Endurance Specialty Holdings Ltd has increased the value of its takeover offer for fellow Bermuda re/insurer Aspen Insurance Holdings Ltd and is making moves to shake up the Aspen board of directors.

Endurance’s move comes after Aspen’s board vehemently rejected a $3.2 billion takeover proposal from Endurance in April and then implemented a “poison pill” to make the takeover more difficult to achieve.

Endurance has raised its offer to $49.50 a share from $47.50, adding about $35 million in total to the value of the bid.

The bidder will also push for a special meeting to increase the size of Aspen’s board to 19 from 12, meaning the majority of seats would be up for election in 2015, Endurance said. Aspen yesterday dismissed Endurance’s move as “desperate”.

Endurance chairman and CEO John Charman said a statement released by his company yesterday: “We will not be deterred by an entrenched board and management that refuse to engage productively on the merits of our compelling proposal.

“Actions we are announcing today demonstrate the absolute determination with which we are pursuing this transaction.”

Aspen’s board and its CEO Chris O’Kane have dismissed the possibility of a merger with Endurance as a bad fit and have criticised what they believe is a “command and control” management style at Endurance.

Endurance has argued the combination makes sense in terms of increased size leading to a stronger market position. And while Mr Charman has said there is little overlap between the two companies’ underwriting books, he sees great opportunities for expense savings for the combined company.

Endurance said it has secured a $1 billion bridge loan from Morgan Stanley to help fund the deal.

Aspen said yesterday that its board unanimously rejected the second offer. The effort to increase the size of the board is among “desperate and unusual legal tactics” pursued by Endurance, Aspen chairman Glyn Jones said in a statement.

“In addition to grossly undervaluing Aspen, the proposal represents a strategic mismatch and, based on our conversations with major clients and brokers, would result in significantly greater dis-synergies than Endurance claims,” Mr Jones added.

“Endurance’s revised proposal represents a backwards step. Given Aspen’s strong 4.4 percent book value growth in the first quarter, Endurance’s new proposal represents an even lower multiple.”

Last night, an Endurance spokesman responded to the Aspen statement.

“The shrill rhetoric of Aspen’s deeply entrenched board merely underscores the need to give Aspen shareholders the voice they deserve, which is exactly what our actions this morning are designed to do,” he said.

“It is clear that Aspen’s board and management, with less than 1.4 percent ownership, are not aligned with the best interests of their shareholders and have presented no credible plan to deliver value that can compete with what we are offering, which represents a 19.5 percent premium over Aspen’s all-time high stock price prior to our offer.

“What Aspen’s board and management have failed to achieve for ten years, we are prepared to deliver today.”

Under the increased proposal, each Aspen shareholder will have the right to receive either $49.50 for each Aspen share in cash; or 0.9197 Endurance shares for each Aspen share; or a combination of cash and Endurance common shares (0.5518 Endurance common shares and $19.80 in cash for each Aspen share). In total, the offer seeks to achieve a mix of 40 percent cash and 60 percent Endurance shares.

Mr Charman said: “In our extensive discussions with many of Aspen’s shareholders over the last couple of months, they have expressed broad support for the strategic and financial merits of the proposed transaction.

“Notwithstanding that support, Aspen’s board and management have refused to engage with us in any manner whatsoever, even after we again approached them privately with a significantly increased proposal.”

Endurance stated it would yesterday file with US financial regulator the Securities and Exchange Commission a preliminary solicitation statement seeking the support of Aspen’s shareholders to convene a special meeting to raise the number of directors to 19.

Endurance is also seeking the support of Aspen shareholders for a court-ordered meeting to vote on a scheme of arrangement under Bermuda law under which Endurance would acquire all of Aspen’s outstanding common shares on financial terms no less favourable than those contained in its increased proposal.

Mr Jones argued Endurance’s legal tactics had little chance of success. “Endurance’s potential plan to seek a court petition for an involuntary scheme has never been used successfully in Bermuda to attempt to effect a hostile acquisition,” Mr Jones said.

“In fact, other hostile bidders have tried in vain to convince the Bermuda Supreme Court to impose an involuntary scheme of arrangement. In its most recent consideration of this issue, the Bermuda Supreme Court described this stratagem as an ‘unprecedented course to embark upon a hostile bid by way of a scheme in the teeth of the board’s opposition’.”

Mr Charman felt differently. “Aspen shareholders’ support for these proposals will clearly demonstrate to Aspen’s board and management that the will of the true owners of the company is to make this transaction a reality,” he said.

Aspen shares slipped 1.4 percent to $45.33 in New York trading yesterday, while Endurance dropped one percent to $51.20.

Bloomberg News quoted Keefe Bruyette & Woods analysts, led by Meyer Shields, stating in a note to clients: “We believe that Endurance will continue to aggressively pursue Aspen.”