Bermuda reinsurer Validus Holdings Ltd. has filed a proxy document detailing why it believes fellow shareholders of fellow Island company IPC Holdings Ltd. should not approve an agreement to merge with Max Capital Group Ltd.

Validus made its own $1.68 billion, all-share offer to take over IPC at the end of last month, just four weeks after IPC and Max had announced an agreement to amalgamate.

Last week, the IPC board voted unanimously to reaffirm the Max deal in favour of the Validus offer.

But the deal still has to be approved of shareholders of both companies and Validus is trying to persuade IPC shareholders to reject it.

"Validus believes it has made a 'superior proposal' for IPC and asks that IPC's shareholders oppose the clearly inferior proposal to combine IPC and Max," Ed Noonan, Validus's chairman and chief executive officer. "We are confident that IPC's shareholders will recognise the near and long term value of our proposal, which offers a premium for IPC shares and better long-term opportunities for growth, and look forward to working towards the completion of a combination with IPC."

In Thursday's filing, Validus claims that a merger with Max would "materially impair IPC's balance sheet to the detriment of shareholders" and that the transaction would mean that IPC would "combine with an unprofitable company in the guise of diversification".

Validus also argues that its offer provides "significantly greater financial value" for shareholders than the Max merger.

Last week, IPC chairman Kenneth Hammond wrote to Validus after the board reaffirmed their backing for the Max agreement. He argued that the Max deal offers an opportunity to diversify insurance operations while the Validus proposal is riskier and would have taken longer to complete.