A war of words has erupted between the two insurers vying for the takeover of Transatlantic Holdings.

Allied World Assurance Company (AWAC) has hit back at Validus’ bid for Transatlantic, describing it as “inferior”.

AWAC chairman, president and CEO Scott Carmilani said in a statement: “We believe that Validus’ proposal is inferior. It cannot provide Transatlantic’s shareholders with the same value that our merger of equals can.”

“Validus’ unsolicited proposal is an attempt to acquire Transatlantic at a significant discount to book value,” Carmilani continued. “In addition, the needed reduction to Transatlantic’s property catastrophe business in the inferior Validus takeover to a level compliant with Transatlantic’s enterprise risk management risk tolerances would lead to limited property catastrophe writing flexibility.”

AWAC’s statement comes off the back of a statement released by Bermuda-based (re)insurer Validus on 17 July, which defended its $3.25bn offer as providing “superior upfront value” to Transatlantic’s shareholders.

In addition to the aggregate earnings power of a combined Validus and Transatlantic, Validus said it believes there are significant opportunities to expand earnings and ROE through combination synergies.

Validus said: “The potential synergies substantially exceed the $80m cited by Allied World and Transatlantic on their joint June 13, 2011 conference call.”

The (re)insurer also said that the merger would create a better spread of risk as well as increasing the combined company’s excess capital by over $500m.