY STATEMENT

This proxy statement is furnished to the holders of Validus voting common shares, $0.175 par value per share (the “Validus Shares” and, together with any non-voting common shares, $0.175 par value per share, the “common shares”) in connection with the solicitation of proxies by the board of directors of Validus Holdings, Ltd. (“Validus”) to be voted at a special meeting of shareholders (the “Validus special meeting”) on June 25, 2009, at 10:00 a.m., Atlantic time, at the registered office of Validus, located at 19 Par-La-Ville Road, Hamilton HM11, Bermuda.

Validus shareholders will be asked at the Validus special meeting:


	•	to approve the issuance of Validus Shares (the “Share Issuance”) in connection with the acquisition (the “Acquisition”) of all of the outstanding common shares, par value $0.01 per share (the “IPC Shares”) of IPC Holdings, Ltd. (“IPC”), pursuant to the Amalgamation Agreement (as defined below), the Exchange Offer (as defined below) and the Scheme of Arrangement (as defined below) or otherwise (the “Share Issuance Proposal”); and

	•	to transact such further business, if any, as may be lawfully brought before the meeting, including to approve the adjournment of the meeting for the solicitation of additional proxies in favor of the above proposal (an “Adjournment Proposal”).

On March 1, 2009, IPC entered into an Agreement and Plan of Amalgamation, as amended on March 5, 2009, among Max Capital Group Ltd. (“Max”), IPC and IPC Limited (the “Max Amalgamation Agreement”) which would result in the amalgamation of Max with IPC Limited, a wholly-owned subsidiary of IPC that was formed for the purpose of the amalgamation (the “Proposed Max Amalgamation”).

On March 31, 2009, Validus publicly announced that it had delivered to IPC an offer to acquire each outstanding IPC Share in exchange for 1.2037 Validus Shares (the “Initial Validus Offer”). IPC announced on April 7, 2009 that its board of directors had determined that the Initial Validus Offer did not constitute a superior proposal to the Proposed Max Amalgamation and reaffirmed its support of the Proposed Max Amalgamation. On May 18, 2009, Validus publicly announced that it had delivered to IPC an increased offer (the “Validus Amalgamation Offer”) to acquire each outstanding IPC Share in exchange for (i) 1.1234 Validus Shares and (ii) $3.00 in cash. Validus has also delivered a proposed agreement and plan of amalgamation and an amendment thereto (as amended, the “Validus Amalgamation Agreement”) signed by Validus so that, upon a termination of the Max Amalgamation Agreement, IPC would have the certainty of Validus’ transaction and would be able to sign the Validus Amalgamation Agreement. IPC announced on May 21, 2009 that its board of directors had determined that the Validus Amalgamation Offer did not constitute a superior proposal to the Proposed Max Amalgamation and reaffirmed its support of the Proposed Max Amalgamation. Additionally, Max has not released IPC from the prohibition in the Max Amalgamation Agreement that prevents IPC from even discussing the Validus Amalgamation Offer with Validus.

In order to consummate the Acquisition without the cooperation of IPC’s board of directors, Validus is pursuing a three-part plan. First, Validus is soliciting proxies from IPC shareholders to vote against the Proposed Max Amalgamation so that IPC is able to terminate the Max Amalgamation Agreement and enter into the Validus Amalgamation Agreement. Second, Validus has commenced an exchange offer for all of the issued and outstanding IPC Shares (the “Exchange Offer”) on the same economic terms as the Validus Amalgamation Offer. Third, Validus is pursuing a “scheme of arrangement” (the “Scheme of Arrangement”) under Part VII of The Companies Act of 1981 of Bermuda, as amended (the “Companies Act”), pursuant to which Validus would acquire all of the issued and outstanding IPC Shares on the same economic terms as in the Validus Amalgamation Offer.

Validus is soliciting proxies from holders of Validus Shares at the Validus special meeting in order to be able to issue the Validus Shares to IPC shareholders in connection with the Acquisition. The Share Issuance will become

effective only if it is approved by Validus shareholders and the IPC Shares are exchanged for Validus Shares and cash, pursuant to the Acquisition. The affirmative vote of a majority of the votes cast at the Validus special meeting at which a quorum is present in accordance with Validus’ bye-laws is required to approve each matter to be acted on at the Validus special meeting, including the Adjournment Proposal.

The Validus Amalgamation Offer, the Exchange Offer and the Scheme of Arrangement are alternative methods for Validus to acquire all of the issued and outstanding IPC Shares on the same economic terms. Ultimately, only one of these transaction structures can be pursued to completion. Validus intends to seek to acquire all IPC Shares by whichever method Validus determines is most effective and efficient.

Based on Validus’ and IPC’s respective capitalizations as of March 31, 2009 and the exchange ratio of 1.1234, Validus estimates that former IPC shareholders would own, in the aggregate, approximately 41.3% of the issued and outstanding Validus common shares on a fully-diluted basis following closing of the Acquisition.

Shareholders of record as of the close of business on May 15, 2009 will be entitled to vote at the Validus special meeting. As of May 15, 2009, there were 59,290,013 outstanding Validus Shares entitled to vote at the Validus special meeting, and 19,771,422 Validus non-voting common shares. Each Validus Share entitles the holder of record thereof to one vote at the Validus special meeting; however, if, and for so long as, the Validus Shares of a shareholder, including any votes conferred by “controlled shares” (as defined below), would otherwise represent more than 9.09% of the aggregate voting power of all Validus Shares entitled to vote on a matter, the votes conferred by such Validus Shares will be reduced by whatever amount is necessary such that, after giving effect to any such reduction (and any other reductions in voting power required by Validus’ bye-laws), the votes conferred by such Validus Shares represent 9.09% of the aggregate voting power of all Validus Shares entitled to vote on such matter. “Controlled shares” include, among other things, all shares that a person is deemed to own directly, indirectly or constructively (within the meaning of Section 958 of the Internal Revenue Code of 1986 or Section 13(d)(3) of the Securities Exchange Act of 1934, as amended).

Validus knows of no specific matter to be brought before the Validus special meeting that is not referred to in the notice of the Validus special meeting. If any such matter comes before the Validus special meeting, including any shareholder proposal properly made, the proxy holders will vote proxies in accordance with their judgment.

Validus Shares are quoted on the New York Stock Exchange (the “NYSE”) under the symbol “VR.” The closing price of a Validus common share on the NYSE on May 22, 2009, the last practicable date prior to the filing of this proxy statement, was $22.01. IPC Shares, which are currently quoted on the NASDAQ Global Select Market (“NASDAQ”) under the symbol “IPCR” and the Bermuda Stock Exchange under the symbol “IPCR BH,” would be delisted upon completion of the Acquisition. The closing price of an IPC Share on NASDAQ on May 22, 2009, the last practicable date prior to the filing of this proxy statement, was $25.07. All references to “dollars” and “$” in this proxy statement refer to U.S. dollars.

Validus’ board of directors has adopted the Validus Amalgamation Agreement and authorized and approved the Share Issuance and deems it fair, advisable and in the best interests of Validus and its shareholders to consummate the Share Issuance, the Acquisition and the other transactions contemplated thereby. Validus’ board of directors recommends that Validus shareholders vote “FOR” the proposals submitted to Validus shareholders on the attached Validus proxy card. All of the Validus officers, directors and those shareholders who are “qualified sponsors” (as defined in this proxy statement), in each case who own Validus Shares, have indicated that they intend to vote the Validus Shares beneficially owned by them in favor of the Validus Share Issuance Proposal and the Adjournment Proposal. As of April 30, 2009, these persons and entities beneficially owned 42.4% of the voting interests relating to the Validus Shares.

This proxy statement provides Validus shareholders with detailed information about the Validus special meeting and the Acquisition. You can also obtain information from publicly available documents filed by Validus and IPC with the SEC. Validus encourages you to read this entire document carefully, including the section entitled Risk Factors beginning on page 39.

Your vote is very important. Whether or not you plan to attend the Validus special meeting, please take time to vote by completing and mailing your enclosed proxy card or by following the voting instructions provided to you if you own your shares through a bank, broker or other nominee. If you do not receive such instructions, you may request them from that firm.

Neither the Securities and Exchange Commission nor any state securities regulatory agency has approved or disapproved the Share Issuance, passed upon the merits or fairness of the Share Issuance or passed upon the adequacy or accuracy of the disclosure in this proxy statement. Any representation to the contrary is a criminal offense.

This proxy statement is dated May 26, 2009
and is first being mailed to Validus shareholders on or about May 27, 2009

Important Notice Regarding the Availability of Proxy Materials for the Validus Special Meeting to be Held on June 25, 2009

The proxy statement and the related proxy materials are available free of charge on Validus’ website at www.validusre.bm.

SOURCES OF ADDITIONAL INFORMATION

This proxy statement includes information, including important business and financial information, also set forth in documents filed by Validus and IPC with the SEC, and those documents include information about Validus and IPC that is not included in or delivered with this proxy statement. You can obtain any of the documents filed by Validus or IPC, as the case may be, with the SEC from the SEC or, without charge, from the SEC’s website at http://www.sec.gov. Validus shareholders also may obtain documents filed by Validus with the SEC or documents incorporated by reference in this proxy statement free of cost, by directing a written or oral request to Validus at:

Validus Holdings, Ltd.
19 Par-La-Ville Road
Hamilton HM11
Bermuda
Attention: Jon Levenson
(441) 278-9000

If you would like to request documents, in order to ensure timely delivery, you must do so at least ten business days before the date of the meeting. This means you must request this information no later than June 11, 2009. Validus will mail properly requested documents to requesting shareholders by first class mail, or another equally prompt means, within one business day after receipt of such request.

The information concerning IPC, its business, management and operations presented or incorporated by reference in this proxy statement has been taken from, or is based upon, publicly available information on file with the SEC and other publicly available information. Although Validus has no knowledge that would indicate that statements and information relating to IPC contained or incorporated by reference 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 IPC, was not involved in the preparation of such information and statements and is not in a position to verify any such information or statements.

The consolidated financial statements of IPC appearing in its annual report on Form 10-K for the year ended December 31, 2008 (including schedules appearing therein), and IPC management’s assessment of the effectiveness of internal control over financial reporting as of December 31, 2008 included therein, have been audited by an independent registered public accounting firm, as set forth in their reports thereon, included therein, and included and/or incorporated herein by reference. Validus has not obtained the authorization of IPC’s independent auditors to incorporate by reference the audit reports relating to this information.

Pursuant to Rule 12b-21 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), Validus requested that IPC provide Validus with information required for complete disclosure regarding the businesses, operations, financial condition and management of IPC. Validus will amend or supplement this proxy statement to provide any and all information Validus receives from IPC, if Validus receives the information before the Validus special meeting and Validus considers it to be material, reliable and appropriate.

See Where You Can Find More Information on page 108.

TABLE OF CONTENTS


	Page

QUESTIONS AND ANSWERS ABOUT THE ACQUISITION AND THE MEETING		1
SUMMARY		7
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF VALIDUS		15
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF IPC		18
UNAUDITED CONDENSED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION		20
COMPARATIVE PER SHARE DATA		35
COMPARATIVE MARKET PRICE AND DIVIDEND INFORMATION		37
FORWARD-LOOKING STATEMENTS		38
RISK FACTORS		39
Risks Related to the Acquisition		39
Risks Related to Validus Following the Acquisition		40
Risk Related to IPC’s Businesses		41
Risk Related to Validus’ Businesses		41
THE ACQUISITION		42
General Description		42
Background of the Acquisition		44
Reasons Why Validus’ Board of Directors Recommends Approval of the Share Issuance		65
Litigation		67
Opinion of Validus’ Financial Advisor		68
Interests of Validus Directors and Executive Officers in the Acquisition		75
Validus Shareholder Approval of Share Issuance		76
Listing of Validus Shares		76
Dividends and Distributions		76
Anticipated Accounting Treatment		76
Sources of Funds, Fees and Expenses		77
THE AMALGAMATION AGREEMENT		79
Structure of the Amalgamation		79
Closing; Completion of the Amalgamation		79
Amalgamation Consideration		79
Treatment of IPC Share Options and Other IPC Equity Awards		80
Representations and Warranties of the Parties in the Amalgamation Agreement		81
Conduct of Business Pending the Closing of the Amalgamation		82
Existing Credit Facilities		84
Access to Information; Confidentiality		84
Agreements to Use Commercially Reasonable Efforts		84
Restrictions on Change in Recommendation by the Boards of Directors of IPC or Validus		85
Restrictions on Solicitation of Acquisition Proposals by IPC		85
Expenses		87
Directors’ and Officers’ Insurance and Indemnification		87
Employee Benefits		87
NYSE Listing and NASDAQ Delisting; Reservation for Issuance		87
Dividends		88
Book Value Calculations		88
Conditions to the Amalgamation		88
Termination of the Amalgamation Agreement		89
Amendments and Waivers Under the Validus Amalgamation Agreement		90
THE EXCHANGE OFFER		91
THE SCHEME OF ARRANGEMENT		91
REGULATORY MATTERS		92

-i-


	Page

INFORMATION ABOUT VALIDUS AND IPC		93
Validus		93
IPC		93
THE VALIDUS SPECIAL MEETING		95
PROPOSALS TO BE SUBMITTED TO VALIDUS SHAREHOLDERS VOTE; VOTING REQUIREMENTS AND RECOMMENDATIONS		98
Proposal 1: Share Issuance		98
Proposal 2: Adjournment Proposal		98
BENEFICIAL OWNERSHIP OF VALIDUS COMMON SHARES		99
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS		103
Validus and IPC		103
Validus		103
SOLICITATION OF PROXIES		105
OTHER MATTERS		106
SHAREHOLDER PROPOSALS FOR VALIDUS 2010 ANNUAL GENERAL MEETING		107
WHERE YOU CAN FIND MORE INFORMATION		108
ANNEX A-1: AGREEMENT AND PLAN OF AMALGAMATION		A-1-1
ANNEX A-2: AMENDMENT TO AGREEMENT AND PLAN OF AMALGAMATION		A-2-1
ANNEX B: OPINION OF VALIDUS’ FINANCIAL ADVISOR		B-1
ANNEX C: SUMMARY OF EXCHANGE OFFER		C-1
ANNEX D: SUMMARY OF SCHEME OF ARRANGEMENT		D-1
ANNEX E: FORM OF THE SCHEME OF ARRANGEMENT		E-1

-ii-

QUESTIONS AND ANSWERS ABOUT THE ACQUISITION AND THE MEETING

The following questions and answers highlight selected information from this proxy statement and may not contain all the information that is important to you. Validus encourages you to read this entire document carefully.


Q:		When and where is the Validus special meeting?


A:		The Validus special meeting will take place at 10:00 a.m., Atlantic Time, on June 25, 2009, at 19 Par-La-Ville Road, Hamilton HM11, Bermuda.


Q:		What is the purpose of the Validus special meeting?

A:		The purpose of the meeting is to seek Validus shareholder approval of:

		• the Share Issuance in connection with the Acquisition of all of the outstanding IPC Shares pursuant to the Amalgamation Agreement, the Exchange Offer, the Scheme of Arrangement or otherwise; and

		• to transact such further business, if any, as may be lawfully brought before the meeting, including to approve the adjournment of the meeting for the solicitation of additional proxies in favor of the above proposal.

		Even if shareholders approve the Share Issuance, the Share Issuance will take effect only if and when the IPC Shares are exchanged for Validus Shares and cash pursuant to the Amalgamation Agreement, the Exchange Offer, the Scheme of Arrangement or otherwise.

Q:		Why is shareholder approval of the Share Issuance required?


A:		Based upon publicly available information about the number of IPC Shares outstanding as of May 8, 2009 and the proposed exchange ratio, Validus expects it would need to issue 63,474,234 Validus Shares in exchange for all outstanding IPC Shares. This number of Validus Shares will be greater than 20% of the total number of Validus Shares outstanding prior to such issuance. The listing requirements of the NYSE require that Validus shareholders approve any issuance of Validus Shares or securities convertible into or exercisable for Validus Shares if (a) the Validus Shares or other securities being issued will have voting power equal to or in excess of 20% of the voting power outstanding before such issuance or (b) the number of Validus Shares to be issued is or will be equal to or in excess of 20% of the number of Validus Shares or other securities before such issuance.


		If the Share Issuance Proposal is approved by Validus’ shareholders, Validus will be permitted to issue Validus Shares in exchange for IPC Shares, pursuant to the Validus Amalgamation Agreement, the Exchange Offer, the Scheme of Arrangement or otherwise. Shareholders are not being asked to vote on the Acquisition and no vote of Validus shareholders is required on such matter.

Q:		Why is Validus proposing the Acquisition?

A:		Based on a number of factors described below under The Acquisition — Reasons Why Validus’ Board of Directors Recommends Approval of the Share Issuance, Validus’ board of directors believes that the Acquisition represents a compelling combination and excellent strategic fit that will enable Validus to capitalize on opportunities in the global reinsurance market. Successful completion of the Acquisition would allow Validus shareholders to benefit from the superior growth potential of a combined company that would be a leading carrier in Bermuda’s short-tail reinsurance and insurance markets, with a strong balance sheet and quality diversification in profitable business lines.

Q:		When do you expect the Acquisition to be completed?


A:		If IPC’s board of directors was to enter into the Validus Amalgamation Agreement promptly following the termination of the Max Amalgamation Agreement, Validus believes the amalgamation could be completed in mid-to-late July, 2009 based on the assumption that IPC terminates the Max Amalgamation Agreement promptly following its June 12, 2009 annual general meeting, allowing approximately one month to hold a special general meeting of IPC’s shareholders to obtain the required shareholder approval and to satisfy the other conditions in the Validus Amalgamation Agreement.


		Validus believes that it would be able to complete the Exchange Offer in June 2009, promptly following termination of the Max Amalgamation Agreement (and subject to the satisfaction or waiver of the other conditions to the Exchange Offer), based on the following. The expiration time of the exchange offer will be June 26, 2009, unless extended. As a result, if the conditions of the Exchange Offer are satisfied or waived at the expiration time of the Exchange Offer, Validus would be able to acquire all of the IPC Shares that are validly tendered pursuant to the Exchange Offer.

-1-


		Validus believes that, under the Scheme of Arrangement, it would be able to close the Acquisition of IPC as early as mid-July based on the assumptions that: (1) the Supreme Court of Bermuda will be able to accommodate the preferred hearings schedule and meeting dates and other procedural matters; (2) IPC shareholders holding at least one-tenth of the issued shares of IPC have requisitioned a special general meeting to be held in late June or early July to approve and have IPC be bound by the Scheme of Arrangement; and (3) the IPC directors, following the rejection of the Proposed Max Amalgamation, or IPC shareholders, convene the requisitioned special general meeting, allowing it to be held by mid-July.

Q:		What would IPC shareholders receive in the Acquisition?


A:		Under the terms of the Validus Amalgamation Agreement, each outstanding IPC Share (including any shares held by IPC shareholders that do not vote in favor of the amalgamation, but excluding any dissenting shares as to which appraisal rights have been exercised pursuant to Bermuda law and excluding any shares held by Validus, IPC or any of their respective subsidiaries) would be cancelled and converted into the right to receive (i) 1.1234 Validus Shares and (ii) $3.00 in cash (less any applicable withholding taxes and without interest), upon closing of the amalgamation. Under the terms of the Exchange Offer, each outstanding IPC Share that is validly tendered and not properly withdrawn before the expiration time of the Exchange Offer would be exchanged for (i) 1.1234 Validus Shares and (ii) $3.00 in cash (less any applicable withholding taxes and without interest) upon closing of the Exchange Offer. Under the terms of the Scheme of Arrangement, each outstanding IPC Share (excluding any IPC Shares owned by Validus, IPC or any of their respective subsidiaries), would be transferred to Validus in exchange for (i) 1.1234 Validus Shares and (ii) $3.00 in cash (less any applicable withholding taxes and without interest) upon effectiveness of the Scheme of Arrangement.


		IPC shareholders would not receive any fractional Validus Shares in the Acquisition. Instead, IPC shareholders would be paid cash in lieu of the fractional share interest to which such shareholders would otherwise be entitled.

Q:		What percentage of Validus Shares will the former holders of IPC Shares own after the Acquisition?

A:		Based on Validus’ and IPC’s respective capitalizations as of March 31, 2009 and the exchange ratio of 1.1234, Validus estimates that former IPC shareholders would own, in the aggregate, approximately 41.3% of the issued and outstanding common shares of Validus on a fully-diluted basis following closing of the Acquisition.

Q:		Would the Validus Amalgamation Agreement signed by IPC be the exact form attached hereto as Annex A-1, as amended by Annex A-2?

A:		Validus delivered the amalgamation agreement to IPC on March 31, 2009 intending it to be executed in the exact form provided. Since then, in response to IPC’s rejection of the Initial Validus Offer, Validus is proceeding with efforts to move forward with the transaction without IPC’s cooperation, including by soliciting your votes to approve the issuance of Validus Shares in connection with the Acquisition. These efforts and Validus’ delivery of the Validus Amalgamation Offer have necessitated certain updates to the form of Validus Amalgamation Agreement which are included in the amendment attached as Annex A-2. Validus cannot predict what other changes may become necessary due to changed circumstances or as a result of negotiations with IPC should that occur. If any changes are made to the Validus Amalgamation Agreement that Validus believes are material to Validus shareholders, Validus will supplement this proxy statement and, if necessary, resolicit proxies from its shareholders.

Q:		Are Validus shareholders able to exercise appraisal rights?

A:		Validus shareholders will not be entitled to exercise appraisal rights with respect to any matter to be voted upon at the Validus special meeting.

Q:		Will I have preemptive rights in connection with the Share Issuance?

A:		No. Validus shareholders will not be entitled to any preemptive rights in connection with the Share Issuance.

-2-


Q:		What will be the composition of the board of directors of Validus following the effectiveness of the Acquisition?

A:		Upon the effectiveness of the Acquisition, Validus’ board of directors would consist of the directors serving on the board of directors of Validus before the Acquisition; however, Validus has publicly expressed to the IPC directors that if they desire to participate in the leadership of Validus after the Acquisition, Validus would consider that.

Q:		How will Validus be managed after the Acquisition?

A:		Upon closing of the Acquisition, the officers of Validus will be the officers serving Validus before the Acquisition.

Q:		What shareholder vote is required to approve the Share Issuance and the Adjournment Proposal at the Validus special meeting and how many votes must be present to hold the meeting?

A:		The affirmative vote of a majority of the votes cast at the Validus special meeting, at which a quorum is present in accordance with Validus’ bye-laws, is required to approve each of the Share Issuance Proposal and the Adjournment Proposal. The Share Issuance will become effective only if it is duly approved by Validus shareholders and all of the other conditions to the Acquisition are satisfied or waived and the Acquisition closes. The affirmative vote of a majority of the votes cast at the Validus special meeting is required to approve each other matter to be acted on, including any Adjournment Proposal. All of the Validus officers, directors and those shareholders who are “qualified sponsors” (as defined in this proxy statement), in each case who own Validus Shares, have indicated that they intend to vote the Validus Shares beneficially owned by them in favor of the Validus Share Issuance Proposal and the Adjournment Proposal. As of April 30, 2009, these persons and entities beneficially owned 42.4% of the voting interests relating to the Validus Shares.

		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 Validus special meeting. Because the vote required to approve the proposals is the affirmative vote of a majority of the votes cast, assuming a quorum is present, a broker non-vote with respect to any proposal to be voted on at the Validus special meeting will not have the effect of a vote for or against the relevant proposal, but will reduce the number of votes cast and therefore increase the relative influence of those shareholders voting. For the Validus special meeting, a quorum consists of two or more shareholders present in person and representing in person or by proxy in excess of 50% of the total issued Validus Shares throughout the meeting.

Q:		Does Validus’ board of directors recommend approval of the proposals?

A:		Yes. Validus’ board of directors, taking into consideration the reasons discussed under The Acquisition — Reasons Why Validus’ Board of Directors Recommends Approval of the Share Issuance, adopted the Validus Amalgamation Agreement and authorized and approved the Share Issuance. Validus’ board of directors deems it fair, advisable and in the best interests of Validus to enter into the Validus Amalgamation Agreement and to acquire all of the outstanding IPC Shares and to consummate the Share Issuance. Validus’ board of directors recommends that Validus shareholders vote “FOR” the matters submitted on the Validus proxy card.

Q:		Have any Validus shareholders agreed to support the proposals?

A:		All of the Validus officers, directors and those shareholders which Validus refers to as “qualified sponsors” (as defined in this proxy statement), in each case who own Validus Shares, have indicated that they intend to vote the Validus Shares beneficially owned by them in favor of the Share Issuance Proposal and the Adjournment Proposal. As of April 30, 2009, these persons and entities beneficially owned 42.4% of the voting interests relating to the Validus Shares.

Q:		Will any other matters be voted on at the Validus special meeting?

A:		Validus knows of no specific matter to be brought before the Validus special meeting that is not referred to in the notice of the Validus special meeting. If any such matter comes before the Validus special meeting, the proxy holders will vote proxies in accordance with their judgment.

-3-


Q:		What is the record date for the Validus special meeting?

A:		Only shareholders of record, as shown by the transfer books of Validus at the close of business on May 15, 2009 (the “Validus record date”) are entitled to receive notice of and to vote at the Validus special meeting or any adjournment thereof.

Q:		How many votes do I have and how many votes can be cast by all Validus shareholders?


A:		Shareholders of record as of the close of business on May 15, 2009 will be entitled to vote at the Validus special meeting. As of May 15, 2009, there were 59,290,013 outstanding Validus Shares entitled to vote at the Validus special meeting, and 19,771,422 non-voting common shares.


Q:		What do I need to do now?

A:		Validus urges you to read carefully this proxy statement, including its annexes, schedules and the documents incorporated by reference herein. You also may want to review the documents referenced under Where You Can Find More Information on page 107 and consult with your accounting, legal and tax advisors. Once you have considered all relevant information, Validus encourages you to fill in and return the attached proxy card (if you are a shareholder of record) or voting instruction form you receive from your bank, broker or other nominee (if you hold your Validus Shares in street name).

Q:		How can I vote my shares in person at the Validus special meeting?

A:		If your Validus Shares are registered directly in your name as of the record date with the transfer agent, Bank of New York Mellon, you are considered the “shareholder of record” with respect to those shares, and the proxy materials and proxy card are being sent directly to you. As the shareholder of record, you have the right to vote in person at the meeting. If you choose to do so, you can bring the enclosed proxy card. Most shareholders of Validus hold their shares through a bank, broker or other nominee (that is, in “street name”) rather than directly in their own name. If you hold your shares in street name, you are a “beneficial holder,” and the proxy materials are being forwarded to you by your bank, broker or other nominee together with a voting instruction form. Because a beneficial holder is not the shareholder of record, you may not vote these shares in person at the meeting unless you have previously either arranged for the Validus Shares beneficially owned by you to be transferred of record into your name by the record date for the Validus special meeting or secured a valid proxy or power of attorney from the bank, broker or other nominee that holds your shares as of the record date for the Validus special meeting (and who has received a valid proxy or power of attorney from the shareholder of record pursuant to a “legal proxy” with a power of subdelegation from the shareholder of record as of the record date). Even if you plan to attend the Validus special meeting, we recommend that you vote your shares in advance as described below so that your vote will be counted if you later decide not to attend the Validus special meeting.

Q:		How can I vote my shares without attending the Validus special meeting?

A:		If you are the shareholder of record, you may direct your vote without attending the Validus special meeting by completing and mailing your proxy card in the enclosed pre-paid envelope. In addition, if you are the shareholder of record, you may grant a proxy to vote your shares at the Validus special meeting by telephone by calling 866-367-5524 and following the simple recorded instructions, twenty-four hours a day, seven days a week, at any time prior to 11:59 p.m., Eastern Time, on the day prior to the Validus special meeting. Alternatively, as a shareholder of record, you may vote via the Internet at any time prior to 11:59 p.m., Eastern Time, on the day prior to the Validus special meeting by going to http://proxy.georgeson.com, entering the company number and control number on your proxy card and following the instructions to submit an electronic proxy. If you vote by telephone or the Internet, you will be required to provide the control number contained on your proxy card. If you hold your Validus Shares in street name you should complete and return the voting instruction form you receive from your bank, broker or other nominee in accordance with the instructions you receive from your bank, broker or other nominee. Your voting instruction form may contain instructions from your bank, broker or other nominee that allow you to vote your shares using the Internet or by telephone. Please consult with your bank, broker or other nominee if you have any questions regarding the voting of shares held in street name.

-4-


Q:		What do I need for admission to the Validus special meeting?

A:		You are entitled to attend the Validus special meeting only if you are (i) a shareholder of record or (ii) a beneficial owner or other person holding a valid proxy from the bank, broker or other nominee that holds your shares (and who has received a “legal proxy,” with a power of subdelegation, from the shareholder of record as of the record date). If you are the shareholder of record, your name will be verified against the list of shareholders of record prior to your admittance to the Validus special meeting. You should be prepared to present photo identification for admission. If you hold your shares in street name and would like to be admitted to the meeting, you will need to provide a valid proxy or power of attorney from the bank, broker or other nominee that holds your shares (and who has received a “legal proxy,” with a power of subdelegation, from the shareholder of record as of the record date) and proof of beneficial ownership on the record date, such as a brokerage account statement showing that you owned Validus Shares as of the record date, a copy of the voting instruction form provided by your bank, broker or other nominee, or other similar evidence of ownership as of the record date, as well as your photo identification. If you do not comply with the procedures outlined above, you may not be admitted to the Validus special meeting.

Q:		If my shares are held in a brokerage account or in “street name,” will my broker vote my shares for me?

A:		If you own your shares through a bank, broker or other nominee, you will receive instructions from that institution on how to instruct them to vote your shares, including by completing a voting instruction form, or providing instructions by Internet or telephone. If you do not receive such instructions, you may contact that institution to request them. In accordance with NYSE rules, banks, brokers and other nominees who hold Validus Shares in street-name for customers may not exercise their voting discretion with respect to the Share Issuance. Accordingly, if you do not provide your bank, broker or other nominee with instructions on how to vote your street name shares, your bank, broker or other nominee will not be permitted to vote them at the Validus special meeting, possibly resulting in a “broker non-vote.”

		A “broker non-vote” with respect to the Validus special meeting will not be considered as a vote cast with respect to any matter presented at the Validus special meeting, but will be counted for purposes of establishing a quorum, provided that your bank, broker or nominee is in attendance in person or by proxy. Because the vote required to approve the proposals is the affirmative vote of a majority of the votes cast, assuming a quorum is present, a broker non-vote with respect to any proposal to be voted on at the Validus special meeting will not have the effect of a vote for or against the relevant proposal, but will reduce the number of votes cast and therefore increase the relative influence of those shareholders voting.

		Because your bank, broker or other nominee will not have discretionary authority to vote your shares, you must provide your bank, broker or other nominee with instructions on how to vote your shares or arrange to attend the Validus special meeting and vote your shares in person if you want your shares to be voted and to avoid a broker non-vote.

Q:		What effect do abstentions and broker non-votes have on the proposals?

A:		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 Validus special meeting. Because the vote required to approve the proposals is the affirmative vote of a majority of the votes cast, assuming a quorum is present, a broker non-vote with respect to any proposal to be voted on at the Validus special meeting will not have the effect of a vote for or against the relevant proposal, but will reduce the number of votes cast and therefore increase the relative influence of those shareholders voting. See also The Validus Special Meeting — Record Date and Shares Entitled to Vote.

Q:		How will my shares be voted if I sign and return a proxy card or voting instruction form without specifying how to vote my shares?

A:		If you sign and return a proxy card or voting instruction form without giving specific voting instructions, your shares will be voted “FOR” the Share Issuance Proposal and “FOR” the Adjournment Proposal and as the persons named as proxies may determine in their discretion with respect to any other matters properly presented for a vote before the Validus special meeting.

-5-


Q:		What do I do if I want to change my vote or revoke my proxy?

A:		You may change your vote or revoke your proxy at any time before your proxy is voted at the Validus special meeting. If you are a shareholder of record, you may change your vote or revoke your proxy by: (1) delivering to Validus (Attention: General Counsel) at 19 Par-La-Ville Road, Hamilton, HM11, Bermuda, a written notice of revocation of your proxy; (2) delivering to Validus an authorized proxy bearing a later date (including a proxy by telephone or over the Internet); or (3) attending the Validus special meeting and voting in person as described above under the question entitled How can I vote my shares at the Validus special meeting? Attendance at the Validus special meeting in and of itself, without voting in person at the Validus special meeting, will not cause your previously granted proxy to be revoked. For shares you hold in street name, you should follow the instructions of your bank, broker or other nominee or, if you have obtained a valid proxy or power of attorney from the bank, broker or other nominee that holds your shares (and who has received a “legal proxy,” with a power of subdelegation, from the shareholder of record as of the record date) giving you the right to vote your shares at the Validus special meeting, by attending the Validus special meeting and voting in person.

Q:		Who can I contact with any additional questions?

		If you have additional questions about the Acquisition, if you would like additional copies of this proxy statement, or if you need assistance voting your Validus Shares, you should contact Georgeson Inc. (“Georgeson”) at:

		Georgeson Inc. 199 Water Street, 26th Floor New York, New York 10038 Banks and Brokerage Firms Please Call: (212) 440-9800 All Others Please Call Toll Free: (888) 274-5146 E-mail inquiries: validus@georgeson.com

Q:		Where can I find more information about the companies?


A:		You can find more information about Validus and IPC in the documents described under Where You Can Find More Information on page 108.

-6-

SUMMARY

This summary highlights the material information in this proxy statement. To fully understand Validus’ proposals, and for a more complete description of the terms of the Acquisition, you should read carefully this entire document, including the annexes and documents incorporated by reference herein, and the other documents referred to herein. For information on how to obtain the documents that are on file with the SEC, see Where You Can Find More Information on page 108.

Validus (page 93)

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 provider of reinsurance and insurance, conducting its operations worldwide through two wholly-owned subsidiaries, Validus Reinsurance, Ltd. (“Validus Re”) and Talbot Holdings Ltd. (“Talbot”). Validus Re is a Bermuda based reinsurer focused on short-tail lines of reinsurance. Talbot is the Bermuda parent of the specialty insurance group primarily operating within the Lloyd’s insurance market through Syndicate 1183. Validus Shares are traded on the NYSE under the symbol “VR” and, as of May 22, 2009, the last practicable date prior to the filing of this proxy statement, Validus had a market capitalization of approximately $1.68 billion. Validus has approximately 280 employees.

As of the date this proxy statement was first mailed to Validus shareholders, Validus was the registered holder of 100 IPC Shares, or less than 1% of the outstanding IPC Shares and Validus was entitled to vote as to all of the IPC Shares it owns.

IPC (page 93)

The following description of IPC is taken from the Registration Statement on Form S-4 filed by IPC with the SEC in connection with the Proposed Max Amalgamation (as amended from time to time, the “IPC/Max S-4”). See Sources of Additional Information above.

IPC, a Bermuda exempted company, provides property catastrophe reinsurance and, to a limited extent, property-per-risk excess, aviation (including satellite) and other short-tail reinsurance on a worldwide basis. During 2008, approximately 93% of its gross premiums written, excluding reinstatement premiums, covered property catastrophe reinsurance risks. Property catastrophe reinsurance covers against unpredictable events such as hurricanes, windstorms, hailstorms, earthquakes, volcanic eruptions, fires, industrial explosions, freezes, riots, floods and other man-made or natural disasters. The substantial majority of the reinsurance written by IPCRe, IPC’s Bermuda-based property catastrophe reinsurance subsidiary, has been, and continues to be, written on an excess of loss basis for primary insurers rather than reinsurers, and is subject to aggregate limits on exposure to losses. During 2008, IPC had approximately 258 clients from whom it received either annual/deposit or adjustment premiums, including many of the leading insurance companies around the world. In 2008, approximately 36% of those clients were based in the United States, and approximately 53% of gross premiums written, excluding reinstatement premiums, related primarily to U.S. risks. IPC’s non-U.S. clients and its non-U.S. covered risks are located principally in Europe, Japan, Australia and New Zealand. During 2008, no single ceding insurer accounted for more than 3.7% of its gross premiums written, excluding reinstatement premiums. IPC did not disclose gross premiums written by class of business in its Quarterly Report on Form 10-Q for the three months ended March 31, 2009. Therefore, comparable disclosure of property catastrophe premiums cannot be presented. At March 31, 2009, IPC had total shareholders’ equity of $1.849 billion and total assets of $2.453 billion.

IPC’s Shares are quoted on NASDAQ under the ticker symbol “IPCR” and the Bermuda Stock Exchange under the symbol “IPCR BH.” IPC’s principal executive offices are located at American International Building, 29 Richmond Road, Pembroke HM 08, Bermuda and its telephone number is (441) 298-5100.

-7-

The Validus Special Meeting (page 95)

The Validus special meeting will be held on June 25, 2009, at 10:00 a.m., Atlantic time, at the registered office of Validus, located at 19 Par-La-Ville Road, Hamilton HM11, Bermuda. Validus shareholders will be asked at the Validus special meeting:


	•	to approve the issuance of Validus Shares in connection with the Acquisition of all of the outstanding IPC Shares, pursuant to the Validus Amalgamation Agreement, the Scheme of Arrangement, the Exchange Offer or otherwise; and

	•	to transact such further business, if any, as may be lawfully brought before the meeting, including to approve the adjournment of the meeting for the solicitation of additional proxies in favor of the above proposal.

You can vote at the Validus special meeting only if you are a shareholder of record, as shown by the transfer books of Validus, at the close of business on May 15, 2009, which is the record date for the Validus special meeting.

The Acquisition (page 42)

General Description (page 42)

In order to consummate the Acquisition, Validus is simultaneously pursuing the following alternative transaction structures, pursuant to which IPC shareholders will receive (i) 1.1234 Validus Shares and (ii) $3.00 in cash (less any applicable withholding taxes and without interest) for each outstanding IPC Share: (1) the Validus Amalgamation Offer; (2) the Exchange Offer; and (3) the Scheme of Arrangement.

If the Validus Amalgamation Agreement is signed by IPC, and all conditions to the amalgamation have been satisfied or waived, IPC will amalgamate with Validus Ltd., a direct, wholly owned subsidiary of Validus, with the amalgamated company continuing as the surviving company and succeeding to and assuming all of the rights, properties, liabilities and obligations of IPC and Validus Ltd. if the amalgamation is consummated. Upon the closing of the amalgamation, the separate corporate existence of each of IPC and Validus Ltd. will cease and they will continue as an amalgamated company and subsidiary of Validus. The amalgamated company will be named “Validus Ltd.” IPC shareholders (including the shareholders that do not vote in favor of the amalgamation excluding dissenting shareholders who exercise appraisal rights pursuant to Bermuda law and excluding Validus, IPC and any of their respective subsidiaries) would have the right to receive (i) 1.1234 Validus Shares and (ii) $3.00 in cash (less any applicable withholding taxes and without interest), for each IPC share they hold. In addition, IPC shareholders will receive cash in lieu of any fractional Validus Share to which they may be entitled.

If the Exchange Offer is consummated, each outstanding IPC Share which is validly tendered and not withdrawn before the expiration time of the Exchange Offer will be exchanged for (i) 1.1234 Validus Shares and (ii) $3.00 in cash (less any applicable withholding taxes and without interest). In addition, IPC shareholders will receive cash in lieu of any fractional Validus Share to which they may be entitled. The Exchange Offer is subject to the condition, among others, that a minimum of 90% of the then outstanding IPC Shares on a fully-diluted basis be tendered (excluding any IPC Shares owned by Validus, its subsidiaries or IPC). If this condition is satisfied and the Exchange Offer is completed, Validus intends, after completion of the Exchange Offer, to acquire the IPC Shares of those shareholders who choose not to tender their IPC Shares pursuant to the Exchange Offer, in accordance with the Companies Act.

If the Scheme of Arrangement becomes effective, Validus will effect the Acquisition of IPC by the transfer of all outstanding IPC Shares (excluding any IPC Shares owned by Validus, IPC or any of their respective subsidiaries) to Validus in exchange for (i) 1.1234 Validus Shares and (ii) $3.00 in cash (less any applicable withholding taxes and without interest), for each IPC share. In addition, IPC shareholders will receive cash in lieu of any fractional Validus Share to which they may be entitled. IPC would thereby become a wholly-owned subsidiary of Validus.

-8-

Based on Validus’ and IPC’s capitalizations as of December 31, 2008 and the exchange ratio of 1.1234, Validus estimates that former IPC shareholders would own, in the aggregate, approximately 41.3% of the issued and outstanding common shares of Validus on a fully-diluted basis following closing of the Acquisition.

Completing the Acquisition

On March 31, 2009, Validus publicly announced that it had delivered to IPC the Initial Validus Offer. IPC announced on April 7, 2009 that its board of directors had determined that the Initial Validus Offer did not constitute a superior proposal to the Proposed Max Amalgamation and reaffirmed its support of the Proposed Max Amalgamation. On May 18, 2009, Validus publicly announced that it had delivered to IPC an increased offer to acquire each outstanding IPC Share for (i) 1.1234 Validus Shares and (ii) $3.00 in cash (less any applicable withholding taxes and without interest). In addition, IPC shareholders will receive cash in lieu of any fractional Validus Share to which they may be entitled. Validus has also delivered the Validus Amalgamation Agreement signed by Validus so that, upon a termination of the Max Amalgamation Agreement, IPC would have the certainty of Validus’ transaction and would be able to sign the Validus Amalgamation Agreement. IPC announced on May 21, 2009 that its board of directors had determined that the Validus Amalgamation Offer did not constitute a superior proposal to the Proposed Max Amalgamation and reaffirmed its support of the Proposed Max Amalgamation. Additionally, Max has not released IPC from the prohibition in the Max Amalgamation Agreement that prevents IPC from even discussing the Validus Amalgamation Offer with Validus.

In order to consummate the Acquisition without the cooperation of IPC’s board of directors, Validus is pursuing a three-part plan.

First, Validus is soliciting proxies from IPC shareholders to vote against the Proposed Max Amalgamation. If the Proposed Max Amalgamation is voted down by IPC shareholders, IPC’s board of directors will be able to terminate the Max Amalgamation Agreement and enter into the Validus Amalgamation Agreement. If IPC’s board of directors were to enter into the Validus Amalgamation Agreement promptly following the termination of the Max Amalgamation Agreement, Validus believes the amalgamation could be completed in mid-to-late July 2009 based on the assumption that IPC terminates the Max Amalgamation Agreement promptly following its June 12, 2009 annual general meeting, allowing approximately one month to hold a special general meeting of IPC’s shareholders to obtain the required shareholder approval and to satisfy the other conditions in the Validus Amalgamation Agreement.

Second, Validus has commenced the Exchange Offer on the same economic terms as the Validus Amalgamation Offer. The Exchange Offer is subject to certain conditions described in the Offer to Exchange. Under Bermuda law, if Validus acquires at least 90% of the IPC Shares which it is seeking to acquire in the Exchange Offer, Validus will have the right to acquire the remaining IPC Shares on the same terms in a second-step acquisition pursuant to the Companies Act (“the second-step acquisition”). Validus believes that it would be able to complete the Exchange Offer in June 2009, promptly following termination of the Max Amalgamation Agreement (and subject to satisfaction or waiver of the other conditions to the Exchange Offer) based on the following. The expiration time of the Exchange Offer will be June 26, 2009, unless extended. As a result, if the conditions to the Exchange Offer are satisfied or waived at the expiration time of the Exchange Offer, Validus would be able to acquire all of the IPC Shares that are validly tendered pursuant to the Exchange Offer.

Third, Validus is pursuing the Scheme of Arrangement on the same economic terms as the Validus Amalgamation Offer. In order to implement the Scheme of Arrangement, the IPC shareholders must approve the Scheme of Arrangement at a meeting ordered by the Supreme Court of Bermuda (the “court-ordered IPC meeting”), IPC must separately approve the Scheme of Arrangement and the Scheme of Arrangement must be sanctioned by the Supreme Court of Bermuda. The Validus Scheme of Arrangement must be approved by a majority in number of the holders of IPC Shares voting at the court-ordered IPC meeting, whether in person or by proxy, representing 75% or more in value of the IPC Shares voting at the court-ordered IPC meeting, whether in person or by proxy. If the IPC shareholders approve the Scheme of Arrangement at the court-ordered IPC meeting, the separate approval of IPC to the Scheme of Arrangement can be provided by either (i) the IPC board of directors voluntarily complying with the will of the IPC shareholders as expressed at the court-ordered IPC meeting, or (ii) the shareholders of IPC approving

-9-

resolutions at a special general meeting of IPC (the “IPC special general meeting”), including resolutions for IPC to approve and to be bound by the Scheme of Arrangement and to terminate the Max Amalgamation Agreement. Following IPC shareholder approval at both the court-ordered IPC meeting and the IPC special general meeting, the satisfaction or, where relevant, waiver of the other conditions to the effectiveness of the Scheme of Arrangement and the granting of a court order from the Supreme Court of Bermuda sanctioning the Scheme of Arrangement, a copy of the court order sanctioning the Scheme of Arrangement will be delivered to the Bermuda Registrar of Companies, at which time the Scheme of Arrangement will be effective. Validus believes that, under the Scheme of Arrangement, it would be able to close the Acquisition as early as mid-July based on the assumptions that: (1) the Supreme Court of Bermuda will be able to accommodate the preferred hearings schedule and meeting dates and other procedural matters; (2) IPC shareholders holding at least one-tenth of the issued IPC Shares have requisitioned the special general meeting to be held in late June or early July; and (3) the IPC directors, following the rejection of the Max Amalgamation Agreement, or IPC shareholders, convene the requisitioned special general meeting, allowing it to be held in mid-July.

Recommendations of the Validus Board of Directors

Validus’ board of directors has adopted the Validus Amalgamation Agreement and authorized and approved the Share Issuance, and deems it fair, advisable and in the best interests of Validus to consummate the Share Issuance, the Acquisition and the other transactions contemplated thereby. Validus’ board of directors recommends that Validus shareholders vote “FOR” the proposals submitted to Validus shareholders on the attached Validus proxy card.

Reasons Why Validus’ Board of Directors Recommends Approval of the Share Issuance (page 65)

Validus’ board of directors recommends approval of the Share Issuance in order to issue shares that are necessary to effect the Acquisition. Validus’ board of directors believes that the Acquisition represents a compelling combination and excellent strategic fit that will enable Validus to capitalize on opportunities in the global reinsurance market. Successful completion of the Acquisition would allow Validus shareholders to benefit from the superior growth potential of a combined company that would be a leading carrier in Bermuda’s short-tail reinsurance and insurance markets, with a strong balance sheet and quality diversification in profitable business lines.

In reaching these conclusions and in determining that the Share Issuance is fair, advisable and in the best interests of Validus, and in recommending the approval of the Share Issuance, Validus’ board of directors consulted with Validus management as well as legal and financial advisors and considered a number of factors. Those factors included, but were not limited to, those set forth under The Acquisition — Reasons Why Validus’ Board of Directors Recommends Approval of the Share Issuance below.

Opinion of Validus’ Financial Advisor (page 68)

Validus’ board of directors received an oral opinion, subsequently confirmed in writing, from Greenhill & Co., LLC (“Greenhill”) that, based upon and subject to the various limitations and assumptions described in the written opinion, as of May 17, 2009, the consideration pursuant to the proposed Acquisition was fair, from a financial point of view, to Validus.

The full text of the written opinion of Greenhill, dated May 17, 2009, which sets forth, among other things, the assumptions made, procedures followed, matters considered and limits on the opinion and the review undertaken in connection with rendering the opinion, is attached as Annex B to this proxy statement and is incorporated herein by reference. Validus shareholders are urged to read the opinion in its entirety, but should note that it is not a recommendation as to how Validus shareholders should vote with respect to the issuance of Validus Shares pursuant to the Acquisition or any other matter.

Dividends and Distributions (page 76)

Each of Validus and IPC regularly pays a quarterly cash dividend, i.e., $0.20 per common share in Validus’ case and $0.22 per common share in IPC’s case. Validus expects to continue to pay its regular quarterly dividends consistent with past practice. Under the terms of the Validus Amalgamation Agreement, before the amalgamation closes, Validus and IPC would both be permitted to declare and pay ordinary course quarterly dividends on their common shares with record and payment dates consistent with past practice; provided that any such dividend is at a rate no greater than the rate it paid

-10-

during the fiscal quarter immediately preceding the date of the Validus Amalgamation Agreement, i.e., $0.20 per common share in Validus’ case and $0.22 per common share in IPC’s case. In addition, the Validus Amalgamation Agreement provides that IPC may declare and pay a one-time dividend to the holders of IPC Shares in an aggregate amount not to exceed any reduction in the Max Termination Fee (as defined herein). The terms of the Exchange Offer and the Scheme of Arrangement will similarly permit such a payment.

Pursuant to the Validus Amalgamation Agreement, Validus and IPC would agree to coordinate the declaration of, and setting of record dates and payment dates for, dividends on Validus common shares and IPC common shares so that the IPC shareholders do not receive dividends on both the IPC common shares and the Validus Shares received in the amalgamation in respect of any calendar quarter or fail to receive a dividend in respect of any calendar quarter.

Anticipated Accounting Treatment (page 76)

The Acquisition will be accounted for under the purchase method of accounting in accordance with Statement of Financial Accounting Standards (“FAS”) No. 141(R), “Business Combinations” (“FAS 141(R)”), under which the total consideration paid in the Acquisition will be allocated among acquired tangible and intangible assets and assumed liabilities based on the fair values of the tangible and intangible assets acquired and liabilities assumed. In the event there is an excess of the total consideration paid in the Acquisition over the fair values, the excess will be accounted for as goodwill. Intangible assets with definite lives will be amortized over their estimated useful lives. Goodwill resulting from the Acquisition will not be amortized but instead will be tested for impairment at least annually (more frequently if certain indicators are present). In the event that management of Validus determines that the value of goodwill has become impaired, an accounting charge will be taken in the fiscal quarter in which such determination is made. In the event there is an excess of the fair values of the acquired assets and liabilities assumed over the total consideration paid in the Acquisition, the excess will be accounted for as a gain to be recognized through the income statement at the consummation of the Acquisition in accordance with FAS 141(R). Validus anticipates the Acquisition will result in an excess of the fair values of the acquired assets and liabilities assumed over the total consideration paid in the Acquisition.

The Amalgamation Agreement (page 79)

The original Validus amalgamation agreement is attached as Annex A-1 and the amendment thereto is attached as Annex A-2 to this proxy statement. This description of the Validus Amalgamation Agreement assumes that it is signed by IPC in the form delivered by Validus to IPC. You should read the Validus Amalgamation Agreement in its entirety because it, and not this proxy statement, is the legal document that would govern the amalgamation if it were signed by IPC.

In response to IPC’s rejection of the Initial Validus Offer, Validus is proceeding with efforts to move forward with the transaction without IPC’s cooperation. These efforts and Validus’ delivery of an increased offer have necessitated certain updates to the form of Validus Amalgamation Agreement which are included in the amendment attached as Annex A-2. Validus cannot predict what other changes may become necessary due to changed circumstances or as a result of negotiations with IPC should that occur.

Amalgamation Consideration (page 79)

Under the Validus Amalgamation Agreement, each outstanding IPC Share (including any shares held by IPC shareholders that do not vote in favor of the amalgamation, but excluding any dissenting shares as to which appraisal rights have been exercised pursuant to Bermuda law, and excluding any shares held by Validus, IPC or any of their respective subsidiaries) will be cancelled and converted into the right to receive (i) 1.1234 Validus Shares and (ii) $3.00 in cash (less any applicable withholding taxes and without interest).

Validus will not issue any fractional Validus Shares in connection with the amalgamation. Instead, any IPC shareholder who would otherwise have been entitled to a fraction of a Validus Share in connection with the amalgamation will be paid an amount in cash determined by multiplying such fraction by the average Validus price (such average Validus common share price is determined by valuing Validus common shares based on the volume weighted average price per Validus common share on the NYSE for the five consecutive trading days immediately preceding the second trading day prior to the closing of the amalgamation).

-11-

Restrictions on Change in Recommendation by the Board of Directors of IPC or Validus (page 85)

Pursuant to the Validus Amalgamation Agreement, the boards of directors of IPC or Validus may not withdraw or modify, in any manner adverse to the other party, its recommendations in connection with the amalgamation except if such board has concluded in good faith, after consultation with its outside counsel and financial advisors, that such action is reasonably likely to be required in order for the directors to comply with their fiduciary duties under applicable law, and such party has not materially breached its obligations with respect to changing its recommendation. Before a party can change its recommendation with respect to the amalgamation, it must provide advance written notice of such change to the other party and give the other party five business days to agree to alter the terms and conditions of the Validus Amalgamation Agreement in a manner that removes the need for the applicable board of directors to change its recommendation in order to prevent a breach of its fiduciary duties. Even if IPC or Validus has had a change in recommendation, each will still be required to submit such matters to the respective shareholders’ meeting. See The Amalgamation Agreement — Restrictions on Change in Recommendation by the Boards of Directors of IPC or Validus below.

Restrictions on Solicitation of Acquisition Proposals by IPC (page 85)

The Validus Amalgamation Agreement precludes IPC and its subsidiaries and advisors from, directly or indirectly, initiating, soliciting, encouraging or facilitating (including by providing information) any effort or attempt to make or implement any proposal or offer with respect to an amalgamation, reorganization, consolidation, business combination or similar transaction involving it or any of its subsidiaries or any purchase or sale involving 10% or more of its consolidated assets (including, without limitation, shares of its subsidiaries), or 10% or more of its total voting power or the voting power of any of its subsidiaries. IPC may withdraw or modify its recommendation as described under The Amalgamation Agreement — Restrictions on Change in Recommendation by the Boards of Directors of IPC or Validus below. See The Amalgamation Agreement — Restrictions on Solicitation of Acquisition Proposals by IPC below.

Conditions to the Acquisition (page 88)

Validus’ and IPC’s respective obligations to complete the amalgamation are subject to the fulfillment or waiver (by both Validus and IPC) of certain conditions, including:


	•	receipt of the required Validus shareholder approval of the Share Issuance and the required IPC vote to adopt the Validus Amalgamation Agreement and approve the amalgamation;

	•	approval for listing on the NYSE of the Validus Shares to be issued or reserved for issuance in connection with the amalgamation, subject to official notice of issuance;

	•	certain regulatory filings, approvals or exemptions will have been made, will have occurred or will have been obtained;

	•	a registration statement registering the shares to be issued in the amalgamation will have become effective under the Securities Act of 1933, as amended, and will not be the subject of any stop order or proceedings seeking a stop order;

	•	no injunction or other legal restraints or prohibitions preventing the consummation of the amalgamation will be in effect;

	•	subject to the materiality standards provided in the Validus Amalgamation Agreement, the representations and warranties of each other party in the Validus Amalgamation Agreement will be true and correct, and each party will have performed its obligations under the Validus Amalgamation Agreement (and each party will have received a certificate from the other party to such effect);

	•	no governmental entity will have imposed any term, condition, obligation or restriction that would reasonably be expected to have a material adverse effect on Validus and its subsidiaries (including the amalgamated entity) after the effective time of the amalgamation; and

-12-


	•	each of IPC and Validus will have received a tax opinion with respect to certain U.S. federal income tax consequences of the amalgamation.

Validus’ obligation to complete the amalgamation is also subject to the fulfillment or waiver (by Validus) of the following condition:


	•	all amendments or waivers under (x) IPC’s credit facilities and (y) Validus’ credit facilities, in each case, as determined by Validus to be necessary to consummate the amalgamation and the other transactions contemplated thereby, shall be in full force and effect.

At any time prior to the effective time of the amalgamation, the parties may, to the extent legally permissible, waive compliance with any of the conditions contained in the Validus Amalgamation Agreement, as described under The Amalgamation Agreement — Amendments and Waivers Under the Amalgamation Agreement below.

The terms of the Exchange Offer and the Scheme of Arrangement will include substantially the same conditions. See Annexes C and D.

Termination of the Amalgamation Agreement (page 89)

The Validus Amalgamation Agreement may be terminated, at any time prior to the effective time of the amalgamation, by mutual written consent of IPC and Validus, and, subject to certain limitations described in the Validus Amalgamation Agreement, by either IPC or Validus, if any of the following occurs:


	•	a regulatory approval required by the Validus Amalgamation Agreement to be obtained has been denied or any governmental authority has taken any action permanently restraining or prohibiting the amalgamation, and such denial or action has become final and non-appealable (unless the failure to complete the amalgamation by that date is due to a breach by the party seeking to terminate the Validus Amalgamation Agreement);

	•	the amalgamation has not been consummated on or before the later of (x) November 30, 2009 or ( y) the date that is five months after the date the Validus Amalgamation Agreement is executed by all parties (unless the failure to complete the amalgamation by that date is due to a breach by the party seeking to terminate the Validus Amalgamation Agreement);

	•	the other party’s board of directors has (1) changed its recommendation to its shareholders, (2) failed to include such recommendation in this proxy statement, or (3) with respect to IPC only, materially breached certain of the non-solicitation obligations applicable to it under the Validus Amalgamation Agreement;

	•	the other party has breached a covenant, agreement, representation or warranty that would preclude the satisfaction of certain closing conditions and such breach is not remedied in the 45 days following written notice to the breaching party or is not capable of being so remedied;

	•	the Validus shareholders have not approved any of the matters for which their approval is solicited for the required Validus vote or the IPC shareholders have not approved and adopted the Validus Amalgamation Agreement and approved the amalgamation at the IPC shareholders’ meeting;

	•	the other party’s good-faith estimate of such party’s book value as of the day prior to the later to occur of the IPC and Validus shareholder meetings indicates that since December 31, 2008, either (1) the other party’s book value has declined by more than 50%, or (2) the other party’s book value has declined by more than 20 percentage points greater than the decline in the terminating party’s book value during the same period (with any increase in a party’s book value since December 31, 2008, deemed to be no change for purposes of measuring the 20 percentage point differential).

In addition, Validus may terminate the Validus Amalgamation Agreement if the total number of dissenting IPC Shares for which appraisal rights have been properly exercised in accordance with Bermuda law exceeds 15% of the issued and outstanding IPC Shares on the business day immediately following the last day on which IPC shareholders can require appraisal of their common shares. See The Amalgamation Agreement — Termination of the Amalgamation Agreement.

-13-

Effects of Termination, Remedies (page 90)

If either of the parties terminates the Validus Amalgamation Agreement, the non-terminating party will be required to pay the other a termination fee of $16 million in certain circumstances, as described under The Amalgamation Agreement — Termination of the Amalgamation Agreement — Effects of Termination; Remedies below.

The Exchange Offer

The terms of the Exchange Offer are set forth in the Offer to Exchange. A summary of the terms of the Exchange Offer is attached as Annex C to this proxy statement.

The Scheme of Arrangement

A summary of the Scheme of Arrangement is attached as Annex D to this proxy statement. The form of Scheme of Arrangement is attached as Annex E to this proxy statement.

-14-

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF VALIDUS

Set forth below is certain selected historical consolidated financial data relating to Validus. The financial data has been derived from Validus’ quarterly report on Form 10-Q for the three months ended March 31, 2009, which is incorporated by reference into this proxy statement (the “Validus 10-Q”) and Validus’ annual report on Form 10-K for the year ended December 31, 2008, which is incorporated by reference into this proxy statement (the “Validus 10-K”). You should not take historical results as necessarily indicative of the results that may be expected for any future period.

This financial data should be read in conjunction with the financial statements and the related notes and other financial information contained in the Validus 10-Q and the Validus 10-K, which is incorporated by reference into this proxy statement. More comprehensive financial information, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” is contained in the Validus 10-Q and the Validus 10-K, and the following summary is qualified in its entirety by reference to the Validus 10-Q and the Validus 10-K and all of the financial information and notes contained therein. See Where You Can Find More Information on page 108.


	Three Months Ended						Year Ended			Year Ended			Year Ended			Period Ended
	March 31,						December 31,			December 31,			December 31,			December 31,
	2009			2008			2008			2007			2006			2005
	(Dollars in thousands, except share and per share amounts)

Revenues
Gross premiums written	$	609,892		$	521,594		$	1,362,484		$	988,637		$	540,789		$	—
Reinsurance premiums ceded		(72,512	)		(84,900	)		(124,160	)		(70,210	)		(63,696	)		—

Net premiums written		537,380			436,694			1,238,324			918,427			477,093			—
Change in unearned premiums		(218,621	)		(144,830	)		18,194			(60,348	)		(170,579	)		—

Net premiums earned		318,759			291,864			1,256,518			858,079			306,514			—
Net investment income		26,772			36,043			139,528			112,324			58,021			2,032
Realized gain on repurchase of debentures		—			—			8,752			—			—			—
Net realized gains (losses) on investments		(23,421	)		7,744			(1,591	)		1,608			(1,102	)		39
Net unrealized gains on investments(2)		22,153			(14,977	)		(79,707	)		12,364			—			—
Other income		757			935			5,264			3,301			—			—
Foreign exchange gains (losses)		(4,200	)		8,179			(49,397	)		6,696			2,157			—

Total revenues		340,820			329,788			1,279,367			994,372			365,590			2,071
Expenses
Losses and loss expenses		131,834			140,024			772,154			283,993			91,323			—
Policy acquisition costs		61,449			56,701			234,951			134,277			36,072			—
General and administrative expenses(1)		38,079			37,107			123,948			100,765			38,354			2,367
Share compensation expenses		7,354			6,535			27,097			16,189			7,878			290
Finance expenses		7,723			21,517			57,318			51,754			8,789			—
Fair value of warrants issued		—			—			—			2,893			77			49,122

Total expenses		246,439			261,884			1,215,468			589,871			182,493			51,779

Net income before taxes		94,381			67,904			63,899			404,501			183,097			(49,708	)
Taxes		526			(1,429	)		(10,788	)		(1,505	)		—			—

Net income (loss)		94,907			66,475			53,111			402,996			183,097			(49,708	)

Comprehensive income (loss)
Unrealized gains arising during the period(2)		—			—						—			(332	)		144
Foreign currency translation adjustments		(196	)		67			(7,809	)		(49	)		—			—
Adjustment for reclassification of losses realized in income		—			—						—			1,102			(39	)

Comprehensive income (loss)	$	94,711		$	66,542		$	45,302		$	402,947		$	183,867		$	(49,603	)

Earnings per share(3)
Weighted average number of common shares and common share equivalents outstanding
Basic		75,744,577			74,209,371			74,677,903			65,068,093			58,477,130			58,423,174
Diluted		79,102,643			78,329,727			75,819,413			67,786,673			58,874,567			58,423,174
Basic earnings per share	$	1.23		$	0.87		$	0.62		$	6.19		$	3.13		$	(0.85	)

Diluted earnings per share	$	1.20		$	0.85		$	0.61		$	5.95		$	3.11		$	(0.85	)

Cash dividends per share	$	0.20		$	0.20		$	0.80		$	—		$	—		$	—

-15-


	Three Months Ended						Year Ended			Year Ended			Year Ended			Period Ended
	March 31,						December 31,			December 31,			December 31,			December 31,
	2009			2008			2008			2007			2006			2005
	(Dollars in thousands, except share and per share amounts)

Selected financial ratios
Losses and loss expenses ratio(4)		41.4	%		48.0	%		61.5	%		33.1	%		29.8	%		—
Policy acquisition cost ratio(5)		19.3	%		19.4	%		18.7	%		15.6	%		11.8	%		—
General and administrative expense ratio(6)		14.3	%		15.0	%		12.0	%		13.3.	%		15.1	%		—
Expense ratio(7)		33.6	%		34.4	%		30.7	%		28.9	%		26.9	%		—
Combined ratio(8)		75.0	%		82.4	%		92.2	%		62.0	%		56.7	%		—

Annualized return on average equity(9)		19.2	%		13.5	%		2.7	%		26.9	%		17.0	%		NM

The following table sets forth summarized balance sheet data as of March 31, 2009 and 2008, and as of December 31, 2008, 2007 and 2006:


	As of		As of		As of		As of		As of
	March 31,		March 31,		December 31,		December 31,		December 31,
	2009		2008		2008		2007		2006
	(Dollars in thousands, except share and per share amounts)

Summary Balance Sheet Data:
Investments at fair value	$	2,926,859	$	2,893,595	$	2,831,537	$	2,662,021	$	1,376,387
Cash and cash equivalents		535,798		347,347		449,848		444,698		63,643
Total assets		4,762,798		4,535,638		4,322,480		4,144,224		1,646,423
Reserve for losses and loss expenses		1,318,732		977,236		1,305,303		926,117		77,363
Unearned premiums		795,233		750,257		539,450		557,344		178,824
Junior subordinated deferrable debentures		304,300		350,000		304,300		350,000		150,000
Total liabilities		2,739,812		2,544,980		2,383,746		2,209,424		453,900
Total shareholders’ equity		2,022,986		1,990,658		1,938,734		1,934,800		1,192,523
Book value per common share(10)		26.68		26.82		25.64		26.08		20.39
Diluted book value per common share(11)		24.65		24.43		23.78		24.00		19.73


NM		— Not meaningful


(1)		General and administrative expenses for the years ended December 31, 2007 and 2006 include $4,000,000 and $1,000,000 respectively, related to our advisory agreement with Aquiline Capital Partners LLC, which, together with its related companies, we refer to as “Aquiline.” Our advisory agreement with Aquiline terminated upon completion of our initial public offering, in connection with which Validus recorded general and administrative expense of $3,000,000 in the year ended December 31, 2007.

(2)		Validus adopted FAS 157 and FAS 159 as of January 1, 2007 and elected the fair value option on all securities previously accounted for as available-for-sale. Unrealized gains and losses on available-for-sale investments at December 31, 2006 of $875,000, previously included in accumulated other comprehensive income, were treated as a cumulative-effect adjustment as of January 1, 2007. The cumulative-effect adjustment transferred the balance of unrealized gains and losses from accumulated other comprehensive income to retained earnings and had no impact on the results of operations for the annual or interim periods beginning January 1, 2007. Validus’ investments were accounted for as trading for the annual or interim periods beginning January 1, 2007 and as such all unrealized gains and losses are included in net income.

(3)		FAS 123(R) requires that any unrecognized stock-based compensation expense that will be recorded in future periods be included as proceeds for purposes of treasury stock repurchases, which is applied against the unvested restricted shares balance. On March 1, 2007 we effected a 1.75 for 1 reverse stock split of our outstanding common shares. The stock split does not affect our financial statements other than to the extent it decreases the number of outstanding shares and correspondingly increases per share information for all periods presented. The share consolidation has been reflected retroactively in these financial statements.

-16-


(4)		The losses and loss expense ratio is calculated by dividing losses and loss expenses by net premiums earned.

(5)		The policy acquisition cost ratio is calculated by dividing policy acquisition costs by net premiums earned.

(6)		The general and administrative expense ratio is calculated by dividing the sum of general and administrative expenses and share compensation expenses by net premiums earned. The general and administrative expense ratio for the year ended December 31, 2007 is calculated by dividing the total of general and administrative expenses plus share compensation expenses less the $3,000,000 termination fee payable to Aquiline by net premiums earned.

(7)		The expense ratio is calculated by combining the policy acquisition cost ratio and the general and administrative expense ratio.

(8)		The combined ratio is calculated by combining the losses and loss expense ratio, the policy acquisition cost ratio and the general and administrative expense ratio.

(9)		Annualized return on average equity is calculated by dividing the net income for the period by the average shareholders’ equity during the period. Annual average shareholders’ equity is the average of the beginning, ending and intervening quarter-end shareholders’ equity balances.

(10)		Book value per common share is defined as total shareholders’ equity divided by the number of common shares outstanding as at the end of the period, giving no effect to dilutive securities.

(11)		Diluted book value per common share is calculated based on total shareholders’ equity plus the assumed proceeds from the exercise of outstanding options and warrants, divided by the sum of common shares, unvested restricted shares, options and warrants outstanding (assuming their exercise). Diluted book value per common share is a Non-GAAP financial measure as described under Item 7, “Management’s Discussion and Analysis of Financial condition and Results of Operations — Financial Measures,” in the Validus 10-K.

-17-

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF IPC

The following disclosure is taken from IPC’s quarterly report on Form 10-Q for the three months ended March 31, 2009 (the “IPC 10-Q”) and IPC’s annual report on Form 10-K for the year ended December 31, 2008 (the “IPC 10-K”), except in respect of diluted book value per common share (as discussed in footnote 5 below). See Sources of Additional Information above.

Set forth below is certain selected historical consolidated financial data relating to IPC. The financial data has been derived from the IPC 10-Q, which is incorporated by reference into this proxy statement, and the IPC 10-K, which is incorporated by reference into this proxy statement. You should not take historical results as necessarily indicative of the results that may be expected for any future period.

This financial data should be read in conjunction with the financial statements and the related notes and other financial information contained in the IPC 10-Q and the IPC 10-K. More comprehensive financial information, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” is contained in other documents filed by IPC with the SEC, and the following summary is qualified in its entirety by reference to such other documents and all of the financial information and notes contained in those documents. See Where You Can Find More Information on page 108.


	Three months ended March 31,						Year Ended December 31,
	2009			2008			2008			2007			2006			2005			2004
	(Dollars in thousands, except share and per share amounts)

Statement of Income (Loss) Data:
Gross premiums written	$	234,610		$	197,875		$	403,395		$	404,096		$	429,851		$	472,387		$	378,409
Net premiums earned		98,708			89,697			387,367			391,385			397,132			452,522			354,882
Net investment income		21,866			23,874			94,105			121,842			109,659			71,757			51,220
Net (losses) gains on investments		(35,572	)		(6,020	)		(168,208	)		67,555			12,085			(10,556	)		5,946
Other income		7			26			65			1,086			3,557			5,234			4,296
Net loss and loss adjustment expenses incurred		39,109			5,324			155,632			124,923			58,505			1,072,662			215,608
Net acquisition costs		9,838			8,674			36,429			39,856			37,542			39,249			37,682
General and administrative expenses		24,281			7,079			26,314			30,510			34,436			27,466			23,151
Interest expense		383			—			2,659			—			—			—			—
Net foreign exchange loss (gain)		3,146			(303	)		1,848			1,167			(2,635	)		2,979			1,290
Net income (loss)	$	8,252		$	86,803		$	90,447		$	385,412		$	394,585		$	(623,399	)	$	138,613
Preferred dividend		—			4,234			14,939			17,128			17,176			2,664			—
Net income (loss), available to common shareholders	$	8,252		$	82,569		$	75,508		$	368,284		$	377,409		$	(626,063	)	$	138,613
Net income (loss) per common share(1)	$	0.15		$	1.31		$	1.45		$	5.53		$	5.54		$	(12.30	)	$	2.87
Weighted average shares outstanding(1)		55,916,256			66,182,883			59,301,939			69,728,229			71,212,287			50,901,296			48,376,865
Cash dividend per common share	$	0.22		$	0.22		$	0.88		$	0.80		$	0.64		$	0.88		$	0.88
Other Data:
Loss and loss adjustment expense ratio(2)		39.6	%		5.8	%		40.2	%		31.9	%		14.7	%		237.0	%		60.8	%
Expense ratio(2)		34.6	%		17.1	%		16.2	%		18.0	%		18.1	%		14.8	%		17.1	%
Combined ratio(2)		74.2	%		22.9	%		56.4	%		49.9	%		32.8	%		251.8	%		77.9	%
Return on average equity(3)		1.8	%		15.5	%		4.2	%		20.1	%		24.0	%		(38.0	)%		8.6	%
Balance Sheet Data (at end of period):
Total cash and investments	$	2,189,966		$	2,475,860		$	2,235,187		$	2,473,244		$	2,485,525		$	2,560,146		$	1,901,094
Reinsurance premiums receivable		199,241			161,474			108,033			91,393			113,811			180,798			85,086
Total assets		2,453,085			2,712,037			2,388,688			2,627,691			2,645,429			2,778,281			2,028,290
Reserve for losses and loss adjustment expenses		354,467			355,276			355,893			395,245			548,627			1,072,056			274,463
Unearned premiums		219,641			181,889			85,473			75,980			80,043			66,311			68,465
Total liabilities		603,611			563,904			537,741			501,946			654,474			1,161,881			359,851
Total shareholders’ equity	$	1,849,474		$	2,148,133		$	1,850,947		$	2,125,745		$	1,990,955		$	1,616,400		$	1,668,439
Diluted book value per common share(4)	$	NA		$	NA		$	32.85	(5)	$	32.42		$	27.94		$	22.26		$	34.44

-18-

NA — Not available


(1)		Net income per common share is calculated upon the weighted average number of common shares outstanding during the relevant year. The weighted average number of shares includes common shares and the dilutive effect of employee stock options and stock grants, using the treasury stock method and convertible preferred shares. The net loss per common share for the year ended December 31, 2005 is calculated on the weighted average number of shares outstanding during the year, excluding the anti-dilutive effect of employee stock options, stock grants and convertible preferred shares. The net income per common share for the year ended December 31, 2008 is calculated on the weighted average number of shares outstanding during the year, excluding the anti-dilutive effect of stock-based compensation and convertible preferred shares.

(2)		The loss and loss adjustment expense ratio is calculated by dividing the net losses and loss expenses incurred by the net premiums earned. The expense ratio is calculated by dividing the sum of acquisition costs and general and administrative expenses by net premiums earned. The combined ratio is the sum of the loss and loss expense ratio and the expense ratio.

(3)		Return on average equity is calculated as the annual net income (loss), available to common shareholders divided by the average of the common shareholders’ equity, which is total shareholders’ equity, excluding convertible preferred shares, on the first and last day of the respective year.

(4)		Diluted book value per common share is calculated as shareholders’ equity divided by the number of common shares outstanding on the balance sheet date, after considering the dilutive effects of stock-based compensation, calculated using the treasury stock method. At December 31, 2008 the average weighted number of shares outstanding, including the dilutive effect of employee stock-based compensation and convertible preferred shares (which were converted on November 15, 2008) using the treasury stock method was 59,301,939.

(5)		IPC reported diluted book value per common share as $33.07 in IPC’s annual report on Form 10-K for the year ended December 31, 2008 and amended it to $32.85 in an amendment to the IPC/Max S-4 filed with the SEC on April 13, 2009.

-19-

UNAUDITED CONDENSED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION

The following unaudited condensed consolidated pro forma financial information is intended to provide you with information about how the acquisition of IPC might have affected the historical financial statements of Validus if it had been consummated at an earlier time. The unaudited condensed consolidated pro forma information has been prepared using IPC’s publicly available financial statements and disclosures, without the benefit of inspection of IPC’s books and records. Therefore, certain pro forma adjustments, such as recording fair value of assets and liabilities and adjustments for consistency of accounting policy, are not reflected in these unaudited condensed consolidated pro forma financial statements. The following unaudited condensed consolidated pro forma financial information does not necessarily reflect the financial position or results of operations that would have actually resulted had the acquisition occurred as of the dates indicated, nor should they be taken as necessarily indicative of the future financial position or results of operations of Validus.

The unaudited condensed consolidated pro forma financial information should be read in conjunction with the Validus 10-Q, the Validus 10-K, the IPC 10-Q and the IPC 10-K, each as filed with the SEC. The unaudited condensed consolidated pro forma financial information gives effect to the proposed acquisition as if it had occurred at March 31, 2009 for the purposes of the unaudited consolidated pro forma balance sheet and at January 1, 2008 for the purposes of the unaudited condensed consolidated pro forma statements of operations for the year ended December 31, 2008 and the three months ended March 31, 2009. For a summary of the proposed business combination contemplated by the Acquisition, see the section of this proxy statement entitled “The Acquisition.”

-20-

The following table presents unaudited condensed consolidated pro forma balance sheet data at March 31, 2009 (expressed in thousands of U.S. dollars, except share and per share data) giving effect to the proposed acquisition of IPC Shares as if it had occurred at March 31, 2009.


	Historical						Pro Forma
	Validus			Historical IPC			Purchase				Pro Forma
	Holdings Ltd.			Holdings Ltd.			adjustments			Notes	Consolidated

Assets
Fixed maturities, at fair value	$	2,644,496		$	1,772,805		$	—			$	4,417,301
Short-term investments, at fair value		282,363			—			—				282,363
Equity investments, at fair value		—			295,091			—				295,091
Cash and cash equivalents		535,798			122,070			(245,706	)	3(a) 3(b), 4		412,162

Total investments and cash		3,462,657			2,189,966			(245,706	)			5,406,917
Premiums receivable		600,943			199,241			(160	)	3(e)		800,024
Deferred acquisition costs		143,510			23,302			—				166,812
Prepaid reinsurance premiums		59,510			3,585			(199	)	3(e)		62,896
Securities lending collateral		99,727			—			—				99,727
Loss reserves recoverable		204,197			4,274			—				208,471
Paid losses recoverable		4,438			—			—				4,438
Net receivable for investments sold		—			—			—				—
Accrued investment income		20,511			27,907			—				48,418
Current taxes recoverable		1,244			—			—				1,244
Intangible assets		126,177			—			—				126,177
Goodwill		20,393			—			—				20,393
Other assets		19,491			4,810			—				24,301

Total assets	$	4,762,798		$	2,453,085		$	(246,065	)		$	6,969,818

Liabilities
Unearned premiums	$	795,233		$	219,641		$	(199	)	3(e)	$	1,014,675
Reserve for losses and loss expense		1,318,732			354,467			—				1,673,199
Reinsurance balances payable		66,180			4,483			(160	)	3(e)		70,503
Deferred taxation		20,914			—			—				20,914
Securities lending payable		105,369			—			—				105,369
Net payable for investments purchased		57,434			—			—				57,434
Accounts payable and accrued expenses		71,650			25,020			—				96,670
Debentures payable		304,300			—			—				304,300

Total liabilities		2,739,812			603,611			(359	)			3,343,064

Shareholders’ equity
Ordinary shares		13,271			561			10,547		3(a) 3(c) 3(d)		24,379
Additional paid-in capital		1,419,602			1,091,491			430,938		3(a) 3(c) 3(d)		2,942,031
Accumulated other comprehensive loss		(8,054	)		(876	)		876		3(d)		(8,054	)
Retained earnings		598,167			758,298			(688,067	)	3(b) 3(d) 3(f)		668,398

Total shareholders’ equity		2,022,986			1,849,474			(245,706	)			3,626,754

Total liabilities and shareholders’ equity	$	4,762,798		$	2,453,085		$	(246,065	)		$	6,969,818


Common shares outstanding		75,828,922			55,948,821			62,852,906				138,681,828
Common shares and common share equivalents outstanding		90,317,793			56,501,900			63,474,234				153,792,027
Book value per share	$	26.68		$	33.06					8	$	26.15

Diluted book value per share	$	24.65		$	32.73					8	$	24.90

Diluted tangible book value per share	$	23.03		$	32.73						$	23.95

-21-

The following table sets forth unaudited condensed consolidated pro forma results of operations for the year ended December 31, 2008 (expressed in thousands of U.S. dollars, except share and per share data) giving effect to the proposed acquisition as if it had occurred at January 1, 2008:


	Historical						Pro Forma
	Validus			Historical IPC			Purchase				Pro Forma
	Holdings, Ltd.			Holdings, Ltd.			adjustments			Notes	Consolidated

Revenues
Gross premiums written	$	1,362,484		$	403,395		$	(251	)	3(e), 5	$	1,765,628
Reinsurance premiums ceded		(124,160	)		(6,122	)		251		3(e)		(130,031	)

Net premiums written		1,238,324			397,273			—				1,635,597
Change in unearned premiums		18,194			(9,906	)		—				8,288

Net premiums earned		1,256,518			387,367			—				1,643,885
Net investment income		139,528			94,105			(9,731	)	3(b)		223,902
Realized gain on repurchase of debentures		8,752			—			—				8,752
Net realized (losses) gains on investments		(1,591	)		(168,208	)		—				(169,799	)
Net unrealized (losses) gains on investments		(79,707	)		—			—				(79,707	)
Other income		5,264			65			—				5,329
Foreign exchange losses		(49,397	)		(1,848	)		—				(51,245	)

Total revenues		1,279,367			311,481			(9,731	)			1,581,117
Expenses
Losses and loss expense		772,154			155,632			—		6		927,786
Policy acquisition costs		234,951			36,429			—				271,380
General and administrative expenses		123,948			20,689			—				144,637
Share compensation expense		27,097			5,625			—				32,722
Finance expenses		57,318			2,659			—				59,977

Total expenses		(1,215,468	)		(221,034	)		—				(1,436,502	)

Income before taxes		63,899			90,447			(9,731	)			144,615
Income tax expense		(10,788	)		—			—				(10,788	)

Income before taxes	$	53,111		$	90,447		$	(9,731	)		$	133,827

Preferred dividend and warrant dividend		6,947			14,939			(14,939	)	3(g)		6,947
Net income available to common shareholders	$	46,164		$	75,508		$	5,208			$	126,880

Earnings per share
Weighted average number of common shares and common share equivalents outstanding
Basic		74,677,903			52,124,034			62,852,906				137,530,809
Diluted		75,819,413			59,301,939			63,474,234				139,293,647
Basic earnings per share	$	0.62		$	1.45					7	$	0.92

Diluted earnings per share	$	0.61		$	1.45					7	$	0.91

-22-

The following table sets forth unaudited condensed consolidated pro forma results of operations for the three months ended March 31, 2009 (expressed in thousands of U.S. dollars, except share and per share data) giving effect to the proposed acquisition of IPC Shares as if it had occurred at January 1, 2008:


	Historical						Pro Forma
	Validus			Historical IPC			Purchase				Pro Forma
	Holdings Ltd.			Holdings Ltd.			adjustments			Notes	Consolidated

Revenues
Gross premiums written	$	609,892		$	234,610		$	(265	)	3(e), 5	$	844,237
Reinsurance premiums ceded		(72,512	)		(3,154	)		265		3(e)		(75,401	)

Net premiums written		537,380			231,456			—				768,836
Change in unearned premiums		(218,621	)		(132,748	)		—				(351,369	)

Net premiums earned		318,759			98,708			—				417,467
Net investment income		26,772			21,866			(1,953	)	3(b)		46,685
Realized gain on repurchase of debentures		—			—			—				—
Net realized (losses) gains on investments		(23,421	)		(35,572	)		—				(58,993	)
Net unrealized (losses) gains on investments		22,153			—			—				22,153
Other income		757			7			—				764
Foreign exchange gains (losses)		(4,200	)		(3,146	)		—				(7,346	)

Total revenues		340,820			81,863			(1,953	)			420,730
Expenses
Losses and loss expense		131,834			39,109			—		6		170,943
Policy acquisition costs		61,449			9,838			—				71,287
General and administrative expenses		38,079			21,792			(13,800	)	3(b)		46,071
Share compensation expense		7,354			2,489			—				9,843
Finance expenses		7,723			383			—				8,106

Total expenses		(246,439	)		(73,611	)		13,800				(306,250	)

Income before taxes		94,381			8,252			11,847				114,480
Income tax credit		526			—			—				526

Income after taxes	$	94,907		$	8,252		$	11,847			$	115,006

Preferred dividend and warrant dividend		1,736			—			—				1,736

Net income available to common shareholders	$	93,171		$	8,252		$	11,847			$	113,270

Earnings per share
Weighted average number of common shares and common share equivalents outstanding
Basic		75,744,577			55,903,740			62,852,906				138,597,483
Diluted		79,102,643			55,916,256			63,474,234				142,576,877
Basic earnings per share	$	1.23		$	0.15					7	$	0.82

Diluted earnings per share	$	1.20		$	0.15					7	$	0.81

-23-

Validus Holdings, Ltd.

Notes To Unaudited Condensed Consolidated Pro Forma Financial Statements (unaudited)

(Expressed in thousands of U.S. dollars, except share and per share data)


1.	Basis of Presentation

The unaudited condensed consolidated pro forma financial information gives effect to the Acquisition as if it had occurred at March 31, 2009 for the purposes of the unaudited condensed consolidated pro forma balance sheet and at January 1, 2008 for the purposes of the unaudited condensed consolidated pro forma statements of operations for the year ended December 31, 2008 and three months ended March 31, 2009. The unaudited condensed consolidated pro forma financial information has been prepared by Validus’ management and is based on Validus’ historical consolidated financial statements and IPC’s historical consolidated financial statements. Certain amounts from IPC’s historical consolidated financial statements have been reclassified to conform to the Validus presentation. The unaudited condensed consolidated pro forma financial statements have been prepared using IPC’s publicly available financial statements and disclosures, without the benefit of inspection of IPC’s books and records or discussion with the IPC management team. Therefore, certain pro forma adjustments, such as recording fair value of assets and liabilities and adjustments for consistency of accounting policy, are not reflected in these unaudited condensed consolidated pro forma financial statements. Additional reclassifications of IPC data to conform to the Validus presentation may also be required.

This unaudited condensed consolidated pro forma financial information is prepared in conformity with US GAAP. The unaudited condensed consolidated pro forma balance sheet as of March 31, 2009 and the unaudited condensed consolidated pro forma statements of operations for the year ended December 31, 2008 and the three months ended March 31, 2009 have been prepared using the following information:

(a) Audited historical consolidated financial statements of Validus as of December 31, 2008 and for the year ended December 31, 2008;

(b) Audited historical consolidated financial statements of IPC as of December 31, 2008 and for the year ended December 31, 2008;

(c) Unaudited historical consolidated financial statements of Validus as of March 31, 2009 and for the three months ended March 31, 2009;

(d) Unaudited historical consolidated financial statements of IPC as of March 31, 2009 and for the three months ended March 31, 2009;

(e) Such other known supplementary information as considered necessary to reflect the Acquisition in the unaudited condensed consolidated pro forma financial information.

The pro forma adjustments reflecting the Acquisition of IPC under the purchase method of accounting are based on certain estimates and assumptions. The unaudited condensed consolidated pro forma adjustments may be revised as additional information becomes available. The actual adjustments upon consummation of the Acquisition and the allocation of the final purchase price of IPC will depend on a number of factors, including additional financial information available at such time, changes in values and changes in IPC’s operating results between the date of preparation of this unaudited condensed consolidated pro forma financial information and the effective date of the Acquisition. Therefore, it is likely that the actual adjustments will differ from the pro forma adjustments and it is possible the differences may be material. Validus’ management believes that its assumptions provide a reasonable basis for presenting all of the significant effects of the transactions contemplated based on information available to Validus at the time and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited condensed consolidated pro forma financial information.

The unaudited condensed consolidated pro forma financial information does not include any financial benefits, revenue enhancements or operating expense efficiencies arising from the Acquisition. In addition, the unaudited condensed consolidated pro forma financial information does not include any additional expenses that may result from the acquisition of IPC Shares. Estimated costs of the transaction as well as the benefit of the negative goodwill have

-24-

Validus Holdings, Ltd.

Notes To Unaudited Condensed Consolidated Pro Forma Financial Statements (unaudited) — (Continued)

(Expressed in thousands of U.S. dollars, except share and per share data)

been reflected in the unaudited condensed consolidated pro forma balance sheets, but have not been included on the pro forma income statement due to their non-recurring nature.

The unaudited condensed consolidated pro forma financial information is not intended to reflect the results of operations or the financial position that would have resulted had the Acquisition been effected on the dates indicated and if the companies had been managed as one entity. The unaudited condensed consolidated pro forma financial information should be read in conjunction with the Validus 10-Q, the Validus 10-K, the IPC 10-Q and the IPC 10-K, as filed with the SEC.


2.	Recent Accounting Pronouncements

In December 2007, the FASB issued Statement No. 141(R), “Business Combinations” (“FAS 141(R)”) and No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51” (“FAS 160”) which are effective for business combinations for which the Acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. On April 1, 2009 the FASB finalized and issued FSP FAS 141(R)-1 which amended and clarified FAS 141 (R) and is effective for business combinations whose Acquisition date is on or after January 1, 2009.

FSP FAS 141(R)-1 has amended FAS 141(R)’s guidance on the initial recognition and measurement, subsequent measurement and accounting, and disclosure of assets acquired and liabilities assumed in a business combination that arise from contingencies.

Significant changes arising from FAS 141 (R) and FSP FAS 141(R)-1 which will impact any future acquisitions include the determination of the purchase price and treatment of transaction expenses, restructuring charges and negative goodwill as follows:


	•	Purchase Price — Under FAS 141(R), the purchase price is determined as of the acquisition date, which is the date that the acquirer obtains control. Previously, the date the business combination was announced was used as the effective date in determining the purchase price;

	•	Transactions Expenses — Under FAS 141(R), all costs associated with purchase transactions must be expensed as incurred. Previously, all such costs could be capitalized and included as part of transaction purchase price, adding to the amount of goodwill recognized;

	•	Restructuring Costs — Under FAS 141(R), expected restructuring costs are not recorded at the closing date, but rather after the transaction. The only costs to be included as a liability at the closing date are those for which an acquirer is obligated at the time of the closing. Previously, restructuring costs that were planned to occur after the closing of the transaction were recognized and recorded at the closing date as a liability;

	•	Negative Goodwill/Bargain Purchases — Under FAS 141(R), where total fair value of net assets acquired exceeds consideration paid (creating “negative goodwill”), the acquirer will record a gain as a result of the bargain purchase, to be recognized through the income statement at the close of the transaction. Previously, negative goodwill was recognized as a pro rata reduction of the assets assumed to allow the net assets acquired to equal the consideration paid; and

	•	Noncontrolling Interests — Under FAS 141(R), in a partial or step acquisition where control is obtained, 100% of goodwill and identifiable net assets are recognized at fair value and the noncontrolling (sometimes called minority interest) interest is also recorded at fair value. Previously, in a partial acquisition only the controlling interest’s share of goodwill was recognized, the controlling interest’s share of identifiable net assets was recognized at fair value and the noncontrolling interest’s share of identifiable net assets was recognized at carrying value. Under FAS 160, a noncontrolling interest is now recognized in the equity section, presented separately from the controlling interest’s equity. Previously, noncontrolling interest in general was recorded in the mezzanine section.

-25-

Validus Holdings, Ltd.

Notes To Unaudited Condensed Consolidated Pro Forma Financial Statements (unaudited) — (Continued)

(Expressed in thousands of U.S. dollars, except share and per share data)


3.	Purchase Adjustments

On April 30, 2009, Validus announced a three-part plan to acquire IPC. The three-part plan involves (1) soliciting IPC shareholders to vote against the Proposed Max Amalgamation, (2) commencing an Exchange Offer for all IPC Shares and (3) petitioning the Supreme Court of Bermuda to approve a Scheme of Arrangement under Bermuda law. If the Acquisition is consummated, former IPC shareholders will no longer have any ownership interest in IPC and will be shareholders of Validus. Validus intends, promptly following the Scheme of Arrangement or Exchange Offer and the second-step acquisition, to amalgamate IPC with a newly-formed, wholly-owned subsidiary of Validus in accordance with Section 107 of the Companies Act.

On May 18, 2009, Validus announced that it delivered an improved offer to the Board of Directors of IPC for the amalgamation of Validus and IPC. Under the improved offer, IPC shareholders will receive $3.00 in cash and 1.1234 Validus Shares for each IPC Share. The improved offer provides IPC shareholders with a total consideration of $30.14 per IPC share based on Validus’ closing price on Friday, May 15, 2009.

In connection with the Acquisition, transaction costs currently estimated at $40,000 will be incurred and expensed. Of this amount, $20,000 relates to Validus expenses as set forth in “The Acquisition — Sources of Funds, Fees and Expenses” and $20,000 is our estimate of IPC’s expenses based on the IPC/Max S-4. In addition, upon termination of the Max Amalgamation Agreement, the Max Termination Fee will be incurred and expensed. The data in the following sentence is taken from “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in the IPC 10-Q, where such disclosure was not made in “thousands of U.S. dollars,” and the data has been reproduced here as it was originally presented. Approximately $13.8 million of expenses, including legal and financial advisory services, were associated with IPC’s strategic initiatives designed to increase shareholder value and which resulted in the Max Amalgamation Agreement. Therefore, Validus is estimating that approximately $13,800 of the estimated $40,000 total transaction costs have been incurred and expensed by IPC in the three months ended March 31, 2009.

As discussed above, these pro forma purchase adjustments are based on certain estimates and assumptions made as of the date of the unaudited condensed consolidated pro forma financial information. The actual adjustments will depend on a number of factors, including changes in the estimated fair value of net balance sheet assets and operating results of IPC between March 31, 2009 and the effective date of the Acquisition. Validus expects to make such adjustments at the effective date of the Acquisition. These adjustments are likely to be different from the adjustments made to prepare the unaudited condensed consolidated pro forma financial information and such differences may be material.

-26-

Validus Holdings, Ltd.

Notes To Unaudited Condensed Consolidated Pro Forma Financial Statements (unaudited) — (Continued)

(Expressed in thousands of U.S. dollars, except share and per share data)

The share prices for both Validus and IPC used in determining the preliminary estimated purchase price are based on the closing share prices on May 15, 2009 (the most practicable date preceding the filing of this proxy statement). The preliminary total purchase price is calculated as follows:


Calculation of Total Purchase Price
IPC Shares outstanding as of May 8, 2009		55,948,821
IPC Shares issued pursuant to option exercises		3,804
IPC Shares issued following vesting of restricted shares, RSUs and PSUs		549,275

Total IPC Shares and share equivalents prior to transaction		56,501,900
Exchange ratio		1.1234

Total Validus Shares to be issued		63,474,234
Validus closing share price on May 15, 2009	$	24.16

Total value of Validus Shares to be issued	$	1,533,537

Total cash consideration paid at $3.00 per IPC share	$	169,506

Total purchase price	$	1,703,043

The allocation of the purchase price is as follows:


Allocation of Purchase Price
IPC shareholders’ equity(b)	$	1,849,474
Total purchase price(a)	$	1,703,043

Negative goodwill (a — b)	$	146,431


(a)		In connection with the Acquisition, 63,474,234 shares are expected to be issued for all of IPC’s common shares, common shares issued pursuant to option exercises, and common shares issued following vesting of restricted shares, restricted share units and preferred share units resulting in additional share capital of $11,108 and Additional Paid-In Capital of $1,522,429. In addition, cash consideration of $3.00 per IPC share, or $169,506 in total, is expected to be paid to IPC shareholders.

(b)		It is expected that total transaction costs currently estimated at $40,000 and the Max termination fee of $50,000 will be incurred and expensed by the consolidated entity. Based on an expected investment return of 3.75% per annum, investment income of $9,731 would have been foregone during the year end December 31, 2008 had these payments of $259,506 been made.

		The data in the following sentence is taken from “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in the IPC 10-Q, where such disclosure was not made in “thousands of U.S. dollars,” and the data has been reproduced here as it was originally presented. Approximately $13.8 million of expenses, including legal and financial advisory services, were associated with IPC’s strategic initiatives, designed to increase shareholder value, and which resulted in the Max Amalgamation Agreement. Therefore, Validus is estimating that approximately $13,800 of the estimated $40,000 total transaction costs have been incurred and expensed by IPC in the three months ended March 31, 2009. These expenses have been eliminated from the unaudited condensed consolidated pro forma results of operations for the three months ended March 31, 2009. In addition, an adjustment of $76,200 was recorded to cash and to retained earnings as at March 31, 2009 to reflect the remaining transaction costs and Max termination fee. Based on an expected investment return of 3.18% per annum, investment income of $1,953 would have been foregone during the three months ended March 31, 2009 had these remaining payments of $245,706 been made.

-27-

Validus Holdings, Ltd.

Notes To Unaudited Condensed Consolidated Pro Forma Financial Statements (unaudited) — (Continued)

(Expressed in thousands of U.S. dollars, except share and per share data)


(c)		Employees of IPC hold 427,000 options to purchase IPC Shares. These options would vest upon a change in control, and would be exercisable. The exercise price range of these options is from $13 to $49, with a weighted average of $34.68. It is expected that 3,804 net shares would be issued upon exercise of these options.

(d)		Elimination of IPC’s Ordinary Shares of $561, Additional Paid in Capital of $1,091,491, Accumulated Other Comprehensive Loss of $876 and Retained Earnings of $758,298.

(e)		A related party balance of $265 for the three months ended March 31, 2009 and $251 for the year ended December 31, 2008 representing reinsurance ceded to IPC by Validus was eliminated from gross premiums written and reinsurance ceded. Corresponding prepaid reinsurance premiums and unearned premiums of $199 and premiums receivable and reinsurance balances payable of $160 have been eliminated from the pro forma balance sheet.

(f)		The unaudited condensed consolidated pro forma financial statements have been prepared using IPC’s publicly available financial statements and disclosures, without the benefit of inspection of IPC’s books and records. Therefore, the carrying value of assets and liabilities in IPC’s financial statements are considered to be a proxy for fair value of those assets and liabilities, with the difference between the net assets and the total purchase price considered to be negative goodwill. In addition, certain pro forma adjustments, such as recording fair value of assets and liabilities and adjustments for consistency of accounting policy, are not reflected in these unaudited pro forma consolidated financial statements. In December 2007, the Financial Accounting Standards Board (“FASB”) issued Statement No. 141(R), Business Combinations (“FAS 141(R)”) This Statement defines a bargain purchase as a business combination in which the total Acquisition-date fair value of the identifiable net assets acquired exceeds the fair value of the consideration transferred plus any noncontrolling interest in the acquiree, and it requires the acquirer to recognize that excess in earnings as a gain attributable to the acquirer. Negative goodwill of $146,431 has been recorded as a credit to retained earnings as upon completion of the Acquisition negative goodwill will be treated as a gain in the consolidated statement of operations.

(g)		On November 15, 2008, IPC’s 9,000,000 Series A Mandatory Convertible preferred shares automatically converted pursuant to their terms into 9,129,600 common shares. Therefore, dividends of $14,939 on these preferred shares of IPC have been eliminated from the unaudited pro forma results of operations for the year ended December 31, 2008.


4.	Adjustments to cash and cash equivalents

The Acquisition will result in the payment of cash and cash equivalents by IPC of $56,200 and by Validus of $189,506.

The unaudited condensed consolidated pro forma statements of operations reflect the impact of these reductions in cash and cash equivalents. Actual transaction costs may vary from such estimates which are based on the best information available at the time the unaudited condensed consolidated pro forma financial information was prepared.

-28-

Validus Holdings, Ltd.

Notes To Unaudited Condensed Consolidated Pro Forma Financial Statements (unaudited) — (Continued)

(Expressed in thousands of U.S. dollars, except share and per share data)

For purposes of presentation in the unaudited condensed consolidated pro forma financial information, the sources and uses of funds of the acquisition are as follows:


Sources of funds
IPC cash and cash equivalents	$	56,200
Validus cash and cash equivalents		189,506

Total	$	245,706


Uses of funds
Cash consideration for IPC shares	$	169,506
IPC transaction costs		6,200
Validus transaction costs		20,000
Max termination fee		50,000

Total	$	245,706


5.	Gross Premiums Written

IPC did not disclose gross premiums written by class of business in the IPC 10-Q. Therefore, a table of gross premiums written by Validus, IPC and pro forma combined cannot be presented.

-29-

Validus Holdings, Ltd.

Notes To Unaudited Condensed Consolidated Pro Forma Financial Statements (unaudited) — (Continued)

(Expressed in thousands of U.S. dollars, except share and per share data)

The following table sets forth the gross premiums written for the year ended December 31, 2008 by Validus, IPC and pro forma combined:


Validus Re	Validus			IPC(a)		Purchase Adjustments			Combined

Property Cat XOL(b)	$	328,216		$	333,749	$	—		$	661,965
Property Per Risk XOL		54,056			10,666		—			64,722
Property Proportional(c)		110,695			—		—			110,695
Marine		117,744			—		—			117,744
Aerospace		39,323			18,125		(151	)		57,297
Life and A&H		1,009			—		—			1,009
Financial Institutions		4,125			—		—			4,125
Other		—			8,318		(100	)		8,218
Terrorism		25,502			—		—			25,502
Workers’ Comp		7,101			—		—			7,101


Total Validus Re Segment		687,771			370,858		(251	)		1,058,378

Talbot
Property		152,143			—		—			152,143
Marine		287,694			—		—			287,694
Aviation & Other		40,028			—		—			40,028
Accident & Health		18,314			—		—			18,314
Financial Institutions		42,263			—		—			42,263
War		128,693			—		—			128,693
Contingency		22,924			—		—			22,924
Bloodstock		16,937			—		—			16,937


Total Talbot Segment		708,996			—		—			708,996


Intersegment revenue
Property		(21,724	)		—		—			(21,724	)
Marine		(8,543	)		—		—			(8,543	)
Specialty		(4,016	)		—		—			(4,016	)

Total Intersegment Revenue Eliminated		(34,283	)		—		—			(34,283	)

Adjustments for reinstatement premium		—			32,537		—			32,537


Total	$	1,362,484		$	403,395	$	(251	)	$	1,765,628


(a)		For IPC, this includes annual (deposit) and adjustment premiums. Excludes reinstatement premiums of $32,537 which are not classified by class of business by IPC.

(b)		For Validus, Cat XOL is comprised of Catastrophe XOL, Aggregate XOL, RPP, Per Event XOL, Second Event and Third Event covers. For IPC, this includes Catastrophe XOL and Retrocessional.

(c)		Proportional is comprised of Quota Share and Surplus Share.

-30-

Validus Holdings, Ltd.

Notes To Unaudited Condensed Consolidated Pro Forma Financial Statements (unaudited) — (Continued)

(Expressed in thousands of U.S. dollars, except share and per share data)


6.	Selected Ratios

Selected ratios of Validus, IPC and pro forma combined are as follows:


	Year Ended									Three Months Ended
	December 31, 2008									March 31, 2009
							Pro forma									Pro forma
	Validus			IPC			combined			Validus			IPC			combined

Losses and loss expenses ratios		61.5	%		40.2	%		56.4	%		41.4	%		39.6	%		40.9	%
Policy acquisition costs ratios		18.7			9.4			16.5			19.3			10.0			17.1
General and administrative cost ratios		12.0			6.8			10.8			14.3			24.6			13.4

Combined ratio		92.2	%		56.4	%		83.7	%		75.0	%		74.2	%		71.4	%


(a)		Factors affecting the losses and loss expense ratio for the year ended December 31, 2008

		Validus’ losses and loss expense ratio, which is defined as losses and loss expenses divided by net premiums earned, for the year ended December 31, 2008 was 61.5%. During the year ended December 31, 2008, the frequency and severity of worldwide losses that materially affected Validus’ losses and loss expense ratio increased. During the year ended December 31, 2008, Validus incurred $260,567 and $22,141 of loss expense attributable to Hurricanes Ike and Gustav, which represent 20.7 and 1.8 percentage points of the losses and loss expense ratio, respectively. Other notable loss events added $45,895 of 2008 loss expense or 3.7 percentage points of the losses and loss expense ratio bringing the total effect of aforementioned events on the 2008 losses and loss expense ratio to 26.2 percentage points. Favorable loss development on prior years totaled $69,702. Favorable loss reserve development benefited Validus’ losses and loss expense ratio for the year ended December 31, 2008 by 5.5 percentage points.

		The data in the following paragraph is taken from “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in IPC’s Annual Report on Form 10-K for the year ended December 31, 2008. Such disclosure was not made in “thousands of U.S. dollars,” and the data has been reproduced here as it was originally presented.

		IPC’s losses and loss expense ratio, which is defined as losses and loss expenses divided by net premiums earned, for the year ended December 31, 2008 was 40.2%. IPC incurred net losses and loss adjustment expenses of $155.6 million for the year ended December 31, 2008. Total net losses for the year ended December 31, 2008 relating to the current year were $206.6 million, while reductions to estimates of ultimate net loss for prior year events were $50.9 million. During 2008, IPC’s incurred losses included: $23.0 million from the Alon Refinery explosion in Texas, a storm that affected Queensland, Australia, and Windstorm Emma that affected parts of Europe, which all occurred in the first quarter of 2008; $10.5 million from the flooding in Iowa in June and tornadoes that affected the mid-west United States in May 2008; together with $160.0 million from Hurricane Ike and $7.6 million from Hurricane Gustav, which both occurred in September 2008. The impact on IPC’s 2008 losses and loss expense ratio from these events was 51.9 percentage points. The losses from these events were partly offset by reductions to IPC’s estimates of ultimate loss for a number of prior year events, including $11.0 million for Hurricane Katrina, $18.6 million for the storm and flooding that affected New South Wales, Australia in 2007 and $22.8 million for the floods that affected parts of the U.K. in June and July 2007. The cumulative $52.4 million of favorable loss reserve development benefited the IPC’s losses and loss expense ratio for the year ended December 31, 2008 by 13.5 percentage points.

-31-

Validus Holdings, Ltd.

Notes To Unaudited Condensed Consolidated Pro Forma Financial Statements (unaudited) — (Continued)

(Expressed in thousands of U.S. dollars, except share and per share data)


(b)		Factors affecting the losses and loss expense ratio for the three months ended March 31, 2009

		Validus’ losses and loss expense ratio, which is defined as losses and loss expenses divided by net premiums earned, for the three months ended March 31, 2009, was 41.4%. During the three months ended March 31, 2009, Validus incurred $6,889 and $6,625 of loss expense attributable to Windstorm Klaus and Australian wildfires, respectively, which represent 2.2 and 2.1 percentage points of the losses and loss expense ratio, respectively. Favorable loss development on prior years totaled $8,079. Favorable loss reserve development benefited Validus’ losses and loss expense ratio for the months ended March 31, 2009 by 2.5 percentage points.

		The data in the following paragraph is taken from “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in the IPC 10-Q. Such disclosure was not made in “thousands of U.S. dollars,” and the data has been reproduced here as it was originally presented.

		IPC’s losses and loss expense ratio, which is defined as losses and loss expenses divided by net premiums earned, for the three months ended March 31, 2009, was 39.6%. In the quarter ended March 31, 2009, IPC incurred net losses and loss adjustment expenses of $39.1 million, compared to $5.3 million in the first quarter of 2008. Net losses incurred in the first quarter of 2009 included $15.0 million from Winter Storm Klaus that affected southern France and $13.3 million from the bushfires in south eastern Australia, as well as net adverse development to their estimates of ultimate losses for several prior year events. The impact on IPC’s losses and loss expense ratio from these events was 28.7 percentage points.

-32-

Validus Holdings, Ltd.

Notes To Unaudited Condensed Consolidated Pro Forma Financial Statements (unaudited) — (Continued)

(Expressed in thousands of U.S. dollars, except share and per share data)


7.	Earnings per Common Share

(a) Pro forma earnings per common share for the year ended December 31, 2008 and the three months ended March 31, 2009 have been calculated based on the estimated weighted average number of common shares outstanding on a pro forma basis, as described in 7(b) below. The historical weighted average number of common shares outstanding of Validus was 74,677,903 and 75,819,413 basic and diluted, respectively, for the year ended December 31, 2008 and 75,744,577 and 79,102,643 basic and diluted, respectively, for the three months ended March 31, 2009.

(b) The pro forma weighted average number of common shares outstanding for the year ended December 31, 2008 and three months ended March 31, 2009, after giving effect to the exchange of shares as if the Exchange Offer had been issued and outstanding for the whole year, is 137,530,809 and 139,293,647, basic and diluted, and 138,597,483 and 142,576,877, basic and diluted, respectively.

(c) In the basic earnings per share calculation, dividends and distributions declared on warrants are deducted from net income. In calculating diluted earnings per share, we consider the application of the treasury stock method and the two-class method and which ever is more dilutive is included into the calculation of diluted earnings per share.

The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2009:


	Historical
	Validus		Pro Forma
	Holdings		Consolidated

Net income	$	94,907	$	115,006

Weighted average shares — basic ordinary shares outstanding		75,744,577		138,597,483
Share Equivalents		—		—
Warrants		2,307,094		2,307,094
Restricted Shares		683,468		1,300,523
Options		367,504		371,777

Weighted average shares — diluted		79,102,643		142,576,877
Basic earnings per share	$	1.23	$	0.82

Diluted earnings per share	$	1.20	$	0.81

The following table sets forth the computation of basic and diluted earnings per share for the year ended December 31, 2008:


	Historical
	Validus		Pro Forma
	Holdings		Consolidated

Net income	$	46,164	$	126,880

Weighted average shares — basic ordinary shares outstanding		74,677,903		137,530,809
Share equivalents
Warrants		—		—
Restricted Shares		1,004,809		1,621,864
Options		136,701		140,974

Weighted average shares — diluted		75,819,413		139,293,647
Basic earnings per share	$	0.62	$	0.92

Diluted earnings per share	$	0.61	$	0.91

-33-

Validus Holdings, Ltd.

Notes To Unaudited Condensed Consolidated Pro Forma Financial Statements (unaudited) — (Continued)

(Expressed in thousands of U.S. dollars, except share and per share data)


8.	Book Value per Share

Validus calculates diluted book value per share using the “as-if-converted” method, where all proceeds received upon exercise of warrants and stock options would be retained by Validus and the resulting common shares from exercise remain outstanding. In its public records, IPC calculates diluted book value per share using the “treasury stock” method, where proceeds received upon exercise of warrants and stock options would be used by IPC to repurchase shares from the market, with the net common shares from exercise remaining outstanding. Accordingly, for the purposes of the Pro Forma Condensed Consolidated Financial Statements and notes thereto, IPC’s diluted book value per share has been recalculated based on the “as-if-converted” method to be consistent with Validus’ calculation.

The following table sets forth the computation of book value and diluted book value per share adjusted for the Acquisition as of March 31, 2009:


	Historical
	Validus		Pro Forma
	Holdings		Consolidated
Book value per common share calculation
Total shareholders’ equity	$	2,022,986	$	3,626,754
Shares		75,828,922		138,681,828

Book value per common share	$	26.68	$	26.15

Diluted book value per common share calculation
Total Shareholders’ equity	$	2,022,986	$	3,626,754
Proceeds of assumed exercise of outstanding warrants	$	152,316	$	152,316
Proceeds of assumed exercise of outstanding stock options	$	50,969	$	50,969
Unvested restricted shares		—		—

	$	2,226,271	$	3,830,039

Shares		75,828,922		138,681,828
Warrants		8,680,149		8,680,149
Options		2,795,868		2,800,141
Unvested restricted shares		3,012,854		3,629,909

		90,317,793		153,792,027

Diluted book value per common share	$	24.65	$	24.90


9.	Capitalization

The following table sets forth the computation of debt to total capitalization and debt (excluding debentures payable) to total capitalization at March 31, 2009, adjusted for the Acquisition:


	Historical
	Validus			Pro Forma
	Holdings			Consolidated
Total debt
Borrowings drawn under credit facility	$	—		$	—
Debentures payable		304,300			304,300

Total debt	$	304,300		$	304,300

Total capitalization
Total shareholders’ equity	$	2,022,986		$	3,626,754
Borrowings drawn under credit facility		—			—
Debentures payable		304,300			304,300

Total capitalization	$	2,327,286		$	3,931,054

Total debt to total capitalization		13.1	%		7.7	%
Debt (excluding debentures payable) to total capitalization		0.0	%		0.0	%

-34-

COMPARATIVE PER SHARE DATA

The IPC historical per share data is taken from the IPC/Max S-4. See Sources of Additional Information above. The pro forma combined data is taken from the Unaudited Condensed Consolidated Pro Forma Financial Information above.

The historical earnings per share, dividends, and book value of Validus and IPC shown in the table below are derived from their respective audited consolidated financial statements as of and for the year ended December 31, 2008 and as of and for the three months ended March 31, 2009. The unaudited pro forma comparative basic and diluted earnings per share data give effect to the Acquisition using the purchase method of accounting as if the Acquisition had been completed on January 1, 2008. The unaudited pro forma book value and diluted book value per share information was computed as if the Acquisition had been completed on December 31, 2008 and March 31, 2009. You should read this information in conjunction with the historical financial information of Validus and of IPC included or incorporated elsewhere in this proxy statement, including Validus’ and IPC’s financial statements and related notes. The unaudited pro forma data is not necessarily indicative of actual results had the Acquisition occurred during the periods indicated. The unaudited pro forma data is not necessarily indicative of future operations of Validus.

This pro forma information is subject to risks and uncertainties, including those discussed in Risk Factors below.


	Per share data at or for the
	year ended December 31, 2008
						Validus
	Historical		Historical			Pro Forma		Equivalent Per			IPC Max
	Validus		IPC			combined		IPC Share(1)			Pro Forma(3)

Basic earnings per common share	$	0.62	$	1.45		$	0.92	$	1.03		$	(0.63	)
Diluted earnings per common share	$	0.61	$	1.45		$	0.91	$	1.02		$	(0.63	)
Cash dividends declared per common share	$	0.80	$	0.88		$	0.80	$	0.90		$	0.73
Book value per common share	$	25.64	$	33.00		$	25.49	$	31.64	(2)	$	32.30
Diluted book value per common share	$	23.78	$	32.85	(4)	$	24.31	$	30.31	(2)		NA


	Per share data at or for the
	three months ended March 31, 2009
					Validus
	Historical		Historical		Pro Forma		Equivalent Per
	Validus		IPC		combined		IPC Share(1)

Basic earnings per common share	$	1.23	$	0.15	$	0.82	$	0.92
Diluted earnings per common share	$	1.20	$	0.15	$	0.81	$	0.91
Cash dividends declared per common share	$	0.20	$	0.22	$	0.20	$	0.22
Book value per common share (at period end)	$	26.68	$	33.06	$	26.15	$	32.38	(3)
Diluted book value per common share	$	24.65	$	32.73	$	24.90	$	30.97	(3)


(1)		Equivalent per share amounts are calculated by multiplying Validus pro forma per share amounts by the Acquisition exchange ratio of 1.1234.

-35-


(2)		For purposes of calculating equivalent per IPC share values for book value per common share and diluted book value per common share, the $3.00 per common share cash consideration is added to the equivalent per share amounts.


(3)		Source: IPC/Max Joint Proxy Statement/Prospectus dated May 7, 2009 at p.22.


(4)		IPC reported diluted book value per common share as $33.07 in the IPC 10-K and amended it to $32.85 in an amendment to the IPC/Max S-4 filed with the SEC on April 13, 2009.

-36-

COMPARATIVE MARKET PRICE AND DIVIDEND INFORMATION

Validus’ and IPC’s Shares are quoted on the NYSE and NASDAQ, respectively, under the ticker symbol “VR” and “IPCR,” respectively. The following table sets forth the high and low closing prices per share of Validus Shares and IPC Shares for the periods indicated (commencing, in the case of Validus, from Validus’ initial public offering on July 25, 2007) as reported on the consolidated tape of the NYSE or NASDAQ Global Select Market, as applicable, as well as cash dividends per common share, as reported in the Validus 10-K and IPC’s annual report on Form 10-K for the year ended December 31, 2008, respectively, with respect to the years 2007 and 2008, and thereafter as reported in publicly available sources. The IPC dividend information was taken from the IPC/Max S-4. See Sources of Additional Information above.


	Validus						IPC
	High		Low		Dividend		High		Low		Dividend

Year ended December 31, 2009
First Quarter	$	26.30	$	21.25	$	0.20	$	30.25	$	20.89	$	0.22
Second Quarter (through May 22, 2009)	$	24.52	$	22.01		N/A	$	27.65	$	24.55		N/A
December 31, 2008
First Quarter	$	26.22	$	23.00	$	0.20	$	28.25	$	24.82	$	0.22
Second Quarter	$	23.72	$	20.11	$	0.20	$	30.38	$	26.55	$	0.22
Third Quarter	$	24.70	$	20.00	$	0.20	$	33.00	$	26.58	$	0.22
Fourth Quarter	$	26.16	$	14.84	$	0.20	$	29.90	$	19.52	$	0.22
Year ended December 31, 2007
First Quarter		N/A		N/A		N/A	$	31.53	$	27.82	$	0.20
Second Quarter		N/A		N/A		N/A	$	32.53	$	28.57	$	0.20
Third Quarter	$	25.28	$	21.11		N/A	$	33.01	$	24.01	$	0.20
Fourth Quarter	$	26.59	$	24.73		N/A	$	30.13	$	26.87	$	0.20

The following table sets out the trading information for Validus Shares and IPC Shares on March 30, 2009, the last full trading day before Validus’ public announcement of delivery of the Initial Validus Offer to the board of directors of IPC, and May 22, 2009, the last practicable trading day for which information was available before first mailing of this proxy statement.


					Equivalent
					Validus
	Validus Common		IPC Common		Per-Share
	Share Close		Share Close		Amount

March 30, 2009	$	24.91	$	25.41	$	30.98
May 22, 2009	$	22.01	$	25.07	$	27.73

Equivalent per-share amounts are calculated by multiplying Validus per-share amounts by the Acquisition exchange ratio of 1.1234 and adding $3.00 in cash per IPC Share.

As of April 30, 2009, directors and executive officers of Validus (exclusive of those shareholders who Validus deems to be “qualified sponsors” (as defined in this proxy statement)) held and were entitled to vote approximately 1.76% of the outstanding Validus Shares. As of March 26, 2009, directors and executive officers of IPC held and were entitled to vote approximately 1.4% of the outstanding IPC Shares.

-37-

FORWARD-LOOKING STATEMENTS

This proxy statement may include forward-looking statements, both with respect to Validus and its industry, that reflect Validus’ 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, many of which are beyond our control. 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. Validus believes that these factors include, but are not limited to, the following: 1) uncertainty as to whether Validus will be able to enter into and to consummate the proposed Acquisition; 2) uncertainty as to the long-term value of Validus Shares; 3) unpredictability and severity of catastrophic events; 4) rating agency actions; 5) adequacy of Validus’ or IPC’s risk management and loss limitation methods; 6) cyclicality of demand and pricing in the insurance and reinsurance markets; 7) Validus’ limited operating history; 8) Validus’ ability to implement its business strategy during “soft” as well as “hard” markets; 9) adequacy of Validus’ or IPC’s loss reserves; 10) continued availability of capital and financing; 11) retention of key personnel; 12) competition; 13) potential loss of business from one or more major insurance or reinsurance brokers; 14) Validus’ or IPC’s 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; 15) general economic and market conditions (including inflation, volatility in the credit and capital markets, interest rates and foreign currency exchange rates); 16) the integration of Talbot or other businesses we may acquire or new business ventures Validus may start; 17) the effect on Validus’ or IPC’s investment portfolios of changing financial market conditions including inflation, interest rates, liquidity and other factors; 18) acts of terrorism or outbreak of war; 19) availability of reinsurance and retrocessional coverage; 20) failure to realize the anticipated benefits of the proposed acquisition, including as a result of failure or delay in integrating the businesses of Validus and IPC; and 21) the outcome of litigation arising from Validus’ offer for IPC, as well as management’s 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 Validus’ most recent reports on Form 10-K and Form 10-Q and the risk factors included in IPC’s most recent reports on Form 10-K and Form 10-Q and other documents of Validus and IPC 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 Validus will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, Validus or its business or operations. Except as required by law, Validus undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

-38-

RISK FACTORS

In addition to the other information included or incorporated by reference in this proxy statement (including the matters addressed under Forward-Looking Statements above), you should carefully consider the following risk factors before deciding whether to vote to approve the Share Issuance Proposal and the Adjournment Proposal. Each proposal is described in this proxy statement under Proposals to Be Submitted to Validus Shareholders Vote; Voting Requirements and Recommendations beginning on page 97. In addition to the risk factors set forth below, you should read and consider other risk factors specific to each of the Validus and IPC businesses that will also affect Validus after the Acquisition, described in Part I, Item 1A of each company’s annual report on Form 10-K for the year ended December 31, 2008, and the other documents that have been filed with the SEC and all of which are incorporated by reference into this proxy statement. If any of the risks described below or in the reports incorporated by reference into this proxy statement actually occurs, the respective businesses, financial results, financial conditions, operating results or share prices of Validus or IPC could be materially adversely affected.

Risks Related to the Acquisition

The Acquisition remains subject to conditions that Validus cannot control and failure to complete the Acquisition could negatively impact Validus.

The Validus Amalgamation Agreement has not yet been signed by IPC and contains a number of conditions precedent that must be satisfied or waived prior to the consummation of the amalgamation. The Exchange Offer and the Scheme of Arrangement contain substantially the same conditions. In addition, the Validus Amalgamation Agreement, the Exchange Offer and the Scheme of Arrangement may be terminated under certain circumstances. In addition to customary termination provisions contained in agreements of this nature, Validus may terminate the Validus Amalgamation Agreement if the total number of dissenting IPC Shares for which appraisal rights have been exercised pursuant to Bermuda law exceeds 15% of the issued and outstanding IPC Shares on the business day immediately following the last day on which IPC shareholders can require appraisal for their common shares. See The Amalgamation Agreement — Termination of the Amalgamation Agreement on page 88, Annex C and Annex D for a complete description of the circumstances under which the Validus Amalgamation Agreement, the Exchange Offer and the Scheme of Arrangement can be terminated.

If the Acquisition is not completed, the ongoing business of Validus may be adversely affected as follows:


	•	the attention of management of Validus will have been diverted to the Acquisition instead of being directed solely to Validus’ own operations and pursuit of other opportunities that could have been beneficial to Validus;

	•	Validus will have to pay certain costs relating to the Acquisition, including certain legal, accounting and financial advisory fees; and

	•	Validus may be required, in certain circumstances, if the amalgamation agreement is signed by IPC, to pay a termination fee of $16 million to IPC.

Validus may waive one or more of the conditions to the Acquisition without resoliciting or seeking additional shareholder approval for the Share Issuance.

Each of the conditions to Validus’ obligations to complete the Acquisition, may be waived, in whole or in part by Validus. The board of directors of Validus will evaluate the materiality of any such waiver to determine whether resolicitation of proxies is necessary or, if shareholder approval of the Share Issuance has been received, whether further shareholder approval is necessary. In the event that any such waiver is not determined to be significant enough to require resolicitation or additional approval of shareholders, the Acquisition may be consummated without seeking further shareholder approval of the Share Issuance.

-39-

A termination of the Max Amalgamation Agreement could under certain circumstances result in the payment of the Max termination fee.

While Validus believes the provision of the Max Amalgamation Agreement providing for the possible payment of the $50 million termination fee (the “Max Termination Fee”) is invalid and is seeking a ruling of the Supreme Court of Bermuda to that effect, if the proposals related to the Max Amalgamation Agreement are not approved by IPC shareholders, a court may determine that IPC is required, or IPC may otherwise be bound, to pay all, or a portion, of the Max Termination Fee, including in the circumstance where IPC subsequently agrees to enter into a business combination with Validus or the Acquisition is completed.

Validus may experience difficulties integrating IPC’s businesses, which could cause Validus to fail to realize the anticipated benefits of the Acquisition.

If the Acquisition is consummated, achieving the anticipated benefits of the Acquisition will depend in part upon whether the two companies integrate their businesses in an effective and efficient manner. The companies may not be able to accomplish this integration process smoothly or successfully. The integration of certain operations following the Acquisition will take time and will require the dedication of significant management resources, which may temporarily distract management’s attention from the routine business of Validus.

Additionally, because of the notice and procedural requirements contemplated by Section 102 and Section 103 of the Companies Act, there may be a period of time after shares have been exchanged in the Exchange Offer during which Validus will not own all of the outstanding IPC Shares, IPC Shares may continue to be subject to limitations on voting set forth in the IPC bye-laws, and Validus may not be able to immediately exercise operational control over IPC, including the right to appoint directors and executive officers of IPC and to manage the day-to-day operations of IPC.

Any delay or inability of management to successfully integrate the operations of the two companies could compromise Validus’ potential to achieve the long-term strategic benefits of the Acquisition and could have a material adverse effect on the business, financial condition, operating results and market value of Validus common shares after the Acquisition.

Validus has only conducted a review of IPC’s publicly available information and has not had access to IPC’s non-public information. Therefore, Validus may be subject to unknown liabilities of IPC which may have a material adverse effect on Validus’ profitability, financial condition and results of operations.

To date, Validus has only conducted a due diligence review of IPC’s publicly available information. The consummation of the Acquisition may constitute a default, or an event that, with or without notice or lapse of time or both, would constitute a default, or result in the acceleration or other change of any right or obligation (including, without limitation, any payment obligation) under agreements of IPC that are not publicly available. As a result, after the consummation of the Acquisition, Validus may be subject to unknown liabilities of IPC, which may have a material adverse effect on Validus’ profitability, financial condition and results of operations.

In addition, the Acquisition may also permit a counter-party to an agreement with IPC to terminate that agreement because completion of the Acquisition would cause a default or violate an anti-assignment, change of control or similar clause. If this happens, Validus may have to seek to replace that agreement with a new agreement. Validus cannot assure you that it will be able to replace a terminated agreement on comparable terms or at all. Depending on the importance of a terminated agreement to IPC’s business, failure to replace that agreement on similar terms or at all may increase the costs to Validus of operating IPC’s business or prevent Validus from operating part or all of IPC’s business.

In respect of all information relating to IPC presented in, incorporated by reference into or omitted from, this proxy statement, Validus has relied upon publicly available information, including information publicly filed by IPC with the SEC. Although Validus has no knowledge that would indicate that any statements contained herein regarding IPC’s condition, including its financial or operating condition (based upon such publicly filed reports and documents) are inaccurate, incomplete or untrue, Validus was not involved in the preparation of such information and statements. For example, Validus has made adjustments and assumptions in preparing the pro forma financial

-40-

information presented in this proxy statement that have necessarily involved Validus’ estimates with respect to IPC’s financial information. Any financial, operating or other information regarding IPC that may be detrimental to Validus following the Acquisition that has not been publicly disclosed by IPC, or errors in Validus’ estimates due to the lack of access to IPC, may have a material adverse effect on Validus’ financial condition or the benefits Validus expects to achieve through the consummation of the Acquisition.

The Acquisition may result in ratings downgrades of one or more of Validus’ insurance or reinsurance subsidiaries (including the newly acquired IPC insurance and reinsurance operating companies) which may adversely affect Validus’ business, financial condition and operating results, as well as the market price of its common shares.

Ratings with respect to claims paying ability and financial strength are important factors in maintaining customer confidence in Validus and its ability to market insurance and reinsurance products and compete with other insurance and reinsurance companies. Rating organizations regularly analyze the financial performance and condition of insurers and reinsurers and will likely reevaluate the ratings of Validus and its reinsurance subsidiaries following consummation of the Acquisition. While each of Standard & Poor’s and A.M. Best have not taken any action with respect to Validus’ ratings following the announcement of the Initial Validus Offer or the Validus Amalgamation Offer, Moody’s has changed the outlook to negative with respect to the A3 insurance financial strength rating of Validus’ reinsurance subsidiary, Validus Reinsurance, Ltd., and the Baa2 long-term issuer rating of Validus. Additionally, although A.M. Best has assigned the reinsurance subsidiaries of IPC (including IPCRe Limited and IPCRe Europe Limited) the financial strength rating of “A” (Excellent) and issuer credit ratings of “a” and IPC the issuer credit rating of “bbb,” A.M. Best has also indicated that each of these IPC ratings is under review with negative implications in connection with the Proposed Max Amalgamation. A.M. Best and the other ratings agencies would most likely provide similar scrutiny and analysis of the Acquisition. Following the Acquisition, any ratings downgrades, or the potential for ratings downgrades, of Validus or its subsidiaries (including the newly acquired IPC operating companies) could adversely affect Validus’ ability to market and distribute products and services and successfully compete in the marketplace, which could have a material adverse effect on its business, financial condition and operating results, as well as the market price for Validus common shares.

The occurrence of severe catastrophic events after the Acquisition may cause Validus’ net income to be more volatile than if the Acquisition did not take place.

For the year ended December 31, 2008, Validus’ gross premiums written (excluding reinstatement premiums) on property catastrophe business were $328.2 million or 24.1% of total gross premiums written. For the year ended December 31, 2008, 93% of IPC’s gross premiums written covered property catastrophe reinsurance risks. For the year ended December 31, 2008, after giving effect to the Acquisition as if it had been consummated on December 31, 2008, gross premiums written on property catastrophe business would have been $661.9 or 37.5% of total gross premiums of Validus on a pro forma basis. Because Validus after the Acquisition will, among other things, have larger aggregate exposures to natural and man-made disasters than it does today, Validus’ aggregate loss experience could have a significant influence on Validus’ net income. See Unaudited Condensed Consolidated Pro Forma Financial Information.

Risk Related to IPC’s Businesses

You should read and consider other risk factors specific to IPC’s businesses that will also affect Validus after the Acquisition, described in Part I, Item 1A of the IPC 10-K and other documents that have been filed by IPC with the SEC and which are incorporated by reference into this proxy statement.

Risk Related to Validus’ Businesses

You should read and consider other risk factors specific to Validus’ businesses that will also affect Validus after the Acquisition, described in Part I, Item 1A of the Validus 10-K and other documents that have been filed by Validus with the SEC and which are incorporated by reference into this proxy statement.

-41-

THE ACQUISITION

General Description

(1) the Validus Amalgamation Offer;

(2) the Exchange Offer; and

(3) the Scheme of Arrangement.

On March 31, 2009, Validus publicly announced that it had delivered the Initial Validus Offer. IPC announced on April 7, 2009 that its board of directors had determined that the Initial Validus Offer did not constitute a superior proposal to the Proposed Max Amalgamation and reaffirmed its support of the Proposed Max Amalgamation. On May 18, 2009, Validus publicly announced that it had delivered to IPC an increased offer to acquire each outstanding IPC Share for (i) 1.1234 Validus Shares and (ii) $3.00 in cash (less any applicable withholding taxes and without interest). In addition, IPC shareholders will receive cash in lieu of any fractional Validus Share to which they may be entitled. Validus has also delivered the Validus Amalgamation Agreement signed by Validus so that, upon a termination of the Max Amalgamation Agreement, IPC would have the certainty of Validus’ transaction and would be able to sign the Validus Amalgamation Agreement. IPC announced on May 21, 2009 that its board of directors had determined that the Validus Amalgamation Offer did not constitute a superior proposal to the Proposed Max Amalgamation and reaffirmed its support of the Proposed Max Amalgamation. Additionally, Max has not released IPC from the prohibition in the Max Amalgamation Agreement that prevents IPC from even discussing the Validus Amalgamation Offer with Validus.

In order to consummate the Acquisition without the cooperation of IPC’s board of directors, Validus is pursuing a three-part plan.

Second, Validus has commenced the Exchange Offer on the same economic terms as the Validus Amalgamation Offer. The Exchange Offer is subject to certain conditions described in the Offer to Exchange. Under Bermuda law, if Validus acquires at least 90% of the IPC Shares which it is seeking to acquire in the Exchange Offer, Validus will have the right to acquire the remaining IPC Shares on the same terms in the second-step acquisition. Validus believes that it would be able to complete the Exchange Offer in June 2009, promptly following termination of the Max Amalgamation Agreement (and subject to satisfaction or waiver of the other conditions to the Exchange Offer) based on the following. The expiration time of the Exchange Offer will be June 26, 2009, unless extended. As a result, if the conditions to the Exchange Offer are satisfied or waived at the expiration time of the Exchange Offer, Validus would be able to acquire all of the IPC Shares that are validly tendered pursuant to the Exchange Offer.

-42-

Third, Validus is pursuing the Scheme of Arrangement on the same economic terms as the Validus Amalgamation Offer. In order to implement the Scheme of Arrangement, the IPC shareholders must approve the Scheme of Arrangement at the court-ordered IPC meeting, IPC must separately approve the Scheme of Arrangement and the Scheme of Arrangement must be sanctioned by the Supreme Court of Bermuda. The Validus Scheme of Arrangement must be approved by a majority in number of the holders of IPC Shares voting at the court-ordered IPC meeting, whether in person or by proxy, representing 75% or more in value of the IPC Shares voting at the court-ordered IPC meeting, whether in person or by proxy. If the IPC shareholders approve the Scheme of Arrangement at the court-ordered IPC meeting, the separate approval of IPC to the Scheme of Arrangement can be provided by either (i) the IPC board of directors voluntarily complying with the will of the IPC shareholders as expressed at the court-ordered IPC meeting, or (ii) the shareholders of IPC approving resolutions at the IPC special general meeting, including resolutions for IPC to approve and to be bound by the Scheme of Arrangement and to terminate the Max Amalgamation Agreement. Following IPC shareholder approval at both the court-ordered IPC meeting and the IPC special general meeting, the satisfaction or, where relevant, waiver of the other conditions to the effectiveness of the Scheme of Arrangement and the granting of a court order from the Supreme Court of Bermuda sanctioning the Scheme of Arrangement, a copy of the court order sanctioning the Scheme of Arrangement will be delivered to the Bermuda Registrar of Companies, at which time the Scheme of Arrangement will be effective. Validus believes that, under the Scheme of Arrangement, it would be able to close the Acquisition as early as mid-July based on the assumptions that: (1) the Supreme Court of Bermuda will be able to accommodate the preferred hearings schedule and meeting dates and other procedural matters; (2) IPC shareholders holding at least one-tenth of the issued IPC Shares have requisitioned the special general meeting to be held in late June or early July; and (3) the IPC directors, following the rejection of the Max Amalgamation Agreement, or IPC shareholders, convene the requisitioned special general meeting, allowing it to be held in mid-July.

Based on Validus’ and IPC’s capitalizations as of March 31, 2009 and the exchange ratio of 1.1234, Validus estimates that former IPC shareholders would own, in the aggregate, approximately 41.3% of the issued and outstanding common shares of Validus on a fully-diluted basis following closing of the Acquisition.

-43-

Background of the Acquisition

On March 2, 2009, IPC 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 IPC 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 directors of Validus, placed a telephone call to James P. Bryce, the Chief Executive Officer and President of IPC. Mr. Noonan spoke with Mr. Bryce and explained that Validus intended to make an Offer to Exchange each outstanding IPC Share for 1.2037 Validus Shares, subject to the termination of the Max Amalgamation Agreement.

Following this telephone call, in the morning of March 31, 2009, Validus delivered a proposal letter containing the Initial Validus Offer to IPC’s board of directors in care of Mr. Bryce and issued a press release announcing the Initial 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


	Re:	Superior Amalgamation Proposal by Validus Holdings, Ltd. (“Validus”) to IPC Holdings, Ltd. (“IPC”)

Dear Sirs:

On behalf of Validus, I am writing to submit a binding offer¹ pursuant to which Validus and IPC would amalgamate in a share-for-share exchange valuing IPC Shares at an 18.0% premium to yesterday’s 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 yesterday’s 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.

¹ Throughout this letter we refer to our “binding offer” because, as of the date of this letter, we had indicated to IPC that our offer could not be withdrawn prior to April 15, 2009. As of the date of this proxy statement, we have revised our offer. The terms of our offer do not prevent us from withdrawing it.

-44-

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 IPC’s common shares on March 30, 2009².

Superior Trading Characteristics. Validus’ common shares have superior trading characteristics to those of Max as noted in the table below.


	Validus	Max

Share Price Change Since Validus IPO(1)	+13.2%	−36.5%
Mkt. Cap as of 3/30/09	$2.0 billion	$0.9 billion
Average Daily Trading Volume(2)	$11.3 million	$6.7 million
Price / Book(3)	1.05x	0.76x
Price / Tangible Book(3)	1.13x	0.77x


(1)		Based on the closing prices on March 30, 2009 and July 24, 2007.

(2)		Three months prior to March 2, 2009, date of announcement of Max and IPC amalgamation.

(3)		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.³ The combined investment portfolio of IPC/Validus is more stable than that of IPC/Max.⁴ 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:


	1.	Superior size and scale, with pro forma December 31, 2008 shareholders’ equity of $3.7 billion and total GAAP capitalization of $4.1 billion;

² The Validus Amalgamation Offer, as increased on May 18, 2009, provides IPC shareholders with total consideration of $30.14 per IPC Share based on Validus’ closing price on May 15, 2009, a 13.2% premium to the closing price of IPC Shares that day and a 21.9% premium based on the closing prices of IPC Shares and Validus Shares on March 30, 2009, the last trading day before the announcement of the Validus Initial Offer.

³ The occurrence of severe catastrophic events after an amalgamation with IPC could cause Validus’ net income to be more volatile than if the amalgamation did not take place. For the year ended December 31, 2008, Validus’ gross premiums written on property catastrophe business were $328.2 million or 24.1% of total gross premiums written. For the year ended December 31, 2008, 93% of IPC’s gross premiums written covered property catastrophe reinsurance risks. For the year ended December 31, 2008, after giving effect to the Validus amalgamation as if it had been consummated on December 31, 2008, gross premiums written on property catastrophe business would have been $661.9 million or 37.5% of total gross premiums of Validus on a pro forma basis. Because Validus after the amalgamation will, among other things, have larger aggregate exposures to natural and man-made disasters than it does today, Validus’ aggregate loss experience could have a significant influence on Validus’ net income. IPC did not disclose gross premiums written by class of business in the IPC 10-Q. Therefore, comparable disclosure of property catastrophe premiums cannot be presented.

⁴ Despite Max’s announced plan to reduce its exposure to alternative investments to 10-12% of its portfolio, according to recent Max disclosures, as a result of the Proposed Max Amalgamation, IPC’s investment in alternative investments would increase from 7% of its total portfolio at December 31, 2008 to 12% of its total portfolio on a pro forma basis after giving effect to the Proposed Max Amalgamation, an increase of 5%.

-45-


	2.	Superior financial flexibility, with debt/total capitalization of only 1.8% and total leverage including hybrid securities of only 9.1%;

	3.	A global platform, with offices and underwriting facilities in Bermuda, at Lloyd’s in London, Dublin, Singapore, New York and Miami;

	4.	Superior diversified business mix, with lines of business concentrated in short-tail lines where pricing momentum is strongest; and

	5.	An experienced, proven and stable management team with substantial expertise operating in IPC’s core lines of business.

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. Max’s 8.8% growth over the same period. In 2008, we grew our book value per share (including accumulated dividends) by 2.4% vs. Max’s 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.⁵

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.⁶

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 IPC’s business. Therefore, a combination with Validus will be less disruptive to IPC’s 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 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.

⁵ As of the date of this letter, our belief that we could close an amalgamation with IPC more quickly than Max was based on the observation that the Validus amalgamation with IPC would not require the approval of U.S. insurance regulators because neither IPC nor Validus operates a U.S.-regulated insurance business that would require any such approval while the Proposed Max Amalgamation requires such approvals.

⁶ We believe that a larger, stronger entity will benefit the Bermuda community because it offers greater stability.

-46-

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,


		/s/ Edward J. Noonan

Edward J. Noonan

Chairman and Chief Executive Officer


cc:	Robert F. Greenhill Greenhill & Co., LLC

John J. Schuster
Cahill Gordon & Reindel LLP

In the afternoon on March 31, 2009, IPC issued a press release acknowledging receipt of the letter from Validus outlining the Initial Validus Offer. The text of the press release reads as follows:

IPC Holdings, Ltd. (NASDAQ: IPCR) (“IPC”) acknowledges receipt of an unsolicited letter dated today, March 31, 2009, from Validus Holdings, Ltd. (NYSE: VR) (“Validus”) outlining a proposed transaction.

On March 2, 2009, IPC entered into an Agreement and Plan of Amalgamation (the “Amalgamation Agreement”) with its wholly-owned subsidiary IPC Limited and Max Capital Group Ltd. (“Max”) which provides that Max will amalgamate with IPC Limited. IPC continues to be bound by the terms of the Amalgamation Agreement and the parties have recently filed a joint proxy statement/prospectus with the Securities & Exchange Commission.

IPC’s Board of Directors will review the terms of the proposal submitted by Validus in a manner consistent with its obligations under the Amalgamation Agreement and applicable Bermuda law.

IPC will have no further comment on this matter until IPC’s Board of Directors makes a determination regarding Validus’ offer.

Also in the afternoon on March 31, 2009, Max issued a press release announcing that it had received from IPC a copy of the letter from Validus outlining the Initial Validus Offer. The text of the press release reads as follows:

Max Capital Group Ltd. (NASDAQ: MXGL; BSX: MXGL BH) today announced that it has received a copy of Validus Holdings, Ltd.’s unsolicited, stock-for-stock, proposal for IPC Holdings, Ltd.

As previously announced on March 2, 2009, Max and IPC entered into an Agreement and Plan of Amalgamation pursuant to which Max will amalgamate with IPC Limited. The Boards of both companies have previously stated that the combination of Max with IPC would create a strong company with a balanced, diversified portfolio of risk across a mix of geographies and business lines with the opportunity to generate more stable and attractive returns on capital. Max’s pending merger with IPC is expected to be completed late in the second quarter or early in the third quarter of this year.

W. Marston (Marty) Becker, Chairman and Chief Executive Officer of Max Capital, said: “In today’s unprecedented business environment and cycle, we believe that diversification, in terms of global presence and

-47-

both short and long-tail exposures, significantly reduces risk and provides a more solid platform for building sustained long-term value. The merger of IPC and Max was founded on a shared vision of allowing the combined group of shareholders to enjoy the benefits of a strong, diversified operating platform with a proven track record. While we have not yet had the opportunity to review Validus’ proposal carefully, we believe that combining two short-tailed property catastrophe oriented companies would appear to do little for true shareholder diversification. By contrast, Max’s track record of building a diversified platform without diluting shareholder value should lead to better long-term growth prospects and value creation following completion of the pending IPC-Max merger.”

In the morning on April 2, 2009, Max sent a letter to IPC’s Board of Directors purporting to outline the relative advantages of the pending Proposed Max Amalgamation as well as the business and financial issues raised by the Initial Validus Offer and issued a press release announcing the letter. The text of the letter reads as follows:

Dear Members of the Board:

We are writing regarding the many business and financial issues raised by the public proposal by Validus Holdings Ltd. (“Validus”) to acquire IPC Holdings, Ltd. (“IPC”) in lieu of the pending IPC amalgamation with Max Capital Group Ltd. (“Max”). The IPC/Max amalgamation was founded on a shared vision of allowing our combined group of shareholders to enjoy the benefits of a strong, diversified operating platform with a proven track record. The Validus proposal does not offer that.

Rather, in light of the Validus proposal, the IPC Board faces two starkly contrasting choices:

A. You can agree to be taken over by Validus at a price that is below IPC’s book value. The result of this takeover for your shareholders would be a minority equity stake in an entity that offers substantially similar product lines to those offered by IPC today, with little risk diversification, and apparently no ability by the IPC Board to steward the longer term prospects of the company.

B. You can complete the planned merger of equals with Max at a price that is below Max’s book value. We believe that this transaction will create a more stable entity that will provide significant product, geographic and risk diversification and over which IPC’s Board will continue to have significant influence, which in turn will provide superior shareholder value.

For the reasons set forth below, and in the accompanying exhibits, we do not agree with Validus that its proposal represents a “Superior Proposal” or is a proposal that can reasonably be expected to lead to a Superior Proposal pursuant to the IPC/Max Plan of Amalgamation dated March 1, 2009 (the “IPC/Max Plan”).

1. A combination with Max delivers 29% more tangible book value per share to IPC. As we operate in an industry where the primary valuation driver is a multiple of book value (and tangible book value), we believe that a transaction that maximizes the book value to shareholders provides the best opportunity to generate shareholder value. The IPC combination with Max is a truly superior proposal versus the takeover proposal by Validus. The takeover proposal by Validus would result in IPC receiving only $28.35 in diluted book value per IPC share and $26.19 of diluted tangible book value per IPC share from Validus. In contrast, our combination delivers $34.93 of diluted book value per IPC share (a 23.2% premium to Validus) and $33.83 of diluted tangible book value per IPC share from Max (a 29.2% premium to Validus). A combination with Max provides greater underlying value to IPC’s shareholders, which we believe will result in greater upside for both IPC and Max shareholders.

2. The IPC/Max Plan creates significant value for IPC shareholders. As we indicated during our discussions, we believe that the IPC/Max Plan provides an attractive financial outcome for IPC. The IPC/Max Plan is expected to be accretive to both earnings per share and return on equity. In addition, as you consider the historical trading multiples of Max and IPC, there is significant opportunity to create substantial value for all shareholders of the combined company. We believe the Validus proposal prioritizes an immediate “premium” in the form of stock for IPC shareholders, while compromising a value creation opportunity for IPC shareholders. Importantly, the written proposal by Validus does not contemplate any participation by the

-48-

IPC board of directors, whose participation remains an important consideration for Max in the amalgamation and provides continuity to shareholders and clients.

3. Max is a truly diversified underwriting platform. The IPC/Max Plan offers IPC’s shareholders superior current and future value by combining IPC with a truly diversified underwriting platform, with a strong and well established track record. Max enjoys a diversified portfolio of business across many dimensions — by class, geography, customers and distribution. We believe that Max’s diversified underwriting platform, with its strong emphasis on profitable longer-tail casualty business, will generate more stable returns on capital through underwriting cycles, compared to the volatility embedded in the Validus short-tail portfolio. Validus, whose 2008 gross premiums written are 94% concentrated in short- tail lines of business, claims that its portfolio represents “diversification.” Validus’ ability to deliver anything approaching true diversification seems to be constrained by its limited underwriting platforms in Bermuda and at Lloyd’s and lack of underwriting capabilities in longer-tail casualty classes.

Combining two short-tailed property catastrophe companies as proposed by Validus does little for shareholder diversification. Validus’ stated intention to take advantage of currently strong rates in the property market is a short-term strategy that is capital intensive, creates greater volatility for shareholders, and is one which IPC could have continued on a stand-alone basis but elected not to do so. By contrast, Max remains committed to an underwriting strategy that produces attractive results across market cycles, by continuing to expand its specialty insurance business in selected underwriting classes and limiting volatility in its underwriting results.

4. Max has a proven, long-term, operating history. Max’s underwriting has been tested through the tragic events of 9/11, the active 2004 hurricane season and the confluence of Hurricanes Katrina, Rita, and Wilma in 2005. Validus’ operating history, by contrast, does not extend beyond the past three years, during which time the industry as a whole has experienced both strong property catastrophe pricing and limited catastrophe activity. The first test of Validus’ portfolio of business and risk management capabilities since its formation three years ago came in 2008 with Hurricanes Ike and Gustav. In our view, the results speak for themselves: the net loss reported by Validus for these events represented 12.4% of its June 30, 2008 shareholders’ equity, the largest percentage loss of its broad peer group which averaged 7.2% of shareholders’ equity. The loss was almost double the net loss incurred by IPC, which represented just 6.7% of IPC’s June 30, 2008 shareholders’ equity. The losses recorded by Validus included a 42% increase in its initial loss estimate for Hurricane Ike (from $165 million to $235 million) during the fourth quarter of 2008. By comparison, Max’s net incurred losses from Hurricanes Ike and Gustav were limited to 3.4% of June 30, 2008 shareholders’ equity, the lowest among the broader peer group, demonstrating the lower embedded volatility of Max’s underwriting results versus Validus.

5. IPC and Max can complete an amalgamation more quickly, and with greater certainty.

(a) IPC and Max can close our amalgamation expeditiously. Max believes that the IPC/Max Plan can close as soon as June 2009. By contrast, we believe that Validus would not be in a position to close a transaction with IPC until September 2009 at the earliest, notwithstanding its public prediction of a second quarter close. As you are well aware, the IPC/Max Plan requires that shareholders have the opportunity to vote on our amalgamation before IPC’s Board can terminate our agreement and thereafter begin discussions with a bidder such as Validus. We anticipate that we will be able to hold our respective shareholder meetings in June, and only after those shareholder votes would Validus be able to pursue its proposal. Validus’ inability to close before September 2009, the middle of hurricane season, adds meaningful uncertainly to Validus’ proposal, as IPC shareholders and the transaction itself would be put at risk by the significant catastrophe exposures of Validus and Validus’ ability to terminate the transaction based upon changes in shareholders’ equity. Much has been made by Validus regarding US regulatory approvals required to complete the IPC/Max amalgamation. As you know, these approvals are well underway and we do not foresee such requisite approvals adversely impacting a possible June closing.

(b) IPC has conducted extensive diligence on Max. IPC was given complete and open access to Max to afford you and your outside advisors and consultants with the ability to conduct extensive due diligence on Max. The Validus proposal seeks to have IPC enter into a transaction for which IPC has not conducted due

-49-

diligence. We also note that certain of Validus’ disclosure schedules will not be provided to IPC until after IPC and Max’s shareholders have the opportunity to vote upon our amalgamation.

6. Max’s business is complementary to IPC. Clients seek a diversified program of reinsurers. As you were able to confirm in your due diligence, Max has very limited overlap with the customers of IPC and neither party expects a combination of IPC and Max to lead to any meaningful disruption of either business. In addition, the continuity of the underwriters at IPC will maximize the opportunity for IPC to continue to write this business in the future, assuming market conditions support it. By contrast, Validus acknowledges that it writes business with many of the same clients as IPC, which we would expect to result in a loss of business as clients seek to diversify their reinsurance placements.

7. Max’s complementary and diversified platform is appreciated by our ratings agencies. Max currently has a financial strength rating of A- by A.M. Best, with its outlook changed to positive in December 2008. As IPC and Max have jointly presented to our ratings agencies, IPC’s Board has the comfort of knowing that the ratings agencies view our combination, and its diversifying impact on IPC’s business, positively. In contrast, we believe that the agencies would not look as favorably on combining two short-tailed property-oriented platforms.

8. Max maintains less underwriting volatility through greater diversification of its portfolio of risks. Max seeks to limit its exposure to catastrophic events (probable maximum loss based on a 1 in 250 year event) to a maximum of 20% of its shareholders’ equity, often operating below this level. As part of the IPC/Max Plan, we have discussed continuing to have a significant presence in the property catastrophe market while on a combined equity basis adhering to this same 20% risk tolerance. In contrast, Validus maintains peak exposures where the probable maximum loss based on a 1 in 250 year event runs at a stated 33% of shareholders’ equity. Max believes that combining this risk profile with IPC would expose IPC shareholders to an even greater level of volatility than at present and would not change the markets perception of IPC as being a property catastrophe company. The volatility of Validus’ results would also seem to be cause for concern, particularly when the net losses from Hurricanes Ike and Gustav (which approximated a 1 in 15 year event) was 12.4% of shareholders’ equity, the highest among its broader peer group. This compared to a net loss of 6.7% of shareholders’ equity for IPC and 3.4% for Max.

9. Max has a proven, long-term history of successful acquisitions without incurring goodwill. We believe IPC’s shareholders can take comfort in Max’s demonstrated history of successfully entering new business lines through acquisitions and start-ups without incurring meaningful goodwill. For example, when Max entered the Lloyds’ market, we booked intangible assets of $8 million upon closing our acquisition of Imagine Group (UK) Limited, which stands in contrast to the $154 million of intangible assets booked by Validus in their acquisition of Talbot.

10. Max has a diversified shareholder base. We believe having a shareholder base dominated by five private equity owners controlling 64.9% of Validus’ total beneficial ownership (as of March 13, 2009) will limit the potential upside in the value of Validus over time as these private shareholders seek to exit their investment. Max has a diversified shareholder base with an 84% public float. In addition, Max has a well diversified shareholder base of high quality institutional shareholders.

11. IPC and Max have compatible cultures. IPC and Max have compatible cultures that will help ease the integration of the two companies. IPC and Max share a common focus on underwriting, claims and actuarial disciplines, and on running our respective businesses as meritocracies.

12. Max’s higher asset leverage provides greater investment income over time. Max believes that investment leverage (invested assets as a multiple of shareholders’ equity) is a positive in driving earnings and stability of returns on capital over time. Based on 2008 figures, Max had total investment to equity of 4.2x versus 1.7x for Validus. As Validus continues to pursue a short-tail strategy, Validus will be limited in its ability to increase its asset leverage. This deprives IPC of the meaningful investment income derived from longer-tail casualty lines and continues to leave IPC shareholders exposed to increased volatility from catastrophes. Validus has commented on Max’s investment portfolio, particularly its alternative investment portfolio. Max’s year end allocation to alternative investments was 14% of total invested assets, which is expected to reduce to 10% to 12% in 2009. In looking at results, Max’s total investment return, including

-50-

realized and unrealized gains and losses, during the very volatile period of 2007 / 2008 has outperformed Validus’ in 6 of the last 8 quarters.

We believe that the facts regarding the proposal submitted by Validus and the attempt by Validus to present a one-sided proposal to IPC shareholders make it clear that Validus has not presented a Superior Proposal, nor one that can be reasonably expected to lead to a Superior Proposal. We believe Validus has created an unnecessary and unproductive disruption for its own opportunistic purposes, which should not distract either IPC’s or Max’s employees and customers from our amalgamation, which we both believe to be in the best interests of our shareholders.

Lastly, Max remains both steadfast in its commitment and excited to complete its planned amalgamation with IPC. We continue to believe that the amalgamation of IPC and Max represents the best strategic and financial opportunity for our collective shareholders.

Very truly yours,


		/s/ W. Marston Becker

W. Marston Becker

Chairman and Chief Executive Officer

Max Capital Group Ltd.

In the afternoon on April 2, 2009, Validus sent a letter to IPC’s board of directors addressing the claims made by Max in its letter to IPC’s 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:

-51-

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 Max’s 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 Max’s stewardship of its business or because so much of Max’s investment portfolio is tied up in risky alternative assets. Indeed, of Max’s $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 Max’s 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, IPC’s book 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 Max’s “diversified” businesses. Max’s 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%.⁷Max’s “diversified” businesses represent diversification without profit. Max’s 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.⁸ Max is not a leader in any category of business, and moreover, it has

⁷ Upon verification of the calculations used to prepare this letter we have determined that Max’s true 2008 accident year GAAP combined ratio is in fact 110.6% rather than 103.4% as set forth in our letter reprinted above. The combined ratio, expressed as a percentage, is a key measurement of profitability traditionally used in the property-casualty insurance business. The combined ratio, also referred to as the “calendar year combined ratio,” is the sum of the losses and loss adjustment expense ratio and the underwriting and other operating expense ratio. The losses and loss adjustment expense ratio is the percentage of net losses and loss adjustment expenses incurred to net premiums earned. The underwriting and other operating expense ratio is the percentage of underwriting and other operating expenses to net premiums earned. When the calendar year combined ratio is adjusted to exclude prior period items, such as loss reserve development, it becomes the “accident year combined ratio.”

⁸ As described elsewhere in this proxy statement, a combined ratio of greater than 100% indicates that premiums are less than aggregate claims and expenses. Validus believes that unprofitable operations do not create value for shareholders.

-52-

chosen to focus on volatile lines of business which yield low margins.⁹ In contrast, Validus is a global leader in very profitable business lines, including marine, energy and war and terrorism.⁹ Furthermore, Max’s 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.¹⁰ 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 Max’s 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)¹¹ 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 Max’s 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 sight of the fact that the Amalgamation Agreement cedes to Max the power to delay the closing of a Validus/IPC combination.¹²

⁹ As of the date of this proxy statement, this statement should be qualified as an expression of our opinion based on our experience and knowledge of the industry.

¹⁰ Upon verification, the statement should refer to 134 countries, rather than 143.

¹¹ IPC and Max may update their predictions as to timing as new information becomes available to each party. For example, in a recent letter to shareholders filed on May 1, 2008, Max discloses that it expects “the transaction to close late in the second quarter or early in the third quarter of 2009.”

¹² As of the date of this proxy statement, the Max Amalgamation Agreement cedes to Max the power to delay the closing of a Validus/IPC combination because IPC has no right to terminate the Max Amalgamation Agreement until after the vote of the IPC shareholders at IPC’s Annual General Meeting, even if IPC’s board of directors changes its recommendation and recommends a vote “FOR” the Validus Amalgamation Offer. Accordingly, should IPC’s board of directors choose to recommend a vote “FOR” the Validus Amalgamation Offer, Max would have the power to delay the closing of a Validus/IPC combination by not terminating the IPC/Max agreement until after the shareholders vote down the Proposed Max Amalgamation.

-53-

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 IPC’s 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.¹³

6. “Max’s business is complementary to IPC.” Max’s 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 IPC’s core reinsurance activities. As we are both aware, the current reinsurance market is in the midst of a capacity shortage.¹⁴ 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.¹⁵

7. “Max’s 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 Max’s speculations.¹⁶

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 IPC’s 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.

¹³ The agreement governing the Initial Validus Offer retained this restrictive prohibition. Validus’ board of directors determined that proposing substantially similar agreement terms with what we believed to be improved economic terms would facilitate IPC’s board of directors’ evaluation of the Initial Validus Offer. On May 18, 2009, Validus amended this provision in the Validus Amalgamation Offer to permit IPC and its subsidiaries and their respective personnel and representatives to participate or engage in discussions relating to an acquisition proposal for IPC so long as IPC’s board has concluded in good faith that such action is required in order for IPC’s directors to comply with fiduciary duties under applicable law and IPC complies with certain notification and confidentiality requirements.

¹⁴ A reinsurance industry commentator has recently stated that, taking reinsurer capital as the nearest proxy for capacity, it is estimated that reinsurer capital, which was down 8 to 10 percent from January 1, 2008 through September 30, 2008, will be down 15 to 20 percent for the year ending December 31, 2008 when reported. In addition, the same commentator observed that capital markets capacity for insurance risk has declined in similar proportions.

¹⁵ We believe that a combined Validus/IPC would be a “go-to” player for reinsurance placements because Validus will be better capitalized (as measured by pro forma shareholders equity) than many of the members of its peer group.

¹⁶ As of the date of this proxy statement, this statement is intended to emphasize that Validus believes the statement being referred to, in the April 2, 2009 Max letter to IPC’s board of directors, is based upon speculation by Max, since, to Validus knowledge, the rating agencies have not made a determination in this regard.

-54-

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. Max’s 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. Max’s acquisition history, on the other hand, is that of acquiring subscale small businesses that significantly lag the leaders in their respective markets.¹⁷

10. “Max has a diversified shareholder base.” Max’s 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.

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. “Max’s higher asset leverage provides greater investment income over time.” Max’s asset leverage has been a significant liability given its risky investment strategy.¹⁸ This leverage would similarly expose a combined IPC/Max to significant volatility. Max’s alternative investments and non-agency asset/mortgage backed securities alone comprise 99% of its tangible equity, indicating a massive amount of embedded risk.¹⁹ Max’s $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.²⁰ In 2007, when the global credit crisis began, Max’s 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 Max’s poor history as stewards of shareholder capital.

* * *

¹⁷ As of the date of this proxy statement, we are aware of only three small acquisitions by Max and we believe, based on our experience and knowledge of the industry, that the acquired entities were not leaders in their markets.

¹⁸ As of the date of this proxy statement, we believe that the investment strategy that has been employed by Max, and is expected to be employed by Max management who will control the combined IPC/Max, and that according to Max’s public information is expected to include a 10% to 12% concentration in alternative investments, should be considered a risky investment strategy that could amount to a significant liability when compared with an investment strategy, like Validus’, that does not allow for such investments in alternative investments.

¹⁹ As of the date of this proxy statement, this statement is intended to emphasize that Max’s alternative investments alone comprised 61% of tangible equity, indicating what we believe to be a significant amount of embedded risk.

²⁰ As of the date of this proxy statement, this statement should be qualified as an expression of our opinion based on our experience and knowledge of the industry and on Max’s investment performance in the third and fourth quarters of 2008, which was worse than the average for its peer group but better than the investment performance of several of its peers.

-55-

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,


		/s/ Edward J. Noonan

Edward J. Noonan

Chairman and Chief Executive Officer

-56-

In the afternoon on April 5, 2009, Validus sent a letter to IPC’s Board of Directors regarding an error that Max had made in its calculation of pro forma tangible book value under the terms of the Initial 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. Becker’s 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,


		/s/ Edward J. Noonan

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 Initial Validus Offer and stating that it “continues 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).” The text of the press release reads as follows:

Max Capital Group Ltd. (NASDAQ:MXGL; BSX: MXGL BH) today confirmed that the calculations of diluted book value per IPC share and diluted tangible book value per IPC share included in Max’s April 2, 2009 letter to the Board of Directors of IPC Holdings, Ltd. (“IPC”) are true and correct. Max has consulted with its financial advisors and SEC counsel.

-57-

In a press release dated April 5, 2009, Validus alleged that Max had made a “substantial error” in its calculation of “pro forma” tangible book value under the proposed terms of Validus’s unsolicited takeover of IPC. However, Validus’s allegation is incorrect and misleading. The calculations that Max presented accurately represent what an IPC shareholder would receive on a stand alone basis from either Max or Validus, without giving effect to what IPC itself contributes to a transaction. The Max presentation allows IPC shareholders to compare the value received under each transaction on an “apples-to-apples” basis. Max believes this is an important measure in comparing the value received today by an IPC shareholder under the agreement with Max and the proposed Validus transaction. The pro forma calculations Validus is utilizing include the additional benefit derived from issuing Validus’ shares to purchase IPC at a discount to book value.

“One has to question whether the IPC shareholders are being well served by the non-substantive claims being initiated by Validus. They have made certain statements that completely misrepresent and falsely characterize the information presented by Max. Since Validus initially made its below book value, unsolicited takeover offer for IPC, it has demonstrated a lack of understanding of what is important to the shareholders of IPC in allowing them to assess the relative value being delivered by Max versus Validus,” stated W. Marston (Marty) Becker, Max Chairman and CEO.

The facts presented in Max’s April 2, 2009 letter to IPC have not changed and are clear:


	(i)	Max delivers to IPC $33.83 of diluted tangible book value per IPC share — a 29.2% premium versus $26.19 delivered by Validus, and


	(ii)	Max delivers to IPC $34.93 of diluted book value per IPC share — a 23.2% premium versus $28.35 delivered by Validus.

As noted above, these figures represent the book value per IPC share being delivered to IPC’s shareholders on a standalone basis, without giving effect to what IPC itself contributes to a transaction.

The conclusion remains clear — a combination with Max provides greater underlying value to IPC’s shareholders today, with true diversification of underwriting exposures and without an over-concentration in short-tail catastrophe oriented business, and will result in greater upside for IPC shareholders as compared to the hostile takeover proposal by Validus.

Max continues to believe that Validus has 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 IPC/Max Plan of Amalgamation dated March 1, 2009).

Additional details on the Max calculations referred to above are posted on [Max’s] website: www.maxcapgroup.com.

In the afternoon on April 6, 2009, Validus sent a letter to IPC’s 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.

-58-

In today’s 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 value²¹ 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 Max’s 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,


		/s/ Edward J. Noonan

Edward J. Noonan

Chairman and Chief Executive Officer

cc: Marty Dolan, J.P. Morgan Securities, Inc.

²¹ If the adjustments to reduce the net asset value of Max were made, it would reduce by $117.4 million the book value that Max contributes to the combined company at closing.

-59-

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 Max’s 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, IPC’s 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 IPC’s management would use to determine the present value of the underlying cash flows.

	(5)	Represents the estimated fair value of the profit within Max’s unearned property and casualty premiums. In determining fair value, IPC’s management estimated the combined ratio associated with Max’s net unearned property and casualty premiums.

	(6)	Represents adjustment to record Max’s 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)

-60-

In the afternoon on April 7, 2009, Kenneth L. Hammond, Chairman of IPC’s board of directors, sent a letter to Mr. Noonan indicating that IPC’s 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 HM11
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.

IPC’s 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, IPC’s board of directors has unanimously reaffirmed its recommendation that IPC shareholders vote in favor of the transaction with Max.

In reaching its decision, IPC’s board of directors considered several factors, including the following:


	•	The Validus Offer Fails to Meet IPC’s Diversification Goals — During 2008, IPC’s board of directors concluded that it would be in IPC’s 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 Max’s 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 Validus’ 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, Max’s balance sheet has significantly lower goodwill and intangibles, resulting in an even greater tangible book value per share to IPC’s shareholders. We are concerned that Validus’s 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 IPC’s shareholders. Max’s diversified book, when combined with IPC’s, 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, Validus’ 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 IPC’s 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

-61-


		would have to be rejected by IPC shareholders before IPC would be able to conduct due diligence on 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,

/s/ Kenneth L. Hammond

Kenneth L. Hammond

Chairman of the Board of Directors

On Behalf of the IPC Holdings Board of Directors

In the afternoon on April 8, 2009, Validus sent a letter to Mr. Hammond, the Chairman of IPC’s board of directors, regarding the IPC press release and letter and issued a press release announcing the letter. The text of the 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 IPC’s operations.

I am disappointed with the Board’s 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

-62-

IPC’s shareholders to solicit their votes AGAINST the Max takeover. If, as we [hope],²³IPC’s 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,²⁴ 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.

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,


		/s/ Edward J. Noonan

Edward J. Noonan

Chairman and Chief Executive Officer

On April 9, 2009, Validus filed a preliminary proxy statement with the SEC which, in its definitive form, is being used to solicit votes from IPC shareholders against the approval of the Proposed Max Amalgamation.

On April 13, 2009, IPC filed an amendment (“Amendment No. 1”) to the IPC/Max S-4 with the SEC, which, among other things, added to the disclosure regarding the background to the Proposed Max Amalgamation including the reasons as to why Validus was excluded from the process that resulted in the Proposed Max Amalgamation. Amendment No. 1 also contained a correction to IPC’s diluted book value for the year ended December 31, 2008.

On April 16, 2009, Validus filed this preliminary proxy statement with the SEC with respect to soliciting votes from Validus shareholders to approve the issuance of Validus Shares in connection with the Acquisition.

On April 21, 2009, Validus filed an amendment to the preliminary proxy statement with the SEC with respect to soliciting votes from IPC shareholders against the Proposed Max Amalgamation.

On April 28, 2009, IPC filed a second amendment to the IPC/Max S-4 with the SEC.

On April 28, 2009, Validus filed the Bermuda Claim (as defined below). The Bermuda Claim challenges the validity of the Max Termination Fee and provisions which restrict the ability of IPC to discuss competing proposals with third parties (the “no talk provisions”) in the Max Amalgamation Agreement. Further, the Bermuda Claim alleges that by entering into the Max Amalgamation Agreement containing the Max Termination Fee and no talk provisions and continuing to act in accordance with the terms of these provisions, the directors of IPC acted in breach of their fiduciary and other duties and not in accordance with the constitution of IPC.

On April 30, 2009, Validus issued a press release outlining its three-part plan to expedite the Acquisition.

²³ As of the date of this proxy statement, the word “hope” has been inserted to replace the word “expect” in this sentence.

²⁴ As of the date of this proxy statement, the reference to “success” in this sentence relates to Validus’ success in pursuing the litigation strategy referenced in the immediately prior sentence followed by the successful consummation of the Acquisition.

-63-

On April 30, 2009, IPC issued a press release reaffirming its belief that the Initial Validus Offer did not represent a superior proposal and that IPC’s board of directors continued to recommend IPC shareholders vote in favor of the Proposed Max Amalgamation.

On May 1, 2009, Validus filed with the SEC an amendment to its preliminary proxy statement with respect to soliciting votes from IPC shareholders against the Proposed Max Amalgamation.

On May 1, 2009, Validus filed an application to expedite the trial of the Bermuda Claim

On May 4, 2009, IPC filed a third amendment to the IPC/Max S-4 with the SEC.

On May 5, 2009, Validus filed an investor presentation titled “Superior Proposal for IPC Shareholders” with the SEC and on May 6, 2009 filed a revised investor presentation with the SEC.

On May 6, 2009, Validus filed an amendment with the SEC to the preliminary proxy statement with respect to soliciting votes from IPC shareholders against the Proposed Max Amalgamation.

On May 7, 2009, IPC and Max filed a joint proxy statement/prospectus for the IPC/Max S-4 with the SEC and stated that they would mail the joint proxy statement/prospectus on or about Thursday, May 7, 2009 to their respective shareholders of record as of the close of business on April 28, 2009.

On May 8, 2009, Validus filed with the SEC and commenced mailing definitive proxy materials and proxy cards to IPC shareholders seeking proxies from IPC shareholders to vote against the Proposed Max Amalgamation.

On May 11, 2009, Validus filed two amendments to this proxy statement with the SEC.

On May 11-12, 2009, Validus’ application to expedite the trial of the Bermuda Claim was heard by the Supreme Court of Bermuda. Following the hearing, on May 13, 2009, the Court denied the application for expedition of the timetable for the proceedings. While this was not a hearing on the merits of Validus’ claims, the Court acknowledged that Validus had raised serious questions to be tried.

On May 12, 2009, Validus filed three preliminary proxy statements with the SEC to, respectively, (i) solicit votes from IPC shareholders to approve the Scheme of Arrangement at the court-ordered IPC meeting, (ii) solicit requisitions from IPC shareholders to compel the board of directors of IPC to call the IPC special general meeting and (iii) solicit votes to approve certain proposals at the IPC special general meeting.

On May 12, 2009, Validus commenced the Exchange Offer.

On May 14, 2009, Validus amended the registration statement of which the Offer to Exchange is a part.

On May 14, 2009, IPC filed a Solicitation/Recommendation Statement on Schedule 14D-9 reporting that IPC’s board of directors had met on May 13, 2009 and stating IPC’s board of directors’ recommendation that IPC shareholders reject the Exchange Offer and not tender their IPC Shares to Validus pursuant to the Exchange Offer.

On May 14, 2009, Validus filed an application to the Supreme Court of Bermuda to convene a court-ordered meeting of IPC shareholders to approve the Scheme of Arrangement. On May 19, 2009, the Court directed that Validus’ application be heard during the week of May 25, 2009. The application is scheduled to be heard by the Court on May 27-28, 2009.

On May 18, 2009, Validus delivered an offer letter to IPC advising IPC of the increased economic terms of the Validus Amalgamation Offer and containing the amendment to the Validus Amalgamation Agreement.

Later on May 18, 2009, IPC issued a press release announcing that its board of directors, along with its legal and financial advisors, would carefully review the revised terms of the Validus Amalgamation Offer consistent with its fiduciary duties and make a formal recommendation to IPC shareholders in accordance therewith.

Also on May 18, 2009, Validus filed an investor presentation titled “Improved Superior Proposal for IPC Shareholders” with the SEC.

-64-

On May 19, 2009, IPC filed an amendment to its Solicitation/Recommendation Statement on Schedule 14D-9.

Also on May 19, 2009, Validus filed an amendment to this proxy statement with the SEC.

On May 21, 2009, IPC filed an amendment to its Solicitation/Recommendation Statement on Schedule 14D-9 reporting that IPC’s board of directors had met on May 20, 2009 and stating IPC’s board of directors’ recommendation that IPC shareholders reject the revised terms of the Exchange Offer and not tender their IPC Shares to Validus pursuant to the Exchange Offer.

On May 21, 2009, Validus amended the registration statement of which the Offer to Exchange is a part.

On May 26, 2009, Validus filed this definitive proxy statement with the SEC.

Reasons Why Validus’ Board of Directors Recommends Approval of the Share Issuance

By approving the Share Issuance, you will be enabling Validus to issue the shares necessary to effect the Acquisition. Validus’ board of directors believes that the Acquisition represents a compelling combination and excellent strategic fit that will enable Validus to capitalize on opportunities in the global reinsurance market. Successful completion of the Acquisition would allow Validus shareholders to benefit from the superior growth potential of a combined company that would be a leading carrier in Bermuda’s short-tail reinsurance and insurance markets, with a strong balance sheet and quality diversification in profitable business lines. In reaching these conclusions and in determining that the Validus Amalgamation Agreement, the Acquisition and the Share Issuance are fair, advisable and in the best interests of Validus, and in recommending the approval of the Share Issuance, Validus’ board of directors consulted with Validus management as well as legal and financial advisors and considered a number of factors. The factors included, but were not limited to, the following:


	•	Validus’ board of directors’ analysis and understanding of the business, operations, financial performance, financial condition, earnings and future prospects of Validus and its assessment, based on such analysis and understanding, that Validus will have:


	•	lines of business concentrated in short-tail lines where pricing momentum is strongest;

	•	enhanced market position and client penetration that will make Validus a more significant player in short-tail reinsurance placements globally;

	•	ability to add a significant amount of short-tail reinsurance premium to Validus’ existing Bermuda infrastructure;

	•	global and diversified operating platforms, with offices and underwriting facilities in Bermuda, at Lloyd’s in London, Dublin, Singapore, New York and Miami;


	•	enhanced size and scope, with GAAP capitalization of approximately $3.9 billion and shareholders’ equity of approximately $3.6 billion (on a pro forma basis as of March 31, 2009);


	•	continuing financial flexibility, with debt/total capitalization of only 1.8% and total leverage including hybrid securities of only 9.3%; and

	•	the opportunity to reduce costs associated with running two separate public companies, including IPC’s NASDAQ listing fees, transfer agent fees, legal and accounting fees related to SEC filings and shareholder mailings, printing and mailing expenses for periodic reports and proxy statements, annual meeting expenses and other investor relations related expenses, which expenses Validus believes are duplicative and can be eliminated if Validus and IPC combine resulting in these expenses for the combined company representing a smaller portion of combined revenues;


	•	the fact that Validus will experience accretion to its book value and tangible book value per share as a result of the transaction;

	•	the fact that Validus would remain within its stated limitations of reinsurance aggregates by exposure zone;

	•	Validus’ board of directors’ understanding of the business, operations, and financial condition of IPC;

-65-


	•	the ongoing representation by all of Validus’ existing directors on Validus’ board of directors after the Acquisition, and the fact that Validus’ senior management will continue to manage Validus;

	•	the written opinion from Greenhill, delivered to Validus’ board of directors on May 17, 2009, to the effect that, based upon and subject to the various limitations and assumptions described therein, as of the date thereof, the consideration pursuant to the proposed Acquisition was fair, from a financial point of view, to Validus, as described in — Opinion of Validus’ Financial Advisor below;

	•	the fact that no external financing is required for the transaction;

	•	Validus’ board of directors’ belief, based on advice from legal counsel, that the Acquisition is likely to receive necessary regulatory approvals in a relatively timely manner without material adverse conditions;

	•	the terms of the Validus Amalgamation Agreement, including:


	•	the requirement that the Share Issuance be approved by holders of a majority of the outstanding Validus Shares casting votes at the Validus special meeting, as described in The Amalgamation Agreement — Conditions to the Amalgamation below;

	•	Validus may terminate the Validus Amalgamation Agreement if the total number of dissenting IPC Shares for which appraisal rights have been exercised pursuant to Bermuda law exceeds 15% of the outstanding IPC Shares, as described in The Amalgamation Agreement — Termination of the Amalgamation Agreement — Termination below.

Validus’ board of directors considered other factors in making its determination and recommendation, including the following:


	•	the possibility that IPC would have to pay a termination fee of up to $50 million to terminate the Max Amalgamation Agreement;

	•	the fact that, in order to agree to a transaction with IPC, Validus’ board of directors thought the Validus Amalgamation Agreement would need to be substantially similar to the Max Amalgamation Agreement;

	•	the restrictions on the conduct of Validus’ business imposed by the Validus Amalgamation Agreement prior to the consummation of the amalgamation, requiring Validus to conduct its business in the ordinary course, subject to specific limitations, which may delay or prevent Validus from undertaking business opportunities that may arise pending completion of the amalgamation;

	•	the inability to control IPC’s conduct of business before the Acquisition;

	•	that Validus shareholders and IPC shareholders may not react favorably to the Validus Amalgamation Offer or the Acquisition, and the execution risk and additional costs that would be required to complete the Acquisition as a result of any legal actions and appraisal actions brought by IPC shareholders;

	•	the effect of the announcement of the Acquisition on Validus’ share price if Validus shareholders do not view the Acquisition positively or if the Acquisition is not completed;

	•	the potential disruption to Validus’ business that could result from the announcement and pursuit of the amalgamation, including the diversion of management and employee attention;

	•	that Validus may wish to purchase retrocessional protection for the 2009 wind season and the cost and availability of that protection;

	•	the possibility that IPC would not find the Validus Amalgamation Offer to be a “superior proposal” under the Max Amalgamation Agreement, which would entail additional costs in order to enable IPC shareholders to consider the Validus Amalgamation Offer;

	•	the possibility that the amalgamation might not be completed due to difficulties with terminating the Max Amalgamation Agreement, obtaining sufficient shareholder approval, the occurrence of a material adverse effect on either company’s business, or the inability to obtain required credit facility consents;

-66-


	•	the fact that Validus may be required to pay IPC a termination fee of $16 million, as described in The Amalgamation Agreement — Termination of the Amalgamation Agreement — Effects of Termination; Remedies below in certain circumstances;

	•	the risk that A.M. Best, S&P or Moody’s might lower the ratings of Validus or any of its reinsurance subsidiaries following the Acquisition;

	•	the possibility that after consummation of the amalgamation Validus might find a material adverse fact or circumstance affecting IPC that was not disclosed by IPC in its publicly available financial and other information, which could have a material adverse effect on Validus; and

	•	the risks described in this proxy statement under the section entitled “Risk Factors.”

The foregoing discussion of the information and factors considered by Validus’ board of directors is not intended to be exhaustive, but is believed to include the material factors considered by Validus’ board of directors. In view of the variety of factors considered in connection with its evaluation of the Validus Amalgamation Agreement, the Share Issuance and the other transactions contemplated by the Acquisition, Validus’ board of directors did not find it practicable to, and did not, quantify or otherwise assign specific weights to the factors considered in reaching its determination and recommendation. In addition, each of the members of Validus’ board of directors may have given differing weights to different factors. Validus’ board of directors believed that the positive factors discussed above outweighed the negative factors discussed above, especially after giving weight to the likelihood of occurrence.

Litigation

On April 28, 2009, Validus filed a claim in the Supreme Court of Bermuda against IPC, IPC Limited and Max (“Bermuda Claim”). The Bermuda Claim challenges the validity of the Max Termination Fee and provisions which restrict the ability of IPC to discuss competing proposals with third parties (“no-talk provisions”) in the Max Amalgamation Agreement. Further, the Bermuda Claim alleges that by entering into the Max Amalgamation Agreement containing the Max Termination Fee and the no talk provisions and continuing to act in accordance with the terms of these provisions, the directors of IPC have acted in breach of their fiduciary or other duties and not in accordance with the constitution of IPC.

First, pursuant to the Max Amalgamation Agreement, in the event of an unsolicited alternate offer from a third party, the board of IPC is required to consider whether such a proposal amounts to a “Superior Proposal”. The Bermuda Claim alleges however, that without the ability to engage in any discussions or information exchange with respect to the Acquisition as a result of the no-talk provisions, the board of IPC is restricted and/or precluded from properly exploring or evaluating whether in fact the alternate offer is a “Superior Proposal”. Second, in the event that a “Superior Proposal” is being made and the directors of IPC vary or alter their recommendation of the Proposed Max Amalgamation within the contractual closing deadline, pursuant to the Max Amalgamation Agreement, Max would be entitled to terminate the Max Amalgamation Agreement and collect the Max Termination Fee from IPC. Under the Max Amalgamation Agreement, the Max Termination Fee is $50,000,000. The Bermuda Claim alleges that this is equivalent to 4.97% of the aggregate consideration value of $1,005,915,920 of the Proposed Max Amalgamation, based on the price of Max common shares on February 27, 2009, the last trading day before the signing of the Max Amalgamation Agreement. The Bermuda Claim also alleges that the quantum of the Max Termination Fee is wholly excessive and was not calculated by reference to the costs and expenses that would be expected to be incurred by Max in the event that the Max Amalgamation Agreement was terminated and substantially exceeds Max’s anticipated liability in respect of such costs and expenses, which, based upon disclosure in the IPC/Max Form S-4, is likely to be little more than $10 million. Therefore, the Max Amalgamation Agreement constitutes an unlawful penalty whose predominant function, the Bermuda Claim alleges, is to deter IPC or IPC Limited from breaching the Max Amalgamation Agreement (including by way of recommending a “Superior Proposal” to its board of directors).

By agreeing to the Max Amalgamation Agreement containing the Max Termination Fee and no-talk provisions, as well as by continuing to act in accordance with their terms, the Bermuda Claim alleges that the directors of IPC have failed to retain sufficient flexibility to consider and, if thought fit, recommend an offer which

-67-

may be more advantageous to IPC shareholders, improperly fettering their ability to exercise the powers conferred upon them by the constitution of IPC and/or act in the best interests of IPC and/or its shareholders. And by doing so, the directors of IPC have acted other than bona fide in the best interest of IPC and/or for an improper or collateral purpose, and the Max Termination Fee and no-talk provisions were therefore beyond the actual or implied authority of the board of directors of IPC, and as such, not binding on IPC and unenforceable by Max.

The Bermuda Claim requests: (1) declaratory relief that: (a) the Max Termination Fee constitutes an unlawful and unenforceable penalty, (b) in entering into the Max Amalgamation Agreement containing the Max Termination Fee and no-talk provisions, the directors of IPC acted in breach of duty and otherwise than in accordance with the constitution of IPC, (c) in continuing to act in accordance with the Max Termination Fee and no-talk provisions in the Max Amalgamation Agreement the directors of IPC continue to act in breach of duty and otherwise than in accordance with the constitution of IPC; (2) an injunction restraining IPC or IPC Limited from making any direct or indirect payment to Max pursuant to the Max Termination Fee and/or taking any steps, whether itself, or by its directors, servants, agents or otherwise to give effect to the no-talk provisions of the Max Amalgamation Agreement and/or the Max Termination Fee; (3) an order that IPC pay the costs of the proceedings; and (4) any other or further relief the court may deem just and proper.

On May 1, 2009, Validus filed an application to expedite the trial of the Bermuda Claim. Validus requested that the Supreme Court of Bermuda set a schedule permitting a trial to be conducted commencing on an earlier date than any date on which IPC seeks to hold its annual general meeting to consider the proposals related to the Proposed Max Amalgamation. Max and IPC opposed the application. On May 13, 2009, the Court denied the application for expedition of the timetable for the proceedings. While this was not a hearing on the merits of Validus’ claims, the Court acknowledged that Validus had raised serious questions to be tried.

Opinion of Validus’ Financial Advisor

Validus’ board of directors received an oral opinion, subsequently confirmed in writing, from Greenhill that, based upon and subject to the various limitations and assumptions described in the written opinion, as of May 17, 2009, the consideration pursuant to the proposed Acquisition was fair, from a financial point of view, to Validus.

The full text of the written opinion of Greenhill, dated May 17, 2009, which sets forth, among other things, the assumptions made, procedures followed, matters considered and limits on the opinion and the review undertaken in connection with rendering the opinion, is attached as Annex B to this proxy statement and is incorporated herein by reference. Greenhill’s opinion is not a recommendation as to how Validus shareholders should vote with respect to the issuance of Validus Shares pursuant to the proposed Acquisition or any other matter. The summary of Greenhill’s opinion that is set forth below is qualified in its entirety by reference to the full text of the opinion. Validus shareholders are urged to read the opinion in its entirety.

In connection with rendering its opinion, Greenhill, among other things:


	•	reviewed the Agreement and Plan of Amalgamation, dated as of March 31, 2009, executed by Validus and Validus Ltd. and a draft dated May 17, 2009 of the Amendment thereto (in each case, not executed by IPC as of the date of the opinion) (together, for purposes of this section, the “Amalgamation Documents”);

	•	reviewed the Form of the Scheme of Arrangement (the “Form of the Scheme of Arrangement”) included in the preliminary proxy statement on Schedule 14A filed by Validus with the SEC on May 12, 2009;

	•	reviewed the preliminary prospectus and offer to exchange, dated May 13, 2009, and the related Letter of Transmittal (both together with the Amalgamation Documents and the Form of the Scheme of Arrangement, the “Transaction Documents”) included in Amendment No. 1 to the Registration Statement on Form S-4 filed by Validus with the SEC on May 14, 2009;

	•	reviewed certain publicly available financial statements of IPC and Validus;

	•	reviewed certain other publicly available business and financial information relating to IPC and Validus that Greenhill deemed relevant;

	•	reviewed certain information, including financial forecasts and other financial and operating data concerning Validus prepared by the management of Validus;

-68-


	•	discussed the past and present operations and financial condition and the prospects of Validus with senior executives of Validus;

	•	reviewed the historical market prices and trading activity for IPC Shares and Validus common shares and analyzed their implied valuation multiples;

	•	compared the value of the consideration pursuant to the Acquisition with that received in certain publicly available transactions that Greenhill deemed relevant;

	•	compared the value of the consideration pursuant to the Acquisition with the trading valuations of certain publicly traded companies that Greenhill deemed relevant;

	•	compared the value of the consideration pursuant to the Acquisition with the relative contribution of IPC to the pro forma combined company based on a number of metrics that Greenhill deemed relevant; and

	•	performed such other analyses and considered such other factors as Greenhill deemed appropriate.

Given the unsolicited nature of the proposed Acquisition, Greenhill’s review and analysis of IPC and its business and financial information were necessarily limited to information that was publicly available as of the date of the opinion. Greenhill did not review financial forecasts and other financial and operating data concerning IPC prepared by management of IPC or other non-public information regarding IPC, nor did Greenhill participate in discussions or negotiations among representatives of IPC and its legal or financial advisor and representatives of Validus or its legal advisor.

In giving its opinion, Greenhill assumed and relied upon, without independent verification, the accuracy and completeness of the information publicly available, supplied or otherwise made available to it by representatives and management of Validus for the purposes of its opinion. Greenhill further relied upon the assurances of the representatives and management of Validus that they were not aware of any facts or circumstances that would make such information inaccurate or misleading. With respect to the financial forecasts and projections and other data that were furnished or otherwise provided to it, Greenhill assumed that such financial forecasts and projections and other data were reasonably prepared on a basis reflecting the best currently available estimates and good faith judgments of the management of Validus as to those matters, and Greenhill relied upon such financial forecasts and projections and other data in arriving at its opinion. Greenhill expressed no opinion with respect to such financial forecasts and projections and other data or the assumptions upon which they were based. Greenhill did not make any independent valuation or appraisal of the assets or liabilities of IPC, nor was Greenhill furnished with any such appraisals. Greenhill assumed, with the consent of Validus’ board of directors, that the Acquisition will be treated as a reorganization for United States federal income tax purposes. Greenhill assumed that the Acquisition will be consummated in accordance with the terms set forth in the applicable final (and fully executed, if applicable) Transaction Documents, which Greenhill further assumed will be identical in all material respects to the applicable draft (and form, as applicable) Transaction Documents that Greenhill reviewed, and without amendment or waiver of any material terms or conditions set forth in the applicable Transaction Documents. Greenhill further assumed that all material governmental, regulatory and other consents, approvals and waivers necessary for the consummation of the applicable Acquisition will be obtained without any adverse effect on IPC, Validus, an Acquisition or the contemplated benefits of an Acquisition meaningful to Greenhill’s analysis. Greenhill’s opinion was necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to it as of, May 17, 2009. It should be understood that subsequent developments may affect Greenhill’s opinion, and Greenhill does not have any obligation to update, revise, or reaffirm its opinion.

Greenhill’s opinion was for the information of Validus’ board of directors and was not intended to be and is not a recommendation as to how Validus shareholders should vote with respect to the issuance of Validus Shares pursuant to an Acquisition or as to whether the Validus shareholders should take any other action at any meeting of the Validus shareholders convened in connection with an Acquisition or any other matter. Greenhill’s opinion did not address the underlying business decision of Validus to engage in the Acquisition or the relative merits of the Acquisition as compared to any other alternative strategies that might exist for Validus, and as such was not intended to be and did not constitute a recommendation to Validus’ board of directors as to whether they should approve the proposed Acquisition, the documents in connection therewith or any related matters. Greenhill did not express an opinion as to any aspect of the proposed Acquisition, other than the fairness to Validus of the consideration pursuant

-69-

to the Acquisition from a financial point of view. In particular, Greenhill did not express any opinion as to the prices at which Validus common shares will trade at any future time. Greenhill further did not express any opinion with respect to the amount or nature of any compensation to any officers, directors or employees of Validus, or any class of such persons relative to the consideration pursuant to the Acquisition or with respect to the fairness of any such compensation.

Summary of Greenhill’s Financial Analyses

The following is a summary of the material financial analyses provided by Greenhill to Validus’ board of directors in connection with rendering its opinion described above. The summary set forth below does not purport to be a complete description of the analyses performed by Greenhill, nor does the order of analyses as set forth below represent the relative importance or weight given to those analyses by Greenhill. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and are not alone a complete description of Greenhill’s financial analyses.

Exchange Ratio Analysis

Greenhill calculated the historical range and average of exchange ratios (the price of an IPC common share divided by the price of a Validus common share). Using the daily closing prices of Validus common shares and IPC Shares, the low, high and average exchange ratios for the three-month, six-month and twelve-month periods ending on May 15, 2009 are set forth in the table below. The percent premium that the consideration pursuant to the Acquisition represents over the average exchange ratios for each period is set forth in the table below.


	Low			Average			High			Premium(1)

May 15, 2009		—			—			—			13.2	%
Previous 3 Months		0.930	x		1.090	x		1.200	x		15.0	%
Previous 6 Months		0.930	x		1.140	x		1.450	x		10.0	%
Previous 12 Months		0.930	x		1.239	x		1.560	x		2.6	%


(1)		Calculated as the premium of $3.00 plus 1.1234 times the average daily closing price of Validus common shares in the period over the average daily closing price of IPC Shares in the period.

Transaction Multiple Analysis

Greenhill calculated the multiple of a range of assumed offer values per IPC Share to several operating metrics for calendar years 2009 and 2010, including estimated earnings per share based upon mean estimates obtained from Institutional Brokers Estimate System, which we refer to as IBES. The calculations were based upon IPC Shares outstanding as of March 31, 2009 on a fully diluted basis. This analysis indicated the following multiples:

Assumed

Value per

2009E P/E

2010E P/E

Price/Book

Price/Tangible

IPC Share

IBES Estimate

Value(1)

Book Value(1)

$28.00

5.5x

5.8x

0.85x

$28.50

5.6x

5.9x

0.87x

$29.00

5.7x

6.0x

0.88x

$29.50

5.8x

6.1x

0.90x

$30.14

5.9x

6.3x

0.92x

$30.50

6.0x

6.3x

0.93x

$31.00

6.1x

6.4x

0.95x

$31.50

6.2x

6.5x

0.96x

$32.00

6.3x

6.7x

0.98x

$32.50

6.4x

6.8x

0.99x

$33.00

6.5x

6.9x

1.01x

$33.50

6.6x

7.0x

1.02x

-70-


(1)		Book value per IPC common share is calculated as of March 31, 2009 and is based upon 55,948,821 IPC common shares outstanding, 526,000 options outstanding and 493,000 unvested restricted stock units, restricted common shares and performance share units.

Dividend Discount Analysis

Greenhill performed a dividend discount analysis of IPC to determine a range of implied present values per IPC common share assuming that IPC continues to operate as a stand-alone company. This range was determined by adding the present value of the estimated future excess capital of IPC available to be dividended in each period and the present value of the estimated terminal value of IPC Shares. To estimate present values, Greenhill discounted the estimated future excess capital of IPC available to be dividended in each period through 2013 and the estimated terminal value of IPC Shares by a range of discount rates that take into account risk, the opportunity cost of capital, expected returns and other appropriate factors.

In connection with this analysis, Greenhill utilized 5-year net income and revenue projections based on IBES estimates for 2009 and 2010, extrapolated by Greenhill to 2013. In calculating these extrapolations, Greenhill assumed, among other things, a 4.0% return on total assets, with projections based on an assumed total assets to total equity ratio of 1.30x, and a net premiums written to total equity ratio of 0.20x. In addition, Greenhill assumed that 493,000 unvested restricted shares of IPC would vest at the end of 2009, and that IPC would continue to pay an aggregate annual dividend equal to $0.88 per IPC common share throughout the 5-year projection period.

Greenhill then calculated a range of implied present values per IPC common share by applying:


	•	a range of terminal multiples of 0.70x to 0.90x to year 2013 estimated book value of IPC Shares; and

	•	a range of discount rates of 9.0% to 11.0% to each of the estimated future excess capital of IPC available to be dividended in each period through 2013 and the estimated terminal value of IPC Shares.

This analysis resulted in a range of implied present values per IPC common share from $26.77 to $36.23.

Comparable Company Analysis

Greenhill reviewed and compared specific financial multiples, ratios and operating statistics of IPC to corresponding financial multiples, ratios and operating statistics for selected publicly traded reinsurance companies and compared the trading value of IPC to the trading values of the selected companies. The companies chosen by Greenhill were:


	•	ACE Limited

	•	Allied World Assurance Company Holdings Ltd

	•	Arch Capital Group Ltd.

	•	Aspen Insurance Holdings Limited

	•	Axis Capital Holdings Limited

	•	Endurance Specialty Holdings Ltd.

	•	Everest Re Group, Ltd.

	•	Flagstone Reinsurance Holdings Limited

	•	Greenlight Capital Re, Ltd.

	•	IPC Holdings, Ltd.

	•	Max Capital Group Ltd.

	•	Montpelier Re Holdings, Ltd.

	•	Munich Re Group

-71-


	•	Odyssey Re Holdings Corp.

	•	PARIS RE Holdings Limited

	•	PartnerRe Ltd.

	•	Platinum Underwriters Holdings, Ltd.

	•	RenaissanceRe Holdings Ltd.

	•	Swiss Reinsurance Company Ltd.

	•	TransAtlantic Holdings, Inc.

	•	XL Capital Ltd

For each of the companies identified above, Greenhill calculated and compared various financial multiples, ratios and operating statistics based on publicly available financial data and closing share prices as of May 15, 2009.

Although none of the companies are directly comparable to IPC (other than IPC), Greenhill selected these companies because they had publicly traded equity securities and were deemed to be similar to IPC in one or more respects including the nature of their business, size, diversification, financial performance and geographic concentration. This analysis indicated the following mean and median trading multiples for the selected companies:

Price/

Tangible Book

Price/EPS

Price/

Book Value

Value

2009E

EPS 2010E

Mean

0.85

0.94

6.5

6.4

Median

0.81

0.84

6.1

5.8

Greenhill then applied a range of selected multiples derived from the selected companies to corresponding financial data of IPC for the corresponding periods. This analysis indicated the following ranges of implied equity value and per share value for IPC:


	Implied per
Statistic	Share Value(2)

2009E Net Income(1)	$	25.04 - $32.56
2010E Net Income(1)	$	23.63 - $30.71
Book Value	$	25.97 - $29.22
Tangible Book Value	$	25.97 - $29.22


(1)		Estimates are mean IBES.

(2)		Based upon 55,948,821 IPC common shares outstanding, 526,000 options outstanding and 493,000 unvested restricted stock units, restricted common shares and performance share units.

Precedent Transaction Analysis

Global Reinsurance Transactions. Using publicly available information, Greenhill analyzed selected merger and acquisition transactions with transaction values over $100 million in the global reinsurance industry beginning

-72-

in February 1999. The following table identifies the global reinsurance transactions reviewed by Greenhill in this analysis:


Announcement Date	Target	Acquiror

August 4, 2008	CastlePoint Holdings, Ltd.	Tower Group, Inc.
January 7, 2008	Helicon Re Holdings, Ltd.	White Mountains Insurance Group, Ltd.
November 5, 2007	PXRE Reinsurance Company	TAWA plc
December 9, 2003	ABB Insurance Holding Sweden AB (Sirius International Group)	White Mountains Insurance Group, Ltd.
October 24, 2003	ERC Life Reinsurance Corporation	Scottish Re Group Limited
December 19, 1999	LaSalle Re Holdings Limited	Trenwick Group Inc.
August 15, 1999	Terra Nova (Bermuda) Holdings Ltd.	Markel Corporation
June 21, 1999	Chartwell Re Corporation	Trenwick Group Inc.
May 27, 1999	Capital Re Corporation	ACE Limited
February 15, 1999	NAC Re Corp.	XL Capital Ltd.

For the selected global reinsurance transactions, to the extent this information was available, Greenhill calculated the multiples implied by each transaction relative to a number of metrics, including the target company’s book value and tangible book value at the time of such transaction. This analysis indicated the following mean and median multiples for the selected global reinsurance transactions:


	GAAP Multiples
			Tangible
	Book Value		Book Value

Mean		0.99x		1.03x
Median		0.95x		0.96x

Greenhill then applied a range of selected multiples derived from the selected global reinsurance transactions to corresponding financial data of IPC for the corresponding date. This analysis indicated the following ranges of implied equity value and per share value for IPC:


	Implied per
Statistic	Share Value(1)

Book Value	$	29.22 - $38.96
Tangible Book Value	$	29.22 - $38.96


(1)		Based upon 55,948,821 IPC common shares outstanding, 526,000 options outstanding and 493,000 unvested restricted stock units, restricted common shares and performance share units.

Premiums Paid Analysis. Greenhill analyzed the premiums paid in stock-for-stock and part cash, part stock acquisition transactions since May 2004 with a transaction value of between $500 million and $5 billion. Greenhill calculated, for each of these transactions, the premium of the transaction consideration over the historical closing prices for each of the one-day, one-week and one-month periods prior to announcement of such transaction. Greenhill then applied the medians and ranges of such premiums, shown in the table below, to corresponding closing prices per IPC Share, using the day immediately prior to the announcement of IPC’s proposed merger with Max as the corresponding announcement date. This analysis indicated a range of implied values per IPC Share shown below:


			Implied per
Timing	Premium Range		Share Value

One Day Prior		14.0% - 25.0%	$	28.97 - $31.76
One Week Prior		15.0% - 25.0%	$	32.20 - $35.00
One Month Prior		16.0% - 25.0%	$	29.77 - $32.08

It should be noted that no transaction utilized in the analyses above is identical to the proposed Acquisition. A complete analysis involves complex considerations and judgments concerning differences in financial and

-73-

operating characteristics of the companies involved in these transactions and other factors that could affect the premiums and multiples in these transactions to which the proposed Acquisition is being compared.

Book Value Growth Analysis

Using IPC book value as of March 31, 2009, based on IPC’s public filings, and mean Bloomberg estimates of IPC book value through the end of year 2009, Greenhill calculated the implied price to book value multiple that a range of assumed offer values per IPC Share would represent at the end of each quarter set forth in the table below. This analysis indicated that due to IPC’s projected book value growth, the implied price to book value multiple would decrease over time, as illustrated below:

Assumed

March 31,

June 30,

September 30,

December 31,

per Share Value

2009

$29.50

0.900x

0.863x

0.852x

0.825x

$30.14

0.919x

0.882x

0.871x

0.843x

$30.50

0.930x

0.892x

0.881x

0.853x

$31.00

0.946x