Watford Holdings Ltd. announced yesterday that it can’t ignore an offer from Enstar Group Limited to buy the Bermuda-based company for $34.50 per share, or nearly $690 million, which beats a competing offer by Arch Capital Group Ltd. for $31.10 per share, or $622 million.

The latest Enstar bid also exceeds an earlier bid that Enstar had put forth of $31 per share in early October, before Arch upped the figure by another 10 cents per share.

Watford’s board “has not determined that Enstar’s proposal in fact constitutes a Superior Proposal under the current provisions of the merger agreement with Arch and has not changed its recommendation in support of the merger with Arch,” Watford stressed in a media statement.

Instead, the board of directors has simply “determined, in its good faith judgment (after consultation with the company’s financial advisors and outside legal counsel), that [Enstar’s] unsolicited, non-binding proposal…could reasonably be expected to lead to a ‘Superior Proposal’ as defined in [Watford’s] merger agreement with Arch,” announced on Oct. 9. Failure to take action on the new Enstar proposal “would be inconsistent with the directors’ exercise of their fiduciary duties under applicable law,” Watford said.

Under the terms of the merger agreement with Arch, the determination by Watford’s board regarding the possible superiority of the new proposal allows Watford to conduct discussions and negotiations with Enstar, and provide information to Enstar, as long as Enstar entering into an Acceptable Confidentiality Agreement as defined in the merger agreement with Arch.

Arch Capital subsidiaries currently manage the underwriting operations of Watford Re, and Arch owns roughly 13 percent of Watford’s shares.

Enstar, a runoff consolidator and specialty underwriter, owns roughly 9 percent of Watford shares. Earlier this year, Enstar increased the capitalization of Starstone, an active specialty underwriting operation in the group.