NEW YORK (Reuters) - Validus Holdings Ltd, a Bermuda-based provider of insurance and reinsurance, said yesterday it was taking its $1.6 billion all-stock hostile bid for rival IPC Holdings Ltd straight to shareholders.

Validus said earlier in April it would reach out to IPC shareholders after IPC's board rejected its takeover bid in favour of a deal with Bermuda rival Max Capital Group Ltd.

It said yesterday it is urging shareholders of IPC, also based in Bermuda, to vote against IPC's deal with Max.

It also said it was starting an exchange offer for all IPC shares and petitioning the Supreme Court of Bermuda to approve it buying IPC's shares without the agreement of IPC's board — if IPC shareholders approve the deal.

Under the exchange offer, Validus would give 1.2037 Validus shares for each IPC share.

"The fact that IPC's board has agreed to an extraordinarily restrictive agreement with Max that precludes IPC from engaging in discussions with Validus has left us with no choice but to take our offer directly to IPC shareholders," said Ed Noonan, Validus' chairman and CEO, in a statement.

Validus made its unsolicited stock offer for IPC on March 31. But IPC already had a deal with Max Capital, and on Tuesday it recommended its shareholders back that agreement.

The battle for IPC, formed more than 15 years ago with backing from American International Group Inc ends a nearly 12-year hiatus in deals among Bermuda-based insurers.

Validus was formed in 2005 after claims from Hurricane Katrina created a surge in demand for property-catastrophe coverage. It expanded into other lines of business through its 2007 acquisition of Talbot Holdings, an underwriter in the Lloyd's of London insurance market.

IPC was formed by Maurice (Hank) Greenberg, who solicited multiple investors to create the company. AIG was IPC's largest shareholder until 2006, when AIG sold its stake.