![]() B E R M U D A I R E L A N D U N I T E D S T A T E S�� LLOYD’S Creating a World Class Specialty Insurer and Reinsurer Investor Presentation April 20, 2009 Filed by Max Capital Group Ltd. pursuant to Rule 425 under the Securities Act of 1933, as amended, and deemed filed pursuant to Rule 14a-12 under the Securities Exchange Act of 1934, as amended Subject Company: Max Capital Group Ltd. (Commission File No.: 000-33047) |
![]() 2 INFORMATION CONCERNING FORWARD LOOKING STATEMENTS AND CERTAIN OTHER INFORMATION This presentation includes statements about future economic performance, finances, expectations, plans and prospects of both IPC Holdings, Ltd. (“IPC”) and Max Capital Group Ltd. (“Max”) that constitute forward-looking statements for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward- looking statements are subject to certain risks and uncertainties, including the risks described in the preliminary joint proxy statement/prospectus of IPC and Max that has been filed with the Securities and Exchange Commission (“SEC”) under “Risk Factors,” many of which are difficult to predict and generally beyond the control of IPC and Max, that could cause actual results to differ materially from those expressed in or suggested by such statements. For further information regarding cautionary statements and factors affecting future results, please also refer to the most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q filed subsequent to the Annual Report and other documents filed by each of IPC or Max, as the case may be, with the SEC. Neither IPC nor Max undertakes any obligation to update or revise publicly any forward-looking statement whether as a result of new information, future developments or otherwise. This presentation contains certain forward-looking statements within the meaning of the U.S. federal securities laws. Statements that are not historical facts, including statements about our beliefs, plans or expectations, are forward-looking statements. These statements are based on our current plans, estimates and expectations. Some forward-looking statements may be identified by our use of terms such as “believes,” “anticipates,” “intends,” “expects” and similar statements of a future or forward looking nature. In light of the inherent risks and uncertainties in all forward-looking statements, the inclusion of such statements in this presentation should not be considered as a representation by us or any other person that our objectives or plans will be achieved. A non-exclusive list of important factors that could cause actual results to differ materially from those in such forward-looking statements includes the following: (a) the occurrence of natural or man-made catastrophic events with a frequency or severity exceeding our expectations; (b) the adequacy of our loss reserves and the need to adjust such reserves as claims develop over time; (c) any lowering or loss of financial ratings of any wholly-owned operating subsidiary; (d) the effect of competition on market trends and pricing; (e) changes in general economic conditions, including changes in interest rates and/or equity values in the United States of America and elsewhere and continued instability in global credit markets; and (f) other factors set forth in the preliminary joint proxy statement/prospectus of IPC and Max, the most recent reports on Form 10-K, Form 10-Q and other documents of IPC or Max, as the case may be, on file with the SEC. Risks and uncertainties relating to the proposed transaction include the risks that: the parties will not obtain the requisite shareholder or regulatory approvals for the transaction; the anticipated benefits of the transaction will not be realized; and/or the proposed transactions will not be consummated. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We do not intend, and are under no obligation, to update any forward looking statement contained in this presentation. Additional Information about the Proposed Business Combination and Where to Find It: This material relates to a proposed business combination between IPC and Max. On March 27, 2009, IPC filed with the SEC a registration statement on Form S-4, which included a preliminary joint proxy statement/prospectus, and filed Amendment No. 1 on April 13, 2009. This material is not a substitute for the preliminary joint proxy statement/prospectus that IPC has filed with the SEC or any other document that IPC or Max may file with the SEC or send to their respective shareholders in connection with the proposed transaction. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE PRELIMINARY JOINT PROXY STATEMENT/PROSPECTUS AND ALL OTHER RELEVANT DOCUMENTS FILED OR THAT WILL BE FILED WITH THE SEC, INCLUDING THE DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS THAT WILL BE PART OF THE DEFINITIVE REGISTRATION STATEMENT ON FORM S-4, AS THEY BECOME AVAILABLE BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED BUSINESS COMBINATION. All such documents, if filed, would be available free of charge at the SEC’s website (www.sec.gov) or by directing a request to IPC, at Jim Bryce, President and Chief Executive Officer, or John Weale, Executive Vice President and Chief Financial Officer, at 441-298-5100, in the case of IPC’s filings, or Max, at Joe Roberts, Chief Financial Officer, or Susan Spivak Bernstein, Senior Vice President, Investor Relations at 441-295- 8800, in the case of Max’s filings. Participants in the Solicitation: IPC and Max and their directors, executive officers and other employees may be deemed to be participants in any solicitation of IPC and Max shareholders, respectively, in connection with the proposed business combination. Information about IPC’s directors and executive officers is available in Amendment No. 1 to the preliminary joint proxy statement/prospectus filed with the SEC on April 13, 2009, relating to IPC’s annual meeting of shareholders; information about Max’s directors and executive officers is available in the amendment to its annual report on Form 10-K, filed with the SEC on April 1, 2009. |
![]() Global underwriter of specialty insurance and reinsurance Multiple operating platforms - Bermuda, Dublin, United States, and Lloyd’s Diversified business profile across specialty classes of business Highly experienced management with proven track record Opportunistic and disciplined underwriting strategy Analytical and quantitative underwriting orientation 5 year average combined ratio, with cats, of 93% Strong, liquid balance sheet with conservative reserving track record Gross premiums written (2008) of $1.3 billion and equity of $1.3 billion Prudent capital management - $305 million in dividends/repurchases over last 5 years Significant expansion of underwriting platforms with minimal goodwill High quality investment portfolio repositioned to reflect traditional underwriting base Alternative investments are now a much smaller part of Max’s asset base and are reducing further Max has evolved and repositioned itself since its formation in 1999 Max Capital Today 3 Short-Tail Long-Tail 62% 38% Insurance Reinsurance 53% 47% |
![]() Bermuda / Dublin Reinsurance Bermuda / Dublin Insurance Lloyd’s U.S Specialty Insurance Major Classes Agriculture Aviation Excess liability Medical malpractice Professional liability Property Marine and energy Whole account Workers’ comp Life and annuity Aviation Excess liability Professional liability Property Personal accident Financial institutions Professional liability Property General liability Marine Property Operating Regions United States Latin America Canada European Union Japan Australia New Zealand United States European Union United Kingdom Japan Denmark United States Offices Bermuda Dublin Bermuda Dublin Hamburg London Leeds Tokyo Copenhagen New York Philadelphia Richmond Atlanta Dallas San Francisco Global Reach Through Established Platforms 4 |
![]() Max Has a Strong Market Position in Specialty Classes … Working layer excess business Focus on Fortune 1000 customers 2008 combined ratio = 88% 2008 GPW - $389 million 2008 GPW - $420 million Bermuda / Dublin Insurance Bermuda / Dublin Reinsurance Working layer excess / quota share business Cross class capability 2008 combined ratio = 87% 5 Excess Liability Professional Liability Aviation Property 14% 14% 41% 32% |
![]() … With an Attractive Position in the U.S. Market and Lloyd’s Launched in 2007 Nationwide niche E&S underwriter Growing into expense base – target combined ratio of 85% to 90% Expected GPW of $250 million in 2009 2008 GPW - $194 million 2008 GPW - £65 million (1) U.S. Insurance Max at Lloyd’s Acquired in November 2008 Direct and reinsurance Expected GPW of $150 million in 2009 ____________________ (1) GPW reflects full year of business, which includes periods prior to the acquisition by Max. Marine General Casualty Property 20% 31% 49% 6 Accident & Health Fin. Institutions Prof. Indemnity / Med. Mal. Employers' Public Liability Property Treaty 45% 1% 19% 18% 17% |
![]() Structure Stock-for-stock merger of equals Exchange Ratio Fixed exchange ratio of 0.6429 IPC shares for each share of Max Pro Forma Ownership (Fully Diluted) 58% by IPC shareholders 42% by Max shareholders Board of Directors 12 directors in total – 6 directors from Max, including CEO, and 6 directors from IPC Non-Executive Chairman: Ken Hammond Non-Executive Vice-Chairman: Mario Torsiello Management Marty Becker, Chief Executive Officer Jim Bryce, Non-Executive Chairman of Max IPC Re Ltd. Peter Minton, Chief Operating Officer Joe Roberts, Chief Financial Officer John Weale, EVP & Treasurer Company Name Max Capital Group Ltd. Reinsurance Company – Max IPC Re Ltd. Approvals IPC and Max shareholder approvals Customary regulatory approvals Targeted Closing June 2009 HSR clearance obtained A Merger of Strength – Transaction Overview 7 |
![]() A truly diversified, balanced global underwriting platform Strong and vibrant franchise serving both property & casualty markets Strong capital base with over $3 billion in equity and minimal leverage Greater size enhances “margin of safety” and financial flexibility Strong and deep management and underwriting teams Complementary businesses with little overlap Excess capital can be profitably deployed Increased ability to accelerate growth in a hardening market Both property & casualty markets currently provide attractive opportunities IPC/Max Creates A World Class Specialty Company We believe this combination will enhance value for IPC / Max shareholders 8 |
![]() Strong and Well-Capitalized Company Combination provides greater size and scale Enhances valuation multiples and ratings profile Supports opportunistic expansion in hardening market Platform/underwriters are in place High quality balance sheet Ability to more efficiently manage capital Greater diversification results in higher capital scores 12/31/2008 Company Equity 1 Everest Re $4,960 2 AXIS 4,461 3 PartnerRe 4,199 4 Arch Capital 3,433 5 Transatlantic 3,198 IPC + Max 3,131 6 RenaissanceRe 3,033 7 OdysseyRe 2,828 8 Aspen 2,779 9 Allied World 2,417 10 Endurance 2,207 11 Validus 1,939 12 IPC Holdings 1,851 13 Platinum Re 1,809 14 Montpelier Re 1,358 15 Max Capital 1,280 16 FlagstoneRe 986 17 Greenlight Capital 485 9 ____________________ (1) Includes RE, AXS, PRE, ACGL, TRH and RNR. (2) Includes ORH, AHL, AWH, ENH, VR, IPCR, PTP, MRH and MXGL. (3) Based on A.M. Best financial strength ratings. Average 3-Year 2007 2008 Current Rating (3) > $3.0 billion of equity (1) 1.28x 1.39x 1.09x 1.01x A to A+ < $3.0 billion of equity (2) 1.06x 1.16x 0.89x 0.83x A- to A |
![]() Strong Balance Sheet and Capital Base Combined (2) ____________________ (1) Investment portfolio includes cash. (2) Does not reflect GAAP purchase accounting adjustments. For more information, see the joint proxy statement/prospectus filed with the SEC by IPC on April 13, 2009. 10 As of December 31, 2008 ($mm) Investment Portfolio (1) $2,235.2 $5,356.9 $7,592.1 Total Assets $2,388.7 $7,252.0 $9,640.7 Loss & LAE Reserves $355.9 $4,305.1 $4,661.0 Stockholders' Equity $1,850.9 $1,280.3 $3,131.3 Corporate Debt $75.0 $241.4 $316.4 Total Debt / Capitalization 3.9% 15.9% 9.2% Investments / Equity 1.21x 4.18x 2.42x |
![]() Property / property cat 100% 2008 GPW = $403 million Reinsurance Insurance 47% 53% Reinsurance Insurance 35% 65% Life & annuity P&C long-tail Other short-tail Property / property cat 39% 14% 32% 15% 2008 GPW = $1,254 million 2008 GPW = $1,658 million Max Capital Reinsurance 100% Combined IPC Holdings A Truly Diversified Operating Platform 11 Life & annuity P&C long-tail Other short-tail Property / property cat 20% 19% 42% 19% |
![]() Opportunistic Expansion in a Hardening Market A merger creates excess capital to support new business Total property / property catastrophe premiums of over $550 million Peak catastrophe risk (1 in 250 PML) will be limited to 20% of capital Retentions on Max’s seasoned casualty insurance business expected to increase Lloyd’s expected to contribute approximately $150 million in gross premiums in 2009 ____________________ (1) Does not reflect GAAP purchase accounting adjustments. For more information, see the joint proxy statement/prospectus filed with the SEC by IPC on April 13, 2009. 12 ($mm) Combined (1) 2008 GPW $403 $1,254 $1,658 2008 NPW $397 $840 $1,237 12/31/2008 Equity $1,851 $1,280 $3,131 NPW / Equity 0.21x 0.66x 0.40x |
![]() Benefits of Combining Short and Long Tail Business Each $1 of catastrophe business is equal to writing 2.5x to 3.0x of casualty business, depending on the class Aggregate underwriting profit is similar – while resulting in more stable results 50% to 60% combined ratio in property is equivalent to achieving a 80% to 87% combined ratio in casualty based on higher (2.5x - 3.0x) premium leverage Earnings enhanced by higher investment income due to longer duration of liabilities Capital to be opportunistically deployed to generate highest risk adjusted returns Segments of the casualty market currently offer attractive opportunities Diversified portfolio of risks will generate increased and more stable underwriting returns 13 Diversified mix of business = lower underwriting volatility and more efficient utilization of capital |
![]() Max Investment Portfolio Highlights 14 Max maintains a highly rated and highly liquid portfolio ____________________ (1) Peers include: IPCR, PRE, ORH, ACGL, RE, RNR, MRH, ENH, TRH, AXS, AWH, PTP, VR, AHL, FSR, and GLRE. Peer average represents 12/31/08 allocation of preferred / equities and “other investments” as % of total investments. Alternatives Cash Fixed Income 68% 18% 14% 12/31/08 Alternatives allocation is decreasing Market neutral / absolute return focus Max alternatives in line with Bermuda peers Max / IPC Target Allocation)= 10 - 12% Bermuda Peers (1) (average),,= 10% As % of Total Investments Long / Short funds Emerging / Global Markets Opportunistic Arbitrage Strategies Distressed Securities 44% 17% 3% 22% 15% 10-12% 16% 14% 29% 0% 5% 10% 15% 20% 25% 30% 35% Max 12/31/05 Max IPC Target |
![]() Cash Alternative Investments Fixed Income Securities 68% 14% 18% Cash Equities Alternative Investments Fixed Income Securities 80% 8% 9% 3% 12/31/08 - $5.4 billion 12/31/08 - $2.2 billion IPC and Max Maintain a High Quality Investment Portfolio Max Capital IPC Holdings IPC and Max have similarly positioned investment portfolios Alternatives / equities of combined portfolio to be reduced to 10% - 12% of total 15 |
![]() March 31, 2009: Validus announces unsolicited, stock-for-stock, below book value, takeover proposal of IPC April 7, 2009: IPC Board unanimously determines Validus proposal is NOT “Superior” and reaffirms its recommendation that IPC shareholders vote to approve the Max merger Key Considerations: “The Validus Offer Fails to Meet IPC’s Diversification Goals” - Max’s diversified operations offer the best path to achieve diversification “The Max Transaction Has Significant Value Creation Potential and Upside for IPC Shareholders” - It also provides greater book value per share to IPC shareholders “The Validus Amalgamation Proposal is Less Certain, is Riskier for IPC’s Shareholders and Would Take Longer to Close” - Any transaction with Validus likely could not be completed before September, right in the middle of wind season April 8, 2009: Validus initiates hostile no vote proxy contest and publicly threatens litigation Max is Committed to the IPC Transaction Max will vigorously defend its merger-of-equals with IPC against Validus' hostile takeover 16 Choice for IPC Shareholders – Vote to Approve Max Merger or NO Transaction |
![]() Validus’ Offer is Risky… …Max Offers Certainty There is no "deal" with Validus Voting against Max merger does not mean IPC would choose to sell itself to Validus VR does not meet strategic objectives of IPC IPC shareholders have deal-in-hand with Max Max meets strategic and financial objectives of IPC VR's proposal is not binding VR can withdraw offer at any time No joint discussions with ratings agencies IPC has not conducted due diligence on VR Consents needed under credit facilities Max merger is executed and is binding IPC has a signed agreement with Max Satisfactory indications from ratings agencies IPC has performed diligence on Max Credit facility consents are in hand VR offer would close during wind season – which could change both firms’ plans Expected June closing - before wind season Combining two short-tail CAT firms is risky IPC/Max will be an established and diversified platform VR at 93% of 52-week high at time of offer VR offer dilutive to IPC book value VR has significantly underperformed market and peers since going hostile on IPC Max at 53% of 52-week high at time of deal A combination with Max delivers more book value per share to IPC Peers have increased 9% since VR proposal Validus has a short and questionable operating history Ike/Gustav losses of 12% of 6/30/08 equity Largest loss among peer group Max has a proven, long-term, operating history Ike/Gustav losses of 3% of 6/30/08 equity Smallest loss among peer group Max Offers Certainty vs. No Deal with Validus 17 Deal vs. No Deal “Binding”? Closing Why Combine Two CAT Co’s? “Stock Premium” is Illusory Risk Management |
![]() Max Maintains Truly Diversified Underwriting Platforms Validus – 2008 GPW (1) Max – 2008 GPW ____________________ (1) Source: VR investor presentation dated March 31, 2009. Max’s casualty lines are developing favorably, with 65-75% in IBNR Validus has no diversification – 94% of 2008 GPW is short-tail business Other short-tail lines includes marine (29% of GPW) which are also catastrophe exposed as losses from Hurricanes Ike/Gustav show Max maintains well established underwriting platforms �� Bermuda, Dublin, U.S. and Lloyd’s Validus has underwriting capabilities in a limited number of lines and platforms Short-Tail Long-Tail Short-Tail Long-Tail Short-Tail Long-Tail 18 Max offers IMMEDIATE diversification across both short-tail and casualty classes |
![]() 83% 84% 75% 77% 96% 84% 104% 101% 96% 96% 124% 102% 0% 25% 50% 75% 100% 125% 150% 300% 2004 2005 2006 2007 2008 Average ____________________ Source: Company filings. Property focused reinsurers include RNR, IPC, VR, MRH and FSR. Diversified reinsurers include RE, AXS, ACGL, TRH, PRE, ORH, AWH, ENH, AHL, PTP and MXGL. Validus had the worst combined ratio relative to its mono-line peers Validus began operations following Hurricanes Katrina, Rita and Wilma Median 94% 116% 85% 83% 94% 94% Max 94% 106% 86% 88% 92% 93% Diversified Platforms Generate More Consistent Margins Diversified Reinsurers Property Focused Reinsurers Median 78% 201% 55% 61% 89% 97% IPC 78% 252% 33% 50% 56% 94% VR 57% 62% 92% NA Validus has underperformed its peers over the last 3 years 19 78% 140% 33% 50% 56% 71% 104% 252% 60% 73% 92% 116% 0% 25% 50% 75% 100% 125% 150% 300% 2004 2005 2006 2007 2008 Average |
![]() Max Has Significantly Less Cat Exposure Versus Validus Max seeks to limit its exposure to catastrophic events (probable maximum loss based on a 1 in 250 year event) to a maximum of 20% of surplus, often operating below this level Validus has significant volatility embedded in its underwriting operations Validus indicates its 1 in 250 year peak PML represents 33% of equity… …whereas Validus lost 12.4% of its equity in Ike/Gustav, a 1:10 -15 year event? Extrapolating recent experience of Ike/Gustav into a 1 in 250 year event, Max’s loss would be consistent with the stated PML Estimated 1 in 250 Year PML as % of 12/31/08 Equity ____________________ (1) Source : VR Q4 2008 investor presentation, filed on 2/13/09. Validus IPC Max U.S. Hurricane 33% 41% 19% California Earthquake 19% 41% 19% Europe Windstorm 21% 36% 5% (1) 20 |
![]() ____________________ Source : Company filings. Losses are generally disclosed net of reinstatement premiums. (1) Results reflect Ike only. (2) Equity includes preferred, which subsequently converted to common. (1) Validus had the greatest loss as a percentage of common equity among all its broad peer group Hurricane Ike is considered a 1 in 10-15 year event so large losses of capital would not be expected Max’s Diversified Portfolio Limits CAT Losses Ike/Gustav Ultimate Net Losses as a % of 6/30/08 Common Equity ($ in millions) (2) (2) Losses $256 $140 $276 $140 $165 $287 $384 $305 $171 $135 $148 $155 $113 $257 $50 VR increased its Ike reserves by 42% in Q4 2008 21 12.4% 11.0% 10.1% 8.9% 8.4% 8.1% 8.1% 7.8% 7.0% 6.7% 6.3% 6.0% 4.8% 4.6% 3.4% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% VR FSR RNR MRH PTP ACGL AXS PRE AHL IPCR ENH ORH AWH RE MXGL |
![]() “Yes a premium, but few convincing strategic reasons: Aside from the premium to IPCR's market price (currently 4%), we see few obvious points that make this a superior offer over the longer term. While the deal brings scale to the combined companies ($4 billion capital base), we view this deal as offering very little in the way of diversification… We expect IPCR management to push for the combination with MXGL, as we think it makes more sense from a strategic and diversification standpoint.” - RBC Capital Markets, Mark A. Dwelle March 31, 2009 “Although the VR bid is currently a 5% premium to the Max Capital (MXGL, $16.96, Market Perform) combination, the MXGL/IPCR merger appears more compelling from a business perspective, in our view, due to the more diverse business mix. As the deals currently stand, we expect IPCR shareholders to continue to prefer the MXGL combination, as the modest price premium in the VR deal is offset by the more diversified pro-forma company MXGL/IPCR would create.” - Keefe, Bruyette & Woods, Dean Evans March 31, 2009 Research analysts have expressed strong support for an IPC / Max merger, placing significant emphasis on the diversification that Max provides IPC “An IPCR/MXGL merger has strategic advantages in our view including: 1) increased diversification, 2) ability to free up excess capital (est. at $300-$400mm) and 3) improved likelihood of ultimately achieving an A rating.” - Fox-Pitt Kelton Cochran Caronia Waller, Daniel Farrell April 7, 2009 Research Analysts Emphasize Diversification 22 |
![]() Max Provides IPC Shareholders More Value than Validus Diluted Tangible Book Value per IPC Share Diluted Book Value per IPC Share Max delivers 29% more value to IPC’s shareholders vs. Validus Max delivers 23% more value to IPC’s shareholders vs. Validus $34.93 $28.35 $20.00 $25.00 $30.00 $35.00 $40.00 Max Validus $26.19 $33.83 $20.00 $25.00 $30.00 $35.00 $40.00 Max Validus As of December 31, 2008 ____________________ Note : See appendix for book value per share calculations included herein. As a multiple of IPC 1.03x 0.80x As a multiple of IPC 1.06x 0.86x 23 |
![]() ____________________ As of April 17, 2009. (1) Composite includes TRH, AWH, PTP, MRH, RE, PRE, ACGL, AHL, RNR, ENH, AXS, ORH. Validus is Underperforming the Market Since Going Hostile Performance Since Validus Offer Validus has significantly underperformed the market and its peers since going hostile on IPC 13.4% underperformance vs. reinsurance composite IPC increase driven by strong performance of sector The proposed value delivered by Validus to IPC is declining (1) 24 (4.1)% 1.3% 5.7% 9.3% 10.4% (5.0)% 0.0% 5.0% 10.0% 15.0% VR Max IPC Composite S&P 500 |
![]() 0.87x 0.83x 0.85x 1.00x 0.50x 0.60x 0.70x 0.80x 0.90x 1.00x 1.10x Max IPC VR Composite ____________________ As of April 17, 2009. (1) Composite includes TRH, AWH, PTP, MRH, RE, PRE, ACGL, AHL, RNR, ENH, AXS, ORH. Max Offers More Upside to IPC Shareholders Price to Book Value – 2008 (Average) (2) (1) (1) Max has historically traded at a higher price/book valuation than VR Max offers significant upside for IPC shareholders Clear path to create significant value for shareholders Validus has concentrated private equity ownership – potential overhang on future valuation Historical Price to Book Value Comparison 25 Price as a % of 52 Week High 73% 91% 81% 57% 0% 20% 40% 60% 80% 100% Max IPC VR Composite Average Since 3 - Year VR IPO 2007 2008 Current Max 1.00x 0.90x 1.11x 0.87x 0.75x Validus NA 0.92 1.07 0.85 0.93 |
![]() Max Offers a Higher Implied Price to IPC Shareholders ____________________ (1) Exchange ratio of 0.6429 IPC shares per Max share implies 1.5555 Max shares per IPC share. (2) Exchange ratio of 1.2037 Validus shares per IPC share. 26 $10.0 $15.0 $20.0 $25.0 $30.0 $35.0 $40.0 $45.0 $50.0 7/25/07 10/3/07 12/12/07 2/20/08 4/30/08 7/10/08 9/18/08 11/27/08 2/5/09 4/17/09 Validus Average Max Average Average Implied Price to IPC Since YTD VR IPO 2007 2008 2009 Max Capital (1) $35.86 $41.72 $35.61 $26.46 Validus (2) 27.94 29.34 27.13 28.62 |
![]() Validus’s Hostile Takeover Makes No Sense Max: Merger-of-Equals Validus: Hostile Takeover Value Enhancing Max provides IPC with 29% more tangible book value per IPC share than Validus Significant valuation upside Rewards IPC Shareholders Merger-of-equals with Max at similar valuation levels IPC shareholders have strong representation going forward Established and Diversified Platform Max has a strong position in long-tail lines, which provides IPC with REAL diversification Certainty of Closing Expected in June 2009 Value Destruction Places no value on IPC’s strong franchise VR does not meet strategic objectives of IPC Overvalued Currency Validus currently overvalued relative to peers, forcing IPC shareholders to dilute book value Higher Risk Platform Short tail portfolio – NO diversification Validus demonstrated poor risk management with the highest Ike/Gustav losses (as % of equity) among peers No Deal Certainty There is no deal with Validus Longer timeframe, taking Validus stock price exposure through wind season No assurance IPC would choose to sell itself to Validus 27 |
![]() Appendix 28 |
![]() IPC Calculation of Standalone Book Value Per Share As of December 31, 2008 Max Validus 29 Shares outstanding Basic shares 55,855,103 (7) 55,805,790 (10) 75,624,697 (16) Warrants (net) 0 635,728 (11) 2,856,884 (16) Stock options (net) 18,608 (8) 120,685 (12) 848,758 (16) Restricted stock awards 474,987 (8) 447,195 (12) 2,986,619 (16) Diluted shares outstanding (1) 56,348,698 57,009,398 82,316,958 Book value per share Shareholders' equity $1,850,947 (9) $1,280,331 (13) $1,938,734 (16) Book value per share (2) $33.14 $22.94 $25.64 Diluted book value per share Shareholders' equity $1,850,947 (9) $1,280,331 (13) $1,938,734 (16) Proceeds from exercise of Warrants and stock options (3) 0 0 0 Diluted book value $1,850,947 $1,280,331 $1,938,734 Diluted book value per share (4) $32.85 $22.46 (14) $23.55 Tangible book value per share Shareholders' equity $1,850,947 (9) $1,280,331 (13) $1,938,734 (16) Goodwill and other intangible assets 0 (40,488) (15) (147,610) (17) Tangible shareholders' equity $1,850,947 $1,239,843 $1,791,124 Tangible book value per share (5) $33.14 $22.22 $23.68 Diluted tangible book value per share Diluted book value $1,850,947 $1,280,331 $1,938,734 Goodwill and other intangible assets 0 (40,488) (15) (147,610) (17) Diluted tangible book value $1,850,947 $1,239,843 $1,791,124 Diluted tangible book value per share (6) $32.85 $21.75 $21.76 |
![]() Calculation of Combined Book Value Per Share (IPC / Max) As of December 31, 2008 Combined (a) (per IPC share) Max IPC Value Delivered by Max per IPC Share (0.6429) 2.5% accretive to IPC 1.2% accretive to IPC ____________________ (a) “Combined” figures exclude impact of purchase accounting adjustments. 30 Shares outstanding Basic shares 55,855,103 (7) 55,805,790 (10) 35,877,542 91,732,645 Warrants (net) 0 635,728 (11) 408,710 408,710 Stock options (net) 18,608 (8) 120,685 (12) 77,589 96,197 Restricted stock awards 474,987 (8) 447,195 (12) 287,502 762,489 Diluted shares outstanding (1) 56,348,698 57,009,398 36,651,342 93,000,040 Book value per share Shareholders' equity $1,850,947 (9) $1,280,331 (13) $1,280,331 $3,131,278 Book value per share (2) $33.14 $22.94 $35.69 $34.13 Diluted book value per share Shareholders' equity $1,850,947 (9) $1,280,331 (13) $1,280,331 $3,131,278 Proceeds from exercise of Warrants and stock options (3) 0 0 0 0 Diluted book value $1,850,947 $1,280,331 $1,280,331 $3,131,278 Diluted book value per share (4) $32.85 $22.46 (14) $34.93 $33.67 Tangible book value per share Shareholders' equity $1,850,947 (9) $1,280,331 (13) $1,280,331 $3,131,278 Goodwill and other intangible assets 0 (40,488) (15) (40,488) (40,488) Tangible shareholders' equity $1,850,947 $1,239,843 $1,239,843 $3,090,790 Tangible book value per share (5) $33.14 $22.22 $34.56 $33.69 Diluted tangible book value per share Diluted book value $1,850,947 $1,280,331 $1,280,331 $3,131,278 Goodwill and other intangible assets 0 (40,488) (15) (40,488) (40,488) Diluted tangible book value $1,850,947 $1,239,843 $1,239,843 $3,090,790 Diluted tangible book value per share (6) $32.85 $21.75 $33.83 $33.23 |
![]() Calculation of Combined Book Value Per Share (IPC / VR) As of December 31, 2008 Validus IPC Termination Fee Combined (b) (per IPC share) 8.7% dilutive to IPC 12.3% dilutive to IPC ____________________ (a) In order to place figures on a comparative basis, “combined” figures are shown per share of IPC by converting the exchange ratio of 1.2037 VR shares per IPC share to 0.8308 (1 ÷ 1.2037) IPC shares per VR share. (b) “Combined” figures exclude impact of purchase accounting adjustments. Value Delivered by VR per IPC Share (1/1.2037) (a) 31 Shares outstanding Basic shares 55,855,103 (7) 75,624,697 (16) 62,826,865 118,681,968 Warrants (net) 0 2,856,884 (16) 2,373,419 2,373,419 Stock options (net) 18,608 (8) 848,758 (16) 705,124 723,732 Restricted stock awards 474,987 (8) 2,986,619 (16) 2,481,199 2,956,186 Diluted shares outstanding (1) 56,348,698 82,316,958 68,386,606 124,735,304 Book value per share Shareholders' equity $1,850,947 (9) $1,938,734 (16) $1,938,734 $(50,000) $3,739,681 Book value per share (2) $33.14 $25.64 $30.86 $31.51 Diluted book value per share Shareholders' equity $1,850,947 (9) $1,938,734 (16) $1,938,734 $(50,000) $3,739,681 Proceeds from exercise of Warrants and stock options (3) 0 0 0 0 Diluted book value $1,850,947 $1,938,734 $1,938,734 $(50,000) $3,739,681 Diluted book value per share (4) $32.85 $23.55 $28.35 $29.98 Tangible book value per share Shareholders' equity $1,850,947 (9) $1,938,734 (16) $1,938,734 $(50,000) $3,739,681 Goodwill and other intangible assets 0 (147,610) (17) (147,610) (147,610) Tangible shareholders' equity $1,850,947 $1,791,124 $1,791,124 $(50,000) $3,592,071 Tangible book value per share (5) $33.14 $23.68 $28.51 $30.27 Diluted tangible book value per share Diluted book value $1,850,947 $1,938,734 $1,938,734 $(50,000) $3,739,681 Goodwill and other intangible assets 0 (147,610) (17) (147,610) (147,610) Diluted tangible book value $1,850,947 $1,791,124 $1,791,124 $(50,000) $3,592,071 Diluted tangible book value per share (6) $32.85 $21.76 $26.19 $28.80 |
![]() Footnotes Note: Book value per share, diluted book value per share, tangible book value per share, and diluted tangible book value per share are all “non-GAAP financial measures” as defined in Regulation G. Combined figures exclude purchase accounting adjustments. For more information on GAAP purchase accounting adjustments, see the joint proxy statement/prospectus filed with the SEC by IPC on April 13, 2009. 1. Calculations are based on treasury stock method for warrants and stock options; and includes all restricted stock and RSUs outstanding as of the 12/31/2008 balance sheet date. Validus’ publicly disclosed calculations are based on the "as-if-converted" method, assuming all proceeds received upon exercise of warrants and stock options will be retained by the Company, and the resulting common shares from exercise remain outstanding. 2. Shareholders’ equity divided by basic shares outstanding. 3. Calculations are based on treasury stock method, assuming the proceeds received upon exercise of warrants and stock options are used to repurchase shares at the 12/31/2008 closing market price. 4. Diluted book value divided by diluted shares outstanding as of the 12/31/2008 balance sheet date. 5. Tangible shareholders’ equity divided by common shares outstanding as of the 12/31/2008 balance sheet date. 6. Diluted tangible book value divided by diluted shares outstanding as of the 12/31/2008 balance sheet date. 7. Common shares outstanding as of 12/31/08 per the IPCR Consolidated Balance Sheet contained within the IPC 2008 Form 10-K. Adjusted to exclude certain restricted stock awards included in shares outstanding. 8. Note 7 in the IPC 2008 Form 10-K Notes to the Consolidated Financial Statements. Adjusted to exclude certain restricted stock awards included in shares outstanding. 9. Per the IPC Consolidated Balance Sheet included in the IPC 2008 Form 10-K. 10. Common shares outstanding as of 12/31/08 per the MXGL Consolidated Balance Sheet contained within the Max 2008 Form 10-K filed 2/19/2009. 11. Note 12 in the Max 2008 Form 10-K Notes to the Consolidated Financial Statements. Based on the treasury stock method. 12. Note 13 in the Max 2008 Form 10-K Notes to the Consolidated Financial Statements. Based on the treasury stock method. 2,021,631 non-vested restricted stock awards included in basic shares outstanding. 13. Per the Max Consolidated Balance Sheet included in the 2008 Form 10-K. 14. As disclosed in Max’s fourth quarter 2008 earnings press release, dated 2/11/2009. 15. Note 5 in the Max 2008 Form 10-K Notes to the Consolidated Financial Statements. 16. Based on page 6 of the Validus Investor Financial Supplement as of 12/31/2008 filed 2/12/2009. 17. Note 6 in the Validus 2008 Form 10-K Notes to the Consolidated Financial Statements. 32 |