Recommended Cash Acquisition by CNA (8011Z)

TIDMHDU

RNS Number : 8011Z

Hardy Underwriting Bermuda Ld

21 March 2012

For immediate release

Not for release, publication or distribution, in whole or in part, directly or indirectly, in, into or from any jurisdiction where to do so would constitute a violation of the relevant laws or regulations of such jurisdiction

21 March 2012

RECOMMENDED CASH ACQUISITION

HARDY UNDERWRITING BERMUDA LIMITED

CNA FINANCIAL CORPORATION

(to be implemented by way of a merger under the Bermuda Companies Act with CNA Bermuda SPV, a wholly-owned subsidiary of CNA)

Summary

-- The boards of CNA Financial Corporation ("CNA") and Hardy Underwriting Bermuda Limited ("Hardy") are pleased to announce that they have reached agreement on the terms of a recommended cash acquisition for the entire issued and to be issued share capital of Hardy by CNA (the "Acquisition"). It is intended that the Acquisition will be implemented by way of a Merger under the Bermuda Companies Act.

-- Under the terms of the Acquisition, Hardy Shareholders will be entitled to receive 280 pence in cash for each Common Share (the "Acquisition Price") which values the entire issued and to be issued share capital of Hardy at approximately GBP143 million.

-- The Hardy Directors, who have been so advised by Rothschild and Peel Hunt, consider the terms of the Acquisition to be fair and reasonable. In providing their advice, Rothschild and Peel Hunt have taken into account the commercial assessment of the Hardy Directors.

-- Accordingly, the Hardy Directors will unanimously recommend that Hardy Shareholders vote to approve the Acquisition at the Special General Meeting (or, in the event that the Acquisition is implemented by way of a Takeover Offer, to accept or procure acceptance of such offer), as the Hardy Directors who are also Hardy Shareholders have irrevocably undertaken to do in respect of their own (and, where applicable, of their connected persons') beneficial shareholdings of 2,264,687 Common Shares representing approximately 4.43 per cent. of the existing issued share capital of Hardy.

-- In addition, CNA has received irrevocable undertakings to vote in favour of the Acquisition from certain institutional Hardy Shareholders in respect of a total of 10,518,735 Common Shares, representing approximately 20.57 per cent. of the existing issued share capital of Hardy.

-- CNA has therefore received irrevocable undertakings to vote in favour of the Acquisition from Hardy Shareholders in respect of a total of 12,783,422 Common Shares, representing approximately 25.00 per cent. of the existing issued share capital of Hardy.

-- A Circular, setting out the details of the Acquisition and the procedures to be followed to approve the Acquisition, will be posted to Hardy Shareholders as soon as practicable and in any event by 18 April 2012. The Special General Meeting is expected to be held in April 2012, and, subject to obtaining the required regulatory consents without delay, the Acquisition is expected to become effective by the end of June 2012.

Commenting on the Acquisition, Thomas F. Motamed, Chairman and Chief Executive of CNA said: "We are delighted to have reached this agreement. Hardy is a specialist insurer and reinsurer with a respected brand and a long and distinguished history of disciplined underwriting in the Lloyd's market. While Hardy's recent results reflect the extraordinary level of natural catastrophe losses across the global insurance industry, the Hardy franchise is built on a strong foundation and has a bright future. The proposed Hardy acquisition significantly expands CNA's global capabilities and aligns well with our specialized underwriting focus."

"Hardy and CNA share similar underwriting and management philosophies. We are pleased that Barbara Merry, Chief Executive, and Patrick Gage, Director of Underwriting, will continue to lead their outstanding team", Motamed continued.

Commenting on the Acquisition, David Mann, Chairman of Hardy said: "Since announcing our strategic review in December 2011, a thorough and transparent process has been conducted. The interest shown in Hardy during the strategic review process demonstrates the underlying quality of Hardy's business, people and franchise. CNA is a highly regarded insurer with an international presence and a strong reputation for delivering outstanding client service. The Board believes that CNA's offer represents the most attractive outcome for our shareholders and will enhance Hardy's business in the interests of our customers, partners and employees."

This summary should be read in conjunction with, and is subject to, the full text of the following announcement and the Appendices.

The Acquisition will be subject to the conditions set out in Appendix 1 to the full announcement and to the further terms and conditions to be set out in the Circular. Appendix 2 to the full announcement contains bases and sources of certain information contained in the announcement. Further details of irrevocable undertakings received by CNA are set out in Appendix 3 to the full announcement. Certain definitions and terms used in the full announcement are set out in Appendix 4 to the full announcement.

Terms used in this summary shall have the meaning given to them in the full announcement.

Enquiries:

CNA Tel: +1 312 822 5000

Thomas F. Motamed, Chairman and Chief Executive

Aon Benfield Securities Tel: +44 (0) 20 7578 7000

(Financial adviser to CNA)

Paul Rayner

Ross Milburn

Fleishman-Hillard Tel: +44 (0)20 7395 7017

(PR adviser to CNA)

Alan O'Sullivan

Hardy Tel: +44 (0) 20 7626 0382

David Mann, Chairman

Barbara Merry Chief Executive

Rothschild Tel: +44 (0) 20 7280 5000

(Joint financial adviser to Hardy)

Crispin Wright

Peel Hunt Tel: +44 (0) 20 7418 8900

(Joint financial adviser to Hardy)

James Britton

Redleaf Polhill Tel: +44 (0) 20 7566 6700

(PR adviser to Hardy) hardy@redleafpolhill.com

Emma Kane / Samantha Robbins

This announcement is not intended to and does not constitute, or form part of, any offer to sell, purchase, exchange or subscribe for, or an invitation to purchase or subscribe for, any securities or the solicitation of an offer to sell, purchase or exchange any securities or of any vote or approval in any jurisdiction pursuant to the Acquisition or otherwise, nor shall there be any sale, issuance or transfer of securities of Hardy in any jurisdiction in contravention of applicable law. This announcement does not constitute a prospectus or a prospectus equivalent document. The Acquisition will be made solely pursuant to the terms of the Circular which will contain the full terms and conditions of the Acquisition, including details of how to vote in respect of the Merger. Any decision in respect of, or other response to, the Acquisition should be made only on the basis of the information in the Circular. Hardy Shareholders are advised to read the formal documentation in relation to the Acquisition carefully, once it has been dispatched.

Whether or not Hardy Shares are voted at the Special General Meeting, if the Merger becomes effective, those shares will be cancelled pursuant to the Merger in return for the payment to each Hardy Shareholder of the Acquisition Price.

Copies of this announcement and any formal documentation relating to the Acquisition are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any Restricted Jurisdiction. If the Acquisition is implemented by way of a Takeover Offer (unless otherwise determined by CNA and permitted by applicable law and regulation), such offer may not be made directly or indirectly, in or into, or by the use of mails or any means or instrumentality (including, but not limited to, facsimile, e-mail or other electronic transmission, telex or telephone) of interstate or foreign commerce of, or of any facility of a national, state or other securities exchange of any Restricted Jurisdiction and the offer may not be capable of acceptance by any such use, means, instrumentality or facilities.

Aon Benfield Securities, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for CNA and for no-one else in connection with the Acquisition and will not be responsible to any person other than CNA for providing the protections afforded to clients of Aon Benfield Securities, nor for providing advice in relation to the Acquisition or any other matters referred to herein.

Rothschild, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Hardy and for no-one else in connection with the Acquisition and will not be responsible to any person other than Hardy for providing the protections afforded to clients of Rothschild, nor for providing advice in relation to the Acquisition or any other matters referred to herein.

Peel Hunt, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Hardy and for no-one else in connection with the Acquisition and will not be responsible to any person other than Hardy for providing the protections afforded to clients of Peel Hunt, nor for providing advice in relation to the Acquisition or any other matters referred to herein.

Notice to US holders of Common Shares

The Acquisition relates to the shares of a Bermudian company and is being made by means of a merger provided for under Bermudian company law. A transaction effected by means of a merger is not subject to the tender offer rules or the proxy solicitation rules under the US Securities Exchange Act of 1934. Accordingly, the Acquisition is subject to the disclosure requirements and practices applicable in Bermuda to mergers, which differ from the disclosure requirements of United States tender offer and proxy solicitation rules. If, in the future, CNA exercises its right to implement the Acquisition by way of a Takeover Offer and determines to extend the offer into the United States, the Acquisition will be made in compliance with applicable United States laws and regulations. The financial information included in this announcement has been prepared in accordance with International Financial Reporting Standards (as adopted by the European Union) and thus may not be comparable to financial information of US companies or companies whose financial statements are prepared in accordance with generally accepted accounting principles in the United States.

Hardy is a company incorporated under the laws of Bermuda. All of the directors of Hardy are residents of countries other than the United States. A majority of the assets of Hardy are located outside the United States. As a result, it may not be possible for Hardy Shareholders in the United States to effect service of process within the United States upon Hardy or its respective officers or directors or to enforce against any of them judgements of the United States courts predicated upon the civil liability provisions of the federal securities laws of the United States. It may not be possible to sue Hardy or its respective officers or directors in a non-US court for violations of the US securities laws. There is also substantial doubt as to enforceability in Bermuda, in original actions or in actions for enforcement, of the judgments of US courts, based on the civil liability provisions of US federal securities laws.

Overseas Shareholders

The release, publication or distribution of this announcement in jurisdictions other than the United Kingdom may be restricted by law and, therefore, any persons who are subject to the laws of any jurisdiction other than the United Kingdom should inform themselves about, and observe, any applicable requirements. In particular the ability of Hardy Shareholders who are not resident in the United Kingdom to vote their Common Shares with respect to the Merger at the Special General Meeting may be affected by the laws of the relevant jurisdiction in which they are located. This announcement has been prepared for the purposes of complying with Bermudian and English law and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws and regulations of any jurisdiction outside of Bermuda or England.

The Acquisition will not be made directly or indirectly, in or into, or by the use of mails or any means or instrumentality (including, but not limited to, facsimile, e-mail or other electronic transmission, telex or telephone) of interstate or foreign commerce of, or of any facility of a national, state or other securities exchange of any Restricted Jurisdiction. If the Acquisition is implemented by way of an offer (unless otherwise determined by CNA and permitted by applicable law and regulation), the offer may not be capable of acceptance by any such use, means, instrumentality or facilities. Copies of this announcement and any formal documentation relating to the Acquisition are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any Restricted Jurisdiction and persons receiving this announcement and all documents (including custodians, nominees and trustees) relating to the Acquisition should observe these restrictions and should not mail or otherwise forward, distribute or send this announcement or documents relating to the Acquisition in or into or from any Restricted Jurisdiction.

Forward-looking statements

This announcement, oral statements made by or on behalf of CNA and/or Hardy regarding the Acquisition and other information published by or on behalf of CNA and/or Hardy or their respective affiliates may contain certain statements that are or may be forward-looking. These statements are based on the assumptions and assessments made by Hardy and CNA in light of their experience and their perceptions of historical trends, current conditions, future developments and other factors they believe appropriate and are naturally subject to uncertainty and changes in circumstances. The forward-looking statements contained herein may include statements about the expected effects of the Acquisition, the expected timing and scope of the Acquisition, anticipated earnings enhancements, estimated cost savings and other synergies, costs to be incurred in achieving synergies, potential disposals and other strategic options and all other statements in this announcement other than historical facts. Forward-looking statements include, without limitation, statements that typically contain words such as: "will", "may", "should", "could", "continue", "believes", "expects", "intends", "estimates", "anticipates", "aims", "targets", "plans" and "forecasts" or words of similar import. By their nature, the forward-looking statements involve risks, changes in circumstances and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Many of these risks and uncertainties relate to factors that are beyond the ability of the person making the statement to control or estimate precisely, such as future market conditions and the behaviour of other market participants. Other unknown or unpredictable factors could also cause actual results to differ materially from those in the forward looking statements. Therefore investors should not place undue reliance on such statements because, by their very nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results, and management's plans and objectives, to differ materially from those expressed or implied in the forward-looking statements.

There are several factors which could cause actual results to differ materially from those expressed or implied in forward-looking statements. Among such factors are changes in the global, political, economic, business, competitive, market and regulatory forces, future exchange and interest rates, changes in tax rates and future business combinations or dispositions, the outcome of litigation, government actions and natural phenomena such as floods, earthquakes and hurricanes. Other unknown or unpredictable factors could cause actual results to differ materially from those in the forward-looking statements. The inclusion of a forward-looking statement in this announcement should not be regarded as a representation by the CNA Group or the Hardy Group that the CNA Group's or the Hardy Group's objectives will be achieved.

CNA and Hardy and their respective affiliates assume no obligation and do not intend to revise or update these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law, the Listing Rules, the Disclosure and Transparency Rules and the rules of the London Stock Exchange.

Responsibility

The CNA Directors (all of whose names will be set out in the Circular) accept responsibility for the information contained in this announcement relating to CNA, the CNA Group and themselves and their immediate families, related trusts and Connected Persons. To the best of the knowledge and belief of CNA Directors (who have taken all reasonable care to ensure that such is the case), such information for which they are responsible is in accordance with the facts and does not omit anything likely to affect the import of such information.

The Hardy Directors (all of whose names will be set out in the Circular) accept responsibility for the information contained in this announcement relating to the Hardy Group and themselves and their immediate families, related trusts and Connected Persons. To the best of the knowledge and belief of the Hardy Directors (who have taken all reasonable care to ensure that such is the case), such information for which they are responsible is in accordance with the facts and does not omit anything likely to affect the import of such information.

Dealing disclosure requirements

Although Rule 8 of the Takeover Code does not apply to Hardy, Hardy Shareholders and persons considering the acquisition or disposal of any interest in Hardy Shares are reminded that they are subject to the Disclosure and Transparency Rules made by the UKLA and other applicable regulatory rules regarding transactions in Hardy securities.

Publication on website

A copy of this announcement will be available free of charge on Hardy's website at http://www.hardygroup.co.uk, and on CNA's website at http://www.cna.com, by no later than 12.00 p.m. (London time) on 22 March 2012.

For immediate release

21 March 2012

RECOMMENDED CASH ACQUISITION

HARDY UNDERWRITING BERMUDA LIMITED

CNA FINANCIAL CORPORATION

(to be implemented by way of a merger under the Bermuda Companies Act with CNA Bermuda SPV, a wholly-owned subsidiary of CNA)

   1.    Introduction

The boards of CNA and Hardy are pleased to announce that they have reached agreement on the terms of a recommended cash acquisition for the entire issued and to be issued share capital of Hardy by CNA (the "Acquisition").

   2.    The Acquisition

It is intended that the Acquisition be implemented by way of a Merger under the Bermuda Companies Act. The purpose of the Merger is to enable CNA to acquire the entire issued and to be issued share capital of Hardy.

Under the terms of the Acquisition, which will be subject to the Conditions and further terms set out in Appendix 1 to this announcement and to be set out in the Circular, Hardy Shareholders will be entitled to receive:

280 pence in cash for each Common Share (the "Acquisition Price")

The Acquisition Price values Hardy's entire issued and to be issued share capital at approximately GBP143 million, and, on this basis, represents the following multiple:

   --       1.55 times Hardy's reported net tangible assets of GBP92 million as at 31 December 2011.

In addition, the Acquisition Price represents a premium of:

-- approximately 50.54 per cent. to the Closing Price of 186 pence per Common Share on 30 November 2011 (being the last Business Day prior to the announcement that Hardy was initiating a strategic review); and

-- approximately 36.59 per cent. to the Closing Price of 205 pence per Common Share on 20 March 2012 (being the last Business Day prior to this announcement).

   3.    Background to and reasons for the Acquisition

CNA believes that the Acquisition will substantially enhance its business by expanding its global presence in specialty insurance and reinsurance products. CNA anticipates that Hardy will become its core platform for future growth in international markets.

CNA has performed substantial analysis on the Lloyd's market which supports its opinion of Hardy as an attractive business with a high quality management team. CNA's interest is predicated on maintaining Hardy's management team and business capabilities while providing capital resources to fund the growth of the business through a combination of Hardy's existing strategies and business development synergies available through CNA. Furthermore, CNA believes that its specialist underwriting expertise and market profile in specialty classes will enhance Hardy's business in these classes.

   4.    Recommendation

The Hardy Directors, who have been so advised by Rothschild and Peel Hunt, consider the terms of the Acquisition to be fair and reasonable. In providing their advice, Rothschild and Peel Hunt have taken into account the commercial assessment of the Hardy Directors.

Accordingly, the Hardy Directors will unanimously recommend that Hardy Shareholders vote to approve the Acquisition at the Special General Meeting (or, in the event that the Acquisition is implemented by way of a Takeover Offer, to accept or procure acceptance of such offer), as the Hardy Directors who are also Hardy Shareholders have irrevocably undertaken to do in respect of their own (and, where applicable, of their connected persons') beneficial shareholdings of 2,264,687 Common Shares representing approximately 4.43 per cent. of the existing issued share capital of Hardy.

   5.    Background to and reasons for the recommendation

On 1 December 2011 the Board of Hardy announced that, following the receipt of several preliminary expressions of interest in its business, it had concluded that it should undertake a strategic review. This review would include consideration of whether shareholder value might best be maximised and business opportunity might be enhanced by finding a buyer or strategic partner for Hardy.

Following this announcement a significant number of parties approached Hardy to express an interest in its business. The Board and its advisers carried out a detailed process with these parties in order to establish which of them, if any, could generate the most attractive proposal for Hardy.

The Board is convinced that the offer from CNA is the most attractive proposal that is currently available to Hardy. CNA's offer values Hardy's entire issued and to be issued share capital at GBP143 million and represents:

-- a premium of 50.54 per cent. to the Closing Price per Common Share of 186p on 30 November, 2011 (being the last Business Day prior to the announcement that Hardy was initiating a strategic review); and

-- a multiple of 1.55 times Hardy's reported net tangible assets of GBP92 million as at 31 December 2011.

Hardy has adopted a strategy of focussing on attractive market sectors within the Marine and Aviation, Specialty, Non Marine Property and Property Treaty Lines. The first three of these business segments have demonstrated strong and sustained underwriting performance. Since 2007, the Property Treaty Unit has focussed on international risks, which is atypical for Lloyd's. During 2010 and 2011 there has been an unprecedented level of international catastrophe losses. Furthermore, these losses have been disproportionately weighted towards territories outside the US. Not surprisingly, therefore, these losses have had a major impact on the performance of Hardy's Property Treaty business unit. This was the principal reason for the loss before tax of GBP42.1 million which Hardy announced for the year ended 31 December 2011.

The consequence of these developments is that Hardy has been required to employ more third party capital to support the underwriting activities of its managed Syndicate 382. This it has done for the 2011 and 2012 years of account with the introduction of third party capital representing 7.5 per cent. and 25 per cent. respectively of Syndicate 382's underwriting capacity. In all probability, it would also need to constrain the rate at which it develops its business.

The interest shown in Hardy during the strategic review process demonstrates the underlying quality of Hardy's business, people and franchise. The Board believes that the acquisition of Hardy by CNA represents an attractive opportunity for Hardy's business, customers, insurance brokers and staff. CNA is a major insurance group with total capital as of 31 December 2011 of $14.2 billion. CNA has stated that it anticipates that Hardy will become its core platform for future growth in international markets. Furthermore, CNA intends to maintain Hardy's management team and business capabilities as well as providing capital resources to fund growth of the business through the combination of Hardy's existing strategies and business development synergies available through CNA.

   6.    Irrevocable undertakings

CNA has received the following irrevocable undertakings to vote in favour of the Acquisition (if implemented by way of a Merger) or accept an offer (if the Acquisition is implemented by way of a Takeover Offer) in respect of a total of 12,783,422 issued Common Shares, representing, in aggregate, approximately 25.00 per cent. of the existing issued share capital of Hardy:

a) from the Hardy Directors who are Hardy Shareholders in respect of their own and, where applicable, their connected persons' beneficial shareholdings of the Common Shares amounting to, in aggregate, 2,264,687 Common Shares, representing approximately 4.43 per cent. of the existing issued share capital of Hardy. These irrevocable undertakings will continue to be binding on the Hardy Directors (but in their capacity as shareholders only) if any competing offer is made for Hardy; and

b) from certain institutional Hardy Shareholders in respect of, in aggregate, 10,518,735 Common Shares, representing approximately 20.57 per cent. of the existing issued share capital of Hardy. The circumstances in which these irrevocable undertakings will cease to be binding are set out in Appendix 3 to this announcement.

Further information on these irrevocable undertakings is set out in Appendix 3 to this announcement.

   7.    Information relating to Hardy

Hardy is a Bermuda-domiciled international insurance and reinsurance group listed on the Main Market of the London Stock Exchange, with business operations in London, Bermuda, Bahrain, Guernsey and Singapore. The Group underwrites an international marine and aviation, property and specialty account together with a property reinsurance account.

For the year ending 31 December 2011, Hardy reported gross written premiums of GBP268.4 million (2010: GBP279.4 million), net written premiums of GBP189.5 million (2010: GBP206.4 million) and a loss for the year of GBP34.6 million (2010: profit of GBP9.6 million). At 31 December 2011, Hardy had net tangible assets of GBP92.0 million (31 December 2010: GBP137.8 million).

Further information on Hardy is available on its website at www.hardygroup.co.uk.

   8.    Information relating to CNA

CNA is the holding company for the seventh largest commercial property and casualty insurance group in the U.S. CNA was founded in 1897 and its subsidiaries have approximately 7,600 employees located in offices in the U.S., Canada and Europe, serving over a million businesses and professionals. It is listed on the New York Stock Exchange and had total capital, as at 31 December 2011, of $14.2 billion.

For the year ending 31 December 2011, CNA reported total revenues of $8,947 million (2010: $9,209 million), net premiums written of $6,798 million (2010: $6,471 million) and net operating income for the year of $614 million (2010: $660 million). At 31 December 2011 CNA had stockholders' equity of $11,557million (2010: $10,954 million).

Further information on CNA is available on its website at www.cna.com.

   9.    Financing of the Acquisition

The cash consideration payable by CNA Group under the terms of the Acquisition will be financed from the existing cash resources of the CNA Group.

Aon Benfield Securities, as financial adviser to CNA, has confirmed that it is satisfied that sufficient resources are available to CNA to enable it to satisfy, in full, the cash consideration, payable to Hardy Shareholders under the terms of the Acquisition.

   10.   Management and employees

CNA recognises the quality of the Hardy management team and Hardy's employees generally, and their importance to the future success of Hardy. Following the Acquisition becoming effective, it is CNA's intention that Barbara Merry, Chief Executive of Hardy, would continue to lead the Hardy team within CNA reporting directly to Thomas Motamed, Chairman and Chief Executive Officer of CNA. CNA and Hardy intend that, on the Acquisition becoming affective, the Hardy board will continue to comprise of Barbara Merry, Patrick Gage, Jamie MacDiarmid and Paul Bailie in addition to Thomas F. Motamed, D. Craig Mense, Thomas Pontarelli and Jonathan D. Kantor. David Mann, Julian Cusack, Allan Dunkle, Anthony Taylor and Fiona Luck will resign as directors of Hardy on the Acquisition becoming effective. CNA has given assurances to the Hardy Directors that, on the Acquisition becoming effective, it is its intention that the CNA Group continue to comply with its legal obligations in relation to pensions and employment rights of all Hardy Group employees. CNA has no current intention to change the location of the Hardy Group's places of business or redeploy its fixed assets.

CNA has also confirmed its intention to retain the Hardy brand, continue with the operational integrity of Hardy as a separate business unit and continue with its existing portfolio and strategy in all material respects.

   11.   Hardy Share Schemes

Appropriate proposals will be made to participants under the Hardy Share Schemes where the relevant options or awards of shares are likely to be exercised in accordance with the rules of the relevant scheme. All other remaining options or awards of shares will lapse or cease to be capable of vesting prior to the Merger and steps will be undertaken to wind up the Hardy Share Schemes.

   12.   Implementation Agreement

CNA, Hardy and CNA Bermuda SPV have entered into an Implementation Agreement in relation to the Merger and related matters. The Implementation Agreement contains certain assurances and confirmations between the parties, including with respect to the implementation of the Merger and regarding the conduct of the business of the Hardy Group in the period prior to the Acquisition Effective Date. The Implementation Agreement, together with the Merger Agreement, also sets out the terms and conditions and means of effecting the Merger as required by the Bermuda Companies Act. Completion of the Merger is subject to satisfaction of the Conditions to the Acquisition set out in Appendix 1 to this announcement.

Pursuant to the Implementation Agreement, Hardy, CNA and CNA Bermuda SPV have agreed, inter alia, to take all reasonable steps to achieve fulfilment of the Merger Conditions and the consummation of the Merger in accordance with an agreed indicative timetable.

Takeover Code

As Hardy is incorporated, and has its registered office, in Bermuda, the Takeover Code does not apply to the Acquisition. However, in accordance with the requirements of Hardy's Bye-laws and pursuant to the terms of the Implementation Agreement, Hardy and CNA have agreed that, except as may be provided in the Implementation Agreement or as otherwise may be agreed between them in writing from time to time, the provisions of the Takeover Code, including but not limited to the general principles set out therein, shall apply to the Acquisition.

Hardy and CNA have acknowledged that the Panel does not have jurisdiction over the Acquisition and have agreed that an Independent Committee of the Hardy Board and the CNA Board (comprising an equal number of Hardy Directors and CNA Directors respectively) shall determine the application and interpretation of the Takeover Code in relation to the Acquisition. In the event of any dispute arising from any such determination which cannot be resolved between the parties, Hardy and CNA have agreed jointly to refer the dispute to an independent third party who has, in the opinion of Hardy and CNA acting reasonably, suitable experience and expertise in respect of the Takeover Code to determine that dispute.

Non Solicitation

The Implementation Agreement includes an undertaking from Hardy (subject to the proper exercise by the Hardy Directors of their fiduciary duties) not to and to procure that no other member of the Hardy Group or any Hardy Director or employee (and to use its reasonable endeavours to procure that no adviser or agent of it or them) shall, on its behalf, solicit, initiate, or otherwise seek to procure any approach or indication of interest from, or discussions or negotiations or re-engagement with, any person in relation to any Competing Proposal or which may reasonably be expected to lead to a Competing Proposal.

In addition, Hardy has agreed to notify CNA promptly, and in any event, within 24 hours, of any approach made or any circumstances indicating that an approach is likely to be made to Hardy in relation to a Competing Proposal.

   13.   Description of the Merger

It is intended that the Acquisition be effected by means of a Merger between Hardy and CNA Bermuda SPV, a wholly-owned, indirect subsidiary of CNA ("MergerCo"), under the Bermuda Companies Act. Under the terms of the Merger, Hardy will be the Surviving Company. The purpose of the Merger is to allow CNA, through a wholly-owned direct subsidiary, to become the owner of all of the issued and to be issued Common Shares of Hardy.

The Merger will be subject to the Conditions and further terms and conditions referred to in Appendix 1 to this announcement and to be set out in the Circular.

In order for the Merger to be adopted, the Merger Agreement requires the approval of Hardy Shareholders by the passing of a resolution at the Special General Meeting. The resolution must be approved by a majority of at least 75 per cent. of the Hardy Shareholders voting (in person or by proxy) at the Special General Meeting. The quorum for the Special General Meeting is no less than two persons at least holding or representing by proxy more than one-third of the Common Shares in issue. Those Hardy shareholders described in paragraph 6 above who have given irrevocable undertakings can be counted towards satisfying this quorum requirement and will be entitled to vote at the Special General Meeting. The approval of TCC, the sole shareholder of MergerCo, is also required.

The Merger will only become effective upon submission to the Registrar of Companies in Bermuda of an application for registration of the Surviving Company and the issue by the Registrar of Companies in Bermuda of a certificate of merger.

Under the terms of the Merger Agreement, at the Effective Time, each Common Share (other than any Common Shares held by CNA, Hardy or MergerCo or any of their respective subsidiaries) will be converted into the right to receive the cash consideration referred to in paragraph 2 above and the issued shares in the capital of MergerCo will be converted into one validly issued and fully paid share in the Surviving Company.

Any Hardy Shareholder who is not satisfied that he has been offered fair value for his Common Shares and who does not vote in favour of the Merger may, within one month of the giving of the notice convening the Special General Meeting, apply to the Court to appraise the value of his Common Shares. If the value per Common Share appraised by the Court is greater than the Acquisition Price, then CNA will or will procure that the Surviving Company will pay that Hardy Shareholder the difference between the appraised value and the Acquisition Price within one month of the Court's appraisal. Any Hardy Shareholder who exercises such appraisal rights will, if the Merger is effected, be bound by the Merger and their Common Shares will be cancelled.

On the date shown in the certificate of merger, the Merger of Hardy and MergerCo and the continuation of Hardy as the Surviving Company will become effective and the property, rights and assets of each of Hardy and MergerCo, in accordance with the Bermuda Companies Act, will vest in the Surviving Company and the Surviving Company will become liable for the obligations and liabilities of each of Hardy and MergerCo. In addition, any existing cause of action, claim or liability to prosecution will be unaffected by the Merger; a civil, criminal or administrative action or proceeding pending by or against Hardy or MergerCo may be continued to be prosecuted by or against the Surviving Company; a conviction against, or ruling, order or judgment in favour of or against, Hardy or MergerCo may be enforced by or against the Surviving Company; and the certificate of merger will be deemed to be the certificate of incorporation of the Surviving Company.

The Circular containing a notice convening the Special General Meeting will be despatched to Hardy Shareholders as soon as practicable and in any event within 28 days of the date of this announcement. It is currently anticipated that the Special General Meeting will be held in April 2012 and the Acquisition is expected to become effective by the end of June 2012 subject to obtaining the required regulatory consents without delay and the satisfaction of Conditions set out in Appendix 1 to this announcement. Further details on the implementation of the Merger will be set out in the Circular.

Each of CNA and Hardy has agreed not, except with the prior written consent of the other (such consent not to be unreasonably withheld or delayed), to exercise any termination rights under Section 106(6) of the Bermuda Companies Act in connection with the Acquisition.

   14.   Delisting

Prior to the Merger becoming effective, a request will be made by Hardy to the UKLA to cancel the listing of the Common Shares on the Official List and to the London Stock Exchange to cancel the admission to trading of the Common Shares on the London Stock Exchange's market for listed securities so that Common Shares will cease to be listed on the Official List with effect from the Effective Time. The last day of dealing in Common Shares on the London Stock Exchange will be the last dealing day before the Effective Time. In addition, with effect from the Effective Time, entitlements to Common Shares held within the CREST system will be cancelled.

   15.   Disclosure of interests in Hardy

Save for the irrevocable undertakings referred to in paragraph 6 above , as at the close of business on 20 March 2012 (being the latest practicable date prior to the date of this announcement), neither CNA, nor any of CNA's Directors or any member of CNA Group, nor, so far as CNA Directors are aware, any person acting in concert with CNA for the purposes of the Acquisition, has any interest in, right to subscribe for, or has borrowed or lent any Common Shares or securities convertible or exchangeable into Common Shares (including pursuant to any long exposure, whether conditional or absolute, to changes in the prices of securities) or right to subscribe for or purchase the same or holds any options (including traded options) in respect of or has any right to acquire any Common Shares or derivatives referenced to Common Shares ("Hardy Securities"), nor does any such person have any short position (whether conditional or absolute and whether in the money or otherwise) including any short position under a derivative or arrangement in relation to Hardy Securities. For these purposes, "arrangement" includes any indemnity or option arrangement or understanding, formal or informal, of whatever nature, relating to Hardy Securities which may be an inducement to deal or refrain from dealing in such securities.

As at close of business on 20 March 2012 (being the latest practicable date prior to the date of this announcement) Aon Benfield Securities had no disclosable interests in Hardy Securities or any short position (whether conditional or absolute and whether in the money or otherwise) including any short position under a derivative or arrangement in relation to Hardy Securities.

   16.   Conditions

The Acquisition will be subject to the Conditions, including the approval of the Merger Agreement by Hardy Shareholders at the Special General Meeting, and approval by relevant regulatory authorities of the changes of control contemplated by the Acquisition.

   17.   General

CNA and Hardy have agreed that, if CNA so elects, and with the prior agreement of Hardy, in accordance with the Implementation Agreement, the Acquisition may be implemented by way of a takeover offer for the entire issued share capital and to be issued share capital of Hardy as an alternative to the Merger. In this event, that offer will be implemented on the same terms, so far as applicable (subject to appropriate amendments), as those which would apply to the Merger.

If the Acquisition is effected by way of a Takeover Offer and such offer becomes or is declared unconditional in all respects and sufficient acceptances are received, CNA intends to (i) request that the London Stock Exchange and the UKLA cancel trading in Common Shares on the London Stock Exchange's main market for listed securities and the listing of Common Shares on the Official List; and (ii) exercise its rights under the Bermuda Companies Act to acquire compulsorily any outstanding Common Shares to which such offer relates.

The Acquisition will be made on the terms and subject to the Conditions set out in Appendix 1 to this announcement and to be set out in the Circular. Certain definitions and terms used in this announcement are set out in Appendix 4 to this announcement, and the bases and values used in this announcement are set out in Appendix 2 to this announcement.

The Circular will be despatched to Hardy Shareholders as soon as practicable and in any event by 18 April 2012 and will include full details of the Acquisition, together with Notice of the Special General Meeting and the expected timetable for the implementation of the Acquisition. In deciding whether or not to vote to approve the Acquisition, Hardy Shareholders should rely on the information contained in, and follow the procedures described in, the Circular and the forms of proxy and direction accompanying the Circular.

Your attention is drawn to the further information contained in the Appendices which form part of, and should be read in conjunction with, this announcement.

Appendix 1 to this announcement contains the terms of and conditions to the Acquisition.

Appendix 2 to this announcement sets out the bases and sources of certain of the information contained in this announcement.

Appendix 3 to this announcement contains certain details relating to the irrevocable undertakings received by CNA.

Appendix 4 to this announcement contains definitions of certain terms used in this announcement.

This summary should be read in conjunction with, and is subject to, the full text of the following announcement and the Appendices.

Enquiries:

CNA Tel: +1 312 822 5000

Thomas F. Motamed, Chairman and Chief Executive

Aon Benfield Securities Tel: +44 (0) 20 7578 7000

(Financial adviser to CNA)

Paul Rayner

Ross Milburn

Fleishman-Hillard Tel: +44 (0) 20 7395 7017

(PR adviser to CNA)

Alan O'Sullivan

Hardy Tel: +44 (0) 20 7626 0382

David Mann, Chairman

Barbara Merry Chief Executive

Rothschild Tel: +44 (0) 20 7280 5000

(Joint financial adviser to Hardy)

Crispin Wright

Peel Hunt Tel: +44 (0) 20 7418 8900

(Joint financial adviser to Hardy)

James Britton

Redleaf Polhill Tel: +44 (0) 20 7566 6700

(PR adviser to Hardy) hardy@redleafpolhill.com

Emma Kane / Samantha Robbins

This announcement is not intended to and does not constitute, or form part of, any offer to sell, purchase, exchange or subscribe for, or an invitation to purchase or subscribe for any securities or the solicitation of an offer to sell, purchase or exchange any securities or of any vote or approval in any jurisdiction pursuant to the Acquisition or otherwise, nor shall there be any sale, issuance or transfer of securities of Hardy in any jurisdiction in contravention of applicable law. This announcement does not constitute a prospectus or a prospectus equivalent document. The Acquisition will be made solely pursuant to the terms of the Circular which will contain the full terms and conditions of the Acquisition, including details of how to vote in respect of the Merger. Any decision in respect of, or other response to, the Acquisition should be made only on the basis of the information in the Circular. Hardy Shareholders are advised to read the formal documentation in relation to the Acquisition carefully, once it has been dispatched.

Notice to US holders of Common Shares

Hardy is a company incorporated under the laws of Bermuda. All of the directors of Hardy are residents of countries other than the United States. A majority of the assets of Hardy are located outside the United States. As a result, it may not be possible for Hardy Shareholders in the United States to effect service of process within the United States upon Hardy or its respective officers or directors or to enforce against any of them judgements of the United States courts predicated upon the civil liability provisions of the federal securities laws of the United States. It may not be possible to sue Hardy or its respective officers or directors in a non-US court for violations of the US securities laws. There is also substantial doubt as to enforceability in Bermuda, in original actions or in actions for enforcement of the judgments of US courts, based on the civil liability provisions of US federal securities laws.

Overseas Shareholders

Forward-looking statements

Responsibility

Dealing disclosure requirements

Publication on website

A copy of this announcement will be available free of charge on Hardy's website at http://www.hardygroup.co.uk and on CNA's website at http://www.cna.com, by no later than 12.00 p.m. (London time) on 22 March 2012.

APPENDIX 1

CONDITIONS AND CERTAIN FURTHER TERMS OF THE ACQUISITION

   1.         Conditions of the Acquisition

1.1 The Acquisition will be conditional upon the Merger becoming unconditional and becoming effective by no later than the Long Stop Effective Date.

   1.2        The Merger will be subject to the following conditions being satisfied:

(a) approval of the Merger Agreement by a majority vote of at least three-fourths of the Hardy Shareholders present and voting, either in person or by proxy, at the Special General Meeting (or at any adjournment of such meeting) at which a quorum is present of not less than two persons at least holding or representing by proxy more than one-third of the Hardy Common Shares in issue at that time;

(b) the Merger Resolutions set out in the notice of the Special General Meeting being duly passed by the requisite majority at the Special General Meeting (or at any adjournment of such meeting);

(c) the issue by the Registrar of Companies in Bermuda of a certificate of merger pursuant to the Bermuda Companies Act confirming the Merger; and

(d) the Implementation Agreement otherwise having become unconditional and not having been terminated in accordance with its terms.

1.3 In addition, CNA and Hardy have agreed that the Acquisition will be conditional upon the following Conditions and, accordingly, the necessary actions to make the Acquisition effective will not be taken unless the following Conditions (as amended if appropriate) have been satisfied or, where relevant, waived in accordance with paragraph 1.4:

(a) the FSA having given notice in writing under section 189(4) of FSMA (in terms which do not impose any material conditions, obligations or restrictions on CNA and/or CNA Bermuda SPV which are additional to Hardy's existing controller consent and are material in the context of the Wider Hardy Group taken as a whole or in the context of the Acquisition) of its approval (or the FSA being treated as having given its approval by virtue of section 189(6) of FSMA) in respect of any acquisition of control (as defined in sections 181 and 182 of FSMA) by CNA and/or CNA Bermuda SPV over each member of the Wider Hardy Group which is a UK authorised person (as defined in section 191G(1) of FSMA), which in any case would take place as a result of the Acquisition or its implementation;

(b) Lloyd's having given its consent in writing under section 12 of the Lloyd's Membership Byelaw or section 43 of the Lloyd's Underwriting Byelaw (as the case may be) (in terms which do not impose any material conditions, obligations or restrictions on CNA and/or CNA Bermuda SPV which are additional to Hardy's existing controller consent and are material in the context of the Wider Hardy Group taken as a whole or in the context of the Acquisition) in respect of any change in the controller of each member of the Wider Hardy Group which is a corporate member or a managing agent of Lloyd's or a Lloyd's coverholder which change of controller would take place as a result of the Acquisition or its implementation;

(c) the Bermuda Monetary Authority confirming in writing that it has no objection to any change in the shareholder controller of any member of the Hardy Group which is a registered person under the Bermuda Insurance Act which would result from the Acquisition or its implementation;

(d) the written notification by Lloyd's of London (Asia) Pte. Ltd. to the Monetary Authority of Singapore under Regulation 18(4) of the Insurance (Lloyd's Asia Scheme) Regulations (the "Regulations") at least 14 days before and in respect of the change in beneficial ownership of Hardy Underwriting Asia Pte. Limited a service company registered with Lloyd's of London (Asia) Pte. Ltd. under Regulation 6 of the Regulations, which would take place as a result of the Acquisition or its implementation;

(e) the Guernsey Financial Services Commission having provided notice in writing under section 25(1)(c) of The Insurance Business (Bailiwick of Guernsey) Law, 2002, as amended, that there is no objection to any person becoming a controller of Hardy Guernsey Limited (or the Guernsey Financial Services Commission's written notification that there is no such objection being deemed to have been given under section 25(1) of The Insurance Business (Bailiwick of Guernsey) Law, 2002, as amended) as a result of the Acquisition or its implementation;

(f) it being established, in terms reasonably satisfactory to CNA, that neither the proposed Acquisition nor any matter arising from or relating to the proposed Acquisition will be referred to the UK Competition Commission for investigation and the relevant four week period within which an application for review of any decision not to refer the proposed Acquisition to the UK Competition Commission may be made to the Competition Appeal Tribunal (the "CAT") having expired without such an application having been made or, where any such application or applications has or have been made, that application or all those applications having been dismissed by the CAT and it being established in terms reasonably satisfactory to CNA that no further appeal has been or will be made against any relevant ruling of the CAT;

(g) any appropriate notifications and filings having been made and all or any applicable waiting periods (including any extensions thereof) under the Hart-Scott-Rodino Antitrust Improvements Act 1976, as amended, and the regulations thereunder having expired, lapsed or been terminated as appropriate in respect of the Acquisition or the proposed acquisition by CNA of the Common Shares;

(h) no Third Party having decided to take, institute, implement or threaten any action proceeding, suit, investigation, enquiry or reference, or having required any action to be taken or otherwise having done anything or having enacted, made or proposed any statute, regulation, decision, order or change to published practice (and in the case of a proposed statute, regulation, decision or order, such proposal continuing to be outstanding) which would or might reasonably be expected to:

(i) make the Acquisition, its implementation or the acquisition or proposed acquisition, by any member of the Wider CNA Group of any shares or other securities in, or control or management of any member of the Wider Hardy Group void, illegal and/or unenforceable under the laws of any Relevant Jurisdiction, or otherwise directly or indirectly prevent, prohibit, or restrain, restrict, delay or otherwise interfere with the implementation of, or impose additional conditions or obligations with respect to, or otherwise impede, challenge, interfere or require amendment of the Acquisition, by any member of the Wider CNA Group or the acquisition of any shares or other securities in, or control or management of any member of the Wider Hardy Group to an extent which in any case is material in the context of the Wider Hardy Group taken as a whole or in the context of the Acquisition;

(ii) require a disposal by any member of the Wider Hardy Group of any of the shares or other securities in any member of the Wider Hardy Group which is material in the context of the Wider Hardy Group taken as a whole or in the context of the Acquisition;

(iii) require, prevent or delay the disposal or divestiture or alter the terms envisaged for such disposal or divestiture by any member of the Wider CNA Group or by any member of the Wider Hardy Group of all or any part of their respective businesses, assets or property or impose any limitation on the ability of all or any of them to conduct their respective businesses (or any part thereof) or to own, use, operate, control or manage any of their respective assets or properties (or any part thereof), to an extent which is material in the context of the Wider Hardy Group or the Wider CNA Group, (as the case may be), in each case, taken as a whole or in the context of the Acquisition;

(iv) impose any limitation on, or result in a delay in, the ability of any member of the Wider CNA Group directly or indirectly to acquire or hold or to exercise effectively all or any rights of ownership in respect of shares or other securities in Hardy (or any member of the Wider CNA Group) or on the ability of any member of the Wider CNA Group directly or indirectly to hold or exercise effectively any rights of ownership in respect of shares or other securities in, or to exercise management control or voting over, any member of the Wider Hardy Group, in each case to an extent which is material in the context of Hardy Group taken as a whole or in the context of the Acquisition;

(v) other than pursuant to the implementation of the Acquisition, require any member of the Wider CNA Group or the Wider Hardy Group to acquire or offer to acquire any shares, other securities (or the equivalent) or interest in any member of the Wider Hardy Group or any asset owned by any third party, which in any case is material in the context of the Wider Hardy Group or the Wider CNA Group, in each case, taken as a whole;

(vi) require, prevent or delay a disposal or divestiture by any member of the Wider CNA Group of any shares or other securities (or the equivalent) in any member of the Wider Hardy Group to an extent which is material in the context of the Wider Hardy Group or the Wider CNA Group, in each case, taken as a whole or in the context of the Acquisition;

(vii) result in any member of the Wider Hardy Group ceasing to be able to carry on business under any name under which it presently carries on business, to an extent which is material in context of the Hardy Group taken as a whole or in the context of the Acquisition;

(viii) impose any limitation on the ability of any member of the Wider CNA Group or any member of the Wider Hardy Group to conduct, integrate or co-ordinate all or any part of their respective businesses with all or any part of the business of any other member of the Wider CNA Group and/or the Wider Hardy Group in a manner which is adverse to and material in the context of the Wider CNA Group and/or the Wider Hardy Group, in each case, taken as a whole, or in the context of the Acquisition; or

(ix) otherwise adversely affect the business, assets, value, profits, prospects or operational performance or financial or trading position of any member of the Wider CNA Group or any member of the Wider Hardy Group in a manner which is adverse to and material in the context of the Wider CNA Group and/or the Wider Hardy Group, in each case taken as a whole, or in the context of the Acquisition; and

all applicable waiting and other time periods (including any extensions thereof) during which any such Third Party could decide to take, institute, implement or threaten any such action, proceedings, suit, investigation, enquiry or reference or take any other step under the laws or any jurisdiction in respect of the Acquisition or the acquisition or proposed acquisition of any Common Shares or otherwise intervene having expired, lapsed, or been terminated;

(i) all notifications, filings or applications which are necessary in connection with the Acquisition having been made, and all necessary waiting and other time periods (including any extensions thereof) under any applicable legislation or regulation of any jurisdiction having expired, lapsed or been terminated (as appropriate) and all statutory and regulatory obligations in any jurisdiction having been complied with and all Authorisations necessary in any jurisdiction for or in respect of the Acquisition or the acquisition or proposed acquisition of any shares or other securities in, or control of, any member of the Hardy Group by any member of the Wider CNA Group having been obtained in terms and in a form reasonably satisfactory to CNA from all applicable Third Parties and all such Authorisations necessary to carry on the business of any member of the Hardy Group in any jurisdiction having been obtained, in each case where the direct consequence of a failure to make such a notification, filing or application or to wait for the expiry, lapse or termination of any such waiting or other time period or to comply with such obligation or obtain such authorisation would be unlawful in any relevant jurisdiction or have a materially adverse effect on the Hardy Group, any member of the Wider CNA Group or the ability of CNA to implement the Acquisition and all such Authorisations remaining in full force and effect at the time at which the Acquisition becomes effective and there being no notice or intimation of an intention to revoke, withdraw, suspend, restrict, modify, amend or not to renew such Authorisations;

(j) save as fairly disclosed in Hardy's 2011 Results Announcement or as otherwise publicly announced by Hardy in accordance with the Listing Rules or the Disclosure Rules and Transparency Rules prior to the close of business on 20 March 2012 or as otherwise fairly disclosed in writing by Hardy to CNA prior to the close of business on 20 March 2012, there being no provision of any authorisation, agreement, arrangement, licence, permit, lease, franchise or other instrument to which any member of the Wider Hardy Group is a party or by or to which any such member or any of its assets may be bound, entitled or subject, which in consequence of the Acquisition or the proposed acquisition of any shares or other securities in Hardy or because of a change in the control or management of Hardy in any case as a result of the Acquisition might reasonably be expected to result in, to an extent which is material in the context of the Wider Hardy Group as a whole:

(i) any monies borrowed by or any other indebtedness (actual or contingent) of, or grant available to any such member, being or becoming repayable or capable of being declared repayable immediately or earlier than their or its stated maturity date or repayment date or the ability of any such member to borrow moneys or incur any indebtedness being withdrawn or inhibited or being capable of becoming or being withdrawn or inhibited;

(ii) any such agreement, arrangement, licence, permit or instrument or the rights, liabilities, obligations or interests of any member of the Wider Hardy Group thereunder being terminated or modified or affected or any onerous obligation or liability arising or any action being taken or arising thereunder;

(iii) any assets, property or interests of any member of the Wider Hardy Group being or falling to be disposed of or charged or any right arising under which any such asset or interest could be required to be disposed of or charged otherwise than, in any such case, in the ordinary course of business;

(iv) the creation or enforcement of any mortgage, charge or other security interest over the whole or any part of the business, property or assets of any member of the Wider Hardy Group;

(v) the rights, liabilities, obligations or interests of any member of the Wider Hardy Group in, or the business of any such member with, any person, firm or body (or any arrangement or arrangements relating to any such interest or business) being terminated, adversely modified or affected;

(vi) the value of any member of the Wider Hardy Group or its financial or trading position or prospects being prejudiced or adversely affected;

(vii) any member of the Wider Hardy Group ceasing to be able to carry on business under any name under which it presently does so; or

(viii) the creation or assumption of any liability, actual or contingent, by any member of the Wider Hardy Group other than in the ordinary course of business,

and no event having occurred which, under any provision of any agreement, arrangement, licence, permit or other instrument to which any member of the Wider Hardy Group is a party or by or to which any such member or any of its assets may be bound, entitled or subject, would be reasonably likely to result in any of the events or circumstances as are referred to in subparagraphs (i) to (viii) of this Condition;

(k) all Authorisations having been granted or obtained in terms satisfactory to CNA, acting reasonably from any person with whom any member of the Wider Hardy Group has entered into contractual arrangements that are required in connection with, or as a consequence of, the Acquisition or its implementation, the absence of which would have a material adverse effect on the business of the Wider Hardy Group taken as a whole (except for any change of control provisions contained in any insurance or reinsurance contracts entered into by any member of the Wider Hardy Group in the ordinary course of business prior to the close of business on 20 March 2012 and which are not individually or in the aggregate material in the context of the business of the Wider Hardy Group taken as a whole);

(l) save as fairly disclosed in Hardy's 2011 Results Announcement or as otherwise publicly announced by Hardy in accordance with the Listing Rules or the Disclosure Rules and Transparency Rules prior to the close of business on 20 March 2012 or as fairly disclosed in writing by Hardy to CNA prior to the close of business on 20 March 2012, no member of the Wider Hardy Group having, since 31 December 2010:

(i) save as between Hardy and wholly-owned subsidiaries of Hardy or for Common Shares issued pursuant to the exercise of options granted prior to 31 December 2011 under the Hardy Share Schemes, issued, agreed to issue, authorised or proposed the issue or authorisation of additional shares of any class;

(ii) save as between Hardy and wholly-owned subsidiaries of Hardy, issued or agreed to issue, authorised or proposed the issue of securities convertible into or exchangeable for shares of any class or rights, warrants or options to subscribe for, or acquire, any such shares or convertible securities;

(iii) other than to another member of the Hardy Group, recommended, declared, paid or made or proposed to recommend, declare, pay or make any bonus, dividend or other distribution whether payable in cash or otherwise;

(iv) save for intra-Hardy Group transactions, amalgamated, merged or demerged with any body corporate or acquired or disposed of or transferred, mortgaged or charged or created any security interest over any assets or any right, title or interest in any asset (including shares and trade investments) or authorised or proposed or announced any intention to propose any amalgamation, merger, demerger, acquisition or disposal, transfer, mortgage, charge or security interest, in each case, other than in the ordinary course of business;

(v) save for intra-Hardy Group transactions, made or authorised or proposed or announced an intention to propose any change in its loan capital;

(vi) issued, authorised or proposed the issue of any debentures or made any change in or to any debentures (save for intra-Hardy Group transactions) or save in the ordinary course of business, incurred or increased any indebtedness or become subject to any (actual or contingent) liability that is material in the context of the Wider Hardy Group taken as a whole;

(vii) save for intra-Hardy Group transactions, purchased, redeemed or repaid or announced any proposal to purchase, redeem or repay any of its own shares or other securities or reduced or, save in respect to the matters mentioned in sub-paragraph (l)(i) above, made any other change to any part of its share capital;

(viii) entered into, effected, implemented, or authorised, proposed or announced its intention to implement, any reconstruction, amalgamation, merger, scheme, commitment (whether in respect of capital expenditure or otherwise) or other transaction or arrangement otherwise than in the ordinary course of business or entered into or offered to enter into or changed the terms of service of or any contract with any director or senior executive, (being an employee of any member of the Wider Hardy Group with a basic annual salary of GBP100,000 or more);

(ix) entered into or varied or authorised, proposed or announced its intention to enter into or vary any contract, transaction or commitment (whether in respect of capital expenditure or otherwise) which is of a long term, onerous or unusual nature or magnitude or which is or could be materially restrictive on the businesses of any member of the Wider Hardy Group or the Wider CNA Group or which involves or could involve an obligation of such a nature or magnitude or which is other than in the ordinary course of business and which, in any of the foregoing cases, is material in the context of the Wider Hardy Group taken as a whole;

(x) (other than in respect of a member which is dormant and was solvent at the relevant time) taken any corporate action or had any legal proceedings started or threatened against it for its winding-up, dissolution or reorganisation or for the appointment of a receiver, administrative receiver, administrator, trustee or similar officer of all or any of its assets or revenues or any analogous proceedings in any jurisdiction or had any such person appointed;

(xi) been unable, or admitted in writing that is it unable, to pay its debts or having stopped or suspended (or threatened to stop or suspend) payment of its debts generally or ceased or threatened to cease carrying on all or substantial part of its business, which in any case is material in the context of the Wider Hardy Group taken as a whole;

(xii) entered into any contract, transaction or arrangement which would be restrictive on the business of any member of the Wider Hardy Group or the Wider CNA Group other than to a nature and extent which is normal in the context of the business concerned and which is not material in the context of the Wider Hardy Group or the Wider CNA Group taken as a whole;

(xiii) other than in respect of intra Hardy Group capital contributions or capitalisations, waived or compromised any claim otherwise than in the ordinary course of business and which is material in the context of the Wider Hardy Group taken as a whole;

(xiv) entered into any contract, commitment, arrangement or agreement otherwise than in the ordinary course of business or passed any resolution or made any offer (which remains open for acceptance) with respect to or announced any intention to, or to propose to, effect any of the transactions, matters or events referred to in paragraphs (i) to (xiii) of this Condition;

   (xv)       made or agreed or consented to any change to:

(A) the terms of the trust deeds constituting the pension scheme(s) established by any member of the Wider Hardy Group for its directors, employees or their dependents;

(B) the contributions payable to any such scheme(s) or to the benefits which accrue or to the pensions which are payable thereunder;

(C) the basis on which qualification for, or accrual or entitlement to, such benefits or pensions are calculated or determined; or

(D) the basis upon which the liabilities (including pensions) of such pension schemes are funded, valued or made; or

(xvi) except as provided for in the Implementation Agreement proposed, agreed to provide or modified the terms of any share option scheme, incentive scheme or other benefit relating to the employment or termination of employment of any person employed by the Wider Hardy Group;

(m) except as fairly disclosed in Hardy's 2011 Results Announcement, or publicly announced in accordance with the Listing Rules or the Disclosure Rules and Transparency Rules by Hardy prior to the close of business on 20March 2012 or as fairly disclosed in writing by Hardy to CNA prior to 20 March 2012, no member of the Wider Hardy Group having taken since 1 December 2011 (or agreed or proposed to take) any action which requires, or would require the consent of the Panel (if the code had applied to Hardy) or the approval of Hardy Shareholders in general meeting in accordance with, or as contemplated by, Rule 21.1 of the Takeover Code;

(n) except as fairly disclosed in Hardy's 2011 Results Announcement, or publicly announced in accordance with the Listing Rules or the Disclosure Rules and Transparency Rules by Hardy prior to the close of business on 20March 2012 or as fairly disclosed in writing by Hardy to CNA prior to 20 March 2012, during the period commencing on 31 December 2010 and ending at close of business on 20 March 2012 (being the date immediately prior to the date of this announcement):

(i) no adverse change or deterioration having occurred in the business, assets, financial or trading position or profits or prospects of any member of the Wider Hardy Group which is, in any such case, material in the context of the Wider Hardy Group taken as a whole;

(ii) no litigation, arbitration proceedings, prosecution or other legal proceedings to which any member of the Wider Hardy Group is or is likely to become a party (whether as a plaintiff, defendant or otherwise) and no investigation by any Third Party against or in respect of any member of the Wider Hardy Group having been instituted, announced or threatened by or against or remaining outstanding in respect of any member of the Wider Hardy Group which in any such case might reasonably be expected to have a material adverse effect on the Wider Hardy Group taken as a whole;

(iii) no contingent or other liability having arisen which would be reasonably likely to adversely affect any member of the Wider Hardy Group to an extent which is material in the context of the Wider Hardy Group taken as a whole; and

(iv) no steps having been taken which are likely to result in the withdrawal, cancellation, termination or modification of any licence held by any member of the Wider Hardy Group which is necessary for the proper carrying on of its business; and

(o) save as fairly disclosed in Hardy's 2011 Results Announcement or as otherwise publicly announced in accordance with the Listing Rules or the Disclosure Rules and Transparency Rules by Hardy prior to the close of business on 20 March 2012 or as otherwise fairly disclosed in writing by Hardy to CNA prior to 20 March 2012, CNA not having discovered:

(i) that any financial, business or other information concerning the Wider Hardy Group as contained in the information publicly disclosed at any time in the preceding 60 months by or on behalf of any member of the Wider Hardy Group is misleading, contains a misrepresentation of fact or omits to state a fact necessary to make that information not misleading, which in any case is material in the context of the Wider Hardy Group taken as a whole; or

(ii) that any member of the Wider Hardy Group, or any partnership, company or other entity in which any member of the Wider Hardy Group has a significant economic interest and which is not a Subsidiary Undertaking of Hardy and which is material in the context of the Wider Hardy Group taken as a whole, is subject to any liability (contingent or otherwise) which in any case is material in the context of the Wider Hardy Group taken as a whole.

1.4 CNA reserves the right (but shall be under no obligation) to waive, in whole or in part, all or any of the Conditions (except the Conditions set out in paragraphs 1.2 and 1.3(a) to (e) above), CNA shall be under no obligation to waive or treat as fulfilled any of the Conditions by a date earlier than the date specified in the Condition set out in paragraph 1.1 for the fulfilment thereof, notwithstanding that other Conditions may at such earlier date have been waived or fulfilled and that there are at such earlier date no circumstances indicating that any of such Conditions may not be capable of fulfilment.

1.5 CNA may (with the prior written consent of Hardy (not to be unreasonably withheld) in accordance with the terms of the Implementation Agreement) implement the acquisition of the entire issued and to be issued common share capital of Hardy by making, directly or indirectly, a takeover offer (as defined in Section 974 of the Companies Act 2006 or an equivalent offer under the provisions of the Bermuda Companies Act 1981) as an alternative to the Merger. In such event, the takeover offer will be implemented on the same terms (subject to appropriate amendments), so far as applicable, as those which would apply to the Merger. In particular, Conditions 1.1 and 1.2 would not apply, however, the takeover offer would be subject to a further condition in the following form:

(a) "valid acceptances being received (and not, where permitted, withdrawn) by not later than 3.00 p.m. (London time) on the first closing date of the offer (or such later time(s) and/or date(s) as CNA may decide) in respect of not less than X per cent. (or such lower percentage as CNA may decide, but not being lower than 50 per cent.) of the voting rights carried by the Hardy Shares to which the offer relates, provided that this condition will not be satisfied unless CNA (together with its wholly owned subsidiaries, if any) shall have acquired or agreed to acquire (whether pursuant to the offer or otherwise), directly or indirectly, Hardy Shares carrying in aggregate more than 50 per cent. of the voting rights then normally exercisable at a general meeting of Hardy."

where X in the above condition will be 75 per cent. except that where there is a Competing Offer in circumstances specified in the Implementation Agreement when the applicable percentage will be 90 per cent. and not 75 per cent.

For the purposes of this Condition 1.5:

- Hardy Shares which have been unconditionally allotted shall be deemed to carry the voting rights they will carry upon issue;

- Hardy Shares that cease to be held in treasury are Hardy Shares to which the offer relates; and

- The expression "Hardy Shares to which the offer relates" shall be construed in accordance with the Bermuda Companies Act.

1.6 The availability of the Acquisition to persons not resident in the United Kingdom and their ability to vote on the Acquisition may be affected by the laws of any relevant jurisdictions. Persons who are not resident in the United Kingdom should inform themselves about and observe any applicable requirements.

1.7 The Merger Agreement will be governed by Bermuda law and be subject to the jurisdiction of the Courts of Bermuda and to the Conditions set out in this announcement and in the formal Circular. The Implementation Agreement will be governed by English law and be subject to the jurisdiction of the English Courts and to the Conditions set out in this announcement and in the formal Circular. The Conditions set out in this Announcement and in the formal Circular will be governed by English law and be subject to the jurisdiction of the English Courts. The Acquisition will comply with the applicable rules and regulations of the Financial Services Authority, the London Stock Exchange and the UKLA.

   2.         Certain further terms of the Acquisition

2.1 Hardy Shares, which will be acquired under the Acquisition, will be acquired fully paid and free from all liens, equities, charges, encumbrances, options, rights of pre-emption and any other third party rights and interests of any nature and together with all rights now or hereafter attaching or accruing to them, including voting rights and the right to receive and retain in full all dividends and other distributions (if any) declared, made or paid on or after the date of this announcement.

APPENDIX 2

SOURCES OF INFORMATION AND BASES OF CALCULATION

In this announcement:

(a) As at the close of business on 20 March 2012, being the last Business Day prior to the date of this announcement, Hardy had in issue 51,141,671 Hardy Shares (excluding 1,677,766 held in treasury). The International Securities Identification Number for Hardy Shares is BMG429851D48.

(b) The value of approximately GBP143 million attributed to the issued share capital of Hardy is based upon 51,161,328 Hardy Shares, being the aggregate of (i) the 51,141,671 Hardy Shares in issue on 20 March 2012 as described in paragraph (a) above; and (ii) a further 19,657 Hardy Shares which may be issued as a result of the exercise of options or the expected vesting of awards under the Hardy Share Schemes, if the Acquisition becomes Effective. It is assumed that any such further Hardy Shares will be satisfied out of Hardy Shares held by Hardy in treasury.

(c) The Acquisition Price implies a multiple of 1.55 times Hardy's reported net tangible assets of GBP92 million as at 31 December 2011.

(d) Unless otherwise stated, financial information relating to the Hardy Group has been extracted or derived (without any adjustment) from the Hardy 2011 Results Announcement.

(e) Unless otherwise stated, all prices and closing prices for Hardy Shares are closing middle market quotations derived from the Daily Official List.

APPENDIX 3

DETAILS OF IRREVOCABLE UNDERTAKINGS

Directors

The following Directors have given irrevocable undertakings to vote in favour of the Acquisition at the Special General Meeting (or to accept an offer (if the Acquisition is implemented by way of a Takeover Offer)) in relation to the following Hardy Shares:

 
                      Number of   Percentage of issued 
  Name            Hardy Shares*       share capital of 
                                               Hardy** 
 P Bailie                44,005                  0.09% 
 J Cusack                 3,800                  0.01% 
 A Dunkle                22,000                  0.04% 
 P Gage                 185,620                  0.36% 
 F Luck                       -                  0.00% 
 J MacDiarmid           133,877                  0.26% 
 D Mann               1,277,500                  2.50% 
 B Merry                580,885                  1.14% 
 A Taylor                17,000                  0.03% 
         Total        2,264,687                  4.43%

* These numbers include Hardy Shares held by family members of the relevant director to which the irrevocable also relates as well as Hardy Shares to be issued in accordance with the terms of the Hardy Share Schemes (where relevant)

** Excludes shares held in treasury

The irrevocable undertakings received from the Hardy Directors will lapse in the event that the Acquisition lapses or is otherwise withdrawn in accordance with its terms, however the undertakings will remain binding in the event of a higher competing offer being announced for Hardy.

Other Hardy Shareholders

Irrevocable undertakings

The following Hardy Shareholders have given irrevocable undertakings to vote (or in the case of Majedie Asset Management Limited to instruct its client's custodian to vote) in favour of the Acquisition at the Special General Meeting (or to accept an offer (if the Acquisition is implemented by way of a Takeover Offer)) in relation to the following Hardy Shares:

 
 Name                                   Number of   Percentage of issued 
                                     Hardy Shares       share capital of 
                                                                  Hardy* 
 1. Majedie Asset Management 
  Limited (as agent for and 
  on behalf of discretionary 
  investment management clients)        3,362,350                  6.57% 
 2. Jupiter Asset Management 
  Limited                               2,781,097                  5.44% 
 3. Henderson Global Investors 
  Limited                               2,048,000                  4.00% 
 4. Aviva Investors Global 
  Services Limited                      2,327,288                  4.55% 
                            Total      10,518,735                 20.57% 
 
   *    Excludes shares held in treasury

Each of the irrevocable undertakings will lapse in the event that the Acquisition lapses or is otherwise withdrawn in accordance with its terms.

The irrevocable undertaking in paragraph 1 above will cease to be binding if a third party announces an offer, scheme of arrangement, merger or amalgamation to acquire the whole of the issued and to be issued share capital of Hardy (a Competing Offer) before the Special General Meeting (or before an offer becomes unconditional as to acceptances) which values the Common Shares at a price per share at least 10 per cent higher than the Acquisition Price.

The irrevocable undertaking in paragraph 2 above will cease to be binding if a Competing Offer is made within five days of the posting of the Circular (or an offer document (as the case may be)) which values the Common Shares at a price per share at least 10 per cent higher than the Acquisition Price.

The irrevocable undertakings in paragraphs 3 and 4 above will cease to be binding if a third party announces a firm intention to make an offer for the whole of the issued share capital of Hardy (other than shares already held by the third party offeror) which, in the reasonable opinion of the persons giving these undertakings, values the Common Shares at a price per share at least 10 per cent higher than the Acquisition Price.

APPENDIX 4

DEFINITIONS

The following definitions apply throughout this announcement unless otherwise stated or the context otherwise requires:

 
 "Acquisition"                               means the recommended acquisition by CNA of the entire issued and to be 
                                             issued share capital 
                                             of Hardy at the Acquisition Price to be effected in accordance with the 
                                             Implementation Agreement 
                                             by means of the Merger or a Takeover Offer, (if CNA in accordance with 
                                             the terms of the Implementation 
                                             Agreement elects to proceed by way of a Takeover Offer) and shall, in 
                                             either case, where the 
                                             context so requires include any subsequent revision, variation, extension 
                                             or renewal thereof 
                                             (howsoever such acquisition is implemented in accordance with the terms 
                                             of the Implementation 
                                             Agreement); 
 "Acquisition Effective Date"                means that date upon which: 
                                             (i) the Merger becomes effective in accordance with its terms; or 
                                             (ii) if CNA elects in accordance with the terms of the Implementation 
                                             Agreement to proceed 
                                             to implement the Acquisition by way of a Takeover Offer, the date that 
                                             such an offer becomes 
                                             or is declared unconditional in all respects; 
 "Acquisition Price"                         means 280 pence for each Common Share; 
 "Aon Benfield Securities"                   means Aon Benfield Securities Limited; 
 "Authorisations"                            means authorisations, orders, grants, recognitions, determinations, 
                                             certifications, confirmations, 
                                             consents, licences, clearances, exemptions, valuations, reports, 
                                             permissions and approvals; 
 "Bermuda Companies Act"                     means the Companies Act 1981 of Bermuda (as amended from time to time); 
 "Bermuda Insurance Act"                     means the Insurance Act 1978 of Bermuda (as amended from time to time); 
 "Board"                                     means the board of directors of Hardy from time to time; 
 "Business Day"                              means a day (other than a Saturday or Sunday) on which banks in the City 
                                             of London and Bermuda 
                                             are generally open for business; 
 "Bye-laws"                                  means the bye-laws of Hardy from time to time; 
 "Circular"                                  means the document to be addressed to Hardy Shareholders and containing a 
                                             notice convening 
                                             the Special General Meeting to consider and, if thought fit, pass the 
                                             Merger Resolutions; 
 "CNA Bermuda SPV"                           means Tweed Merger Company Limited, (a wholly-owned subsidiary of TCC, a 
                                             subsidiary of CNA), 
                                             which is incorporated as a Bermuda exempted company limited by shares; 
 "CNA Board" or CNA Directors"               means the directors of CNA from time to time; 
 "CNA Group"                                 means CNA and its Group including CNA Bermuda SPV; 
 "Closing Price"                             means the closing middle market quotation of a Common Share, as derived 
                                             from the Daily Official 
                                             List; 
 "Common Shares" or "Hardy Shares"           means the common shares of 20 pence each in the capital of Hardy and, 
                                             where the context so 
                                             permits, shall include any Depositary Interests representing such Common 
                                             Shares; 
 "Companies Act 2006"                        means the UK Companies Act 2006 (as amended from time to time); 
 "Competing Offer"                           means any bona fide offer or proposal, scheme, merger, amalgamation or 
                                             possible offer, business 
                                             combination or similar transaction (whether or not subject to 
                                             pre-conditions) which is proposed 
                                             by a third party (which is not acting in concert with CNA or CNA Bermuda 
                                             SPV), the purpose 
                                             of which is to enable (a) that third party, directly or indirectly, to 
                                             acquire (in one transaction 
                                             or a series of transactions) and when aggregated with any Common Shares 
                                             already held by such 
                                             third party (and any person acting in concert with that third party) more 
                                             than 50 per cent. 
                                             of the issued and to be issued share capital of Hardy or the whole or 
                                             more than 50 per cent. 
                                             of the business and assets of Hardy or any of its subsidiaries or (b) 
                                             that third party and 
                                             Hardy to effect a Reverse Takeover; 
 "Competing Proposal"                        means any bona fide offer or proposal (including a partial or tender 
                                             offer), scheme, merger, 
                                             amalgamation and whether or not subject to pre-conditions or possible 
                                             offer, business combination 
                                             or similar transaction which is proposed by a third party (which is not 
                                             acting in concert 
                                             with CNA or CNA Bermuda SPV), the purpose of which is to enable (a) that 
                                             third party, directly 
                                             or indirectly, to acquire (in one transaction or a series of 
                                             transactions) and when aggregated 
                                             with any Common Shares already held by such third party (and any person 
                                             acting in concert 
                                             with that third party) more than 50 per cent. of the issued and to be 
                                             issued share capital 
                                             of Hardy or the whole or more than 50 per cent. of the business and 
                                             assets of Hardy or any 
                                             of its subsidiaries or (b) that third party and Hardy to effect a Reverse 
                                             Takeover or (c) 
                                             that third party, directly or indirectly, to acquire (in one transaction 
                                             or a series of transactions), 
                                             including by way of an issue of shares (or securities granting rights to 
                                             subscribe for or 
                                             convert or exchange any securities into shares), shares which carry or 
                                             would when issued, 
                                             carry 10 per cent or more of the votes exercisable at a general meeting 
                                             of Hardy (when aggregated 
                                             with any Common Shares already held by such third party and any person 
                                             acting in concert with 
                                             that person) or (d) the entering into by any member of the Hardy Group of 
                                             a transaction or 
                                             series of transactions howsoever implemented that, in any case, would be 
                                             reasonably likely 
                                             to preclude, impede, delay or prejudice the implementation of the 
                                             Acquisition; 
 "Conditions"                                means: 
                                             (i) for so long as the Acquisition is being implemented by means of the 
                                             Merger, the terms 
                                             and conditions comprising the Merger Conditions; and 
                                             (ii) for so long as the Acquisition is being implemented by means of the 
                                             Takeover Offer, the 
                                             terms and conditions comprising the Takeover Offer Conditions, 
                                             and "Condition" shall be construed accordingly; 
 "Connected Persons"                         means those persons whose interests in shares the CNA Directors and the 
                                             Hardy Directors are, 
                                             individually and collectively, respectively taken to be interested in 
                                             pursuant to Part 22 
                                             of the Companies Act 2006 and related regulations; 
 "Court"                                     means the Supreme Court of Bermuda; 
 "CREST"                                     means the relevant system (as defined in the CREST Regulations) in 
                                             respect of which Euroclear 
                                             UK and Ireland Limited is the Operator (as defined in the CREST 
                                             Regulations); 
 "CREST Regulations"                         means the Uncertificated Securities Regulations 2001 (SI 2001/3755); 
 "Depositary Interests"                      means the depositary interests representing Common Shares held through 
                                             CREST established pursuant 
                                             to the deed poll dated 17 December 2007 executed by Capita IRG Trustees 
                                             Limited; 
 "Directors"                                 mean the directors of Hardy from time to time; 
 "Disclosure Rules and Transparency Rules"   means the disclosure rules and transparency rules made by the FSA and 
                                             forming part of the 
                                             FSA's handbook of rules and guidance, as from time to time amended. 
 "Effective"                                 means, in the context of the Acquisition: 
                                             (a) if the Acquisition is effected by means of the Merger, the Merger 
                                             having become effective 
                                             pursuant to its terms; or 
                                             (b) if the Acquisition is effected by means of Takeover Offer, the 
                                             Takeover Offer having been 
                                             declared or become unconditional in all respects; 
 "Effective Time"                            means 6:00 p.m. on the Acquisition Effective Date; 
 "FSA"                                       means the Financial Services Authority of the UK (or any successor 
                                             authority or authorities 
                                             carrying out insurance or insurance mediation regulatory functions in the 
                                             United Kingdom and/or 
                                             the function of the competent authority under Part VI of FSMA from time 
                                             to time); 
 "FSMA"                                      means the UK Financial Services and Markets Act 2000 (as amended from 
                                             time to time); 
 "Group"                                     means, in relation to any person, that person and any companies which are 
                                             holding companies, 
                                             subsidiaries or Subsidiary Undertakings of it or of any such Holding 
                                             Company and "Group Company" 
                                             shall mean any one of them; 
 "Hardy Group"                               means Hardy and its Group; 
 "Hardy 2011 Results Announcement"           means the preliminary announcement of Hardy's financial results for the 
                                             twelve months ended 
                                             on 31 December 2011 as released by Hardy issuing an RNS statement at 
                                             7.00am on 1 March 2012; 
 "Hardy Share Schemes"                       means the Hardy Deferred Annual Bonus Plan, the Hardy Performance Share 
                                             Plan, the Hardy Restricted 
                                             Share Plan, the Hardy SAYE Share Option Scheme, the Hardy Approved Share 
                                             Option Scheme and 
                                             the Hardy Share Incentive Plan; 
 "Hardy Shareholders"                        means holders of Common Shares from time to time (including such persons 
                                             who hold an interest 
                                             in Common Shares through Depositary Interests); 
 "Holding Company"                           shall have the meaning ascribed to it in section 736 of the Companies Act 
                                             2006; 
 "Implementation Agreement"                  means the agreement between CNA (1), CNA Bermuda SPV (2) and Hardy (3), 
                                             dated 21 March 2012, 
                                             in relation to the implementation of the Acquisition; 
 "Independent Committee"                     means a committee comprising one non--executive director of the Board as 
                                             nominated by Hardy 
                                             from time to time and one non--executive director of CNA as nominated by 
                                             CNA from time to 
                                             time; 
 "Listing Rules"                             means the rules and regulations made by the FSA in its capacity as the 
                                             UKLA under FSMA, and 
                                             contained in the UKLA's publication of the same name; 
 "Lloyd's"                                   means the Society and Corporation of Lloyd's created and governed by the 
                                             Lloyd's Acts 1871 
                                             to 1982, including the Council of Lloyd's (and its delegates and other 
                                             persons through whom 
                                             the Council may act), as the context may require; 
 "Lloyd's Membership Byelaw"                 means the Lloyd's Membership Byelaw made by the Council of Lloyd's on 7 
                                             December 2005 (as 
                                             amended from time to time); 
 "Lloyd's Underwriting Byelaw"               means the Lloyd's Underwriting Byelaw made by the Council of Lloyd's on 4 
                                             June 2003 (as amended 
                                             from time to time); 
 "London Stock Exchange"                     means London Stock Exchange plc; 
 "Long Stop Effective Date"                  means 5:00 p.m. on 30 September 2012 or such later date as CNA and Hardy 
                                             may agree in writing; 
 "Merger"                                    means the merger of Hardy and CNA Bermuda SPV on the terms and conditions 
                                             of the Implementation 
                                             Agreement and the Merger Agreement and in accordance with the Bermuda 
                                             Companies Act; 
 "Merger Agreement"                          means the conditional agreement effecting the merger of CNA Bermuda SPV 
                                             and Hardy under the 
                                             Bermuda Companies Act to be entered into between Hardy (1) CNA (2), and 
                                             CNA Bermuda SPV (3) 
                                             in the form set out in Schedule 4 to the Implementation Agreement; 
 "Merger Conditions"                         means the conditions set out in Appendix 1 to this announcement; 
 "Merger Resolutions"                        means the resolutions of Hardy Shareholders required to implement the 
                                             Merger in the form set 
                                             out in Schedule 3 to the Implementation Agreement; 
 "Official List"                             means the Official List maintained by the UKLA; 
 "Panel"                                     means the UK Panel on Takeovers and Mergers; 
 "Peel Hunt"                                 means Peel Hunt LLP; 
 "Regulatory Information Service or RIS"     means any of the services set out in Schedule 12 to the Listing Rules; 
 "Relevant Jurisdiction"                     means Bermuda, Bahrain, Guernsey, the United States of America and the 
                                             Member States of the 
                                             European Union; 
 "Restricted Jurisdiction"                   means any jurisdiction where local laws or regulations may result in 
                                             significant risk of civil, 
                                             regulatory or criminal exposure if information concerning the Acquisition 
                                             is sent or made 
                                             available to Hardy Shareholders in that jurisdiction; 
 "Reverse Takeover"                          means as defined in Rule 10.2.2(4) of the Listing Rules; 
 "Rothschild"                                means N M Rothschild & Sons Limited; 
 "Special General Meeting"                   means the special general meeting of the shareholders of Hardy to be 
                                             convened to consider 
                                             and, if thought fit, to approve the Merger Resolutions and any 
                                             adjournment thereof; 
 "Subsidiary Undertaking"                    has the meaning ascribed to it in section 1162 of and Schedule 7 of the 
                                             Companies Act 2006; 
 "Surviving Company"                         means Hardy as the surviving company following the Merger; 
 "Takeover Code"                             means the City Code on Takeovers and Mergers as amended and in force from 
                                             time to time; 
 "Takeover Offer Conditions"                 means the condition that the Takeover Offer be conditional on valid 
                                             acceptances being received 
                                             in respect of not less than 75 per cent (except where there is a 
                                             Competing Offer in circumstances 
                                             specified in the Implementation Agreement when the applicable percentage 
                                             will be 90 per cent 
                                             and not 75 per cent) (or such lower percentage as CNA may specify (but 
                                             not being lower than 
                                             50 per cent.) in any case in the Takeover Offer Announcement) of the 
                                             voting rights attaching 
                                             to the Hardy Shares to which the Takeover Offer relates and all of the 
                                             Merger Conditions other 
                                             than Conditions 1.1 and 1.2; 
 "Takeover Offer"                            means a takeover offer to acquire the entire issued and to be issued 
                                             share capital of Hardy 
                                             other than shares that at the date of the offer are already held by the 
                                             offeror on terms that 
                                             are the same in relation to all shares to which the offer relates; 
 "TCC"                                       means The Continental Corporation, a wholly owned subsidiary of CNA and 
                                             owner of MergerCo; 
 "Third Party"                               any central bank, ministry, governmental, quasi-governmental (including 
                                             the European Union, 
                                             supra national, statutory, regulatory or investigative body or authority 
                                             (including any national 
                                             or supra national anti-trust or merger control authority), national, 
                                             state, municipal or local 
                                             government (including any subdivision, court, administrative agency or 
                                             commission or other 
                                             authority thereof), body exercising any regulatory, taxing, or other 
                                             authority, in any Relevant 
                                             Jurisdiction; 
 "United States" or "US"                     means the United States of America, its territories and possessions, any 
                                             state of the United 
                                             States and the District of Columbia, and all other areas subject to its 
                                             jurisdiction; 
 "UKLA"                                      means the FSA acting in its capacity as the competent authority for 
                                             listing in the United 
                                             Kingdom for the purposes of Part VI of FSMA; 
 "Wider CNA Group"                           means CNA and its subsidiaries, Subsidiary Undertakings, associated 
                                             undertakings and any other 
                                             undertaking in which CNA and/or any such subsidiary or associated 
                                             undertakings (aggregating 
                                             their interests) has or together have a direct or indirect interest in 
                                             ten per cent. or more 
                                             of the equity share capital (as defined in the Companies Act 2006), as at 
                                             the date of this 
                                             announcement and not including, for the avoidance of doubt, any member of 
                                             the Hardy Group; 
                                             and 
 "Wider Hardy Group"                         means Hardy and the subsidiaries and Subsidiary Undertakings of Hardy and 
                                             its associated undertakings 
                                             under its control ("control" being as defined in s.719 of the UK Income 
                                             Tax (Earnings and 
                                             Pensions) Act 2003) (including any joint venture, partnership, firm or 
                                             company in which any 
                                             member of the Hardy Group is interested or any undertaking in which Hardy 
                                             and such undertakings 
                                             (aggregating their interests) have a substantial interest).

In this announcement, unless the context otherwise requires:

-- "associated undertaking" has the meaning given by paragraph 19 of Schedule 6 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 other than paragraph 19(1)(b) of Schedule 6 to those Regulations;

-- references to a "person" include any individual, firm, body corporate (wherever incorporated), government, state or agency of a state or any joint venture, association, partnership, works council or employee representative body (whether or not having separate legal personality);

   --      references to "acting in concert" shall be construed in accordance with the  Takeover Code; 
   --      unless otherwise stated references to time are to London time; and

-- any phrase introduced by the terms "including", "include", "in particular" or any similar expression shall be construed as illustrative and shall not limit the sense of the words preceding those terms.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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