Aspen Insurance Holdings Ltd yesterday took aim at the compensation package of Endurance Specialty Holdings Ltd boss John Charman as the war of words intensified between the Bermuda insurance-sector rivals.

Endurance is pursuing efforts to take over Aspen, despite its second offer, worth about $3.2 billion, having been rejected by the Aspen board. Yesterday US financial regulator the Securities and Exchange Commission (SEC) declared “effective” Endurance’s registration statement relating to the takeover bid.

The boards of both companies have lobbied Aspen shareholders, who will ultimately decide whether the combination goes through.

Each company has attacked the other’s track record on pursuing the interests of shareholders and on corporate governance.

Aspen’s latest letter, mailed to shareholders yesterday, singles out Mr Charman’s compensation package for criticism.

“Despite Mr Charman reportedly getting kicked out of his prior company, in 2013 the Endurance board gave him a $35.1 million restricted stock grant and options valued at another $10.2 million,” Aspen states.

“These awards are not conditioned on performance and are simply a handout to Mr Charman, as long as he stays at Endurance for several years.”

Aspen accuses Endurance of “tone deafness by actually boasting about its high insider ownership when that ownership level is substantially due to these excessive equity awards”.

It added that holders of more than 60 percent of Endurance shares had rejected Mr Charman’s compensation package, but the board had made no changes in response.

SEC filings show that Mr Charman’s compensation for last year included $60 in salary, as well as the restricted awards and option awards highlighted by Aspen. A nominal salary, without any bonuses, is all Mr Charman will receive for the rest of his first five years in the job, according to a statement made by Endurance when he first joined the company.

In an investor presentation published yesterday, Endurance said that its insider ownership totalled 5.2 percent, as opposed to 1.2 percent at Aspen, backing up its case for board and management being better aligned with the interests of shareholders.

Mr Charman took over at the helm of Endurance in May last year, about a year after he was squeezed out by the board of Axis Capital, the company he founded in 2001. Endurance said at the time that Mr Charman and his family had invested $30 million in Endurance shares. He has committed to invest a further $25 million in Endurance shares on the completion of the combination with Aspen.

Endurance responded that the focus on Mr Charman’s compensation was “misleading” and an attempt at distracting from the offer, and from Aspen’s “poor operating performance under current management and dismal corporate governance practices”.

“Aspen’s statements regarding John Charman’s compensation arrangements are clearly misleading,” an Endurance spokesman said. “The facts are clear: no other CEO in our industry is aligned with shareholders like John Charman.

“He invested $30 million of his own capital in Endurance upon joining the company, committed to invest an additional $25 million in connection with the Aspen transaction and receives no base salary or other compensation, all of which is evidence that he is fully committed to the company as a shareholder on a long-term basis.

“We are confident that Aspen shareholders — who have overwhelmingly indicated their support for the transaction — will see through this smokescreen and vote to send a clear message to the Aspen board that now is the time to engage with Endurance and to take concrete action towards realising the compelling value of the transaction.”

In its presentation, Endurance took its own shot at Aspen CEO Chris O’Kane’s compensation. “In April 2014, following public announcement of Endurance’s initial acquisition proposal, Chris O’Kane received a share grant that was 26 percent larger than his 2013 share grant,” Endurance stated.

According to regulatory filings, Mr O’Kane’s compensation for the 2013 fiscal year totalled $4.67 million, which included $887,085 in salary, $1.18 million as a bonus, and a stock award of $2.43 million.

Endurance argues that the combined company would a be stronger competitor in the industry and could slash corporate expenses across the larger organisation. Aspen argues that the merger would lead to a loss of business, that Aspen shareholders would do better with a stand-alone company and that the offer undervalues Aspen.

Endurance is seeking support from Aspen shareholders for a special meeting to vote on its plan to expand the Aspen board, and has set a target date of July 25 for Aspen shareholders to vote on its proposals. Endurance has set up a website outlining its offer and the strategic case for the merger at www.endurance-aspen.com, while Aspen lays out its arguments at aspen.shareholderresource.com.

Increased merger activity in the re/insurance sector has been expected by some observers this year, as companies flush with cash after a period of below-average catastrophe incidence struggle to grow profitability. On the underwriting side, they are being challenged by suppressed rates as a wave of alternative capital enters the market, while investment returns have been reduced to a trickle by low interest rates.

Earlier this month at a conference in the UK, XL Group CEO Mike McGavick predicted a wave of M&A activity in the insurance space over the next few years, primarily as a result of regulatory pressures.