IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE VALIDUS HOLDINGS, LTD., Plaintiff, v. TRANSATLANTIC HOLDINGS, INC., STEPHEN P.

BRADLEY, IAN H. CHIPPENDALE, JOHN G. FOOS, JOHN L. MCCARTHY, ROBERT F. ORLICH, RICHARD S. PRESS, MICHAEL C. SAPNAR, ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG and GO SUB, LLC, Defendants. : : : : : : : : : : : : : : : :

C.A. No. _____-___

VERIFIED COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF Plaintiff Validus Holdings, Ltd. (Validus), by and through its undersigned attorneys, as and for its complaint against Transatlantic Holdings, Inc. (Transatlantic), Stephen P. Bradley, Ian H. Chippendale, John G. Foos, John L. McCarthy, Robert F. Orlich, Richard S. Press, Michael C. Sapnar, Allied World Assurance Company Holdings, AG (Allied World), and GO Sub, LLC (Merger Sub) (defendants other than Transatlantic, Allied World and Merger Sub are collectively referred to herein as the Individual Defendants), upon knowledge as to matters relating to itself and upon information and belief as to all other matters, alleges as follows:

NATURE OF THE ACTION 1. This is an action for declaratory, injunctive, and other relief to prevent the

Individual Defendants who comprise the board of directors of Transatlantic (the Transatlantic Board) from continuing to breach their fiduciary duties to the detriment of Transatlantic and its stockholders. Aided and abetted by Allied World, the Individual Defendants are pursuing an ill-conceived scheme to consummate the proposed acquisition of Transatlantic by Allied World (the Proposed Allied World Takeover) pursuant to an Agreement and Plan of Merger by and among Transatlantic, Allied World and Merger Sub (the Merger Agreement) and are thwarting the ability of the Transatlantic stockholders to take advantage of the proposed cash and stock offer of Validus. 2. On June 12, 2011, with no prior effort to explore alternatives, the

Individual Defendants caused Transatlantic to enter into the Merger Agreement. Since then, in flagrant breach of their fiduciary duties, the Individual Defendants have rejected the offer from Validus, a Bermuda exempted company offering a broad spectrum of reinsurance and insurance products, refused to change their recommendation to Transatlantic stockholders, refused to enter into discussions with Validus and adopted a poison pill and amended Transatlantics by-laws in an apparent effort to more easily manipulate Transatlantic stockholder meetings. The offer from Validus has had a greater market value than the Proposed Allied World Takeover since its public announcement by Validus.

3.

On July 12, 2011, Validus delivered to Transatlantic a proposal letter for,

and publicly announced, a merger transaction that would deliver to the Transatlantic stockholders a price as of the announcement of the offer of $55.95 per share, consisting of 1.5564 Validus voting common shares in the merger and $8.00 in cash per share pursuant to a one-time special dividend from Transatlantic immediately prior to closing of the merger (the Validus Merger Offer). 4. On July 19, 2011, the Individual Defendants rejected the Validus Merger

Offer. Although the Validus Merger Offer represented a $6.04 or 12.1% premium, as of July 12, 2011 (and a $2.82 or 5.8% premium, as of July 19, 2011), over the market value of the Proposed Allied World Takeover, the Individual Defendants claimed it does not constitute a superior proposal. 5. However, also on July 19, 2011, the Individual Defendants determined

that the Validus proposal is reasonably likely to lead to a Superior Proposal [as defined under the Merger Agreement] and that the failure to enter into discussions regarding the Validus proposal would result in a breach of [their] fiduciary duties under applicable law. As a result, the Board has determined to offer to engage in discussions and exchange information with Validus. (emphasis added) 6. Despite admitting that entering into discussions with Validus would likely

lead to a superior deal for the Transatlantic stockholders, and that a failure to do so would be a breach of their fiduciary duties, the Individual Defendants are still arbitrarily refusing to enter into discussions with Validus.

7.

As a pretext for this refusal, Transatlantic and the Individual Defendants

have asserted that the Merger Agreement requires Validus to enter into a confidentiality agreement with a two-year standstill provision before they may even discuss a potential transaction with Validus. While the Merger Agreement may require Transatlantic to enter into a confidentiality agreement with Validus, it does not require Transatlantic and the Individual Defendants to insist that Validus (or any other third party) enter into a standstill agreement, let alone enforce a standstill against Validus (or any other third party). In fact, Section 5.5(e) of the Merger Agreement clearly provides that the terms of any confidentiality agreement with a third party must simply be determined in good faith by [the Transatlantic Board] to be substantially similar to and not less favorable to [Transatlantic], in the aggregate, than those contained in the Allied World confidentiality agreement (emphasis added). Moreover, it is clear that the Transatlantic Board is able to make such a determination based on the fact that Allied World is currently not bound by an effective standstill provision. Validus remains ready and willing to enter into a confidentiality agreement without a standstill. Not surprisingly, however, Validus has refused to sign a standstill agreement that would preclude it from taking its offer directly to Transatlantic stockholders or opposing the Proposed Allied World Takeover. 8. In light of the Individual Defendants wrongful refusal to enter into

discussions with Validus, on July 25, 2011, Validus commenced a non-coercive, nondiscriminatory, cash and stock exchange offer for all of the outstanding shares of Transatlantic common stock (the Validus Exchange Offer and, together with the

Validus Merger Offer, the Validus Offer) on terms consistent with the Validus Merger Offer. 9. The Individual Defendants' immediate reaction to the Validus Exchange

Offer was, once again, to seek to block the Transatlantic stockholders from considering the Validus Offer. On July 26, 2011, the Individual Defendants (i) caused Transatlantic to put in place a poison pill shareholder rights plan (the Poison Pill) that will effectively block Validus ability to complete the Validus Exchange Offer unless and until the Individual Defendants agree to exempt Validus exchange offer from the Poison Pill and (ii) amended Transatlantics by-laws in an apparent effort to more easily manipulate Transatlantic stockholder meetings. 10. Moreover, in an attempt to convince the Transatlantic stockholders that

the superior Validus Offer be spurned in favor of the objectively inferior Proposed Allied World Takeover, the Individual Defendants have breached on multiple occasions their duty of candor by making numerous material misrepresentations and omissions regarding the Validus Offer and the Proposed Allied World Takeover. 11. Among other things, Transatlantic and the Individual Defendants have

stated in multiple filings with the Securities and Exchange Commission (the SEC) that the reason the Individual Defendants are refusing to enter into discussions with Validus is that Validus has refused to enter into a confidentiality agreement. This assertion is highly misleading. In truth, Validus and its advisors have communicated to Transatlantic and its advisors on multiple occasions that Validus is ready and willing to enter into a standard

confidentiality agreement so long as it does not preclude Validus from taking its offer directly to Transatlantic stockholders or opposing the Proposed Allied World Takeover. 12. Individual Defendants have consistently misrepresented the restrictive

nature of the proposed confidentiality agreement, which would grant the Transatlantic Board a veto right over Validus ability to even present a proposal to Transatlantics stockholders. Individual Defendants further misrepresented that a restrictive standstill agreement is required by the Merger Agreement, only belatedly disclosed that the confidentiality agreement not accepted by Validus contained a standstill agreement, and failed to disclose that the standstill agreement was interposed to block Validus from being able to compete fairly for Transatlantic. 13. Individual Defendants have also made material misrepresentations to the

effect that Allied World is bound by a standstill agreement and have failed to disclose that any standstill that existed between Transatlantic and Allied World was expressly or effectively waived when Allied World was permitted to enter into the Merger Agreement, to solicit Transatlantic stockholders in connection with the Proposed Allied World Takeover, and to take other actions in connection with the Proposed Allied World Takeover. 14. Moreover, Individual Defendants have failed to disclose that a standstill

agreement would be entirely superfluous in light of the Individual Defendants adoption of the Poison Pill, which effectively achieves the same result of blocking the Transatlantic stockholders from considering any offer not blessed by the Individual

Defendants. Further, Individual Defendants have failed to fully disclose that Transatlantic is permitting Allied World to dictate the confidentiality agreement negotiations process, and thus outsourcing to Allied World the Transatlantic Boards fiduciary duties to Transatlantic stockholders. 15. Finally, Individual Defendants have misrepresented the character of their

meetings with Validus and its advisors regarding a confidentiality agreement by implying that Transatlantic is actively seeking to enter into a confidentiality agreement, and thus discussions, with Validus. Transatlantics misstatements are all the more troublesome because, in its August 9, 2011 amendment to its Solicitation/Recommendation Statement on Schedule 14D-9 (the Schedule 14D-9 Amendment), Transatlantic seeks to justify multiple unfounded negative assertions regarding the Validus Offer based on the fact that Transatlantic has been unable (of its own doing) to engage in diligence regarding Validus operations. 16. Transatlantics July 28, 2011 Solicitation/Recommendation Statement on

Schedule 14D-9 (the Schedule 14D-9) demonstrates that Allied World is aiding and abetting the Individual Defendants breaches of fiduciary duty. In particular, the Schedule 14D-9 discloses that, on July 25, 2011, Allied World, through its outside legal advisor, informed Transatlantic that Allied World was taking the position that Transatlantic entering into a confidentiality agreement with Validus that did not contain a standstill would not comply with the terms of the Merger Agreement, and that Allied

World reserved all of its rights i.e., threatened to sue if Transatlantic proceeded to enter into discussions with Validus. 17. Moreover, in their SEC filings, as set forth in detail below, Defendants

have made a series of additional misleading misrepresentations, including: Allied Worlds stating in a filing on July 25, 2011 that Allied Worlds bid for Transatlantic was superior in all respects to the Validus Merger Offer and the best possible combination, when, in fact, the Validus Merger Offer represented a 3.7% premium to the consideration proposed by Allied World as of July 22, 2011, and when, in fact, it is difficult to identify any respect in which the Allied World bid is, in fact, superior. Transatlantics failure on multiple occasions, including in the Schedule 14D-9 Amendment, to state that the Validus Offer has represented a market value premium to the Proposed Allied World Takeover as of the dates referenced by Transatlantic therein. Allied Worlds and Transatlantics portraying the Proposed Allied World Takeover as a merger of equals, when, in fact, Allied Worlds subsidiary would acquire Transatlantic, Transatlantics non-executive chairman and chief executive officer would cease to serve a role in the combined company (TransAllied), and TransAllied would have its headquarters in Switzerland, at the current headquarters of Allied World. Transatlantics characterizing the Validus Exchange Offer as highly conditional, and thereby falsely implying that the Validus Exchange Offer is more conditional than the Proposed Allied World Takeover when the level of conditionality is, in fact, substantially similar. 18. On August 7, 2011, Transatlantic announced that it had received a

proposal from National Indemnity Company (National Indemnity) to acquire all of the outstanding shares of Transatlantic common stock for $52.00 per share (the National Indemnity Proposal). On August 8, 2011, Transatlantic announced that the National Indemnity Proposal does not constitute a Superior Proposal under the terms of the Merger Agreement, but is reasonably likely to lead to a Superior Proposal, and that the failure to

enter into discussions regarding the National Indemnity Proposal would result in a breach of the Transatlantic Boards fiduciary duties under applicable law. Transatlantic has stated that it must . . . obtain from National Indemnity an executed confidentiality agreement containing terms that are substantially similar, and not less favorable, to Transatlantic, in the aggregate, than those contained in the confidentiality agreement between Transatlantic and Allied World . . . . 19. Validus brings this action for declaratory and injunctive relief (i) to

compel the Individual Defendants to fulfill their fiduciary duties to Transatlantics stockholders and stop burying their heads in the sand, (ii) to stop their effort to block the Transatlantic stockholders from considering the Validus Merger Offer and Validus Exchange Offer, (iii) to clarify that Section 5.5(e) of the Merger Agreement does not preclude the Transatlantic Board from determining in good faith that a confidentiality agreement entered into with Validus (or any other third party) is substantially similar to and not less favorable to Transatlantic, in the aggregate, than Transatlantics confidentiality agreement with Allied World, even if such third-party confidentiality agreement does not contain a standstill, and (iv) to stop Allied World from aiding and abetting the Individual Defendants breaches of fiduciary duty. Validus seeks, among other things, declaratory and injunctive relief enjoining Transatlantic and the Individual Defendants from demanding that Validus agree to subject itself to a standstill, continuing to refuse to enter into discussions with Validus, misleadingly recommending that stockholders vote in favor of the inferior Proposed Allied World Takeover, and engaging

in any action or inaction that has the effect of improperly impeding, thwarting, frustrating or interfering with the Validus Offer. THE PARTIES 20. Plaintiff Validus is a Bermuda-based provider of reinsurance and

insurance, with its executive offices located at 29 Richmond Road, Pembroke, Bermuda HM 08. Validus conducts its operations worldwide through two wholly-owned subsidiaries, Validus Reinsurance, Ltd. (Validus Re) and Talbot Holdings Ltd. (Talbot). Validus Re is a Bermuda-based reinsurer focused on short-tail lines of reinsurance. Talbot is the Bermuda parent of the specialty insurance group primarily operating within the Lloyds insurance market through Syndicate 1183. Validus owns 200 shares of Transatlantic common stock acquired on July 11, 2011. Validus is the offeror in the Validus Exchange Offer. Validus common shares publicly trade on the New York Stock Exchange (NYSE) under the symbol VR and, as of August 3, 2011, it had 99,032,232 common shares outstanding. 21. Defendant Transatlantic is a Delaware corporation headquartered in New

York. Through its subsidiaries, Transatlantic offers reinsurance capacity for a range of property and casualty products, directly and through brokers, to reinsurance and insurance companies, in domestic and international markets. Transatlantic common stock publicly trades on the NYSE under the symbol TRH and, as of June 30, 2011, it had 62,483,787 shares of common stock outstanding.

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22.

Individual Defendant Stephen P. Bradley has been a member of the

Transatlantic Board since 2010. Individual Defendant Bradley is the Chairperson of the Nominating and Corporate Governance Committee and also serves on the Audit, Finance and Investment, and Risk Management Committees. Individual Defendant Bradley receives payments from Transatlantic in the amount of $37,000 as an annual Board Member Retainer Fee and $5,000 as Chairperson of the Nominating and Corporate Governance Committee. During 2010, Individual Defendant Bradley received a grant of 2,200 restricted stock units with a grant date fair value of $98,648. Individual Defendant Bradley will become a member of the board of directors of TransAllied (the TransAllied Board) following the closing of the Proposed Allied World Takeover. Current members of the Allied Worlds board of directors receive $75,000 annually for serving as a director and $1,500 per meeting attended, and are entitled to additional fees for committee service (the Allied World Director Fees). Based upon information and belief, Individual Defendant Bradley will receive the Allied World Director Fees as a member of the TransAllied Board following the closing of the Proposed Allied World Takeover. 23. Individual Defendant Ian H. Chippendale has been a member of the

Transatlantic Board since 2007. Individual Defendant Chippendale is the Chairperson of the Compensation Committee and also serves on the Nominating and Corporate Governance, Risk Management, and Underwriting Committees. Individual Defendant Chippendale receives payments from Transatlantic in the amount of $37,000 as an annual Board Member Retainer Fee and $5,000 as Chairperson of the Compensation Committee.

11

During 2010, Individual Defendant Chippendale received a grant of 2,200 restricted stock units with a grant date fair value of $98,648. Individual Defendant Chippendale will become a member of the TransAllied Board following the closing of the Proposed Allied World Takeover. Based upon information and belief, Individual Defendant Chippendale will receive the Allied World Director Fees as a member of the TransAllied Board following the closing of the Proposed Allied World Takeover. 24. Individual Defendant John G. Foos has been a member of the

Transatlantic Board since 2007. Individual Defendant Foos is the Chairperson of the Audit Committee and also serves on the Executive, Finance and Investment, Nominating and Corporate Governance, and Risk Management Committees. Individual Defendant Foos receives payments from Transatlantic in the amount of $37,000 as an annual Board Member Retainer Fee and $10,000 as Chairperson of the Audit Committee. During 2010, Individual Defendant Foos received a grant of 2,200 restricted stock units with a grant date fair value of $98,648. Individual Defendant Foos will become a member of the TransAllied Board following the closing of the Proposed Allied World Takeover. Based upon information and belief, Individual Defendant Foos will receive the Allied World Director Fees as a member of the TransAllied Board following the closing of the Proposed Allied World Takeover. 25. Individual Defendant John L. McCarthy has been a member of the

Transatlantic Board since 2008. Individual Defendant McCarthy is the Chairperson of the Risk Management Committee and also serves on the Compensation, Nominating and

12

Corporate Governance, and Underwriting Committees. Individual Defendant McCarthy receives payments from Transatlantic in the amount of $37,000 as an annual Board Member Retainer Fee and $5,000 as Chairperson of the Risk Management Committee. During 2010, Individual Defendant McCarthy received a grant of 2,200 restricted stock units with a grant date fair value of $98,648. Individual Defendant McCarthy will become a member of the TransAllied Board following the closing of the Proposed Allied World Takeover. Based upon information and belief, Individual Defendant McCarthy will receive the Allied World Director Fees as a member of the TransAllied Board following the closing of the Proposed Allied World Takeover. 26. Individual Defendant Robert F. Orlich (Orlich) is and was at all relevant

times the President and Chief Executive Officer of Transatlantic. Individual Defendant Orlich has been a member of the Transatlantic Board since 1994. Individual Defendant Orlich is also the Chairperson of the Underwriting and Executive Committees and serves on the Risk Management Committee. Individual Defendant Orlich served as Chairman of the Transatlantic Board from July 2008 through July 2009. Individual Defendant Orlich also currently serves as Chairman, President and Chief Executive Officer of Transatlantic Reinsurance Company (Transatlantic Re) and Putnam Reinsurance Company (Putnam Re) and has been a director of Transatlantic Re and Putnam Re since 1992. In 2010, Individual Defendant Orlich received nearly $10 million in total compensation from Transatlantic.

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27.

Individual Defendant Richard S. Press (Press) is Chairman of the

Transatlantic Board, and has been a member of the Transatlantic Board since 2006. Individual Defendant Press was appointed Chairman of the Transatlantic Board in July 2009. Individual Defendant Press is the Chairperson of the Finance and Investment Committee and also serves on the Audit, Compensation, Executive, and Nominating and Corporate Governance Committees. Individual Defendant Press receives payments from Transatlantic in the amount of $37,000 as an annual Board Member Retainer Fee, $127,000 as Chairman of the Transatlantic Board, and $5,000 as the Chairperson of the Finance and Investment Committee. During 2010, Individual Defendant Press received a grant of 2,200 restricted stock units with a grant date fair value of $98,648. Under the terms of the Merger Agreement, Individual Defendant Press will become the Chairman of the TransAllied Board and receive the Allied World Director Fees following the closing of the Proposed Allied World Takeover. 28. Individual Defendant Michael C. Sapnar (Sapnar) has been Executive

Vice President, Chief Operating Officer, and a member of the Transatlantic Board since May 2011. Individual Defendant Sapnar also serves on the Risk Management and Underwriting Committees. Individual Defendant Sapnar has been employed by Transatlantic since 1995, serving as Executive Vice President and Chief Underwriting Officer, Domestic Operations of Transatlantic, since 2006 and Senior Vice President and Chief Underwriting Officer of Transatlantic Re and Putnam Re from 2002 through 2006. In 2010, Individual Defendant Sapnar received nearly $4 million in total compensation from Transatlantic. Under the terms of the Merger Agreement, Individual Defendant

14

Sapnar will become a member of the TransAllied Board and receive the Allied World Director Fees and will serve as President and Chief Executive Officer of TransAllieds Global Reinsurance division following the closing of the Proposed Allied World Takeover. 29. Defendant Allied World, a Switzerland corporation, operates as a specialty

insurance and reinsurance company in the United States and certain other jurisdictions. Allied World common stock publicly trades on the NYSE under the symbol AWH and, as of May 2, 2011, it had 37,919,865 shares of common stock outstanding. 30. Defendant GO Sub, LLC, a Delaware limited liability company and

wholly-owned subsidiary of Allied World, was formed to effectuate the merger between Transatlantic and Allied World. Where appropriate from the context of the allegations, Merger Sub and Allied World are sometimes referred to herein collectively as Allied World. 31. The Individual Defendants, as directors and/or officers of Transatlantic,

have a fiduciary responsibility to Validus and the other public stockholders of Transatlantic, and owe them the highest obligations of good faith, loyalty, fair dealing, due care and candor. 32. The Individual Defendants, together with Transatlantic and Allied World,

are referred to herein collectively as Defendants.

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STATEMENT OF FACTS I. TRANSATLANTICS DIRECTORS HAVE KNOWN FOR YEARS THAT VALIDUS IS INTERESTED IN A BUSINESS COMBINATION. 33. Validus is a multi-billion-dollar, publicly-traded company specializing in

property and casualty reinsurance and insurance products. 34. Validus regularly considers a variety of strategic transactions to enhance

its business, including through acquisitions of companies, businesses, intellectual properties and other assets. Validus has been interested in pursuing a business combination with Transatlantic since September 2008. In September 2008 and March 2009, Validus informed Transatlantic that it was interested in a business combination. Validus and Transatlantic also discussed a business combination in 2010. II. THE INDIVIDUAL DEFENDANTS DISMISS VALIDUS JUNE 7TH WRITTEN INQUIRY WITHOUT ANY INVESTIGATION AND SIGN UP AN INADEQUATE DEAL DESIGNED TO KEEP THEM EMPLOYED. 35. On June 3, 2011, Edward J. Noonan (Noonan), Chairman and Chief

Executive Officer of Validus, spoke with Orlich about the merits of a strategic merger between Validus and Transatlantic. On June 7, 2011, Noonan followed up their conversation by sending a letter to Orlich demonstrating Validus interest in a transaction with Transatlantic (the June 7th Letter). This letter highlighted some of the reasons that a Validus and Transatlantic merger would make a terrific complimentary fit and requested a meeting to discuss what a combined company could look like. 36. Validus has completed similar transactions before. In 2009, Validus

successfully superseded a previous agreement and purchased IPC Holdings Ltd. (IPC)

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while providing IPC stockholders an additional 14% premium. Even when faced with Validus initial superior proposal, IPCs board would not terminate a previously struck deal with Max Capital Group Ltd., which provided for the continued employment of IPCs chairman, independent directors and senior management structure. Only when faced with court proceedings, a negative RiskMetrics recommendation, and finally, the failure to obtain the necessary stockholder vote, did IPC finally begin to negotiate with Validus. Validus did not retain any of IPCs executives or directors. The Individual Defendants likely knew of these actions at the time they received the June 7th Letter. 37. Transatlantic never responded to the June 7th Letter. In fact, the next

news Validus heard regarding Transatlantics future was via a press release five days later, announcing the Merger Agreement. Thus, the Individual Defendants had no way of knowing that Validus intended to keep senior Transatlantic management intact, as reflected in Validus public statements regarding the Validus Merger Offer. Instead, the Individual Defendants jumped the gun and signed up the inferior Proposed Allied World Takeover designed to ensure that they remained entrenched and employed. 38. The Merger Agreement provides that Transatlantic stockholders will

receive 0.88 of a share of Allied World stock for each share of Transatlantic common stock that they own. Also, each outstanding Transatlantic stock option will be converted into an option to purchase 0.88 of a share of Allied World stock at an exercise price per share equal to the quotient of the exercise price of the Transatlantic option divided by 0.88. Even though the proposed consideration in the Proposed Allied World Takeover is

17

all stock, it will be a taxable transaction. U.S. federal income tax law generally does not permit an acquisition of a U.S. corporation by a non-U.S. corporation to be tax-free if the stockholders of the U.S. corporation receive stock in the acquisition constituting more than 50% (by vote or value) of the combined company. For that reason, among others, any gain recognized by a Transatlantic stockholder in the Proposed Allied World Takeover generally will be taxable for U.S. federal income tax purposes. In contrast, the Validus Merger Offer is expected to be tax-free to Transatlantic stockholders for U.S. federal income tax purposes to the extent of the stock component of the consideration (though it may be taxable to the extent of the proposed dividend). 39. In the Merger Agreement, the Individual Defendants specifically

negotiated to preserve their directorships. Thus, at the close of the Proposed Allied World Takeover, the TransAllied Board will consist of eleven members, composed of: (i) four purportedly independent Transatlantic directors selected by Transatlantic; (ii) Defendant Press (who will serve as non-executive chairman for a one-year term); (iii) Defendant Sapnar; (iv) four purportedly independent Allied World directors selected by Allied World; and (v) Scott A. Carmilani (current Chairman, President and Chief Executive Officer of Allied World). Additionally, Defendant Sapnar will serve as President and Chief Executive Officer, Global Reinsurance, of TransAllied. 40. Thus, the Merger Agreement provides that six out of seven Individual

Defendants will sit on the TransAllied Board, while one of those six Defendant Sapnar will also occupy a high-level executive position. In contrast to these personal benefits

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that nearly all of the members of the Transatlantic Board will receive, however, Transatlantic stockholders will receive consideration in the Proposed Allied World Takeover that does not fully value Transatlantic. 41. The Individual Defendants lack any real economic interest in

Transatlantic, resulting in the situation where their sole interest in the Proposed Allied World Takeover is to preserve their lucrative and prestigious roles as directors and officers in a public company by continuing as members of the TransAllied Board (and, in the case of Defendant Sapnar, as an executive officer of TransAllied) following consummation of the Proposed Allied World Takeover. The joint proxy statement / prospectus of Transatlantic and Allied World filed as part of Allied Worlds Form S-4 on July 7, 2011 (as amended on August 5, 2011, the Joint Proxy Statement / Prospectus) discloses that the officers and directors of Transatlantic beneficially own approximately 0.35% of the shares of Transatlantic common stock outstanding on [July 22, 2011]. Moreover, the bulk of this ownership comes from restricted stock grants and options rather than purchases using personal funds. In short, the Individual Defendants are not economically aligned with Transatlantic stockholders and were not acting in Transatlantic stockholders best interests when they approved the Proposed Allied World Takeover. 42. The Proposed Allied World Takeover price represents only 79% of

Transatlantics book value as of June 10, 2011 (and 68% as of August 5, 2011). Indeed, the Proposed Allied World Takeover price as of June 10, 2011 was so low that, even before Validus made the Validus Merger Offer public, Barclays Analyst Jay Gelb

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predicted that it could result in a bidding war, with other P&C insurers and reinsurers competing for [Transatlantic]. 43. Indeed, Transatlantics own stockholders have not been shy about voicing

their frustration with the price of the Proposed Allied World Takeover. For example, Davis Selected Advisers, L.P. (Davis Advisers), a holder of approximately 23.8% of Transatlantic common stock as of June 13, 2011, has expressed dissatisfaction with the Proposed Allied World Takeover. In a June 13, 2011 Schedule 13D filing (and again in a July 6, 2011 Schedule 13D filing), Davis Advisers indicated that it had serious concerns about and may oppose the Proposed Allied World Takeover; may encourage Transatlantic management to explore other strategic options to maximize shareholder value; and may have discussions with [Transatlantic] and/or third parties regarding opportunities to maximize [Transatlantics] value. . . . 44. Likewise, Tweedy Browne Co. (Tweedy Browne), a holder of more

than 2% of Transatlantics common stock as of March 31, 2011, has also voiced opposition to the Proposed Allied World Takeover. According to a June 15, 2011, Bloomberg article, entitled Transatlantic Shareholder Tweedy Browne Opposes $3.2 Billion Allied Merger, Tom Shrager, one of four managing directors at Tweedy Browne, reasoned as follows: It is really puzzling to us why they would want to sell the company at a 20 percent discount from book value. . . . Simply doing it for size is not a good enough reason to sell at this big discount.

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III.

THE INDIVIDUAL DEFENDANTS APPROVE DEAL PROTECTION MEASURES IN THE MERGER AGREEMENT WITHOUT ANY PROPER BASIS. 45. When the Individual Defendants received the June 7th Letter, they likely

thought that a transaction with Validus meant the end of their directorships and management positions. So, instead of running a full and fair process to determine the best deal for Transatlantics stockholders, they quickly took an offer received from someone willing to continue their lucrative and prestigious roles as directors and officers in a public company by continuing as members of the TransAllied Board (and, in the case of Defendant Sapnar, as an executive officer of TransAllied) following consummation of the Proposed Allied World Takeover. 46. Not only did the Individual Defendants fail to enter into discussions with

Validus, they did not even respond to the June 7th Letter. 47. In their rush to lock in an undervalued deal that preserved their lucrative

board seats and executive officer positions, the Individual Defendants approved several provisions in the Merger Agreement designed to thwart competing bids. 48. In particular, Section 5.5(e) of the Merger Agreement contains a No-

Talk clause which provides that Transatlantic: may furnish or cause to be furnished information to, and enter or cause to be entered into discussions with, and only with, a [competing bidder]. . ., if the [Transatlantic Board] has (i) determined in good faith (after consultation with its outside legal counsel and financial advisor or advisors) that (A) such Acquisition Proposal constitutes or is reasonably likely to lead to a Superior Proposal and (B) the failure to enter into discussions

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regarding the Acquisition Proposal would result in a breach of its fiduciary duties under applicable Law, (ii) provided at least three Business Days notice to [Allied World] of its intent to furnish information to or enter into discussions with such Person in accordance with this Section 5.5(e), and (iii) obtained from such Person an executed confidentiality agreement containing terms that are determined in good faith by [Transatlantic] to be substantially similar to and not less favorable to [Transatlantic], in the aggregate, than those contained in the [Allied World Confidentiality Agreement] (emphasis added). 49. The No-Talk provision requires the Transatlantic Board to consult[]

with its outside legal counsel and financial advisor or advisors. The Joint Proxy Statement / Prospectus discloses that Transatlantics financial advisors will receive fees of approximately $25 million in the aggregate in connection with the Proposed Allied World Takeover. 50. In breach of their fiduciary duty, at Allied Worlds urging and under

Allied Worlds coercion, the Individual Defendants have taken the incorrect position that the Merger Agreement, notwithstanding its language that a determination of substantial similarity rests solely on the good faith determination of the Transatlantic Board, prohibits Transatlantic and its advisors from entering into discussions with Validus unless Validus enters into a confidentiality agreement containing a restrictive standstill that would prohibit Validus from pursuing the Validus Offer or from opposing the Proposed Allied World Takeover, without the written permission of the Individual Defendants. While at the same time, Transatlantic and the Individual Defendants have failed to disclose that Allied World is permitted, among other things, to (i) maintain its current Merger Agreement with Transatlantic, (ii) make public statements in favor of, and solicit

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Transatlantic stockholders with respect to, the Proposed Allied World Takeover which it has been doing on a regular basis, (iii) make counteroffers to the Transatlantic Board, as contemplated by Section 5.5 of the Merger Agreement, without the Transatlantic Boards consent, (iv) solicit in opposition to the Transatlantic Board, if it were to change its recommendation with respect to the Proposed Allied World Takeover, and (v) purchase 45,000 shares of Transatlantic common stock, as required by Section 6.11 of the Merger Agreement, notwithstanding, in each case, the purported existence of a standstill agreement in Transatlantics confidentiality agreement with Allied World that would prevent Allied World from taking any of these actions. In light of the fact that Allied World has already taken the actions described in (i) and (ii) above, and is contractually obligated to take the action described in (v) above, Transatlantics statement that Allied World continues to be bound by the standstill provisions of the confidentiality agreement represents nothing less than an intentional misstatement of a material fact. 51. Moreover, the actions that Allied World is permitted to take make it clear

that any standstill to which Allied World may have been subject has been effectively or expressly waived. Therefore, the Individual Defendants imposition of a standstill agreement on Validus cannot be credibly considered as being required pursuant to the terms of Section 5.5(e) of the Merger Agreement in order to comply with the covenant that Transatlantic obtain a confidentiality agreement determined in good faith by [Transatlantic] to be substantially similar to and not less favorable to [Transatlantic], in the aggregate, than those contained in the [Allied World] Confidentiality Agreement

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(emphasis added). Rather, the Individual Defendants, and Allied World, are using this provision as a pretext for Transatlantics refusal to enter into discussions with Validus. 52. The Merger Agreement also obligates Transatlantic to pay Allied World

$115 million (a greater than 4.2% break-up fee, based on the market value of the Allied World shares that would have been payable to Transatlantic stockholders had the Proposed Allied World Takeover been consummated on June 10, 2011 and representing a significantly higher percentage based on the current market value of Allied World shares) if, in certain circumstances, the Individual Defendants terminate the Merger Agreement or withdraw or modify their recommendation of the Proposed Allied World Takeover. Indeed, so eager were the Individual Defendants to try to lock up the undervalued Proposed Allied World Takeover and coerce their own stockholders into voting for it, they agreed to pay a fee of up to $70 million merely upon a naked no vote. 53. Pursuant to Section 5.5(d) of the Merger Agreement, upon receipt of an

acquisition proposal, Transatlantic must: (i) keep [Allied World] fully informed, on a current basis, of any material changes in the status of, and any material changes or modifications in the terms of, any such Acquisition Proposal, inquiry or request and, if requested by [Allied World], counsel for [Transatlantic] shall consult with counsel for [Allied World] once per day, at mutually agreeable times, regarding such status and any such changes or modifications, and (ii) provide to [Allied World] as soon as practicable after receipt or delivery thereof with copies of all correspondence and other written material sent or provided to [Transatlantic] from any third party in connection with any Acquisition Proposal or sent or provided by [Transatlantic] to any third party in connection with any Acquisition Proposal; provided, however, that any material written material or material correspondence shall be sent

24

or provided . . . within 24 hours after receipt or delivery thereof (emphasis added). This provision gives Allied World a de facto third seat at the bargaining table, for, by agreeing to it, Transatlantic effectively ceded away its negotiating position. 54. Next, the Merger Agreement requires Transatlantic to set a stockholder

meeting date and Force the Vote on Transatlantics stockholders even if the Individual Defendants make an Adverse Recommendation Change between now and the stockholder meeting date. This allows Allied World to hold Transatlantic and its stockholders hostage, unable to terminate the Merger Agreement in order to accept a Superior Proposal. 55. The Individual Defendants and Allied World could agree to permit a

potentially indefinite extension of time to complete the Proposed Allied World Takeover therefore keeping the No-Talk and Force the Vote provisions in place for an unreasonably long period. 56. Allied World and Merger Sub wrongfully induced the Individual

Defendants to enter into the Merger Agreement with these offending provisions by offering the Individual Defendants the lucrative and prestigious right to continue as members of the TransAllied Board (and, in the case of Defendant Sapnar, as an executive officer of TransAllied) following consummation of the Proposed Allied World Takeover. Far from negotiating at arms length, Allied World and Merger Sub offered the Individual Defendants extensive personal benefits to get the Individual Defendants to breach their

25

fiduciary duties. To this day, Allied World and Merger Sub continue to aid and abet the Individual Defendants breaches of fiduciary duty by refusing and preventing Transatlantic from terminating the Proposed Allied World Takeover and by enforcing the illegal provisions in the Merger Agreement. IV. THE INDIVIDUAL DEFENDANTS REFUSE TO ACKNOWLEDGE THE VALIDUS OFFER AS A SUPERIOR PROPOSAL, BUT ADMIT THAT THEY HAVE A FIDUCIARY OBLIGATION TO ENTER INTO DISCUSSIONS WITH VALIDUS. 57. On July 12, 2011, Validus sent a proposal letter detailing the terms of the

Validus Merger Offer to the Individual Defendants (the Superior Proposal Letter). It provided the material financial terms of the Validus Merger Offer and explained that the stock component of the Validus Merger Offer unlike the stock to be received in the Proposed Allied World Takeover was intended to be tax-free for U.S. federal income tax purposes to the Transatlantic stockholders. The Superior Proposal Letter stated that the only contingencies to the Validus Merger Offer were regulatory approvals, final approval of a definitive merger agreement by the Validus board of directors and approval by the Validus stockholders of the necessary share issuance. There are no financing or due diligence requirements. It also included a draft merger agreement and a commitment to enter into a mutually acceptable confidentiality agreement. 58. Based on July 12, 2011 closing prices for Allied World and Transatlantic

stock, the Proposed Allied World Takeover represented for Transatlantic stockholders only a 1.8% premium to the market value of Transatlantics common stock. In contrast,

26

based on July 12, 2011 closing prices for Validus and Transatlantic stock, the Validus Offer represented a 14.1% premium to the market value of Transatlantics common stock. 59. On July 17, 2011, Validus provided supplemental information to the

Individual Defendants (which Validus subsequently made public), including regarding the proposed management of the combined company and potential synergies expected by Validus in connection with the Validus Merger Offer and Validus views regarding potential capital management for the combined company. Validus noted in this information that it expected that the Validus Merger Offer would generate substantially more synergies than the $80 million forecasted by Allied World in connection with the Proposed Allied World Takeover. 60. On July 19, 2011, Transatlantic issued a press release stating the Validus

Merger Offer does not constitute a Superior Proposal and Transatlantic remains committed to the terms of the Allied World Merger Agreement. However, the Individual Defendants also determined that the Validus proposal is reasonably likely to lead to a Superior Proposal and that the failure to enter into discussions regarding the Validus proposal would result in a breach of [their] fiduciary duties under applicable law. As a result, the Board has determined to offer to engage in discussions and exchange information with Validus (emphasis added). 61. Before deciding to reject the Validus Merger Offer, the Individual

Defendants failed to obtain an opinion from either of Transatlantics financial advisors in

27

order to ascertain whether or not the consideration being offered by Validus in the Validus Merger Offer was fair to Transatlantic stockholders. 62. On July 23, 2011, Transatlantic sent a letter to Validus attaching a

confidentiality agreement (the Confidentiality Agreement) stating: Pursuant to Section 5.5(e) of the [Merger Agreement] prior to engaging in discussions or exchanging information with Validus, Transatlantic is required to provide Allied World with three business days prior notice (which we have done) and to obtain from Validus an executed confidentiality agreement containing terms that are substantially similar, and not less favorable to Transatlantic, in the aggregate, than those contained in the confidentiality agreement between Transatlantic and Allied World. We have attached a confidentiality agreement between Transatlantic and Validus for your signature, so that we can commence the process of entering into discussions and exchanging information. Transatlantic included Allied World and Allied Worlds outside legal advisor as direct copies on this letter, deliberately and improperly interposing Allied World and its outside legal advisor directly into the Individual Defendants negotiation of the Confidentiality Agreement with Validus. 63. The Confidentiality Agreement includes provisions regarding

confidentiality of information exchanged, but it also includes an onerous standstill provision providing: For a period of two years after the date of this Agreement, neither Company nor any of its subsidiaries or representatives will, unless it shall have been specifically invited in writing by the board of directors of the other Company, in any manner, directly or indirectly, (a) effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or

28

participate in or in any way assist or encourage any other person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in, (i) any acquisition of any securities (or beneficial ownership thereof) or material assets of the other Company, including rights or options to acquire such ownership; (ii) any tender or exchange offer, merger or other business combination involving such other Company; (iii) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to such other Company; or (iv) any solicitation of proxies (as such terms are defined in Rule 14a-l of Regulation 14A under the Securities Exchange Act of 1934, as amended (the Exchange Act), disregarding clause (iv) of Rule 14a-1(l)(2) and including any otherwise exempt solicitation pursuant to Rule 14a-2(b)) or consents to vote any voting securities of such other Company; (b) form, join or in any way participate in a group (as such term is used in Rule 13d-5 under the Exchange Act) with respect to any voting securities of such other Company or otherwise act in concert with any person in respect of any such securities; (c) otherwise act, alone or in concert with others, to seek to control, control, advise, change or influence the management, Board of Directors, governing instruments, shareholders, policies or affairs of such other Company; (d) enter into any discussions or arrangements with any third party with respect to any of the foregoing; or (e) make any public disclosure, or take any action which might force such other party to make any public disclosure, with respect to the matters set forth in this Agreement; provided, that each Company may make confidential requests to the other Company to amend or waive any of the limitations set forth in this paragraph, which the other Company may accept or reject in its sole discretion, so long as any such request is not knowingly made by the Company in a manner that would require the public disclosure thereof by either Company. 64. Following receipt of a revised Confidentiality Agreement from Validus

outside legal advisor on July 23, 2011, Transatlantic and its advisors did not substantively engage Validus or its advisors regarding the Confidentiality Agreement. Instead, Transatlantic provided a copy of the revised Confidentiality Agreement to Allied World and its advisors. Consequently, on July 25, 2011, Allied World, through its outside legal

29

advisor, informed Transatlantic that Allied World was taking the position that Transatlantic entering into a confidentiality agreement with Validus that did not contain a standstill would not comply with the terms of the Merger Agreement, and that Allied World reserved all of its rights i.e., threatened to sue if Transatlantic proceeded to enter into discussions with Validus. 65. The actions of Transatlantic and the Individual Defendants regarding the

Confidentiality Agreement were a deliberate effort on the part of the Individual Defendants to avoid entering into discussions with Validus, and thus to hide their heads in the sand regarding the superiority of the Validus Merger Offer. The Individual Defendants have expressly or effectively waived whatever standstill to which Allied World may originally have been a party. Among other things, Allied World was permitted to enter into the Merger Agreement, and is permitted under the Merger Agreement to make counterproposals to Transatlantic in the event of a superior proposal from a third party, to speak publicly about its bid and to solicit Transatlantic stockholders. Thus, the Merger Agreements requirement that the terms of a confidentiality agreement be substantially similar to the terms of the Allied World confidentiality agreement cannot, under a good-faith reading, prevent Transatlantic from entering into a confidentiality agreement that would still permit Validus to pursue its own proposal and oppose the Proposed Allied World Takeover. This is particularly so given that Transatlantic has now put in place the Poison Pill. Given that the Individual Defendants have now blocked the ability of Validus and every other bidder for Transatlantic from pursuing an acquisition the Individual Defendants do not approve,

30

there can be no justification for the Individual Defendants continued insistence that the terms of the Merger Agreement require that Validus be subject to a superfluous standstill agreement. 66. Despite the terms of the Validus Merger Offer and their acknowledgement

that the Validus Merger Offer is reasonably likely to lead to a superior proposal and that their refusal to enter into discussions with Validus is a breach of their fiduciary duties, the Individual Defendants have hidden behind the No-Talk provision of the Merger Agreement and refused to enter into discussions with Validus or declare the Validus Merger Offer a Superior Proposal under the Merger Agreement, and have maintained their recommendation to stockholders in favor of the Proposed Allied World Takeover. 67. These acts and failures to act are a breach of the Individual Defendants

fiduciary duties of care and loyalty. Specifically, with no adequate investigation or attempt to enter into negotiations with Validus, in order to preserve their lucrative and prestigious roles as directors and officers in a public company by continuing as members of the TransAllied Board (and, in the case of Defendant Sapnar, as an executive officer of TransAllied) following consummation of the Proposed Allied World Takeover, and subsequently to save the embarrassment of admitting yet another mistake to stockholders who are already berating them, the Individual Defendants are wrongfully recommending to Transatlantic stockholders a transaction that is demonstrably against the stockholders interest. Of course at this point, the Individual Defendants can hardly be trusted to make a disinterested recommendation to their stockholders, both because of their self-interest in

31

originally locking up the Proposed Allied World Takeover to maintain their directorships and management positions, and because a change of recommendation now would amount to an admission that they made a foolish and very costly mistake by agreeing to a $115 million termination fee without first exploring reasonably available alternatives. V. THE INDIVIDUAL DEFENDANTS SET A RECORD DATE THAT VIOLATES FEDERAL SECURITIES LAW AND NEW YORK STOCK EXCHANGE RULES IN AN ATTEMPT TO MANIPULATE THE VOTE. 68. On the morning of July 13, 2011, approximately 12 hours after Validus

announcement of the Validus Merger Offer, both Allied World and Transatlantic issued press releases that they had each set July 22, 2011 as the record date for their respective special meetings of stockholders to be held in connection with the Proposed Allied World Takeover. 69. The Individual Defendants precipitous decision to set July 22, 2011 as the

record date was in blatant violation of federal law, NYSE requirements, and their fiduciary duty. Rule 14a-13 promulgated under the Securities Exchange Act of 1934, as amended, requires that a registrant distribute broker search cards in connection with a stockholder meeting at least 20 business days prior to the record date, unless inquiry at such time is impracticable. Because the July 22, 2011 record dates were set on July 13, 2011, broker search cards could have been distributed only nine calendar days, or seven business days, prior to the record dates for the special meetings. The Individual Defendants action also violates NYSE Rule 402.05, which requires NYSE-listed companies, including Allied World and Transatlantic, to make inquiry of brokers at least 10 days in advance of the record date.

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70.

Since Allied World filed the Joint Proxy Statement / Prospectus on July 7,

2011, neither Allied World nor Transatlantic could have had a reasonable expectation of completing the SEC review and comment process relating to the Form S-4 prior to earlyto mid-August, and therefore, would not be reasonably likely to be in a position to mail the Joint Proxy Statement / Prospectus to their stockholders prior to some date in August. 71. Even if Allied World and Transatlantic had determined that it was

necessary to set a record date following the announcement of the Validus Merger Offer, they could have complied with Rule 14a-13 and NYSE Rule 402.05 by setting a record date of August 10, 2011 a date that was reasonably likely to be in advance of the date on which the SECs review and comment process would be completed. 72. Furthermore, as of August 5, 2011, neither Allied World nor Transatlantic

had set a date for their respective special meetings of shareholders, so there was no legitimate need on July 13, 2011 to set a July 22, 2011 record date. 73. It is apparent that the sole purpose of establishing a July 22, 2011 record

date was to manipulate the corporate machinery in an effort to inappropriately influence the stockholder franchise. Indeed, Transatlantics and Allied Worlds violation of Rule 14a-13 represents a blatant and self-serving attempt to prevent stockholders (and potential stockholders that would like to acquire shares of Transatlantic subsequent to the announcement of the Validus Merger Offer and Transatlantics position with respect thereto) from being able to effectively exercise their voting rights with respect to the Proposed Allied World Takeover.

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VI.

TRANSATLANTIC VIOLATES ITS DUTY OF CANDOR BY FILING FALSE AND MISLEADING SCHEDULE 14D-9 AND SCHEDULE 14D-9 AMENDMENT. 74. On July 28, 2011, Transatlantic filed with the SEC the Schedule 14D-9 in

which Transatlantic advised its stockholders that the Individual Defendants had determined to stand by their recommendation that the stockholders approve the inferior Proposed Allied World Takeover and reject the Validus Exchange Offer. On August 7, 2011, Transatlantic filed with the SEC the Schedule 14D-9 Amendment. The Schedule 14D-9 and Schedule 14D-9 Amendment include a host of material misstatements and omissions, some rehashed and some new. 75. In addition, the Schedule 14D-9 discloses that the Transatlantic Board

held a meeting and determined to recommend that stockholders reject the Validus Exchange Offer on July 26, 2011, just one day after Validus filed its exchange offer documents with the SEC. Notwithstanding the timing of this meeting, Transatlantic did not publicly announce such determination until July 28, 2011, thereby delaying two days and allowing Transatlantic stock to trade during this period without disclosure in the marketplace of the significant decision by the Transatlantic Board. A. 76. The Schedule 14D-9 and Schedule 14D-9 Amendment Contain False and Misleading Statements Regarding the Confidentiality Agreement. On page 30 of the Schedule 14D-9, Transatlantic states that Transatlantic

and Validus have not been able to complete mutual due diligence [a]s a result of Validus refusal to sign a standard confidentiality agreement. However, Validus has stood ready and willing to sign a standard confidentiality agreement for the particular

34

circumstances in which the companies find themselves involving a target that has agreed to a transaction and an intervening bidder that has already commenced an exchange offer at a higher price and a solicitation in opposition to the inferior transaction, i.e., without a standstill, and it is Transatlantic that has refused to negotiate a standard confidentiality agreement with representatives of Transatlantic refusing to negotiate Validus proposed confidentiality agreement or to engage in substantive discussions with Validus and its advisors regarding other alternatives that would not include an effective standstill. 77. The Schedule 14D-9 and Schedule 14D-9 Amendment are materially false

and misleading because they contain disclosure that omits key provisions of Section 5.5(e) of the Merger Agreement regarding the requirement that Transatlantic seek a confidentiality agreement with terms substantially similar, and not less favorable to Transatlantic, in the aggregate, than those contained in Transatlantics confidentiality agreement with Allied World. Specifically, Transatlantics disclosure on pages 18 and 34 of the Schedule 14D-9 fails to clarify that this determination need only be made solely by the Transatlantic Board in good faith. Transatlantic repeats this misleading omission on page 4 of the Schedule 14D-9 Amendment when discussing the National Indemnity Proposal. It is extremely false and misleading for Transatlantic to fail to disclose to Transatlantic stockholders that Transatlantics insistence on a standstill is a self-imposed one. 78. The Schedule 14D-9 and Schedule 14D-9 Amendment are false and

misleading because they fail to disclose that, in light of Allied Worlds recent conduct

35

and disclosures, either Allied World is in violation of its standstill with Transatlantic or Transatlantic has expressly waived (or done so on an effective basis) the standstills material restrictions. Indeed, if Allied were still bound by a standstill comparable to the one that Transatlantic proposed to Validus, then Allied World would be unable to (i) maintain its current Merger Agreement with Transatlantic, (ii) make public statements in favor of, and solicit Transatlantic stockholders with respect to, the Proposed Allied World Takeover which it has been doing on a regular basis, (iii) make counteroffers to the Transatlantic Board, as contemplated by Section 5.5 of the Merger Agreement, without the Transatlantic Boards consent, (iv) solicit in opposition to the Transatlantic Board, if it were to change its recommendation with respect to the Proposed Allied World Takeover, or (v) purchase 45,000 shares of Transatlantic common stock, as required by Section 6.11 of the Merger Agreement. In light of the fact that Allied World has already taken the actions described in (i) and (ii) above, and is contractually obligated to take the action described in (v) above, Transatlantics statements that Allied World continues to be bound by the standstill provisions of the confidentiality agreement are false and misleading and contain material omissions. 79. The Schedule 14D-9 is materially false and misleading because Validus is

ready and willing to enter into a standard confidentiality agreement that does not impair Validus ability to pursue the Validus Offer and oppose the Proposed Allied World Takeover. Contrary to Transatlantics assertions, Validus refusal to enter into a confidentiality agreement is not the cause for the failure of Transatlantic and Validus to complete mutual due diligence.

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80.

The Amended Schedule 14D-9 is materially false and misleading because

it justifies false and misleading assertions made by Transatlantic regarding the Validus Offer and Validus operations on the basis that Transatlantic is unable to complete due diligence on Validus as a result of Validus refusal to enter into a confidentiality agreement.1 B. The Schedule 14D-9 and Schedule 14D-9 Amendment Contain False and Misleading Statements Regarding the Consideration Provided by the Competing Transactions. On the last bullet on page 5 of the Schedule 14D-9 Amendment,

81.

Transatlantic lists among its reasons for recommending that Transatlantics stockholders reject the Validus Exchange Offer the fact that the market value of the Validus Exchange Offer represented a 2.9% discount to the closing price of Transatlantic stock on July 25, 2011. In comparison, Transatlantic includes a comparison of the market value of the Proposed Allied World Takeover both as of June 10, 2011 and July 25, 2011. Moreover, even though Transatlantic seeks to compare the market value of the consideration represented by the Validus Offer and the Proposed Allied World Takeover, at no time does Transatlantic state clearly the percentage premium to market value that the Validus Offer represents over the Proposed Allied World Takeover as of such dates. Compounding this material omission, both the Schedule 14D-9 (on page 24) and

On August 10, 2011, Validus delivered a one-way confidentiality agreement to Transatlantic that would permit Transatlantic to receive and review non-public information regarding Validus and the Validus Offer (and, if required by law, to disclose this information publicly), and does not require Transatlantic to be bound by a standstill.

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Schedule 14D-9 Amendment (on page 6) contain the statement that The Exchange Offer Economically Disadvantages Transatlantic Stockholders. 82. The Schedule 14D-9 Amendment discloses that the Transatlantic Board

has made the determination that the all-cash National Indemnity Proposal is reasonably likely to lead to a Superior Proposal under the Merger Agreement. It is materially misleading for Transatlantic to disclose the Transatlantic Boards views regarding longterm value and the importance of book value per share without explaining its views as to the potential long-term value creation potential of the National Indemnity Proposal or, if the Transatlantic Board has no view, why the Transatlantic Board believes that such factors are not relevant to a determination that the National Indemnity Proposal is reasonably likely to lead to a Superior Proposal. C. The Schedule 14D-9 and Schedule 14D-9 Amendment Contain False and Misleading Statements Regarding the Conditionality of the Validus Exchange Offer. On page 21 of the Schedule 14D-9 (restated on page 4 of the Schedule

83.

14D-9 Amendment), Transatlantic states that the Validus Exchange Offer is highly conditional, resulting in substantial uncertainty. However, this statement is false and misleading to stockholders because the passage implies that the Validus Exchange Offer has an unusual level of conditionality and that it is more conditional than the Proposed Allied World Takeover. In fact, the Proposed Allied World Takeover contains a number of conditions that are not conditions to the Validus Exchange Offer (or the Validus Merger Offer).

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84.

The terms of the Validus Exchange Offer are standard for transactions of

that structure, and, in fact, its conditionality is comparable to, if not less conditional than, the Proposed Allied World Takeover. For example, the Proposed Allied World Takeover contains the following additional conditions: the Proposed Allied World Takeover requires stockholder consent to the expansion of the board, a corporate name change and an increase in share capital, while the Validus Exchange Offer has no equivalent condition; the Proposed Allied World Takeover requires that Allied World purchase 45,000 shares of Transatlantic common stock following receipt of required shareholder approvals, while the Validus Exchange Offer has no equivalent condition; and the Proposed Allied World Takeover requires each partys chief executive officer to execute a certificate as to the satisfactions of the conditions relating to representations, warranties and covenants, while the Validus Exchange Offer has no equivalent condition. Conversely, the additional conditions to the Validus Exchange Offer primarily relate to either the termination of the Proposed Allied World Takeover or actions that can be controlled by the Transatlantic Board such as the redemption of the Poison Pill. Further, Validus has fulfilled or is well on its way to fulfilling certain other additional conditions to the Validus Exchange Offer e.g., Validus has obtained all required credit agreement consents and has taken affirmative steps to obtain the required approval of its shareholders by filing a preliminary proxy statement on August 1, 2011. Thus, the statement that the Validus Exchange Offer is highly conditional, and resulting implication that it is more conditional than the Proposed Allied World Takeover, is a material misstatement.

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85.

Page 24 of the Schedule 14D-9 refers to the likelihood that the necessary

regulatory approvals for the Proposed Allied World Takeover will be received in a timely manner. However, the Schedule 14D-9 fails to explain why Transatlantic does not believe that regulatory approvals in connection with the Validus Offer would be received in a timely manner or, given the current state of such approvals, why Transatlantic believes that obtaining such approvals in connection with the Validus Offer would take significantly more time than obtaining such approvals in connection with the Proposed Allied World Takeover, particularly in light of disclosures on page B-7 of the Schedule 14D-9 Amendment that suggest that Transatlantic and Allied World have not yet made the filings necessary to obtain many of the approvals required in connection with the Proposed Allied World Takeover. D. The Schedule 14D-9 and Schedule 14D-9 Amendment Contain False and Misleading Comparisons of Share Values for the Allied World and Validus Transactions. On page 22 of the Schedule 14D-9, Transatlantic states that the Individual

86.

Defendants believe that the Transatlantic-Allied World Merger would provide greater value to Transatlantics stockholders within a shorter timeframe than other potential strategic alternatives. This statement is materially false and misleading because the Individual Defendants do not have a reasonable basis for such a belief. In addition, the Schedule 14D-9 Amendment does not disclose how the National Indemnity Proposal has impacted the Transatlantic Boards view of the factors disclosed in the Schedule 14D-9. 87. On page 25 of the Schedule 14D-9, there is a graph that purports to

portray the book value per Transatlantic share as reported by Transatlantic, pro forma for

40

the Proposed Allied World Takeover and pro forma for the Validus Exchange Offer. However, the comparison between the pro forma numbers is materially false and misleading as Validus pro forma book value per share includes a reserve charge while Allied Worlds pro forma book value per share does not include a reserve charge, a fact which is not noted in the Schedule 14D-9. The failure to include any disclosure about the differences between the two pro forma book values renders the current disclosure extremely misleading to Transatlantic stockholders. 88. On pages 25 and 26, the Schedule 14D-9 references Allied Worlds and

Validus stockholder returns over the period from the third quarter of 2006 to the first quarter of 2011. However, these comparisons are false and misleading because Validus did not complete its initial public offering until July of 2007. It is false and misleading for the Individual Defendants to use comparisons for periods for which there is data for Allied World but not Validus. This is especially true because the differences between the periods make the relative returns of Allied World appear to be superior to Validus returns. In fact, since Validus initial public offering through the date of public announcement of the Proposed Allied World Takeover, Validus has delivered to its shareholders a total return of 55%, compared with a 24% return for Allied World shareholders during this same period. 89. On page 27, the Schedule 14D-9 cites the potential for greater multiple

expansion if there were to be an Allied World/Transatlantic merger than there would be if there were a Validus/Transatlantic merger, which apparently is based on historical price

41

to book value per share ratios of the two companies. Transatlantic repeats these statements regarding multiple expansion on page 7 of the Schedule 14D-9 Amendment. However, these disclosures are false and misleading because the two companies have different periods for which historical data is available, which influences the two companies historical ratios. In addition, these disclosures are false and misleading because Transatlantic does not explain the reasons that Allied Worlds shares have traded at a discount to Validus historical price to book value per share ratio including the possibility that the market may believe that Allied World now has less likelihood for growth than Validus (rather than imply room for future multiple expansion). 90. The graph on page 29 of the Schedule 14D-9 is false and misleading

because it depicts Validus probable maximum loss/equity ratio as of March 31, 2011, even though, as noted in footnote 3 to the graph, Transatlantic had available more recent information regarding Validus ratio. Transatlantics decision to display the 32% ratio based on the March 31, 2011 data when it was aware that Validus current probable maximum loss/equity ratio is only 27% is another flagrant attempt to mislead stockholders into supporting Allied Worlds offer for Transatlantic. 91. The graph on page 30 of the Schedule 14D-9 fails to indicate that Validus

debt includes its hybrid notes, even though such hybrid notes are considered to be equity by ratings agencies. The Schedule 14D-9 is misleading because it does not disclose the equity treatment of the hybrid notes or exclude the hybrid notes from the calculation of Validus debt/capital ratio.

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E.

The Schedule 14D-9 and Schedule 14D-9 Amendment Contain False and Misleading Statements Regarding the Structure of the Validus Exchange Offer. On page 31 of the Schedule 14D-9, the Individual Defendants state, as a

92.

consideration purportedly weighing against the Validus Exchange Offer, that Transatlantic stockholders would not have majority control over a Validus/Transatlantic combined company, but would have majority control over TransAllied. However, this disclosure is false and misleading because the terms of the Merger Agreement require that, in order for a proposal to qualify as a Superior Proposal pursuant to the fiduciary out provisions of the Merger Agreement, Transatlantic stockholders cannot control more than fifty percent of the combined company. In order for Validus to structure an offer that could have been recommended by the Transatlantic Board, Validus was required to structure the Validus Merger Offer such that it constituted a Superior Proposal. The stock and cash consideration of the Validus Exchange Offer is based on the amounts of stock and cash offered to Transatlantic stockholders in the Validus Merger Offer. It is false and misleading for Transatlantic to criticize the Validus Exchange Offer (and, by implication, the Validus Merger Offer) because it does not provide Transatlantic stockholders with control of the combined company when Transatlantic has effectively required that Validus (or any other third party) structure its offer in this manner. 93. Page 7 of the Schedule 14D-9 Amendment notes the definition of Superior

Proposal. However, Transatlantics disclosure regarding the definition of Superior Proposal is materially misleading because it does not attempt to reconcile this definition

43

with the Transatlantic Boards previously stated views of the structure of the Validus Exchange Offer. F. The Schedule 14D-9 and Schedule 14D-9 Amendment Omit Transatlantics Failure to Obtain an Expert Opinion Regarding the Fairness of the Validus Exchange Offer. The Schedule 14D-9 fails to disclose that the Individual Defendants did

94.

not obtain an outside expert opinion regarding the Validus Exchange Offer, or the Individual Defendants reasons for failing to do so. It appears that no expert opinions were sought by the Individual Defendants as to whether the consideration offered by Validus in the Validus Exchange Offer is fair to Transatlantic stockholders. The Individual Defendants failed to seek these opinions despite the fact that Transatlantics financial advisors were able to deliver an opinion that the lower market value consideration offered by the Proposed Allied World Takeover was fair to Transatlantic stockholders. Likewise, although the Transatlantic Board discussed the National Indemnity Proposal with its financial advisors on August 8, 2011, the Schedule 14D-9 does not disclose whether or not the Transatlantic Board sought to obtain a fairness opinion from its advisors as of such date with respect to either the Validus Exchange Offer or the National Indemnity Proposal, or an updated fairness opinion in respect of the Proposed Allied World Takeover (in light of the then-current valuation of Allied World stock as of such date). These material omissions render the Schedule 14D-9 false and misleading because they create the implication that the consideration offered by the Proposed Allied World Takeover is fair to Transatlantic stockholders, but that the consideration offered in the Validus Exchange Offer is not.

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VII.

TRANSATLANTIC CONTINUES TO MISREPRESENT THE STANDSTILL AGREEMENT AND MISREPRESENTS ITS POISON PILL IN AN AUGUST 1, 2011 PRESENTATION. 95. On August 1, 2011, Transatlantic filed a presentation with the SEC.

Through this presentation, Transatlantic continues to misrepresent its demand for a standstill agreement from Validus, and makes new misrepresentations regarding its amendment of Transatlantics by-laws and its adoption of the Poison Pill. A. 96. Transatlantics Representations Regarding Its Demand for a Standstill Agreement Are False and Misleading. The continuing misrepresentations regarding the demand for a standstill

agreement, together with Transatlantics insistence on a standstill that is not contractually required, make clear that Transatlantic is using the demand for a standstill agreement as a pretext for refusing to enter into discussions with Validus in connection with the Validus Offer. 97. On page 3 of the August 1, 2011 presentation, which is subtitled The

Facts, Transatlantic claims that Allied World entered a confidentiality agreement with a standstill and continues to be bound by it. As noted in the paragraphs above, in light of Allied Worlds recent conduct and disclosures, either Allied World is in violation of the standstill or Transatlantic has expressly waived (or done so on an effective basis) the standstills material restrictions. Transatlantics statements to the contrary constitute material misstatements and omissions. 98. Transatlantic further asserts on page 3 that the Merger Agreement requires

Validus to enter into a confidentiality agreement, and that Validus summarily refused to

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sign this confidentiality agreement. Transatlantic further claims on page 3 that Validus sent Transatlantic a draft confidentiality agreement without a standstill and which would expressly enable Validus to use Transatlantics confidential information in any manner (including making it public). These statements are false and misleading. While the Merger Agreement may require Validus to enter into a confidentiality agreement, the Merger Agreement does not require the Individual Defendants to insist that Validus (or any other third party) enter into a standstill agreement. The revisions proposed by Validus would not expressly enable Validus to have carte blanche in disclosing Transatlantics confidential information, but rather were intended to permit Validus to comply with applicable law in light of the then-pending Validus Exchange Offer and solicitation against the Proposed Allied World Takeover. B. 99. Transatlantics Representations Regarding the By-law Amendments and Poison Pill Are Incomplete and Misleading. Transatlantic claims on page 4 of the August 1, 2011 presentation that the

amendments to Transatlantics by-laws are customary and consistent with the bylaws of many other Delaware public companies, yet fails to provide any substantiation for the assertion that they are customary and consistent. 100. Furthermore, Transatlantics description of the amendments as enabl[ing]

the Board to postpone a stockholder meeting to give stockholders sufficient time to consider new information released immediately prior to a meeting is grossly misleading. Transatlantic fails to disclose that the Transatlantic Board may use this newly-minted postponement power not only to postpone a meeting if new information becomes

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available, but also to give them more time to solicit proxies, including once the meeting commences, if stockholder sentiment turns against the Proposed Allied World Takeover. Transatlantic does not disclose the conflict of these amended by-law provisions with the proposal to be voted on by Transatlantic stockholders at Transatlantics special meeting that purports to give Transatlantic stockholders control over an adjournment of such meeting. 101. Likewise, in describing the Poison Pill it has adopted, Transatlantic does

not clearly explain that the Transatlantic Board chose to exempt Allied World from the Poison Pill, even though Allied World has not paid a control premium for Transatlantic. In addition, Transatlantic does not explain why it is in the stockholders best interests to exempt Allied World from the Poison Pill. VIII. TRANSATLANTICS AND ALLIED WORLDS FALSE AND MISLEADING JOINT PROXY STATEMENT / PROSPECTUS. 102. On July 7, 2011, Allied World filed a preliminary Joint Proxy Statement /

Prospectus. The preliminary Joint Proxy Statement / Prospectus was amended on August 5, 2011. Transatlantic intends to distribute the Joint Proxy Statement / Prospectus to its stockholders in an attempt to convince them to approve the Proposed Allied World Takeover. 103. The Joint Proxy Statement / Prospectus includes a number of materially

false and misleading statements, and material omissions, which include, but are not limited to, the following:

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A. 104.

The Joint Proxy Statement / Prospectus Inaccurately Portrays the Proposed Allied World Takeover as a Merger of Equals. In the Joint Proxy Statement / Prospectus, Allied World and Transatlantic

refer to Allied Worlds proposed acquisition of Transatlantic as a merger of equals. This description of the nature of the Proposed Allied World Takeover is materially false and misleading because Allied World is actually acquiring Transatlantic. This misrepresentation is evidently intended to divert attention from the Individual Defendants failure to negotiate a sufficient premium for the Transatlantic stockholders. 105. The Proposed Allied World Takeover is structured as a merger of

Transatlantic into Merger Sub, resulting in Transatlantic becoming a wholly-owned subsidiary of Allied World. The nature of the Proposed Allied World Takeover as an acquisition of Transatlantic by Allied World, rather than an equal combination of two public companies, is also indicated by the fact that (i) Richard S. Press (the current nonexecutive chairman of the Transatlantic Board) will cease to serve as the non-executive chairman of the TransAllied Board one year following the close of the Proposed Allied World Takeover, (ii) the fact that the headquarters of TransAllied will be located in Switzerland (the current headquarters of Allied World), (iii) the fact that Scott A. Carmilani, Allied Worlds current Chairman, President and Chief Executive Officer, will continue as President and Chief Executive Officer of TransAllied, and (iv) the fact that Robert F. Orlich, Transatlantics current Chief Executive Officer, will play no role with TransAllied.

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106.

In addition, in connection with the selected transaction analysis conducted

by one of Transatlantics financial advisors, three of the four transactions considered as part of this analysis were acquisitions, not mergers of equals. Therefore, even one of Transatlantics own financial advisors did not view the Proposed Allied World Takeover as a merger of equals. 107. The failure to clearly disclose the true nature of the Proposed Allied World

Takeover is materially misleading and is an omission of material information that is necessary for Transatlantic stockholders to make informed voting and investment decisions. B. The Joint Proxy Statement / Prospectus Fails To Make Adequate Disclosure Regarding Projections for Both Allied World and Transatlantic. The Joint Proxy Statement / Prospectus contains material omissions

108.

because it does not contain adequate disclosure regarding the projections for both Allied World and Transatlantic. As noted in paragraph 109 below, the disclosures do not include basic and customary information investors would typically use in valuing insurance and reinsurance companies. 109. The Individual Defendants have failed to disclose critical elements of their

projections, including Allied Worlds and Transatlantics net premiums earned, investment income, income taxes, and debt. In addition, the current disclosure regarding the projections omits critical information about the key assumptions used in

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order to derive such projections, including an explanation of the significant projected improvement in the loss/combined ratios. 110. To have a basis for assessing the reasonableness of the projections and

make a fully-informed decision, Transatlantic stockholders need to be provided the material assumptions used to derive the projections. 111. For example, it appears that in order for Transatlantic to meet its 2011

projections, it would need to experience near-zero catastrophe losses for the second half of 2011, recognize additional favorable reserve development, experience materially lower non-catastrophe loss ratios for the second half of 2011 or some combination of the above. It is critical that Transatlantic stockholders be warned that the projections included in the Joint Proxy Statement / Prospectus are predicated on unreasonably sunny assumptions. C. 112. The Joint Proxy Statement / Prospectus Uses Outdated Financial Information. The Joint Proxy Statement / Prospectus contains a material omission

because its pro forma financial information is outdated. Allied Worlds and Transatlantics financial information is current only as of March 31, 2011, or for periods ending March 31, 2011. Yet financial information for both Transatlantic and Allied World as of, and for periods ended, June 30, 2011 is available: Transatlantic filed its Quarterly Report on Form 10-Q for the period ended June 30, 2011 on August 5, 2011, and furnished its second-quarter results via a Current Report on Form 8-K filed with the SEC on July 27, 2011, and Allied World furnished its second-quarter results via a Current Report on Form 8-K filed with the SEC on August 3, 2011. Thus, the financial

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information provided in the Joint Proxy Statement / Prospectus contains material omissions and does not accurately depict Allied World, Transatlantic or the pro forma combined TransAllied entity. D. The Joint Proxy Statement / Prospectus Fails To Describe Accurately the Tax Consequences to Transatlantic Stockholders of Owning Allied World Shares. Since the Proposed Allied World Takeover has been structured as an all-

113.

stock transaction that will be fully taxable to Transatlantics stockholders, a stockholder being asked to approve the Proposed Allied World Takeover should be informed that such stockholder, if it will have a gain associated with the Proposed Allied World Takeover, may have to pay taxes, even though there is no cash consideration being paid to Transatlantic stockholders in the Proposed Allied World Takeover. Therefore, in order for a Transatlantic stockholder to pay any taxes that it may owe, the stockholder will either have to sell some of the shares of Allied World that it is receiving in the Proposed Allied World Takeover or pay such taxes from available cash on hand. Nevertheless, the Individual Defendants have failed to disclose the material facts to Transatlantic stockholders. 114. Moreover, the summary of material income tax consequences on pages

142 and 143 of the Joint Proxy Statement / Prospectus is materially false and misleading because it does not address certain material tax consequences to the Transatlantic stockholders of the ownership or disposition of Allied World shares acquired in the merger.

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115.

Specifically, the Joint Proxy Statement / Prospectus fails to disclose the

potential for Transatlantic stockholders to be subject to (i) Swiss withholding tax on future distributions, (ii) ordinary income characterization of gains on disposition of Allied World shares under the controlled foreign corporation rules, or (iii) U.S. taxation on distributions and gains under the passive foreign investment company rules. IRREPARABLE HARM 116. Validus realleges and reaffirms the allegations in the preceding paragraphs

as if fully set forth herein. 117. Validus has no adequate remedy at law. Only through the exercise of the

Courts equitable powers will Validus and Transatlantics other stockholders be protected from irreparable injury. Absent equitable relief from the Court, Validus will be precluded from consummating the Validus Offer, and Transatlantics stockholders will be deprived of the opportunity to sell their shares to Validus at a premium to the Proposed Allied World Takeover and obtain a portion of the unique business that will result from the combination of Validus and Transatlantic, including the opportunity for additional upside potential in an uncertain economic environment. COUNT I Breach of Fiduciary Duties Against the Individual Defendants for Refusing to Recommend Against an Inferior Proposed Allied World Takeover 118. Validus realleges and reaffirms the allegations in the preceding paragraphs

as if fully set forth herein.

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119.

The Individual Defendants have breached their fiduciary duties by

favoring their own interests over those of Transatlantic's stockholders by refusing to recommend against the Proposed Allied World Takeover in the face of the Validus Offer. The Individual Defendants originally favored the inferior Proposed Allied World Takeover to ensure prestigious and lucrative positions with TransAllied something they assumed they would not have received had they pursued a transaction with Validus following Transatlantics receipt of the June 7th Letter. Now, because they cannot bring themselves to admit their $115 million blunder to Transatlantics stockholders who are already questioning their judgment, they continue to disingenuously recommend in favor of the demonstrably inferior Proposed Allied World Takeover. 120. Unless the Proposed Allied World Takeover is enjoined by the Court, the

Individual Defendants will continue to breach the fiduciary duties they owe to Plaintiff and other Transatlantic stockholders. 121. Plaintiff has no adequate remedy at law.

COUNT II Breach of Fiduciary Duties Against the Individual Defendants for Failure to Enter into Discussions Regarding the Validus Merger Offer 122. Validus realleges and reaffirms the allegations in the preceding paragraphs

as if fully set forth herein. 123. The Individual Defendants owe fiduciary duties to Transatlantics

stockholders, including the duties to act with due care and the utmost good faith and loyalty.

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124.

The Validus Merger Offer is a cash and stock, non-discriminatory offer for

all of Transatlantics shares. The Validus Merger Offer is non-coercive, represents a premium to the Proposed Allied World Takeover, is fair to Transatlantics stockholders, and poses no threat to Transatlantics corporate policy or effectiveness. 125. The Individual Defendants have failed to conduct a good faith and

reasonable investigation of the Validus Offer. Instead, the Individual Defendants refuse to engage Validus in a meaningful dialogue and fail to reasonably inform themselves about the Validus Merger Offer. Because the Individual Defendants refused to run an adequate process, failed to respond to the June 7th Letter and the Validus Merger Offer, and continue to refuse to enter into a standard confidentiality agreement with Validus in order to enter into discussions with Validus, the Individual Defendants could not possibly be well informed concerning the Validus Offer. The Individual Defendants have rejected a superior offer without engaging in any substantive discussions with Validus, either directly or through their legal and financial advisors, and without making any attempt to learn more about the Validus Offer. This failure to conduct a good faith and reasonable investigation of the Validus Offer is a violation of the Individual Defendants fiduciary duties. 126. The Individual Defendants refusal to enter into discussions with Validus

deprives Transatlantics stockholders of one of their fundamental rights the right to choose the ultimate form of disposition of their investment in shares of Transatlantic common stock in an uncertain economic environment.

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127.

The Individual Defendants failure to adequately consider the Validus

Merger Offer and to enter into discussions with Validus has no economic justification, serves no legitimate purpose, and is an unreasonable response to the Validus Offer at a time in which the Validus Merger Offer poses no threat to the interests of Transatlantics stockholders. 128. The Individual Defendants have admitted that the Validus proposal is

reasonably likely to lead to a Superior Proposal and that the failure to enter into discussions regarding the Validus proposal would result in a breach of [their] fiduciary duties under applicable law (emphasis added). 129. The Individual Defendants actions are in breach of the fiduciary duties

they owe to Transatlantics stockholders. 130. Validus seeks an order declaring that the Individual Defendants have

breached their fiduciary duties to Transatlantics stockholders by unreasonably refusing to enter into discussions with Validus and by failing to inform themselves of the potential parameters of the Validus Offer. 131. Plaintiff has no adequate remedy at law.

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COUNT III Breach of Fiduciary Duties Against the Individual Defendants for Making False, Misleading and Incomplete Disclosures in Connection With Seeking Transatlantic Stockholder Approval of the Allied Merger 132. Validus realleges and reaffirms the allegations in the preceding paragraphs

as if fully set forth herein. 133. The Individual Defendants owe fiduciary duties to Transatlantics

stockholders, including the duty of candor, which requires full, fair, complete and accurate disclosure. 134. The misleading omissions and disclosures by the Individual Defendants

set forth above affirm the inadequacy of disclosures to Transatlantics stockholders. As a result of the Individual Defendants failure to provide full, fair, complete and accurate disclosure, Validus has been damaged thereby. 135. Plaintiff has no adequate remedy at law.

COUNT IV Declaratory Judgment Against the Individual Defendants and Transatlantic that Transatlantics Interpretation of Section 5.5(e) of the Merger Agreement Constitutes a Breach of the Individual Defendants Fiduciary Duty 136. Validus realleges and reaffirms the allegations in the preceding paragraphs

as if fully set forth herein. 137. Transatlantic has asserted that Section 5.5(e) of the Merger Agreement,

the No-Talk provision, requires Validus to enter into a standstill before Transatlantic is permitted to enter into discussions and exchange information with Validus.

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138.

Section 5.5(e) of the Merger Agreement does not require Validus to enter

into a standstill before Transatlantic is permitted to enter into discussions and exchange information with Validus. 139. The Individual Defendants are using this incorrect interpretation of

Section 5.5(e) of the Merger Agreement as a pretext for refusing to enter into discussions and exchange information with Validus. 140. Transatlantics enforcement of a faulty interpretation of Section 5.5(e)

constitutes a breach of the Individual Defendants fiduciary duty. COUNT V Declaratory Judgment Against the Individual Defendants and Transatlantic Invalidating Section 5.5(e) of the Merger Agreement To Permit and Cause Transatlantic To Enter into Discussions with Validus 141. Validus realleges and reaffirms the allegations in the preceding paragraphs

as if fully set forth herein. 142. Section 5.5(e) of the Merger Agreement, the No-Talk provision, does not

preclude the Transatlantic Board from determining in good faith that a confidentiality agreement entered into with Validus (or any other third party) is substantially similar to and not less favorable to Transatlantic, in the aggregate, than Transatlantics confidentiality agreement with Allied World, even if such third-party confidentiality agreement does not contain a standstill, and does not require Validus to enter into a standstill before Transatlantic is permitted to enter into discussions and exchange information with Validus.

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143.

If Section 5.5(e) of the Merger Agreement, the No-Talk provision, were to

require Validus to enter into a standstill before Transatlantic is permitted to enter into discussions and exchange information with Validus, agreeing to the No-Talk was a breach of the Individual Defendants fiduciary duties, and is invalid. COUNT VI Aiding and Abetting the Individual Defendants Breaches of Fiduciary Duty Against Allied World 144. Validus realleges and reaffirms the allegations in the preceding paragraphs

as if fully set forth herein. 145. Defendant Allied World is sued herein as an aider and abettor of the

Individual Defendants breaches of fiduciary duties described herein. 146. The Individual Defendants breached their fiduciary duties to

Transatlantics stockholders as set forth herein. Such breaches could not and would not have occurred but for the conduct of Allied World, who knowingly aided and abetted such breaches by, among other things: (a) (b) (c) (d) causing the Individual Defendants to enter into the Merger Agreement; enticing the Individual Defendants with personal benefits not shared with the stockholders generally; rendering substantial assistance to the Individual Defendants in connection with the breaches described herein; and threatening to hold Transatlantic liable if the Individual Defendants do not stand by their improper assertion that the Merger Agreement requires Validus to enter into a standstill agreement as a precondition to entering into discussions with Transatlantic.

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147.

As a result of such substantial assistance by Allied World, Validus and

other Transatlantic stockholders have been and will be damaged in that they have been and will be prevented from considering a transaction, free from undue influence, that is in their best interests. 148. Plaintiff has no adequate remedy at law. REQUEST FOR RELIEF WHEREFORE, Validus respectfully requests that the Court issue an order: a. Ordering Defendants to make all appropriate disclosures and correct all false and misleading statements and omissions of material fact heretofore made by them, including those made in their securities filings; b. Permanently enjoining Defendants, their officers, employees, agents, nominees and affiliates, and all other persons acting in concert with them or on their behalf, directly or indirectly, from taking any steps to, or in connection with: i. consummating a business combination between Allied World and Transatlantic; or ii. making any materially false or misleading statement in any solicitation with respect to the shares of Transatlantic stock; unless and until Defendants comply, in full, with the federal securities laws; and unless and until such time in the future as the Court may determine that the effects of Defendants unlawful conduct have dissipated; c. Declaring that the Individual Defendants have breached their fiduciary duties to Transatlantics stockholders by unlawfully locking up the inferior Proposed

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Allied World Takeover and by refusing to enter into discussions and exchange information with Validus and to inform themselves of the potential parameters of the Validus Offer; d. Compelling the Individual Defendants to take appropriate actions in good faith to enter into discussions with Validus regarding the Validus Offer; e. Declaring that Section 5.5(e) of the Merger Agreement does not preclude the Transatlantic Board from determining in good faith that a confidentiality agreement entered into with Validus (or any other third party) is substantially similar to and not less favorable to Transatlantic, in the aggregate, than Transatlantics confidentiality agreement with Allied World, even if such third-party confidentiality agreement does not contain a standstill; f. To the extent that the relief requested in clause e. above is not available, declaring Section 5.5(e) of the Merger Agreement invalid; g. Enjoining the Individual Defendants from engaging in any action or inaction that has the effect of improperly impeding, thwarting, frustrating or interfering with consideration or acceptance of the Validus Exchange Offer in a manner inconsistent with their fiduciary duties; h. Enjoining Transatlantic, its employees, agents and all persons acting on its behalf or in concert with it from taking any action that has the effect of impeding Validus efforts to acquire control of Transatlantic, in violation of their respective fiduciary duties to Transatlantics stockholders;

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i. Awarding Validus its costs and disbursements in this action, including reasonable attorneys and experts fees; and j. Granting Validus such other and further relief as this Court may deem just and proper.

Of the New York Bar: Robert E. Zimet, Esq. Christopher P. Malloy, Esq. SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP Four Times Square New York, New York 10036-6522 Tel.: (212) 735-3000 Fax: (212) 735-2000

/s/ Robert S. Saunders Edward P. Welch (ID No. 671) Robert S. Saunders (ID No. 3027) SKADDEN, ARPS, SLATE MEAGHER & FLOM LLP One Rodney Square P.O. Box 636 Wilmington, Delaware 19899-0636 Tel.: (302) 651-3000 Fax: (302) 651-3001

Attorneys for Plaintiff Validus Holdings, Ltd. DATED: August 10, 2011

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