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Validus defends Transatlantic bid

NEW YORK (Reuters) - Reinsurer Validus Holdings Ltd defended its $3.25 billion bid for Transatlantic Holdings Inc , saying a deal would create more than $1 billion of earnings power that it could put toward more share repurchases.

Validus offered to buy Transatlantic on Tuesday, trumping a $3.06 billion stock deal that Transatlantic has already signed with rival Allied World Assurance Co Holdings.

Bermuda-based Validus said it believes its bid would create more than the $80 million in synergies touted by Allied World and Transatlantic. It said it would seek to retain the Transatlantic management team.

It also said it projects that the combination would create a better spread of risk for Validus and increase the combined company`s excess capital by over $500 million.

Validus said the deal would create $1.1 billion of "pre-synergy, precatastrophe" earnings power available for share repurchases. The company's currently has $382.0 million remaining in its share repurchase program.

Validus shares closed at $28.25 on the New York Stock Exchange on Sunday. They are down more than 8 percent since the company announced the Transatlantic bid.

(Reporting by Michael Erman)