Warren Buffett's Berkshire Hathaway offered $1.7 billion in cash for Bermuda-based reinsurer IPC Holdings, which rejected the bid in favor of a lower offer from Validus, Bloomberg reported, citing two people with knowledge of the bid.

Earlier this month, Validus agreed to buy IPC for $1.65 billion, beating rivals Flagstone and Max Capital, and ending a long bidding war.

Berkshire is the Party M named in a regulatory filing today, Bloomberg said.

In a filing with the U.S. securities and exchange commission, IPC said that on June 20 it received an offer from an additional party (Party M) to acquire the company.

Party M's revised offer contemplated consideration of $30.00 in cash in exchange for each IPC Share, with no financing condition, but would have required IPC to pay a $50 million inducement fee and restricted IPC from paying a dividend in the third quarter of 2009, the filing said.

According to the filing, one of the reasons why IPC rejected Party M's offer was because it would not have permitted a dividend.

Berkshire Hathaway and IPC Holdings could not be immediately reached for comment by Reuters.

(Reporting by Hezron Selvi in Bangalore; Editing by David Cowell)

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