Bermuda-based reinsurer Validus Holdings has topped Allied World Assurance Company's offer to buy Transatlantic Holdings.Validus' offer of $55.95 per share for the US reinsurer, announced last night, is worth around $3.5 billion, a 12 percent premium over the $51.10 per share Allied deal.Two years ago, Validus acquired Bermuda rival IPC Holdings Ltd, after derailing a proposed merger between Max Capital Group and IPC.If Transatlantic pulls out of the merger with Allied World, which was announced last month, it would have to pay a $115 million break-up fee. Under the Validus offer, Transatlantic shareholders would receive 1.5564 Validus common shares and $8 in cash per share.Ed Noonan, chairman and chief executive of Validus, said the offer represented a “compelling strategic combination”."The combination of Validus' strong positions in Bermuda and London with Transatlantic's profile in the United States, continental Europe and Asia will produce a rare example of a complementary business fit with minimal overlap,” Mr Noonan said.“Combining a leader of the short-tail reinsurance market with a leader of the long-tail market creates a franchise properly balanced to manage the reinsurance underwriting cycle.“Validus has a superior business plan that will drive earnings by capturing the best priced segments of the reinsurance market while strengthening Transatlantic's balance sheet to position it to better withstand the remaining leg of the soft casualty pricing cycle."The Validus bid represents a 14 percent premium over Transatlantic's closing share price yesterday of $49.02.