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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.       )

þ    Filed by the Registrant   o    Filed by a Party other than the Registrant

 

Check the appropriate box:

þ

 

Preliminary Proxy Statement
o   CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
o   Definitive Proxy Statement
o   Definitive Additional Materials
o   Soliciting Material Pursuant to §.240.14a-12

HCC INSURANCE HOLDINGS, INC.

GRAPHIC

(Name of Registrant as Specified in its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

o

 

No fee required.
þ   Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
    (1)   Title of each class of securities to which transaction applies:
        Common Stock, $1.00 par value
    (2)   Aggregate number of securities to which transaction applies:
        (a) 95,644,299 shares of Common Stock (including restricted shares and performance shares), (b) 735,900 options to purchase shares of Common Stock and (c) 71,270 shares of Common Stock subject to restricted stock unit awards.
    (3)   Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
        In accordance with Section 14(g) of the Securities Exchange Act of 1934, as amended, the filing fee of $871,492 was determined by multiplying .0001162 by the maximum aggregate value of the transaction of $7,499,930,706. The maximum aggregate value of the transaction was determined based upon the sum of (a) 95,644,299 shares of Common Stock (including restricted shares and performance shares) multiplied by $78.00 per share, (b) 735,900 options to purchase shares of Common Stock multiplied by $46.36 (which is the difference between $78.00 and the weighted average exercise price of $31.64 per share) and (c) 71,270 shares of Common Stock subject to restricted stock unit awards multiplied by $78.00 per share.
    (4)   Proposed maximum aggregate value of transaction: $7,499,930,706
    (5)   Total fee paid: $871,492

o

 

Fee paid previously with preliminary materials.
o   Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

 

(1)

 

Amount Previously Paid:    

 

 

(2)

 

Form, Schedule or Registration Statement No.:    

 

 

(3)

 

Filing Party:    

 

 

(4)

 

Date Filed:    

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LOGO

HCC Insurance Holdings, Inc.
13403 Northwest Freeway
Houston, Texas 77040
(713) 690-7300

[    ·    ], 2015

Dear Stockholder,

You are cordially invited to attend a special meeting of the stockholders of HCC Insurance Holdings, Inc., which we refer to as HCC, the Company, we or us, which special meeting will be held at [HCC Headquarters, 13403 Northwest Freeway, Houston, Texas 77040], on [    ·    ], at [    ·    ] [a.m./p.m.], Central Time.

At the special meeting, you will be asked to consider and vote upon a proposal to adopt the Agreement and Plan of Merger, dated as of June 10, 2015, among Tokio Marine Holdings, Inc., a Japanese corporation, which we refer to as Tokio Marine, TMGC Investment (Delaware) Inc., a Delaware corporation and wholly-owned indirect subsidiary of Tokio Marine, which we refer to as Merger Sub, and HCC, as it may be amended from time to time, which we refer to as the merger agreement, pursuant to which HCC would be acquired by Tokio Marine. In addition, you will be asked to consider and vote on an advisory (non-binding) proposal to approve the compensation that may be paid or become payable to our named executive officers in connection with the merger, including the agreements and understandings pursuant to which such compensation may be paid or become payable, as described in the section entitled "The Merger—Interests of HCC's Directors and Executive Officers in the Merger—Golden Parachute Compensation." You will also be asked to consider and vote on a proposal to adjourn the special meeting to a later date or time, if necessary or appropriate, to solicit additional proxies in the event there are insufficient votes at the time of the special meeting or any adjournment or postponement thereof to adopt the merger agreement and approve the merger. If the merger agreement is adopted and the merger is completed, you, as a holder of HCC common stock, will be entitled to receive $78.00 in cash, without interest, less any applicable withholding taxes, for each share of HCC common stock owned by you at the consummation of the merger, and HCC will become a wholly-owned indirect subsidiary of Tokio Marine.

After careful consideration, our board of directors has unanimously determined that the merger agreement and the transactions contemplated thereby, including the merger, are advisable, fair to, and in the best interests of HCC and its stockholders and unanimously recommends that you vote "FOR" the adoption of the merger agreement and approval of the merger, "FOR" the approval, on an advisory (non-binding) basis, of the compensation that may be paid or become payable to HCC's named executive officers in connection with the merger, including the agreements and understandings pursuant to which such compensation may be paid or become payable, as described in the section entitled "The Merger—Interests of HCC's Directors and Executive Officers in the Merger—Golden Parachute Compensation" and "FOR" the adjournment of the special meeting to a later date or time, if necessary or appropriate, to solicit additional proxies in the event there are insufficient votes at the time of the special meeting or any adjournment or postponement thereof to adopt the merger agreement and approve the merger.

Your vote is very important, regardless of the number of shares of common stock you own. We cannot consummate the merger unless the merger agreement is adopted and the merger is approved by the affirmative vote of the holders of at least a majority of the outstanding shares of the Company's common stock entitled to vote at the special meeting. Therefore, the failure of any stockholder to vote will have the same effect as a vote by that stockholder against the adoption of the merger agreement and approval of the merger.


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The attached proxy statement provides you with detailed information about the special meeting, the merger agreement and the merger. A copy of the merger agreement is attached as Annex A to this document. We encourage you to read this document and the merger agreement carefully and in their entirety. You may also obtain more information about HCC from documents we have filed with the Securities and Exchange Commission.

Thank you in advance for your continued support and your consideration of this matter.

Best regards,

GRAPHIC

Christopher J.B. Williams
Chief Executive Officer

Neither the Securities and Exchange Commission nor any state securities regulatory agency has approved or disapproved the merger, passed upon the merits or fairness of the merger or passed upon the adequacy or accuracy of the disclosure in this document. Any representation to the contrary is a criminal offense.

This proxy statement is dated [    ·    ], 2015 and is first being mailed to stockholders on or about [    ·    ], 2015.


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LOGO

HCC Insurance Holdings, Inc.
13403 Northwest Freeway
Houston, Texas 77040
(713) 690-7300

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held on [    
·    ], 2015

To the Stockholders of HCC Insurance Holdings, Inc.:

A special meeting of stockholders of HCC Insurance Holdings, Inc., which we refer to as HCC, the Company, we or us, will be held at [HCC Headquarters, 13403 Northwest Freeway, Houston, Texas 77040], on [    ·    ], at [    ·    ] [a.m./p.m.], Central Time for the following purposes:

Our board of directors has specified the close of business on [    ·    ], 2015 as the record date for the purpose of determining the stockholders who are entitled to receive notice of, and to vote at, the special meeting. Only stockholders of record at the close of business on the record date are entitled to notice of and to vote at the special meeting and at any adjournment or postponement thereof. Each stockholder is entitled to one vote for each share of HCC common stock held on the record date.

Under Delaware law, HCC stockholders who do not vote in favor of the merger agreement will have the right to seek appraisal of the fair value of their shares as determined by the Delaware Court of Chancery if the merger is completed, but only if they submit a written demand for such an appraisal prior to the vote on the merger agreement and strictly comply with the other Delaware law procedures explained in the accompanying proxy statement.

Regardless of whether you plan to attend the special meeting in person, we request that you complete, sign, date and return the enclosed proxy or submit your proxy by telephone or the Internet prior to the special meeting to ensure that your shares will be represented at the special meeting. If you have Internet access, we encourage you to submit your proxy via the Internet. If a properly executed proxy is returned without an indication as to how the shares of common stock represented thereby are to be voted with regard to a particular proposal, the common stock represented by the proxy will be voted in accordance with the recommendation of the Company's board of directors, which, as of the date of this proxy statement, are "FOR" the adoption of the merger agreement and approval of the merger, "FOR"


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the approval, on an advisory (non-binding) basis, of the compensation that may be paid or become payable to the Company's named executive officers in connection with the merger and "FOR" the adjournment of the special meeting to a later date or time, if necessary or appropriate, to solicit additional proxies in the event there are insufficient votes at the time of the special meeting or any adjournment or postponement thereof. If you attend the special meeting, you may revoke your proxy and vote in person if you wish, even if you have previously returned your proxy card. Your prompt attention is greatly appreciated.

THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE ADOPTION OF THE MERGER AGREEMENT AND APPROVAL OF THE MERGER, "FOR" THE APPROVAL, ON AN ADVISORY (NON-BINDING) BASIS, OF THE COMPENSATION THAT MAY BE PAID OR BECOME PAYABLE TO HCC'S NAMED EXECUTIVE OFFICERS IN CONNECTION WITH THE MERGER AND "FOR" THE ADJOURNMENT OF THE SPECIAL MEETING TO A LATER DATE OR TIME, IF NECESSARY OR APPROPRIATE, TO SOLICIT ADDITIONAL PROXIES IN THE EVENT THERE ARE INSUFFICIENT VOTES AT THE TIME OF THE SPECIAL MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF TO ADOPT THE MERGER AGREEMENT AND APPROVE THE MERGER.

By Order of the Board of Directors,

GRAPHIC

Randy D. Rinicella
Senior Vice President, General Counsel and Secretary

[    ·    ], 2015
Houston, Texas


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ADDITIONAL INFORMATION

This document incorporates important business and financial information about HCC from documents that are not included in or delivered with this document. See "Where You Can Find More Information" on page 96. You can obtain documents incorporated by reference in this document by contacting the Company at Investor Relations, HCC Insurance Holdings, Inc., 13403 Northwest Freeway, Houston, Texas 77040, by email at InvestorRelations@hcc.com or by visiting the Company's website at www.hcc.com. If you wish to request documents, you should do so by [    ·    ], 2015 in order to receive them before the special meeting.

For additional questions about the merger, assistance in submitting proxies or voting shares of HCC common stock or additional copies of the proxy statement or the enclosed proxy card, please contact:

D.F. King & Co., Inc.
48 Wall Street
New York, NY 10005
hcc@dfking.com
Toll-Free: (877) 478-5041
All Others: (212) 269-5550


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TABLE OF CONTENTS

SUMMARY

  1

QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING

 
15

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION

 
23

THE SPECIAL MEETING

 
24

Date, Time, Place and Purpose of the Special Meeting

 
24

Record Date and Quorum

 
24

Required Votes

 
24

Voting, Proxies and Revocation

 
26

Abstentions

 
28

Adjournments and Postponements

 
28

Solicitation of Proxies

 
28

Questions and Additional Information

 
29

List of Stockholders

 
29

THE COMPANIES

 
30

HCC Insurance Holdings, Inc. 

 
30

Tokio Marine Holdings, Inc. 

 
30

TMGC Investment (Delaware) Inc. 

 
30

THE MERGER

 
31

Background of the Merger

 
31

Reasons for the Merger; Recommendation of the Company's Board of Directors

 
41

Opinion of Goldman, Sachs & Co. 

 
44

Financial Projections

 
52

Merger Financing

 
54

Interests of HCC's Directors and Executive Officers in the Merger

 
54

Deferred Compensation

 
58

Material U.S. Federal Income Tax Consequences of the Merger

 
62

Regulatory Approvals

 
64

Litigation Related to the Merger

 
67

THE MERGER AGREEMENT

 
68

Explanatory Note Regarding the Merger Agreement

 
68

The Merger

 
68

Effects of the Merger

 
69

When the Merger Becomes Effective

 
69

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The Merger Consideration and the Conversion of HCC Capital Stock

  69

Payment Procedures

 
70

Treatment of Equity Compensation Awards

 
71

Representations and Warranties

 
71

Covenants Regarding Conduct of Business by HCC Pending the Merger

 
74

Acquisition Proposals

 
77

Change in Company's Recommendation

 
78

Employee Benefits and Plans

 
79

Other Covenants and Agreements

 
80

Consents and Approvals

 
81

Conditions to the Merger

 
81

Termination of the Merger Agreement

 
83

Termination Fees

 
84

Amendment of the Merger Agreement

 
86

Governing Law and Jurisdiction

 
86

Specific Performance

 
86

APPRAISAL RIGHTS

 
87

CURRENT MARKET PRICE OF COMMON STOCK

 
91

SUBMISSION OF STOCKHOLDER PROPOSALS

 
91

HOUSEHOLDING ISSUES

 
92

DELISTING OF COMPANY COMMON STOCK

 
92

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 
93

Section 16(a) Beneficial Ownership Reporting Compliance

 
95

WHERE YOU CAN FIND MORE INFORMATION

 
96

Annex A

 

Agreement and Plan of Merger, dated June 10, 2015, by and among HCC Insurance Holdings, Inc., Tokio Marine Holdings, Inc. and TMGC Investment (Delaware) Inc. 

  A-1


Annex B


 


Opinion of Goldman, Sachs & Co., dated June 10, 2015


 


B-1


Annex C


 


Section 262 of the Delaware General Corporation Law


 


C-1

*
Pursuant to Item 601(b)(2) of Regulation S-K, HCC agrees to furnish supplementally a copy of any omitted schedule to the Agreement and Plan of Merger to the staff of the Securities and Exchange Commission, which we refer to as the SEC, upon request.

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SUMMARY

The following summary highlights information in this proxy statement and may not contain all of the information that is important to you. Accordingly, we encourage you to read carefully this entire proxy statement, its annexes and the documents referred to in this proxy statement. Each item in this summary includes a page reference directing you to a more complete description of the item in this proxy statement.

The Companies (Page 30)

HCC Insurance Holdings, Inc.    HCC Insurance Holdings, Inc., which we refer to as HCC, the Company, we or us, is a Delaware corporation with common stock listed and traded on the New York Stock Exchange, which we refer to as NYSE, under the ticker symbol "HCC." HCC is a leading specialty insurer with offices in the United States, the United Kingdom, Spain and Ireland. HCC's principal offices are located at 13403 Northwest Freeway, Houston, TX 77040, and its telephone number is (713) 690-7300. HCC's home page on the Internet is www.hcc.com. The information provided on HCC's website is not part of this proxy statement and is not incorporated herein by reference.

Tokio Marine Holdings, Inc.    Tokio Marine Holdings, Inc., which we refer to as Tokio Marine, the ultimate holding company of the Tokio Marine Group, is incorporated in Japan and is listed on the Tokyo Stock Exchange. The Tokio Marine Group operates in the property and casualty insurance, reinsurance and life insurance sectors globally with a presence in approximately 40 countries/areas. The Tokio Marine Group has over Yen 20.8 trillion ($173 billion) in total assets, Yen 4.3 trillion ($36 billion) of total revenues (as at the end of March 2015) and approximately 40,000 employees. Tokio Marine Group's main operating subsidiary, Tokio Marine & Nichido Fire, was founded in 1879 and is the oldest and largest property and casualty insurer in Japan. Tokio Marine & Nichido Fire conducts business in the United States through its U.S. subsidiaries. See "The Companies—Tokio Marine Holdings, Inc." on page 30.

TMGC Investment (Delaware) Inc.    TMGC Investment (Delaware) Inc., which we refer to as Merger Sub, is a Delaware corporation that was formed solely for the purpose of entering into the merger agreement and consummating the transactions contemplated by the merger agreement. It is an indirect wholly-owned subsidiary of Tokio Marine. It has not conducted any activities to date other than activities incidental to its formation and in connection with the transactions contemplated by the merger agreement. We refer to Merger Sub together with Tokio Marine as the Tokio Marine Parties. See "The Companies—TMGC Investment (Delaware) Inc." on page 30.

The Merger (Page 31)

The Agreement and Plan of Merger, dated June 10, 2015, among Tokio Marine, Merger Sub and HCC, which we refer to as the merger agreement, provides that Merger Sub will merge with and into HCC, which we refer to as the merger. As a result of the merger, the separate corporate existence of Merger Sub will cease, and HCC will continue as the surviving corporation, which we refer to as the surviving corporation, and will become a wholly-owned indirect subsidiary of Tokio Marine. Upon completion of the proposed merger, shares of the Company's common stock will no longer be listed on any stock exchange or quotation system. If the merger agreement is adopted and the merger is completed, each outstanding share of the Company's common stock (other than shares of the Company's common stock held by HCC, Tokio Marine or Merger Sub or any of their respective subsidiaries, or by any holder who has properly exercised appraisal rights of such shares in accordance with Section 262 of the General Corporation Law of the State of Delaware, which we refer to as the DGCL) will be converted into the right to receive $78.00 in cash, without interest, less any applicable withholding taxes. The merger agreement is attached to this proxy statement as Annex A. We urge you to read carefully the merger agreement in its entirety as it is the legal document governing the merger.

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The Special Meeting (Page 24)

Date, Time and Place.    The special meeting will be held at [HCC Headquarters, 13403 Northwest Freeway, Houston, Texas 77040], on [    ·    ], at [    ·    ] [a.m./p.m.], Central Time.

Purpose.    You will be asked to consider and vote upon (1) the adoption of the merger agreement and approval of the merger, (2) on an advisory (non-binding) basis, the compensation that may be paid or become payable to HCC's named executive officers in connection with the merger, (3) the adjournment of the special meeting to a later date, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to adopt the merger agreement and approve the merger and (4) such other business as may properly come before the special meeting or any adjournments or postponements of the special meeting.

Record Date and Quorum.    You are entitled to vote at the special meeting if you owned shares of the Company's common stock at the close of business on [    ·    ], 2015, the record date for the special meeting. You will have one vote for each share of the Company's common stock that you owned on the record date. As of the record date, there were [    ·    ] shares of the Company's common stock issued and outstanding and entitled to vote at the special meeting. The presence at the special meeting, in person or by proxy, of the holders of [    ·    ] shares of the Company's common stock (a majority of the Company's common stock entitled to vote at the special meeting) constitutes a quorum for the purpose of considering the proposals.

Vote Required.    The adoption of the merger agreement and approval of the merger requires the affirmative vote of the holders of at least a majority of the outstanding shares of the Company's common stock entitled to vote at the special meeting, or any adjournment or postponement thereof. The approval, on an advisory basis, of the compensation that may be paid or become payable to HCC's named executive officers in connection with the merger, including the agreements and understandings pursuant to which such compensation may be paid or become payable, requires the affirmative vote of the holders of at least a majority of the shares of the Company's common stock present in person or represented by proxy at the special meeting and entitled to vote on the matter. The adoption of the proposal to adjourn the special meeting to a later time, if necessary or appropriate, to solicit additional proxies requires the affirmative vote of the holders of at least a majority of the shares of the Company's common stock represented in person or by proxy at the special meeting and entitled to vote thereon.

Reasons for the Merger; Recommendation of the Company's Board of Directors (Page 41)

The Company's board of directors unanimously determined that the merger agreement and the transactions contemplated thereby, including the merger, are advisable, fair to, and in the best interests of HCC and its stockholders. The Company's board of directors unanimously recommends that the stockholders of the Company vote "FOR" the adoption of the merger agreement and approval of the merger, "FOR" the approval, on an advisory (non-binding) basis, of the compensation that may be paid or become payable to HCC's named executive officers in connection with the merger and "FOR" the adjournment of the special meeting to a later date or time, if necessary or appropriate, to solicit additional proxies in the event there are insufficient votes at the time of the special meeting or any adjournment or postponement thereof to adopt the merger agreement and approve the merger.

For a description of the reasons considered by the Company's board of directors in deciding to recommend approval of the proposal to adopt the merger agreement and approve the merger, see "The Merger—Reasons for the Merger; Recommendation of the Company's Board of Directors" beginning on page 41.

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Background of the Merger (Page 31)

A description of the process we undertook, which led to the proposed merger, including our discussions with Tokio Marine, is included in the proxy statement under "The Merger—Background of the Merger."

Opinion of Goldman, Sachs & Co. (Page 44)

In connection with the merger, at the meeting of the Company's board of directors on June 9, 2015, Goldman, Sachs & Co., which we refer to as Goldman Sachs, rendered its oral opinion to the Company's board of directors, which opinion was subsequently confirmed in writing, to the effect that, as of the date of the written opinion and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations upon the scope of review undertaken by Goldman Sachs, as set forth in its opinion, the $78.00 in cash per share of the Company's common stock to be paid to the holders (other than Tokio Marine and its affiliates) of shares of the Company's common stock pursuant to the merger agreement was fair, from a financial point of view, to such holders.

The full text of Goldman Sachs's written opinion, dated June 10, 2015, is attached as Annex B to this proxy statement. HCC encourages you to read the opinion in its entirety for a discussion of the assumptions made, procedures followed, matters considered and qualifications and limitations upon the scope of the review undertaken by Goldman Sachs in rendering the opinion. Goldman Sachs's opinion is directed to the Company's board of directors and addresses only the fairness from a financial point of view of the $78.00 in cash per share of the Company's common stock to be paid to the holders (other than Tokio Marine and its affiliates) of shares of the Company's common stock pursuant to the merger agreement as of the date of the opinion. Goldman Sachs's opinion does not address any other aspects of the merger and does not constitute a recommendation as to how the stockholders of HCC should vote at any stockholders' meeting related to the merger or to take any other action with respect to the merger.

Treatment of Equity Compensation Awards (Page 71)

Equity-based awards held by the Company's directors, executive officers and employees as of the effective time of the merger, which we refer to as the effective time, will be treated at the effective time as follows:

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Treatment of Employee Stock Purchase Plan (Page 55)

The Company will take all actions necessary to cause the Company's 2013 Employee Stock Purchase Plan, which we refer to as the ESPP, not to (a) commence an offering period to purchase the Company's common stock that would otherwise begin after the end of the offering period in effect as of the date of the merger agreement or (b) accept payroll deductions to be used to purchase the Company's common stock under the ESPP after the end of the offering period in effect as of the date of the merger agreement. Immediately prior to the effective time, with respect to any outstanding purchase rights under the ESPP, the offering period under the ESPP will end, each participant's accumulated payroll deduction will be used to purchase the Company's newly-issued common stock in accordance with the terms of the ESPP and at the effective time such newly-issued shares of the Company's common stock will be treated the same as all other shares of the Company's common stock. The Company will take all actions necessary to cause the ESPP to terminate immediately after the purchases described in the foregoing sentence, if any, and immediately prior to the effective time.

Merger Financing (Page 54)

The merger is not conditioned upon receipt of financing by Tokio Marine. Tokio Marine has informed us that it expects to use cash on hand together with borrowings to fund the merger.

Material U.S. Federal Income Tax Consequences of the Merger (Page 62)

In general, the receipt of cash in exchange for shares of the Company's common stock pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes and may also be a taxable transaction under applicable state, local or foreign income or other tax laws. Holders of the Company's common stock should consult their tax advisors about the tax consequences to them of the exchange of shares of the Company's common stock for cash pursuant to the merger in light of their particular circumstances.

Interests of HCC's Directors and Executive Officers in the Merger (Page 54)

In considering the recommendation of the Company's board of directors that you vote to adopt the merger agreement and approve the merger, you should be aware that, aside from their interests as shareholders of the Company, the Company's directors and executive officers have interests in the merger that are different from, or in addition to, those of other shareholders of the Company generally. Members of the Company's board of directors were aware of and considered these interests, among other matters, in evaluating and negotiating the merger agreement and the merger, and in recommending to the shareholders of the Company that the merger agreement be approved. Interests of the Company's directors and executive officers that may be different from or in addition to the interests of the Company's stockholders include:

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The Company's stockholders should take these interests into account in deciding whether to vote "FOR" the proposal to adopt the merger agreement and approve the merger. These interests are discussed in more detail in the section entitled see "The Merger—Interests of HCC's Directors and Executive Officers" beginning on page 54.

Security Ownership of Certain Beneficial Owners and Management (Page 93)

As of [    ·    ], 2015, the directors and executive officers of HCC beneficially owned in the aggregate [    ·    ] of the shares of the Company's common stock entitled to vote at the special meeting or approximately [    ·    ]% of the outstanding shares of the Company's common stock. We currently expect that each of these individuals will vote all of his or her shares of the Company's common stock in favor of each of the proposals to be presented at the special meeting, although none of them is obligated to do so.

Appraisal Rights (Page 87)

Under the DGCL, HCC stockholders who do not vote in favor of the merger agreement will have the right to seek appraisal of the fair value of their shares of the Company's common stock as determined by the Delaware Court of Chancery if the merger is completed, but only if they strictly comply with the procedures and requirements set forth in Section 262 of the DGCL. Any holder of record of shares of the Company's common stock intending to exercise appraisal rights, among other things, must submit a written demand for appraisal to us prior to the vote on the proposal to adopt the merger agreement and approve the merger, must not vote in favor of the proposal to adopt the merger agreement and approve the merger, must continue to hold the shares of the Company's common stock through the effective time and must otherwise comply with all of the procedures required by Section 262 of the DGCL. The relevant provisions of the DGCL are included as Annex C to this proxy statement. You are encouraged to read these provisions carefully and in their entirety. Moreover, due to the complexity of the procedures for exercising the right to seek appraisal, stockholders who are considering exercising such rights are encouraged to seek the advice of legal counsel. Failure to comply strictly with these provisions will result in loss of the right of appraisal. You should be aware that the fair value of your shares of the Company's common stock as determined under Section 262 of the DGCL could be more than, the same as or less than the value that you are entitled to receive under the terms of the merger agreement.

Conditions to the Merger (Page 81)

Before the merger can be completed, a number of conditions must be satisfied or, to the extent permitted, waived. These include:

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Termination of the Merger Agreement (Page 83)

HCC and Tokio Marine may terminate the merger agreement by mutual written consent at any time before the consummation of the merger. In addition, with certain exceptions, either Tokio Marine or HCC may terminate the merger agreement at any time before the consummation of the merger (absent willful or intentional breach in any material respect by the terminating party that proximately contributed to the occurrence of the failure of a condition to consummating the merger) if:

Tokio Marine may also terminate the merger agreement if:

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HCC may also terminate the merger agreement if:

Termination Fees (Page 84)

HCC has agreed to pay Tokio Marine a termination fee of $187.5 million in cash in the event that:

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Acquisition Proposals (Page 77)

Under the terms of the merger agreement, subject to certain exceptions described below, the Company has agreed that neither it nor any of its subsidiaries nor any of the officers and directors of the Company or any of its subsidiaries will, and the Company will use its commercially reasonable efforts to cause its and its subsidiaries' employees, investment bankers, attorneys, accountants and other advisors or representatives not to, directly or indirectly, nor shall it authorize any of the officers and directors of it or its subsidiaries to:

Under the merger agreement, an "acquisition proposal" means:

Notwithstanding the general restrictions above, if, at any time prior to obtaining the Company's stockholder approvals, the Company receives an unsolicited written acquisition proposal and the Company's board of directors determines in good faith, based on the information then available and after consultation with its financial advisor and outside counsel, that the acquisition proposal is, or could reasonably be expected to result in, a superior proposal and that the failure to take the actions described below would be inconsistent with the directors' fiduciary duties under applicable law, then the Company may:

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Prior to obtaining the Company's stockholder approvals, the Company's board of directors may approve, recommend, or otherwise declare advisable or propose to approve, recommend or declare advisable (publicly or otherwise) an unsolicited written acquisition proposal that the Company's board of directors reasonably believes to be credible if and only to the extent that the Company's board of directors has determined in good faith, based on the information then available and after consultation with its financial advisor and outside counsel that such acquisition proposal constitutes a superior proposal and that the failure to take such action would be inconsistent with the directors' fiduciary duties under applicable law.

A "superior proposal" is an unsolicited acquisition proposal that would result in any third party (or the stockholders of a third party) becoming the beneficial owner (or owners), directly or indirectly, of (a) more than 50% of the assets (on a consolidated basis) or (b) more than 50% of the total voting power and more than 50% of the number of outstanding shares of the Company's common stock (or of the surviving entity in a merger involving the Company or the resulting direct or indirect parent of the Company or such surviving entity) that the Company's board of directors has determined in its good faith judgment (x) would result in a transaction that, if consummated, would be more favorable to the stockholders of the Company than the merger, taking into account all of the terms and conditions of such proposal and of the merger agreement (including any proposal by Tokio Marine to amend the terms of the merger agreement) and the time likely to be required to consummate such acquisition proposal, and (y) is reasonably capable of being consummated on the terms so proposed, taking into account all financial, regulatory, legal and other aspects of such proposal, including the likelihood of termination and the existence of a financing contingency.

Changes in Company Recommendation (Page 78)

Subject to certain exceptions described below, under the merger agreement, the Company's board of directors and each committee of the Company's board of directors are not permitted to withhold, withdraw, qualify or modify (or publicly propose or resolve to withhold, withdraw, qualify or modify), in a manner adverse to Tokio Marine, its recommendation with respect to the merger, or approve, recommend or otherwise declare advisable (or publicly propose to approve or recommend) any acquisition proposal. We refer to any of the foregoing as a change in Company recommendation.

Subject to certain exceptions described below, under the merger agreement, the Company and the Company's board of directors are not permitted to cause or permit the Company or any of our subsidiaries to enter into any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement or other agreement, with the exception of confidentiality agreements on terms relating to confidentiality not less restrictive to the other party than those contained in the confidentiality agreement between Tokio Marine and the Company, relating to any acquisition proposal.

Notwithstanding the above, the Company's board of directors may, prior to the time the Company's stockholder approvals have been obtained, make a change in Company recommendation if the Company's board of directors has determined in good faith, based on the information then available and after consulting with its financial advisor and outside legal counsel, that the failure to take such action would be inconsistent with the directors' fiduciary duties under applicable law. However, the Company's board of directors may not take any such action, unless (1) if such change in Company recommendation is in connection with an acquisition proposal, such acquisition proposal constitutes a superior proposal, (2) prior to making such change in Company recommendation, the Company

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provides prior written notice to Tokio Marine at least five business days in advance, which we refer to as the change in Company recommendation notice period, of its intention to make such change in Company recommendation, which notice must specify all material terms and conditions of the superior proposal (including the identity of the party making such superior proposal) and must attach the most current version of any documents evidencing such superior proposal and any material modifications to such superior proposal, and (3) during the change in Company recommendation notice period the Company will, and will cause our financial advisor and outside counsel to, negotiate with Tokio Marine in good faith should Tokio Marine propose to make adjustments in the terms and conditions of the merger agreement to obviate the need for a change in Company recommendation (as determined in the good faith judgment of the Company's board of directors after taking into account any amendments that Tokio Marine agrees to make prior to the end of the change in Company recommendation notice period). Any material amendment to any acquisition proposal will be deemed to be a new acquisition proposal, including for purposes of the change in Company recommendation notice period.

The Company has agreed that it will promptly (and, in any event, within two business days) notify Tokio Marine if any inquiries, proposals or offers with respect to an acquisition proposal are received by, any information or data in connection with an acquisition proposal is requested from, or any discussions or negotiation in connection with an acquisition proposal are sought to be initiated or continued with, the Company or any of its representatives, indicating, in connection with such notice, among other things, the name of the person making the proposal and the material terms and conditions of any proposals or offers. Thereafter, the Company is required to keep Tokio Marine reasonably informed, on a prompt basis, of the status and terms of any such proposals or offers and the status of any such discussions or negotiations, including any change in the Company's intentions as previously notified.

Regulatory Approvals (Page 64)

Under the HSR Act, the merger may not be completed until certain information and documentary materials have been provided to the Antitrust Division of the U.S. Department of Justice, which we refer to as the Antitrust Division, and the Federal Trade Commission, which we refer to as the FTC, by Tokio Marine and HCC, and the applicable waiting period has expired or been terminated. The parties filed the required notifications with the Antitrust Division and the FTC on [    ·    ], 2015, and the parties' request for early termination of the applicable waiting period was granted on [    ·    ], 2015.

The Antitrust Division and the FTC frequently scrutinize the legality under the antitrust laws of transactions such as the merger. At any time before or after the merger, the Antitrust Division, the FTC or a state attorney general could take action under the antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the merger or seeking divestiture of substantial businesses or assets of Tokio Marine or HCC or their subsidiaries. Private parties may also bring legal actions under the antitrust laws under certain circumstances.

Completion of the merger is also subject to the adoption of a decision by the European Commission finding the merger to be compatible with the internal market and the EEA Agreement pursuant to Council Regulation (EU) No. 139/2004, which we refer to as the EUMR, or the compatibility having been deemed to exist pursuant to the EUMR. Under the EUMR, transactions meeting the prescribed turnover thresholds may not be completed until the European Commission has adopted a decision declaring the transaction compatible with the internal market and the EEA Agreement, or such compatibility is deemed to exist by the expiration of the applicable waiting period. [Upon formal filing of the required notification, the European Commission has 25 working days in which to conduct its Phase 1 review of the transaction and to either adopt a clearance decision, or to refer the transaction for an in-depth Phase 2 review.] Tokio Marine filed a case team allocation request with the European Commission on [    ·    ], 2015, and a draft notification on [    ·    ], 2015. Tokio Marine formally notified the merger to European Commission on [    ·    ], 2015. [The Phase 1 review period ends on [    ·    ],

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2015 / The Commission adopted a decision pursuant to the EUMR declaring the transaction compatible with the internal market and the EEA Agreement on [    ·    ], 2015.]

The insurance laws and regulations of the states of California, Indiana, Maryland, Nevada, Oklahoma and Texas, jurisdictions where insurance company subsidiaries of the Company are domiciled or "commercially domiciled," generally require that, prior to the acquisition of control of an insurance company domiciled or "commercially domiciled" in those respective jurisdictions, the acquiring company must obtain the approval of the insurance regulators of those jurisdictions.

The insurance laws and regulations of multiple states where insurance company subsidiaries of the Company are authorized require the filing of pre-acquisition notifications regarding potential competitive impact of an acquisition of control of an insurance company authorized in those jurisdictions in which the requirement to make such notifications is triggered (and not otherwise exempted) under applicable law. Such notifications generally must be made at least 30 days before completion of the acquisition (which period may be terminated earlier by the applicable state's insurance regulator or extended on a one time basis for up to an additional 30 days). On or about [    ·    ], 2015, Tokio Marine made such notifications with the insurance regulators of the states of Alaska, Hawaii, Illinois, New Mexico, Nevada, Pennsylvania, Rhode Island and South Dakota.

The insurance law of the state of Texas provides that a person may not acquire control of an entity licensed as an insurance agency in Texas, unless it has filed certain information with the Texas Department of Insurance and received approval for such acquisition or such acquisition has not been disapproved before the 61st day after the date the Texas Department of Insurance receives all such required information.

The insurance laws and regulations of Bermuda, a jurisdiction where an insurance company subsidiary of the Company is domiciled, generally require that, prior to the acquisition of control of an insurance company domiciled in Bermuda, the acquiring company provide notice to the Bermuda Monetary Authority. Tokio Marine provided such notice on July 1, 2015.

Following the merger, members of the Tokio Marine group will become controllers of a number of United Kingdom regulated entities within the HCC group. Under United Kingdom regulatory rules, applications for approval of the change of control must be made to (i) the United Kingdom Prudential Regulation Authority, which we refer to as the PRA, in relation to those members of the HCC group who are regulated jointly by the PRA and the United Kingdom Financial Conduct Authority, which we refer to as the FCA, (ii) the FCA, in relation to those members of the HCC group who are regulated solely by the FCA, and (iii) the Society and Corporation of Lloyd's, which we refer to as Lloyd's, in relation to those members of the HCC group which are a Lloyd's underwriting agent or corporate member of Lloyd's. The PRA and FCA have 60 working days from filing of a complete application to either (i) approve the change of control unconditionally; (ii) approve the change of control subject to conditions; or (iii) object to the change of control. If, during its review, either the PRA or FCA decides it requires further information, the 60 working day timeline can be suspended by up to 30 working days while the information is sought. In relation to Lloyd's underwriting agents, Lloyd's has 3 working days to respond to an initial application for approval of a change of control and raise any immediate issues, or exercise its right to challenge the application. Lloyd's will then undertake detailed due diligence and provide written approval once satisfied with all aspects of the transaction. [Tokio Marine and Tokio Marine & Nichido Fire Insurance Co., Ltd submitted change of control applications to the PRA, FCA and Lloyd's on [    ·    ], 2015, [    ·    ], 2015 and [    ·    ], 2015 respectively.] [On [    ·    ], 2015, [    ·    ], 2015 and [    ·    ], 2015, respectively, each of the PRA, FCA and Lloyd's provided an approval notice to Tokio Marine and Tokio Marine & Nichido Fire Insurance Co., Ltd approving the change(s) of control over which it had jurisdiction.]

In addition to the foregoing, the Company and Tokio Marine may be required to make certain other filings with governmental authorities in connection with the merger.

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The Insurance Business Act of Japan requires Tokio Marine to file prior notification with, and Tokio Marine & Nichido Fire to obtain the prior approval of, the Japan Financial Services Agency, which we refer to as the JFSA, in connection with the merger.

If any objections are asserted with respect to the transactions contemplated hereby under any applicable laws or if any suit is instituted by any governmental entity or any private party challenging any of the transactions contemplated by the merger agreement as violative of any applicable laws, each of the Company, Merger Sub and Tokio Marine will use its reasonable best efforts to resolve any such objections or challenge as such governmental entity or private party may have to such transactions under such applicable laws so as to permit consummation of the merger. However, neither Tokio Marine nor the Company is required to take any action that would result in a negative regulatory action. For purposes of the merger agreement, a negative regulatory action is defined as any limitations, conditions, restrictions or actions that, individually or in the aggregate, would or would reasonably be expected to result (a) in the case of the Company and its subsidiaries, in a "material adverse effect" (as such term is defined in the merger agreement) or (b) in the case of Tokio Marine or its subsidiaries, in a material adverse effect on the business, financial condition or results of operations of Tokio Marine and its subsidiaries (not including the Company and its subsidiaries), taken as a whole.

Litigation Related to the Merger (Page 67)

HCC is aware of two putative stockholder class actions that have been filed since announcement of the merger: Albert Ari v. Christopher J.B. Williams, et al., No. 15-11159, filed June 16, 2015, and Susan Paskowitz v. Emmanuel T. Ballases et al., No. 15-11171, filed June 18, 2015, which we refer to collectively as the Complaints. The Complaints were filed in the Court of Chancery of the State of Delaware and name as defendants HCC, Tokio Marine, Merger Sub, and each of the members of the Company's board of directors. The Complaints allege, among other things, that the Company's directors breached their fiduciary duties to the Company's public stockholders by approving the merger and failing to take steps to maximize the value of HCC. The Complaints also allege that Tokio Marine and Merger Sub aided and abetted the alleged breaches of fiduciary duties. The Complaints seek, among other things, an order enjoining the merger, compensatory damages and an award of attorneys' fees and costs.

The defendants believe that the claims asserted against them in the Complaints are without merit and intend to defend the stockholder actions vigorously.

Current Market Price of Common Stock (Page 91)

The Company's common stock is traded on the NYSE under the symbol "HCC." On [    ·    ], 2015, there were [    ·    ] registered stockholders of the Company's common stock. Below is a summary of the NYSE high and low sales prices of shares of the Company's common stock on the NYSE, as reported in published financial sources as well as the cash dividend paid per share for the periods specified below. The closing sale price of the Company's common stock on the NYSE on June 9, 2015, the last full trading day before the release of media reports regarding Tokio Marine's offer to acquire HCC for $78.00 per share, was $56.69. On [    ·    ], 2015, the closing price for the Company's common stock on

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the NYSE was $[    ·    ] per share. You are encouraged to obtain current market quotations for the Company's common stock in connection with voting your shares.

 
  Common Stock
Price
   
 
 
  Dividends
Declared
 
 
  High   Low  

2012

                   

Quarter ended March 31

  $ 31.71   $ 26.62   $ 0.155  

Quarter ended June 30

  $ 32.69   $ 29.91   $ 0.155  

Quarter ended September 30

  $ 34.46   $ 30.06   $ 0.165  

Quarter ended December 31

  $ 37.65   $ 33.74   $ 0.165  

2013

                   

Quarter ended March 31

  $ 42.11   $ 37.37   $ 0.165  

Quarter ended June 30

  $ 43.69   $ 40.81   $ 0.165  

Quarter ended September 30

  $ 46.14   $ 41.85   $ 0.225  

Quarter ended December 31

  $ 46.38   $ 42.57   $ 0.225  

2014

                   

Quarter ended March 31

  $ 46.14   $ 41.19   $ 0.225  

Quarter ended June 30

  $ 48.97   $ 44.17   $ 0.225  

Quarter ended September 30

  $ 50.76   $ 46.51   $ 0.295  

Quarter ended December 31

  $ 54.96   $ 47.11   $ 0.295  

2015

                   

Quarter ended March 31

  $ 58.41   $ 51.90   $ 0.295  

Quarter ended June 30

  $ 77.40   $ 56.10   $ 0.295  

Quarter ended September 30 (through [·], 2015)

   
 
   
 
   
 
 

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QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING

The following questions and answers address briefly some commonly asked questions you may have regarding the special meeting and the proposed merger. These questions and answers may not address all questions that may be important to you as a holder of shares of the Company's common stock. For important additional information, please refer to the more detailed discussion contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents referred to in this proxy statement.

Q:
What is the proposed transaction?

A:
The proposed transaction is the merger of Merger Sub with and into the Company, with the Company being the surviving entity. The Merger Sub is currently a wholly-owned indirect subsidiary of Tokio Marine. As a result of the merger, the Company will become a wholly-owned indirect subsidiary of Tokio Marine, the Company's common stock will cease to be listed on the NYSE, the Company will not be publicly traded and the Company's common stock will be deregistered under the Exchange Act.

Q:
When and where will the special meeting of stockholders be held?

A:
The special meeting of HCC stockholders will be held at [HCC Headquarters, 13403 Northwest Freeway, Houston, Texas 77040], on [    ·    ], at [    ·    ] [a.m./p.m.], Central Time. You should read the section entitled "The Special Meeting" beginning on page 24.

Q:
What are the proposals that will be voted on at the special meeting?

A:
You will be asked to consider and vote upon (1) the adoption of the merger agreement and approval of the merger, (2) on an advisory (non-binding) basis, the compensation that may be paid or become payable to HCC's named executive officers in connection with the merger, including the agreements and understandings pursuant to which such compensation may be paid or become payable, (3) the adjournment of the special meeting to a later date, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting and (4) such other business as may properly come before the special meeting or any adjournment or postponement thereof.

Q:
What will a HCC stockholder receive when the merger occurs?

A:
For every share of the Company's common stock held at the time of the merger, HCC stockholders will be entitled to receive $78.00 in cash, without interest, less any applicable withholding taxes. We refer to this amount in this proxy statement as the per share merger consideration. Holders of shares who perfect appraisal rights, if any, will not receive the per share merger consideration, but will instead be paid the fair value of their shares, as determined by the Delaware Court of Chancery, unless such holder subsequently withdraws or otherwise loses such holder's rights to demand for appraisal.

Q:
How do the Company's directors and executive officers intend to vote?

A:
Each of our directors and executive officers has informed us that he or she currently intends to vote all of his or her shares of the Company's common stock "FOR" the adoption of the merger agreement and approval of the merger and the other proposals to be considered at the special meeting, although none of them is obligated to do so.

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Q:
What will happen in the merger to equity-based compensation awards that have been granted to employees, officers and directors of HCC?

A:
Equity-based awards held by the Company's directors, executive officers and employees as of the effective time will be treated at the effective time as follows:
Q:
How does the per share merger consideration compare to the market price of the Company's common stock?

A:
The per share merger consideration represents approximately a 37.6% premium over $59.69, the closing price of the Company's common stock on the NYSE on June 9, 2015, the last full trading day before the release of media reports regarding the merger of Tokio Marine and HCC and approximately a 35.8% premium over the trailing one month average of the daily closing prices of the shares of the Company's common stock. The closing sale price of the Company's common stock on the NYSE on [    ·    ], 2015 was $[    ·    ]. You are encouraged to obtain current market quotations for the Company's common stock in connection with voting your shares.

Q:
Who is entitled to attend and vote at the special meeting?

A:
The record date for the special meeting is [    ·    ], 2015. If you own shares of the Company's common stock as of the close of business on the record date, you are entitled to notice of, and to vote at, the special meeting or any adjournment or postponement of the special meeting. As of the record date, there were approximately [    ·    ] shares of the Company's common stock issued and outstanding.

Q:
What vote of our stockholders is required to adopt the merger agreement and approve the merger?

A:
Under Delaware law, the adoption of the merger agreement and approval of the merger requires the affirmative vote of the holders of at least a majority of the outstanding shares of the Company's common stock.

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Q:
What vote of our stockholders is required to approve on an advisory (non-binding) basis, the compensation that may be paid or become payable to HCC's named executive officers in connection with the merger?

A:
The approval, on an advisory (non-binding) basis, of the compensation that may be paid or become payable to HCC's named executive officers in connection with the merger, including the agreements and understandings pursuant to which such compensation may be paid or become payable, as described below, requires the affirmative vote of the holders of at least a majority of the outstanding shares of the Company's common stock represented in person or by proxy at the special meeting and entitled to vote thereon. Because the vote is advisory only, if the proposal does not receive the affirmative vote of the holders of at least a majority of the outstanding shares of the Company's common stock, such a vote would not be binding on HCC or Tokio Marine.

Q:
What vote of our stockholders is required to adopt the proposal to adjourn the special meeting to a later time, if necessary or appropriate, to solicit additional proxies?

A:
The adoption of the proposal to adjourn the special meeting to a later date or time, if necessary or appropriate, to solicit additional proxies in the event there are insufficient votes at the time of the special meeting or any adjournment or postponement thereof to adopt the merger agreement and approve the merger requires the affirmative vote of the holders of at least a majority of the shares of the Company's common stock represented in person or by proxy at the special meeting and entitled to vote thereon. If less than a majority of the outstanding shares entitled to vote are represented at a meeting, a majority of the shares so represented may also adjourn the meeting under HCC's Fourth Amended and Restated Bylaws.

Q:
How does the Company's board of directors recommend that I vote on the proposals?

A:
The Company's board of directors has unanimously determined that the merger agreement and the transactions contemplated thereby, including the merger, are advisable, fair to, and in the best interests of HCC and its stockholders and unanimously recommends that you vote "FOR" the proposal to adopt the merger agreement and approve the merger and "FOR" the approval, on an advisory (non-binding) basis, of the compensation that may be paid or become payable to HCC's named executive officers in connection with the merger, including the agreements and understandings pursuant to which such compensation may be paid or become payable, as described in the section entitled "The Merger—Interests of HCC's Directors and Executive Officers in the Merger—Compensation for HCC's Named Executive Officers." You should read the section entitled "The Merger—Reasons for the Merger; Recommendation of the Company's Board of Directors" beginning on page 41. The Company's board of directors also recommends that you vote "FOR" the adjournment of the special meeting to a later date or time, if necessary or appropriate, to solicit additional proxies in the event there are insufficient votes at the time of the special meeting or any adjournment or postponement thereof to adopt the merger agreement and approve the merger.

Q:
Do any of the Company's directors and executive officers have any interests in the merger that may differ from, or be in addition to, my interests as a stockholder?

A:
Yes. In considering the recommendation of the Company's board of directors to vote "FOR" the adoption of the merger agreement and approval of the merger, you should be aware that some of the Company's directors and executive officers have interests in the merger that are different from, or in addition to, the interests of our stockholders generally. For descriptions of these interests, please see the section of this proxy statement entitled "The Merger—Interests of HCC's Directors and Executive Officers in the Merger."

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Q:
How are votes counted?

A:
Votes will be counted by the inspector of election appointed for the special meeting, who will separately count "FOR" and "AGAINST" votes and abstentions. Because under Delaware law the adoption of the merger agreement and approval of the merger requires the affirmative vote of the holders of at least a majority of the outstanding shares of the Company's common stock, the failure to vote or the abstention from voting will have the same effect as a vote "AGAINST" the adoption of the merger agreement and approval of the merger. Because the approval, on an advisory (non-binding) basis, of the compensation that may be paid or payable to HCC's named executive officers in connection with the merger and the adjournment of the special meeting to a later date or time, if necessary or appropriate, to solicit additional proxies in the event there are insufficient votes at the time of the special meeting or any adjournment or postponement thereof to adopt the merger agreement and approve the merger each requires the affirmative vote of the holders of at least a majority of the shares of the Company's common stock represented in person or by proxy at the special meeting and entitled to vote thereon, abstentions will count as a vote "AGAINST" each such proposal, but the failure to vote your shares will have no effect on the outcome of either of such proposals, unless the shares are counted as present at the special meeting.

Q:
What will happen if all of the proposals to be considered at the special meeting are not approved?

A:
As a condition to completion of the merger, the holders of at least a majority of the outstanding shares of the Company's common stock must vote to adopt the merger agreement and approve the merger. Completion of the merger is not conditioned or dependent on stockholder approval of any of the other proposals to be considered at the special meeting.

Q:
What do I need to do now?

A:
After carefully reading and considering the information contained in this proxy statement, including the annexes and the other documents referred to in this proxy statement, please ensure your shares are voted at the meeting by submitting a proxy in one of the ways described below. You have one vote for each share of the Company's common stock you own as of the record date.

Q:
How do I vote if I am a stockholder of record?

A:
You may vote by:

submitting your proxy by using the Internet voting instructions printed on each proxy card you receive;

submitting your proxy by using the telephone number printed on each proxy card you receive;

submitting your proxy by completing, signing and dating each proxy card you receive and returning it in the enclosed prepaid envelope; or

by appearing in person at the special meeting.

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Q:
How do I vote if my shares of the Company's common stock are held by my brokerage firm, bank, trust or other nominee?

A:
If your shares of the Company's common stock are held in a brokerage account or by another nominee, such as a bank or trust, then the brokerage firm, bank, trust or other nominee is considered to be the stockholder of record with respect to those shares. However, you still are considered to be the beneficial owner of those shares of the Company's common stock, with your shares being held in "street name." "Street name" holders generally cannot vote their shares directly and must instead instruct the brokerage firm, bank, trust or other nominee how to vote their shares. Your brokerage firm, bank, trust or other nominee will only be permitted to vote your shares of the Company's common stock for you at the special meeting if you instruct it how to vote. Therefore, it is important that you promptly follow the directions provided by your brokerage firm, bank, trust or other nominee regarding how to instruct them to vote your shares. Telephone and internet voting may be available; please follow the instructions on the enclosed voting instruction form. If you wish to vote in person at the special meeting, you must bring a legal proxy from your brokerage firm, bank, trust or other nominee authorizing you to vote at the special meeting. Please contact your brokerage firm, bank, trust or other nominee for instruction on how to obtain a legal proxy.
Q:
What if I fail to instruct my brokerage firm, bank, trust or other nominee how to vote?

A:
Your brokerage firm, bank, trust or other nominee will not be able to vote your shares of the Company's common stock, unless you have properly instructed your nominee on how to vote. Because the adoption of the merger agreement and approval of the merger requires an affirmative vote of the holders of at least a majority of the outstanding shares of the Company's common stock for approval, the failure to provide your nominee with voting instructions will have the same effect as a vote "AGAINST" the proposal to adopt the merger agreement and approve the merger. Because the proposals to approve, on an advisory (non-binding) basis, the compensation that may be paid or become payable to HCC's named executive officers in connection with the merger and to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies in the event there are insufficient votes at the time of the special meeting or any adjournment or postponement

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Q:
What constitutes a quorum for the special meeting?

A:
The presence, in person or by proxy, of the holders of at least a majority of the outstanding shares of the Company's common stock entitled to vote at the special meeting will constitute a quorum for the special meeting. If you are a stockholder of record and you submit a properly executed proxy card by mail, submit your proxy by telephone or via the Internet or vote in person at the special meeting, then your shares of the Company's common stock will be counted as part of the quorum. If you are a "street name" holder of shares and you provide your brokerage firm, bank, trust or other nominee with instructions as to how to vote your shares or obtain a legal proxy from such broker or nominee to vote your shares in person at the special meeting, then your shares will be counted as part of the quorum. All shares of the Company's common stock held by stockholders that are present in person or represented by proxy and entitled to vote at the special meeting, regardless of how such shares are voted or whether such stockholders abstain from voting, will be counted in determining the presence of a quorum.

Q:
What does it mean if I receive more than one proxy?

A:
If you receive more than one proxy from the Company and its representatives, it means that you hold shares of the Company's common stock that are registered in more than one account. For example, if you own your shares in various registered forms, such as jointly with your spouse, as trustee of a trust or as custodian for a minor, you will receive, and you will need to sign and return, a separate proxy card for those shares, because they are held in a different form of record ownership. Therefore, to ensure that all of your shares are voted, you will need to sign and return each proxy card you receive by mail or submit your proxy by telephone or via the Internet by using the different control number(s) on each proxy card.

Q:
May I change my vote after I have delivered my proxy?

A:
Yes. If you are the stockholder of record of the Company's common stock, you have the right to change or revoke your proxy at any time prior to it being voted at the special meeting:

if you submitted your proxy by telephone or the Internet, by submitting another proxy by telephone or the Internet in accordance with the instructions on the proxy card;

by delivering to HCC's Secretary, a signed written notice of revocation bearing a date later than the date of the proxy, stating that the proxy is revoked;

by submitting a later-dated proxy card relating to the same shares of the Company's common stock; or

by attending the special meeting and voting in person (your attendance at the meeting will not, by itself, revoke your proxy; you must vote in person at the meeting).

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HCC Insurance Holdings, Inc.
13403 Northwest Freeway
Houston, Texas 77040-6094
Attn: Secretary

Q:
Should I send in my stock certificates now?

A:
No. After the merger is completed, you will be sent a letter of transmittal with detailed written instructions for exchanging your stock certificates or book-entry shares for the per share merger consideration. If your shares of the Company's common stock are held in "street name" by your brokerage firm, bank, trust or other nominee, you will receive instructions from your brokerage firm, bank, trust or other nominee as to how to effect the surrender of your "street name" shares in exchange for the merger consideration. PLEASE DO NOT SEND IN YOUR CERTIFICATES NOW.

Q:
What happens if I sell my shares of the Company's common stock before the special meeting?

A:
The record date for stockholders entitled to vote at the special meeting is earlier than the date of the special meeting and the expected closing date of the merger. If you transfer your shares of the Company's common stock after the record date but before the special meeting, you will, unless special arrangements are made, retain your right to vote at the special meeting but will transfer the right to receive the merger consideration to the person to whom you transfer your shares. In addition, if you sell your shares prior to the special meeting or prior to the effective time, you will not be eligible to exercise your appraisal rights in respect of such shares. For a more detailed discussion of your appraisal rights and the requirements for perfecting your appraisal rights, see "Appraisal Rights" on page 87 and Annex C.

Q:
Will I still be paid dividends prior to the merger?

A:
We have historically paid quarterly dividends to our stockholders. In accordance with the merger agreement, we may pay regular quarterly cash dividends with respect to shares of the Company's common stock not in excess of $0.295 per share, with the timing of declaration, record and payment dates thereof consistent with past practice. While the declaration and payment of dividends, including the amount and frequency of dividends, are at the discretion of the Company's board of directors and depend upon many factors, including the Company's consolidated financial position, liquidity requirements, operating results and such other factors as the Company's board of directors may deem relevant, we currently expect to continue to declare and pay quarterly dividends of $0.295 per share in accordance with past practice.

Q:
Am I entitled to appraisal rights in connection with the merger?

A:
Stockholders are entitled to appraisal rights under Section 262 of the DGCL, provided they follow the procedures precisely and satisfy the conditions set forth in Section 262 of the DGCL. For more information regarding appraisal rights, see "Appraisal Rights" on page 87. In addition, a copy of Section 262 of the DGCL is attached as Annex C to this proxy statement. Failure to strictly comply with Section 262 of the DGCL may result in your waiver of, or inability to, exercise appraisal rights.

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Q:
Is the merger expected to be taxable to me?

A:
In general, the receipt of cash in exchange for shares of the Company's common stock pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes and may also be a taxable transaction under applicable state, local or foreign income or other tax laws. Please see the section of this proxy statement entitled "The Merger—Material U.S. Federal Income Tax Consequences of the Merger" beginning on page 62. You should consult your own tax advisors about the tax consequences to you of the exchange of shares of the Company's common stock for cash pursuant to the merger in light of your particular circumstances.

Q:
Who can answer further questions?

A:
For additional questions about the merger, assistance in submitting proxies or voting shares of the Company's common stock, or additional copies of the proxy statement or the enclosed proxy card, please contact our proxy solicitor:

D.F. King & Co., Inc.
48 Wall Street
New York, NY 10005
hcc@dfking.com
Toll-Free: (877) 478-5041
All Others: (212) 269-5550

If your brokerage firm, bank, trust or other nominee holds your shares in "street name," you should also call your brokerage firm, bank, trust or other nominee for additional information.

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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION

This proxy statement, and the documents to which we refer you in this proxy statement, includes forward-looking statements based on the Company's current expectations. Actual results and events in future periods may differ materially from those expressed or implied by these forward-looking statements because of a number of risks, uncertainties and other factors. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. Risks, uncertainties and assumptions include, but are not limited to: (1) the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement; (2) the inability to complete the proposed merger due to the failure to obtain stockholder approval for the proposed merger or the failure to satisfy other conditions to completion of the proposed merger, including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the transaction; (3) the failure of Tokio Marine to obtain the necessary financing arrangements to consummate the transaction; (4) risks related to disruption of management's attention from the Company's ongoing business operations due to the transaction; (5) the effect of the announcement of the proposed merger on the Company's relationships with its distributors, operating results and business generally; and (6) the outcome of any legal proceedings that have been or may be instituted against the Company and others relating to the merger agreement.

Actual results may differ materially from those indicated by such forward-looking statements. In addition, the forward-looking statements represent the Company's views as of the date on which such statements were made. The Company anticipates that subsequent events and developments will cause its views to change. However, although the Company may elect to update these forward-looking statements at some point in the future, it specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing the Company's views as of any date subsequent to the date hereof. Additional factors that may cause results to differ materially from those described in the forward-looking statements are set forth in the Company's SEC filings, including its Annual Report on Form 10-K for the year ended December 31, 2014, which was filed with the SEC on February 27, 2015 and its Quarterly Reports on Form 10-Q, which were filed with the SEC on May 5, 2015 and [    ·    ], 2015, in each case under the heading "Item 1A—Risk Factors and Cautionary Factors that May Affect Future Results."

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THE SPECIAL MEETING

Date, Time, Place and Purpose of the Special Meeting

This proxy statement is being furnished to HCC stockholders as part of the solicitation of proxies by the Company's board of directors for use at the special meeting to be held at [HCC Headquarters, 13403 Northwest Freeway, Houston, Texas 77040], on [    ·    ], at [    ·    ] [a.m./p.m.], Central Time or at any postponement or adjournment thereof. The purpose of the special meeting is for HCC stockholders to consider and vote upon: the adoption of the merger agreement and approval of the merger; on an advisory (non-binding) basis, the compensation that may be paid or become payable to HCC's named executive officers in connection with the merger, including the agreements and understandings pursuant to which such compensation may be paid or become payable, as described below; the adjournment of the special meeting to a later date or time, if necessary or appropriate, to solicit additional proxies in the event there are insufficient votes at the time of the special meeting or any adjournment or postponement thereof to adopt the merger agreement and approve the merger; and such other business as may properly come before the special meeting, or any adjournment or postponement of the special meeting. HCC stockholders must adopt the merger agreement and approve the merger in order for the merger to occur. If HCC stockholders fail to adopt the merger agreement and approve the merger, the merger will not occur. A copy of the merger agreement is attached to this proxy statement as Annex A. You are urged to read the merger agreement in its entirety.

Record Date and Quorum

We have fixed the close of business on [    ·    ], 2015 as the record date for the special meeting, and only holders of record of the Company's common stock on the record date are entitled to vote at the special meeting. As of the record date, there were [    ·    ] shares of the Company's common stock outstanding and entitled to vote. Once a share of the Company's common stock is represented at the special meeting, it will be counted for purposes of determining a quorum at the special meeting. However, if a new record date is set for an adjourned or postponed special meeting, then a new quorum will have to be established. Proxies received but marked as abstentions will be included in the calculation of the number of shares considered to be present at the special meeting.

Each share of the Company's common stock entitles its holder to one vote on all matters properly coming before the special meeting.

A majority of the shares of the Company's common stock issued, outstanding and entitled to vote present in person or represented by proxy at the special meeting constitutes a quorum for the purpose of considering the proposals. Shares of the Company's common stock represented at the special meeting but not voted, including shares of the Company's common stock for which proxies have been received but for which stockholders have abstained from voting, will be treated as present at the special meeting for purposes of determining the presence or absence of a quorum for the transaction of all business.

Required Votes

Vote for Approval of the Merger

You may vote FOR or AGAINST, or you may ABSTAIN from voting on, the proposal to adopt the merger agreement and approve the merger. Consummation of the merger requires the adoption of the merger agreement and approval of the merger by the affirmative vote of the holders of at least a majority of the outstanding shares of the Company's common stock entitled to vote at the special meeting. Therefore, if you abstain or fail to vote, it will have the same effect as a vote "AGAINST" the adoption of the merger agreement and approval of the merger.

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Advisory (Non-Binding) Vote on Compensation

In accordance with Section 14A of the Exchange Act, HCC is required to provide its stockholders with the opportunity to cast an advisory (non-binding) vote to approve certain compensation to HCC's named executive officers that may be paid or become payable in connection with the merger. This compensation is summarized in the Golden Parachute Compensation Table under "The Merger—Interests of HCC's Directors and Executive Officers in the Merger," including the footnotes to that table and the related narrative disclosure. As required by Section 14A of the Exchange Act, HCC is asking its stockholders to vote on the adoption of the following resolution:

The vote on executive compensation payable in connection with the merger is a vote separate and apart from the vote to adopt the merger agreement and approve the merger. Accordingly, you may vote to adopt the merger agreement and approve the merger and vote not to approve the executive compensation and vice versa. Because the vote on executive compensation paid or that may become payable in connection with the merger is advisory only, it will not be binding on HCC or Tokio Marine. Accordingly, because HCC is contractually obligated to pay the compensation, if the merger agreement is adopted and the merger is completed, the compensation will be payable, subject only to the conditions applicable thereto, regardless of the outcome of the advisory vote.

The affirmative vote of the holders of at least a majority of the shares of the Company's common stock present in person or by proxy and entitled to vote on the matter will be required to approve the advisory resolution on executive compensation payable to HCC's named executive officers in connection with the merger. Therefore, if you abstain, it will have the same effect as a vote "AGAINST" the adoption of the proposal and, if you fail to vote, it will have no effect on the outcome of the proposal, unless the shares are counted as present at the special meeting.

Vote for Approval of an Adjournment of the Special Meeting

The Company's stockholders are being asked to approve a proposal that will give us authority to adjourn the special meeting, if necessary or appropriate, for the purpose of soliciting additional proxies in favor of the proposal to adopt the merger agreement and approve the merger, if there are not sufficient votes at the time of the special meeting to adopt the merger agreement and approve the merger. If this adjournment proposal is approved, the special meeting could be adjourned by the Company's board of directors to any date. In addition, the Company's board of directors can postpone the special meeting before it commences, whether for the purpose of soliciting additional proxies or for other reasons. The Company does not intend to call a vote on this proposal if the proposal to adopt the merger agreement and approve the merger is approved at the special meeting.

The vote on the adjournment proposal is a vote separate and apart from the vote on the proposal to adopt the merger agreement and approve the merger. Accordingly, you may vote to approve the proposal to adopt the merger agreement and approve the merger and vote not to approve the adjournment proposal and vice versa.

The affirmative vote of the holders of at least a majority of the shares of the Company's common stock present in person or by proxy and entitled to vote on the matter will be required to approve the proposal to adjourn the special meeting. Therefore, if you abstain, it will have the same effect as a vote "AGAINST" the adoption of the proposal to adjourn the special meeting and, if you fail to vote, it will

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have no effect on the outcome of the proposal, unless the shares are counted as present at the special meeting.

Voting by HCC's Directors and Executive Officers

As of [    ·    ], 2015, the directors and executive officers of HCC beneficially owned in the aggregate [    ·    ] shares of the Company's common stock entitled to vote at the special meeting or approximately [    ·    ]% of the outstanding shares of the Company's common stock. We currently expect that each of these individuals will vote all of his or her shares of the Company's common stock in favor of each of the proposals to be presented at the special meeting, although none of them is obligated to do so.

Voting, Proxies and Revocation

Invitation to Special Meeting

All holders of shares of the Company's common stock as of the close of business on the record date, including stockholders of record and beneficial owners of the Company's common stock registered in the "street name" of a bank, broker or other nominee, are invited to attend the special meeting. If you are a stockholder of record, please be prepared to provide proper identification, such as a driver's license. If you hold your shares in "street name," you will need to provide proof of ownership, such as a recent account statement or voting instruction form provided by your bank, broker or other nominee or other similar evidence of ownership, along with proper identification.

Voting in Person

Stockholders of record will be able to vote in person at the special meeting. If you are not a stockholder of record, but instead hold your shares of the Company's common stock in "street name" through a bank, broker or other nominee, you must provide a proxy executed in your favor from your bank, broker or other nominee in order to be able to vote in person at the special meeting.

Providing Voting Instructions by Proxy

To ensure that your shares of the Company's common stock are voted at the special meeting, we recommend that you provide voting instructions promptly by proxy, even if you plan to attend the special meeting in person.

Proxy Vote by Stockholders of Record

If you are a stockholder of record of your shares of the Company's common stock and you submit a proxy by telephone or the Internet or by returning a signed and dated proxy card by mail that is received by HCC at any time prior to the closing of the polls at the special meeting, your shares will be voted at the special meeting as you indicate. If you sign your proxy card without an indication as to how the shares of the Company's common stock represented thereby are to be voted with regard to a particular proposal, the shares of the Company's common stock represented by the proxy will be voted in accordance with the recommendation of the Company's board of directors, which, as of the date of this proxy statement, are "FOR" the adoption of the merger agreement and approval of the merger, "FOR" the approval, on an advisory (non-binding) basis, of the compensation that may be paid or become payable to the Company's named executive officers in connection with the merger and "FOR" the adjournment of the special meeting to a later date or time, if necessary or appropriate, to solicit additional proxies in the event there are insufficient votes at the time of the special meeting or any adjournment or postponement thereof to adopt the merger agreement and approve the merger.

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Vote of Shares of the Company's Common Stock Held in "Street Name"

If your shares of the Company's common stock are held in "street name," you will receive instructions from your brokerage firm, bank, trust or other nominee that you must follow in order to have your shares of the Company's common stock voted. If you have not received such voting instructions or require further information regarding such voting instructions, contact your broker. Brokers who hold shares of the Company's common stock in "street name" for a beneficial owner of those shares typically have the authority to vote in their discretion on "routine" proposals when they have not received instructions from beneficial owners. However, brokers are not allowed to exercise their voting discretion with respect to the approval of matters that are "non-routine," such as adoption of the merger agreement and approval of the merger, without specific instructions from the beneficial owner. If the broker or nominee cannot vote on the proposal because it is non-routine, there is a "broker non-vote" on that proposal. Broker non-votes will not be counted for quorum purposes, because all of the matters being considered at the meeting are "non-routine." Broker non-votes would count as votes "AGAINST" the proposal to adopt the merger agreement and approve the merger. Broker non-votes would not be counted as votes for or against the proposal to approve, on an advisory (non-binding) basis, the compensation that may be paid or become payable to HCC's named executive officers in connection with the merger or (unless the related shares are otherwise counted as present at the special meeting) the adjournment of the special meeting to a later date or time, if necessary or appropriate, to solicit additional proxies in the event there are insufficient votes at the time of the special meeting or any adjournment or postponement thereof to adopt the merger agreement and approve the merger. If your broker or other nominee holds your shares of the Company's common stock in "street name," your broker or other nominee will vote your shares only if you provide instructions on how to vote by filling out the voter instruction form sent to you by your broker with this proxy statement.

Deadline to Vote by Proxy

Proxies received by HCC at any time prior to the closing of the polls at the special meeting, in the case of proxies submitted by using proxy cards, or 11:59 p.m., Eastern Time, on [    ·    ], 2015, in the case of proxies submitted by telephone or Internet, that have not been revoked or superseded before being voted, will be voted at the special meeting.

Revocation of Proxy

If you are a stockholder of record of your shares of the Company's common stock, you have the right to change or revoke your proxy at any time before the vote taken at the special meeting:

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Written notices of revocation and other communications with respect to the revocation of any proxies should be addressed to:

HCC Insurance Holdings, Inc.
13403 Northwest Freeway
Houston, Texas 77040-6094
Attn: Secretary

If you are a "street name" holder of the Company's common stock, you may change your vote by submitting new voting instructions to your brokerage firm, bank, trust or other nominee. You must contact your brokerage firm, bank, trust or other nominee to obtain instructions as to how to change or revoke your proxy.

Abstentions

An abstention occurs when a stockholder attends a meeting, either in person or by proxy, but abstains from voting. Abstentions will be included in the calculation of the number of shares of the Company's common stock represented at the special meeting for purposes of determining whether a quorum has been achieved. Abstaining from voting will have the same effect as a vote "AGAINST" the adoption of the merger agreement and approval of the merger, a vote "AGAINST" the approval, on an advisory (non-binding) basis, of the compensation that may be paid or become payable to HCC's named executive officers in connection with the merger and a vote "AGAINST" the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies, and in accordance with the recommendations of the Company's board of directors on any other matters properly brought for a vote before the special meeting, or at any adjournment or postponement thereof to adopt the merger agreement and approve the merger.

Adjournments and Postponements

Although it is not currently expected, the special meeting may be adjourned or postponed for the purpose of soliciting additional proxies. In the event that there is present, in person or by proxy, sufficient favorable voting power to secure the vote of the stockholders of the Company necessary to approve the proposal to adopt the merger agreement and approve the merger, the Company does not anticipate that it will adjourn or postpone the special meeting, unless it is advised by counsel that such adjournment or postponement is necessary under applicable law to allow additional time for any disclosure.

The special meeting may be adjourned by a resolution of the Company's board of directors or by the affirmative vote of the holders of at least a majority of the shares of the Company's common stock present in person or represented by proxy at the special meeting and entitled to vote at the special meeting. Any signed proxies received by the Company in which no voting instructions are provided on such matter will be voted in favor of an adjournment in these circumstances.

Any adjournment or postponement of the special meeting for the purpose of soliciting additional proxies will allow the Company's stockholders who have already sent in their proxies to revoke them at any time prior to their use at the special meeting as adjourned or postponed.

Solicitation of Proxies

This solicitation of proxies is being made by HCC and the cost of this solicitation is being borne by HCC. We have retained D.F. King & Co., Inc., which we refer to as D.F. King, a professional proxy solicitation firm, to assist in the solicitation of proxies for the special meeting for a fee of approximately $15,000, plus reimbursement of reasonable out-of-pocket expenses. D.F. King's employees and our directors, officers and employees may solicit the return of proxies by personal

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contact, mail, electronic mail, facsimile, telephone, the Internet or other means of communication. D.F. King expects that approximately [    ·    ] of its employees will assist in the solicitation. We may also issue press releases asking for your vote or post letters or notices to you on our website, www.HCC.com. Our directors, officers and employees will not be paid additional remuneration for their efforts. We will also request brokers and other fiduciaries to forward proxy solicitation material to the beneficial owners of shares of the Company's common stock that the brokers and fiduciaries hold of record. Upon request, we will reimburse them for their reasonable out-of-pocket expenses.

Questions and Additional Information

If you have questions about the merger or how to submit your proxy, or if you need additional copies of this proxy statement or the enclosed proxy card or voting instructions, please call our proxy solicitor, D.F. King & Co., Inc., toll-free at (877) 478-5041, all others at (212) 269-5550 or via email at hcc@dfking.com.

List of Stockholders

A list of our stockholders entitled to vote at the special meeting will be available for inspection for any purpose germane to the meeting at our principal executive offices at least ten days prior to the date of the special meeting and continuing through the special meeting. The list will also be available at the meeting for inspection by any stockholder present at the meeting.

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THE COMPANIES

HCC Insurance Holdings, Inc.

HCC is a leading specialty insurer with offices in the United States, the United Kingdom, Spain and Ireland. HCC's principal offices are located at 13403 Northwest Freeway, Houston, TX 77040, and its telephone number is (713) 690-7300. HCC's home page on the Internet is www.hcc.com. The information provided on HCC's website is not part of this proxy statement and is not incorporated herein by reference.

Tokio Marine Holdings, Inc.

Tokio Marine, the ultimate holding company of the Tokio Marine Group, is incorporated in Japan and is listed on the Tokyo Stock Exchange. With a presence in approximately 40 countries, Tokio Marine Group ranks as one of the world's most globally diversified and financially secure insurance groups. The Tokio Marine Group has over Yen 20.8 trillion ($173 billion) in total assets, Yen 4.3 trillion ($36 billion) of total revenues (as at the end of March 2015) and approximately 40,000 employees. Tokio Marine Group's main operating subsidiary, Tokio Marine & Nichido Fire, was founded in 1879 and is the oldest and largest property and casualty insurer in Japan. Tokio Marine & Nichido Fire conducts business in the United States through its U.S. subsidiaries.

TMGC Investment (Delaware) Inc.

Merger Sub is a Delaware corporation that was formed solely for the purpose of entering into the merger agreement and consummating the transactions contemplated by the merger agreement. It is an indirect wholly-owned subsidiary of Tokio Marine. It has not conducted any activities to date other than activities incidental to its formation and in connection with the transactions contemplated by the merger agreement. We refer to Merger Sub together with Tokio Marine as the Tokio Marine Parties.

The Company's insurance company subsidiaries are parties to reinsurance agreements with affiliates of Tokio Marine and other reinsurers. These reinsurance agreements with affiliates of Tokio Marine were entered into in the ordinary course of business of the Company's insurance company subsidiaries and are on arm's-length terms.

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THE MERGER

Background of the Merger

Set forth below is a description of the material aspects of the background and history behind the merger. This description may not contain all of the information that is important to you. The Company encourages you to read carefully the entire proxy statement, including the merger agreement attached as Annex A, for a more complete understanding of the merger.

The Company's board of directors and senior management regularly review and evaluate the Company's long-term strategic plans and competitive positioning in the marketplace with the goal of maximizing stockholder value. As part of the Company's regular, ongoing process of reviewing its long term strategic plans, the Company's board of directors and senior management of the Company from time to time consider a variety of strategic opportunities that might be available to the Company, including possible acquisitions, divestitures and business combination transactions.

In late June, 2014, Christopher J.B. Williams, the Company's chief executive officer, received an unsolicited phone call from an executive officer of a large insurance company, which we refer to as Party A, regarding Party A's interest in meeting with Mr. Williams to discuss their respective businesses.

On July 10, 2014, Mr. Williams and the executive officer of Party A met for dinner in New York City. At that meeting, Mr. Williams and the executive officer of Party A discussed various topics, including the state of the financial and insurance markets and challenges and opportunities facing their respective businesses. The executive officer of Party A expressed to Mr. Williams an interest in the possibility of the two companies engaging in a strategic transaction. The executive officer of Party A did not make any proposal for the Company or indicate that a proposal for the Company would be forthcoming. After the dinner, Mr. Williams informed Robert A. Rosholt, the chairman of the Company's board of directors, about the discussions with the executive officer of Party A.

On August 1, 2014, Mr. Williams had a telephone conversation with the chief executive officer of a company that operates in the insurance industry, which we refer to as the Acquisition Target, during which Mr. Williams expressed an interest in exploring the possibility that the Company enter into a business combination transaction with the Acquisition Target.

On August 18, 2014, a regular quarterly meeting of the Company's board of directors was held at which representatives of Goldman Sachs made presentations to the Company's board of directors regarding the Company. In addition, representatives of the Company's financial advisers discussed with the Company's board of directors, among other things, the property and casualty insurance industry in general and the environment for mergers and acquisitions in that industry. At that meeting, Mr. Williams updated the other directors on his conversation and meeting with the executive officer of Party A and his conversations with the chief executive officer of the Acquisition Target and one other potential acquisition target with which the Company might consider entering into a business combination transaction. The Company's board of directors also generally discussed potential acquirers of the Company and relevant financial considerations in connection with any potential sale of the Company. The Company's board of directors then considered and discussed with the financial advisers a potential stock-for-stock business combination transaction with the Acquisition Target.

On August 20, 2014, a meeting of the Company's board of directors was held at which the Company's board of directors continued to discuss a potential business combination transaction with the Acquisition Target. The Company's board of directors authorized the Company's management to continue discussions with representatives of the Acquisition Target and report back to the Company's board of directors on the results of such discussions.

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Between August 20, 2014 and September 23, 2014, the Company's management engaged with representatives of the Acquisition Target to discuss the parameters of a potential business combination transaction between the Company and the Acquisition Target.

On September 8, 2014, Mr. Williams and the executive officer of Party A had a follow-up discussion regarding their respective businesses. Mr. Williams relayed to the executive officer of Party A that the Company's board of directors had made no determination that the Company was for sale and that the Company's board of directors was confident in the Company's long-term strategic plan. Mr. Williams further relayed that, if the Company were to entertain any strategic alternatives, the strategic alternative would have to involve a highly compelling premium price for the shares of the Company. At the end of the discussion, the executive officer of Party A expressed a desire to continue discussions with Mr. Williams. The executive officer of Party A did not make any proposal for the Company or indicate that a proposal for the Company would be forthcoming.

On September 23, 2014, a special meeting of the Company's board of directors was held to consider, among other things, a potential business combination transaction with the Acquisition Target. At that meeting, representatives of the Company's financial advisers reviewed with the Company's board of directors their financial analyses of the Company, the Acquisition Target and key metrics regarding the proposed merger consideration in a potential business combination transaction involving the Company and the Acquisition Target as well as certain pro forma metrics of such a combination. Representatives of Willkie Farr & Gallagher LLP, which we refer to as Willkie Farr, the Company's legal adviser, reviewed with the directors their fiduciary duties under applicable law and key legislative considerations relating to the proposed transaction with the Acquisition Target. The Company's board of directors discussed and considered the strategic rationale behind the proposed business combination transaction with the Acquisition Target and very recent legislative developments relating to such potential transaction. After such discussion and consideration, the Company's board of directors determined to defer pursuit of a business combination transaction with the Acquisition Target.

Also at that meeting, Mr. Williams reported on the follow-up discussion he had on September 8, 2014, with the executive officer of Party A and that no further discussions had been scheduled with representatives of Party A. The Company's board of directors authorized Mr. Williams to continue discussions with representatives of Party A and report back to the Company's board of directors regarding the results of such discussions.

On September 30, 2014, Mr. Williams and Brad T. Irick, the chief financial officer of the Company, met for dinner in New York City with the executive officer of Party A. At that meeting, Messrs. Williams and Irick continued discussions with the executive officer of Party A regarding their respective businesses. At the end of the meeting, the executive officer of Party A expressed a desire to continue discussions with Mr. Williams. The executive officer of Party A did not make any proposal for the Company or indicate that a proposal for the Company would be forthcoming.

On November 12, 2014, a regular quarterly meeting of the Company's board of the directors was held. At that meeting, Mr. Williams updated the Company's board of directors regarding the meeting on September 30, 2014 with the executive officer of Party A. The Company's board of directors authorized Mr. Williams to continue discussions with representatives of Party A.

On December 17, 2014, Mr. Williams and the executive officer of Party A met for dinner in New York City to continue discussions regarding their respective businesses generally, factors affecting the property and casualty insurance industry, the potential for Party A to enter into a strategic transaction involving the Company and that such a proposal might be made at a price reflecting a valuation in the range of 2.0x the Company's tangible book value. Mr. Williams relayed to the executive officer of Party A that the Company's board of directors had made no determination that the Company was for sale. At the end of the meeting, the executive officer of Party A expressed a desire to continue discussions

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with Mr. Williams and suggested that Mr. Williams have further discussions at Party A's headquarters with the executive officer and the chairman of the board and chief executive officer of Party A.

In January of 2015, Messrs. Rosholt and Williams discussed with representatives of Goldman Sachs the benefit, if opportunities presented themselves, of having informal discussions with other companies that had large market capitalizations and operated in the insurance industry to learn about such companies' businesses and strategic objectives, and understand whether they might be complementary to the Company's businesses. Later that month, at the direction of Messrs. Rosholt and Williams, representatives of Goldman Sachs approached a few companies that operate in the insurance industry in Japan to inquire whether any of them would be interested in having an introductory meeting with Mr. Williams in Asia in early February. Representatives of Tokio Marine indicated that they would be interested in such a meeting.

On February 3, 2015, Mr. Williams had an introductory meeting in Tokyo with Kunihiko Fujii, the senior managing director of Tokio Marine, and Kenji Okada, a general manager of Tokio Marine. Representatives of Goldman Sachs were also present at that meeting. At that meeting, Messrs. Williams and Fujii discussed, in general terms, aspects of the two companies' respective businesses. Representatives of Tokio Marine expressed a desire to continue discussions with Mr. Williams, but did not make any proposal for the Company or indicate that a proposal for the Company would be forthcoming.

On February 19, 2015, Mr. Williams travelled to Party A's headquarters to meet and continue discussions with both the executive officer and the chairman of the board and chief executive officer of Party A regarding their respective businesses. At the end of the meeting, the representatives of Party A orally expressed an interest in making a proposal to acquire the Company and suggested that such a proposal might be made at a price reflecting a valuation in the range of 2.0x the Company's tangible book value. Mr. Williams relayed to the executive officer and the chairman of the board and chief executive officer of Party A that the Company's board of directors had made no determination that the Company was for sale and advised them that he would report to the Company's board of directors regarding his meeting with them and their oral indication of interest.

On February 27, 2015, Mr. Williams met with two executive officers of another large insurance company, which we refer to as Party B, to discuss the Company and its business generally. Representatives of Goldman Sachs were also present at that meeting. At that meeting, Mr. Williams and the executive officers of Party B discussed their respective businesses and factors affecting the property and casualty insurance industry. Party B did not express an interest in continuing discussions with the Company and no further meetings were held with Party B.

During this period, Mr. Williams regularly updated Mr. Rosholt regarding the discussions and meetings with Party A, Party B and Tokio Marine.

On March 5, 2015, a regular quarterly meeting of the Company's board of directors was held. At that meeting, Mr. Rosholt updated the other directors regarding discussions with Party A relating to the Company and its business and that Party A had orally expressed an interest in making a proposal to acquire the Company. Mr. Rosholt noted that, other than Party A indicating that a potential proposal could be made at a price reflecting a valuation in the range of 2.0x the Company's tangible book value, the discussion did not include price negotiations or discussions of any specific terms of any potential transaction. Mr. Williams then provided the other directors with an update regarding his conversations with Party A, Party B and Tokio Marine. He also noted that, while no party had made a formal proposal to acquire the Company, it was possible that one or both of Party A and Tokio Marine would make one. Representatives of Goldman Sachs made a presentation to the Company's board of directors regarding the Company, and reviewed with the Company's board of directors the property and casualty insurance industry in general and current mergers and acquisitions activity in that industry. Representatives of Willkie Farr made a presentation to the Company's board of directors regarding the

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directors' fiduciary duties under applicable law when considering any proposal relating to a sale of the Company. The Company's board of directors authorized the Company's senior management to continue discussions with representatives of Tokio Marine and Party A.

On March 8, 2015, Messrs. Williams and Irick, along with William N. Burke, the president and chief operating officer of the Company, met in London with Tsuyoshi Nagano, the president of Tokio Marine, and Mr. Fujii, as well as Ian Brimecome, a senior managing executive officer of Tokio Marine, and Su Fen Lim, the senior vice president of global strategy of Tokio Marine, to continue discussions regarding the Company. Representatives of Goldman Sachs were also present at that meeting. Representatives of Tokio Marine did not make any proposal for the Company or indicate that a proposal for the Company would be forthcoming.

On March 18, 2015, Mr. Williams met for dinner with the executive officer of Party A in New York City to continue their discussions. At that meeting, Mr. Williams and the executive officer of Party A discussed, among other things, their respective businesses generally, factors affecting the property and casualty insurance industry, the potential for Party A to enter into a strategic transaction involving the Company and that such a proposal might be made at a price reflecting a valuation in the range of 2.0x the Company's tangible book value. Mr. Williams relayed to the executive officer of Party A that the Company's board of directors had made no determination that the Company was for sale.

On March 23, 2015, representatives of Goldman Sachs met with representatives of Tokio Marine in Tokyo to discuss the status of the discussions with the Company and Tokio Marine's interest in continuing discussions regarding the Company. Representatives of Tokio Marine emphasized that Tokio Marine's board of directors had not made any determination regarding whether Tokio Marine would make a proposal for the Company but indicated that, in order for Tokio Marine's board of directors to make such a determination, representatives of Tokio Marine would first need to have further meetings with representatives of the Company.

On March 30, 2015, a special meeting of the Company's board of directors was held. At that meeting, Mr. Williams updated the Company's board of directors regarding his recent meetings with Party A and Tokio Marine. He indicated that a follow-up meeting was scheduled with Party A for April 7, 2015 and that conversations with Tokio Marine would also continue.

On April 7, 2015, Messrs. Williams and Burke met the executive officer of Party A for dinner in New York City to continue their discussions regarding the respective businesses of the Company and Party A.

On April 9, 2015, Messrs. Williams, Burke and Irick met for dinner in New York City with Messrs. Fujii, Brimecome and Okada to continue their discussions regarding the respective businesses of the Company and Tokio Marine.

On April 10, 2015, Messrs. Williams, Burke and Irick met with Messrs. Fujii, Brimecome and Okada at the offices of Goldman Sachs in New York City to continue their general discussions regarding their respective companies. At that meeting, the representatives of Tokio Marine informed the representatives of the Company that Tokio Marine was considering whether to make an all-cash proposal to acquire the Company, and that such a proposal might be forthcoming on or around May 8, 2015. The parties did not discuss pricing or other specific terms of any potential transaction, but Mr. Williams relayed to the representatives of Tokio Marine that the Company's board of directors had made no determination that the Company was for sale and that any proposal to acquire the Company would likely need to involve a highly compelling premium price for the shares of the Company in order for the Company's board of directors to entertain it. The parties further discussed an overview of timing, structure, business considerations and potential synergies that would be relevant to an acquisition of the Company.

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On April 13, 2015, a special telephonic meeting of the investment and finance committee of the Company's board of directors was held. At that meeting, Mr. Williams updated the committee on the developments with Party A and Tokio Marine. Mr. Williams reported on the discussions and dinner meeting with the executive officer of Party A and noted that Party A had not made any specific proposal with respect to a potential strategic transaction involving the Company, but continued to express an interest in engaging in such a transaction. Mr. Williams also reported on the dinner meeting with Tokio Marine on April 9, 2015 and the meeting with Tokio Marine at the offices of Goldman Sachs on April 10, 2015, including the potential receipt of a proposal from Tokio Marine on or around May 8, 2015. Mr. Williams suggested that a special meeting of the Company's board of directors be scheduled for May 11, 2015 to discuss any proposal that might be received from Tokio Marine.

On April 29, 2015, in furtherance of the matters discussed at the April 10, 2015 meeting, at the request of the Company, representatives of Goldman Sachs sent to representatives of Tokio Marine and Tokio Marine's financial advisers, Credit Suisse Group AG, which we refer to as Credit Suisse, and Evercore Group, L.L.C., which we refer to as Evercore, information derived from publicly available financial reports intended to help demonstrate to Tokio Marine the estimated financial benefits to Tokio Marine that might result from an acquisition of the Company by Tokio Marine, and representatives of Goldman Sachs and Credit Suisse subsequently discussed such information.

On May 1, 2015, Mr. Fujii called Mr. Williams to inform him that a proposal to acquire the Company might be forthcoming on or around May 4, 2015.

On May 2, 2015, representatives of Goldman Sachs had a telephone call with representatives of Credit Suisse to continue their discussions regarding the estimated financial benefits to Tokio Marine that might result from an acquisition of the Company by Tokio Marine.

On May 4, 2015, Mr. Williams received a letter from Mr. Fujii setting forth a non-binding indication of interest by Tokio Marine to acquire, through a merger transaction, all of the outstanding shares of the Company for $76.00 per share in cash, with limited conditionality. The $76.00 per share in cash proposal represented a 33% premium relative to the closing price of the Company's shares on May 1, 2015, the last trading day before the date of the letter. The letter recited assumptions on which such indication of interest was based and additional terms of Tokio Marine's proposal, including that: (i) the Company would pay only a regular dividend in the second quarter of 2015 of $0.295 per share, and that no further dividends would be paid prior to the closing of the merger; (ii) the proposal would expire on May 18, 2015; and (iii) Tokio Marine was willing to work expeditiously toward executing a definitive agreement, but only if the Company entered into a non-disclosure agreement and an exclusivity agreement providing, among other things, for a 30-day exclusivity period during which the Company would be prohibited from discussing alternative potential transactions with, or soliciting acquisition proposals from, third parties. In the letter, Tokio Marine also expressed its desire to retain intact and motivate the Company's existing management team following the closing of the transaction, and stated that it planned to establish appropriate management retention and multi-year compensation plans for the benefit of the Company's employees. Mr. Williams also received from Mr. Fujii drafts of a non-disclosure agreement and an exclusivity agreement.

Later that same day, Mr. Williams contacted Messrs. Fujii and Brimecome to request clarification with respect to some of the assumptions regarding the number of the Company's outstanding shares referenced in the letter received from Tokio Marine. Mr. Williams noted that certain of the assumptions made by Tokio Marine may have been based on outdated information, and asked whether, if updated information were taken into account, Tokio Marine's proposal price would be increased from the $76.00 per share noted in the letter.

Also on May 4, 2015, Mr. Williams called the executive officer of Party A to follow up on Party A's previous indication of interest in making a proposal to acquire the Company. The executive officer of Party A indicated that Party A was still interested in making a proposal to acquire the Company, but

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that its proposal would likely not be greater than $60.00 per share. The executive officer of Party A asked Mr. Williams whether Mr. Williams thought that the Company's board of directors would be receptive to such a proposal. Mr. Williams indicated that, in his view, it was unlikely that the Company's board of directors would find such a proposal sufficiently attractive. The executive officer of Party A then indicated that he would discuss the matter further with the chairman of the board and chief executive officer of Party A.

On May 5, 2015, representatives of Goldman Sachs and Tokio Marine held a discussion in response to a request from Tokio Marine to secure further information regarding certain assumptions made in Tokio Marine's initial proposal letter, and the Company, through Goldman Sachs, provided Tokio Marine with additional information regarding the facts underlying such assumptions.

Also on May 5, 2015, Mr. Williams and Mr. Brimecome spoke by telephone and Mr. Brimecome indicated to Mr. Williams that a revised proposal would be forthcoming from Tokio Marine.

Also on May 5, 2015, the executive officer of Party A and Mr. Williams spoke by telephone to continue the discussions regarding a potential strategic transaction involving the Company. The executive officer of Party A informed Mr. Williams that any proposal from Party A to acquire the Company would not likely be greater than $60.00 per share, and asked Mr. Williams whether, in his view, such a proposal would be appealing to the Company's board of directors. Mr. Williams indicated that, in his view, it would be unlikely that the Company's board of directors would find such a proposal sufficiently attractive.

On May 6, 2015, Mr. Fujii, on behalf of Tokio Marine, sent another letter to Mr. Williams. The letter stated that, following the discussions between the parties and based on Tokio Marine's updated assumptions, Tokio Marine was willing to increase its proposal to acquire the Company from $76.00 per share to $77.50 per share.

On May 6, 2015, Messrs. Fujii and Brimecome had a telephone call with representatives of Goldman Sachs regarding Tokio Marine's proposal. Representatives of Tokio Marine reiterated to representatives of Goldman Sachs that any proposal made by Tokio Marine was conditioned on the parties' entry into an exclusivity agreement. Representatives of Tokio Marine also orally revised their proposal to permit the Company to pay all regularly scheduled quarterly dividends on its shares of common stock in an amount not to exceed $0.295 per share, per quarter, between the execution of the merger agreement and the closing of the merger.

On May 7, 2015, a special meeting of the Company's board of directors was held. During that meeting, Mr. Williams updated the Company's board of directors on his recent conversations with Tokio Marine and Party A, noting that the most recent discussion with the representatives of Party A resulted in an oral indication of interest that was potentially around $60.00 per share. He then described the written proposals (and oral revisions) received from Tokio Marine. Also during that meeting, representatives of Goldman Sachs reviewed with the Company's board of directors certain financial information relating to the possible transaction with Tokio Marine. Representatives of Goldman Sachs noted that Tokio Marine had conveyed to them, through Credit Suisse, that the entry by the Company into an exclusivity agreement was a pre-condition to Tokio Marine's further consideration of an acquisition of the Company. A discussion was held among representatives of Goldman Sachs, the Company's senior management and the Company's board of directors regarding other companies in the property and casualty insurance industry and the potential interest or ability of any such company to engage in or consummate a transaction with the Company at an attractive price. In addition, representatives of Willkie Farr reviewed with the directors their fiduciary duties under applicable law, relevant terms relating to potential deal protection provisions that might be requested by Tokio Marine in any definitive merger agreement relating to an acquisition of the Company and the terms of the non-disclosure agreement and exclusivity agreement proposed by Tokio Marine. The Company's board of directors then discussed with representatives of Goldman Sachs and Willkie Farr strategic

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considerations involved in granting exclusivity, including deal protection provisions and a termination fee, to Tokio Marine. The Company's board of directors also discussed with representatives of Goldman Sachs and Willkie Farr the potential for negotiating an increase in the proposal price above $77.50 per share.

At the end of the discussion, the Company's board of directors unanimously determined to establish an ad hoc committee of the Company's board of directors, which we refer to as the transaction committee, comprising Frank J. Bramanti, John N. Molbeck, Mr. Rosholt and J. Mikesell Thomas, to review, analyze and negotiate the terms of any potential transaction with Tokio Marine, authorized the transaction committee and the Company's senior management to execute and deliver an exclusivity agreement with Tokio Marine if the transaction committee was satisfied with the responses received from Tokio Marine after any initial discussions between the financial and legal advisers to each party regarding the proposed merger consideration and the deal protection and other terms of any potential transaction, and authorized the transaction committee to delegate to the Company's management the power and authority to negotiate the terms and conditions of any potential transaction with Tokio Marine.

Later on May 7, 2015, Mr. Williams had separate telephone conversations with Messrs. Fujii and Brimecome. Mr. Williams advised each of Messrs. Fujii and Brimecome that the Company's board of directors had authorized the Company's financial and legal advisers to speak with Tokio Marine's financial and legal advisers regarding a potential path forward, and that the Company's advisers would contact Tokio Marine's advisers.

Also on May 7, 2015, representatives of Goldman Sachs spoke with representatives of Credit Suisse by telephone. During that conversation, at the direction of the Company, representatives of Goldman Sachs advised Credit Suisse that the Company's board of directors was prepared to authorize the Company to enter into an exclusivity arrangement with Tokio Marine if: (i) Tokio Marine increased its proposal price to $79.00 per share; and (ii) there was agreement between the parties on key transaction terms to be communicated by Willkie Farr to Sullivan & Cromwell LLP, which we refer to as Sullivan & Cromwell, Tokio Marine's legal adviser. Representatives of Credit Suisse advised Goldman Sachs that Tokio Marine believed that the $77.50 proposal price represented a full price for the Company's shares, but that Credit Suisse would discuss the matter with Tokio Marine.

Also on May 7, 2015, representatives of Willkie Farr spoke with representatives of Sullivan & Cromwell. Representatives of Willkie Farr informed Sullivan & Cromwell that, in order for the Company to enter into exclusive negotiations with Tokio Marine, the discussions between Goldman Sachs and Credit Suisse regarding the price offered by Tokio Marine would need to result in an outcome that the Company's board of directors deemed acceptable, and there would need to be agreement on the following key transaction terms: (i) the scope of and exceptions to the deal protection provisions to be included in the merger agreement; (ii) the definition of "material adverse effect" in the merger agreement to be used as the standard for determining when Tokio Marine might have a right under the merger agreement not to close the merger under certain circumstances; and (iii) the terms of the non-disclosure agreement and exclusivity agreement to be entered into by the Company and Tokio Marine.

Specifically, representatives of Willkie Farr requested a 45-day "go shop" period, during which the Company would be permitted actively to solicit acquisition proposals from third parties, with a lower termination fee payable to Tokio Marine in the event that the merger agreement were terminated in order for the Company to enter into a definitive agreement with a party that emerged as a result of such solicitation. Representatives of Sullivan & Cromwell indicated that Tokio Marine had already extensively discussed the prospect of a "go shop" covenant with Sullivan & Cromwell prior to making its initial proposal for the Company, and that Tokio Marine felt strongly that a "go shop" covenant should not be included in the merger agreement. Representatives of Willkie Farr indicated that the

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Company's board of directors believed that a "go shop" covenant was appropriate in this circumstance but that the Company's board of directors might agree to forego a "go shop" covenant if there were meaningful termination rights that would allow the Company to terminate the merger agreement to accept an unsolicited superior proposal, subject to paying a termination fee of 2.0% of the aggregate equity value of the transaction. Representatives of Willkie Farr and Sullivan & Cromwell also discussed the general framework for and approach to other potential deal protection terms to be included in the merger agreement. Representatives of Willkie Farr further indicated that they would send to Sullivan & Cromwell a proposed draft of the definition of "material adverse effect" that would be used in the merger agreement. Representatives of Willkie Farr and Sullivan & Cromwell also discussed the terms of the non-disclosure agreement and exclusivity agreement proposed by Tokio Marine. Representatives of Willkie Farr indicated that, if the parties were to proceed with exclusive negotiations, the Company would propose changes to such documents, including requiring Tokio Marine to confirm in writing at a "check in" time set for approximately two weeks after the execution of the exclusivity agreement that it did not intend to make any material modifications to its proposal with respect to a potential transaction with the Company, failing which written confirmation the exclusivity agreement would terminate at the check in time. Representatives of Willkie Farr further indicated that the non-disclosure agreement should include a customary "standstill" provision. Representatives of Sullivan & Cromwell indicated that it would discuss these matters with Tokio Marine before responding to Willkie Farr.

After the call between Willkie Farr and Sullivan & Cromwell on May 7, 2015, representatives of Willkie Farr sent a proposed draft of the definition of "material adverse effect" to Sullivan & Cromwell.

On May 8, 2015, a representative of Credit Suisse contacted a representative of Goldman Sachs by telephone and indicated that Tokio Marine had agreed to increase the merger consideration from $77.50 per share to $78.00 per share, and that the merger consideration would not be increased any further.

Also on May 8, 2015, a representative of Sullivan & Cromwell contacted a representative of Willkie Farr and informed Willkie Farr that Tokio Marine rejected the inclusion of a "go shop" covenant in the merger agreement but would be willing to agree to a termination fee equal to 2.5% of the aggregate equity value of the transaction. Representatives of Sullivan & Cromwell also indicated that all of the other terms discussed between Willkie Farr and Sullivan & Cromwell were generally acceptable to Tokio Marine, subject to some minor clarifications and agreement on specific language. After the call, a representative of Sullivan & Cromwell sent Willkie Farr some minor edits to the definition of "material adverse effect."

Later on May 8, 2015, the transaction committee met to discuss the responses received by the Company's advisers from Tokio Marine regarding the merger consideration and the termination fee. After discussion of the responses, the transaction committee indicated their approval of the merger consideration and termination fee and authorized further negotiation of the non-disclosure agreement and the exclusivity agreement with Tokio Marine.

After the transaction committee meeting on May 8, 2015, representatives of Willkie Farr, at the instruction of the transaction committee, sent to Sullivan & Cromwell revised drafts of the non-disclosure agreement and exclusivity agreement reflecting the terms that were previously discussed with Sullivan & Cromwell.

Also on May 8, 2015 and May 9, 2015, representatives of Willkie Farr and Sullivan & Cromwell exchanged drafts of the non-disclosure agreement and exclusivity agreement, and the Company and Tokio Marine each executed both of such agreements on May 9, 2015.

On May 10, 2015, at the direction of the Company, Goldman Sachs granted representatives of Tokio Marine and its advisers access to an electronic data room that had been established for the purpose of sharing information with Tokio Marine to facilitate Tokio Marine's due diligence review of the Company. During the period from May 9, 2015 to June 10, 2015, Tokio Marine, with the assistance of its legal and financial advisers, performed a due diligence review of the Company.

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On May 17, 2015, a representative of Sullivan & Cromwell distributed an initial draft of the merger agreement to Willkie Farr.

On May 20, 2015, a regular quarterly meeting of the Company's board of directors was held. At that meeting, the Company's senior management updated the Company's board of directors on the status of Tokio Marine's due diligence review of the Company. Representatives of Willkie Farr then reviewed with the Company's board of directors the directors' fiduciary duties under applicable law in the context of a sale of the Company and summarized for the Company's board of directors the terms of the initial draft of the merger agreement proposed by Tokio Marine, and the Company's board of directors discussed the proposed draft merger agreement. Representatives of Goldman Sachs also participated in that discussion.

After the meeting of the Company's board of directors on May 20, 2015, the transaction committee met with representatives of the Company's senior management and Willkie Farr to discuss further the terms of the draft merger agreement proposed by Tokio Marine. At the end of the meeting, the transaction committee authorized Willkie Farr to complete a revised draft of the merger agreement reflecting the input received from the transaction committee and to send such revised draft to Sullivan & Cromwell.

On May 21, 2015 and May 22, 2015, representatives of the Company held due diligence sessions in Houston, Texas with representatives of Tokio Marine. Representatives of Goldman Sachs and of advisers to Tokio Marine were also present. During such meetings, the Company's senior management made presentations to Tokio Marine regarding the Company's business and operations and Tokio Marine asked questions of the Company's senior management in connection with its due diligence review of the Company.

On May 22, 2015, a representative of Willkie Farr sent a revised draft of the merger agreement to Sullivan & Cromwell.

During the period from May 22, 2015 to June 9, 2015, representatives of Willkie Farr, with the assistance of Goldman Sachs and under the direction of the transaction committee and the Company's senior management, negotiated the terms and conditions of the merger agreement with Tokio Marine's legal and financial advisers. In addition, during the period from May 22, 2015 to June 9, 2015, the Company's senior management held discussions and otherwise communicated with Tokio Marine regarding plans for the post-closing compensation of the Company's employees, including the implementation of a retention plan that would pay retention bonuses to certain of the Company's key employees.

On May 22, 2015, which was the "check in" date under the exclusivity agreement, Tokio Marine sent a confirmation letter to the Company pursuant to the exclusivity agreement. In the letter, Tokio Marine reaffirmed its interest in acquiring the Company at a price of $78.00 per share and confirmed that it did not intend to make any material modifications to its proposal with respect to a potential transaction with the Company.

During the period from May 26, 2015 through May 28, 2015, Messrs. Williams, Burke and Irick met in Tokyo with representatives of Tokio Marine to discuss further the Company and its business in connection with Tokio Marine's due diligence review of the Company, and to discuss plans with respect to the post-closing operation of the Company as a subsidiary of Tokio Marine, including the implementation of a retention plan that would pay retention bonuses to certain of the Company's key employees.

On May 28, 2015, the transaction committee held a telephonic meeting attended by members of the Company's senior management and representatives of Willkie Farr. At this meeting, Mr. Williams updated the transaction committee regarding the status of Tokio Marine's due diligence review of the Company, including the diligence sessions held on May 21 and 22, 2015 and on the receipt of the

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confirmation letter from Tokio Marine under the exclusivity agreement. Representatives of Willkie Farr then updated the transaction committee on the status of negotiations with Sullivan & Cromwell and discussed with the transaction committee the outstanding issues relating to the merger agreement.

On June 1, 2015, a representative of Sullivan & Cromwell sent Willkie Farr a draft letter agreement proposing an extension of the exclusivity period under the exclusivity agreement to June 10, 2015.

Also on June 1, 2015, the transaction committee held a telephonic meeting, which was also attended by members of the Company's senior management team and representatives of Willkie Farr. At that meeting, Mr. Williams and representatives of Willkie Farr updated the transaction committee regarding the outstanding business and legal issues relating to the proposed merger agreement and received guidance from the transaction committee regarding the negotiation of such issues. At the end of this meeting, the transaction committee authorized the entry by the Company into the letter extending the exclusivity period under the exclusivity agreement to June 10, 2015.

On June 3, 2015, Tokio Marine again expressed its desire to retain intact the Company's existing management team. Tokio Marine and Mr. Williams discussed employment agreement addenda that Tokio Marine had requested that senior managers execute in order to provide that any closing of a transaction with Tokio Marine would not entitle the manager to resign for "good reason."

On June 4, 2015, the transaction committee held a telephonic meeting, which was also attended by members of the Company's senior management team and representatives of Willkie Farr. At that meeting, Mr. Williams and representatives of Willkie Farr updated the transaction committee regarding the outstanding business and legal issues relating to the proposed merger agreement, advised the transaction committee regarding the status of the discussions regarding the post-closing compensation arrangements for the Company's executive officers and received guidance from the transaction committee regarding the negotiation of such issues.

On June 5, 2015, the Company and Tokio Marine each delivered to the other an executed letter extending the exclusivity period under the exclusivity agreement to June 10, 2015.

On June 9, 2015, a special meeting of the Company's board of directors was held to consider the proposed transaction with Tokio Marine. Representatives of Goldman Sachs and Willkie Farr also attended the meeting. At that meeting, representatives of Willkie Farr discussed with the Company's board of directors the terms of the proposed merger agreement with Tokio Marine, including, among other things, the deal protection provisions and related exceptions, the parties' respective termination rights, the closing conditions and the terms relating to the interests of the Company's management team and other employees in connection with the proposed merger. A discussion was held regarding other companies in the property and casualty insurance industry and the potential interest or ability of any such company to engage in or consummate a transaction with the Company at an attractive price. Representatives of Goldman Sachs presented the Company's board of directors with its financial analyses of the Company and the merger consideration. After making its presentation and engaging in related discussions with the directors, Goldman Sachs delivered to the Company's board of directors its oral opinion (which was subsequently confirmed in writing as of June 10, 2015) to the effect that, as of that date, and based upon and subject to the assumptions made, procedures followed, matters considered, qualifications and limitations on the review undertaken by Goldman Sachs, as set forth in its opinion, the $78.00 in cash per share merger consideration to be paid to the holders of shares of the Company's common stock pursuant to the merger agreement was fair, from a financial point of view, to such holders. After further discussion and consideration, the Company's board of directors unanimously determined that the merger agreement and the transactions contemplated thereby, including the merger, are advisable, fair to and in the best interests of the Company and its stockholders, and unanimously resolved to approve the merger agreement and the transactions contemplated by the merger agreement and to recommend that the stockholders of the Company adopt the merger agreement and approve the merger.

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Later that same day, Mr. Williams informed Mr. Fujii that the Company's board of directors had unanimously approved the proposed transaction with Tokio Marine.

On June 10, 2015, Tokio Marine's board of directors approved the entry by Tokio Marine into the merger agreement with the Company. Promptly after the conclusion of the meeting of Tokio Marine's board of directors, Mr. Fujii notified Mr. Williams about the decision of Tokio Marine's board of directors.

At approximately 1:30 a.m., Eastern Time, on June 10, 2015, the parties entered into the merger agreement. In addition, on June 10, 2015, senior managers of the Company executed the employment agreement addenda that Tokio Marine had requested that they execute. The Company and Tokio Marine issued a joint press release announcing the transaction prior to the opening of the United States and United Kingdom financial markets, and following the closing of the Japanese financial markets, on June 10, 2015.

Reasons for the Merger; Recommendation of the Company's Board of Directors

After consideration, the Company's board of directors unanimously determined that the merger agreement and the transactions contemplated thereby, including the merger, are advisable, fair to and in the best interests of the Company and its stockholders, and unanimously approved the merger agreement and the transactions contemplated by the merger agreement. The Company's board of directors unanimously recommends that the stockholders of the Company vote "FOR" the adoption of the merger agreement and approval of the merger.

In reaching its decision to approve the merger agreement and the transactions contemplated by the merger agreement, the Company's board of directors consulted with the Company's management, as well as its independent financial adviser and legal adviser, and considered a number of factors that the Company's board of directors believed supported its decision, including the following:

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The Company's board of directors also considered a variety of risks and other potentially negative factors concerning the merger agreement and the transactions contemplated by the merger agreement, including the following:

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The foregoing discussion of the factors considered by the Company's board of directors is not intended to be exhaustive, but rather includes the material factors considered by the Company's board of directors. In reaching its decision to approve the merger agreement and the transactions contemplated by the merger agreement, the Company's board of directors did not quantify or assign any relative weights to the factors considered, and individual directors may have given different weights to different factors. The Company's board of directors considered all these factors as a whole, including discussions with, and questioning of, the Company's management and the Company's independent financial adviser and legal adviser, and overall considered the factors to be favorable to, and to support, its determination.

For the reasons set forth above, the Company's board of directors unanimously determined that the merger agreement and the transactions contemplated thereby, including the merger, are advisable, fair to and in the best interests of the Company and its stockholders, and unanimously approved the merger agreement and the transactions contemplated by the merger agreement. The Company's board of directors unanimously recommends that the Company's stockholders vote "FOR" the adoption of the merger agreement and approval of the merger.

Opinion of Goldman, Sachs & Co.

On June 9, 2015, at a meeting of the Company's board of directors, Goldman Sachs rendered to the Company's board of directors its oral opinion, subsequently confirmed in writing, that, as of the date of its written opinion, and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations upon the scope of review undertaken by Goldman Sachs, the $78.00 in cash per share of the Company's common stock to be paid to the holders (other than

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Tokio Marine and its affiliates) of shares of the Company's common stock pursuant to the merger agreement was fair from a financial point of view to such holders.

The full text of the written opinion of Goldman Sachs, dated June 10, 2015, which sets forth the assumptions made, procedures followed, matters considered and qualifications and limitations upon the scope of review undertaken in connection with the opinion, is attached as Annex B. This summary of the Goldman Sachs opinion is qualified in its entirety by reference to the full text of the written opinion. Goldman Sachs provided its opinion for the information and assistance of the Company's board of directors in connection with its consideration of the merger agreement. The Goldman Sachs opinion does not constitute a recommendation as to how any holder of shares of the Company's common stock should vote with respect to the merger agreement, the merger, or any other matter.

In connection with rendering the opinion described above and performing its related financial analyses, Goldman Sachs reviewed, among other things:

Goldman Sachs also held discussions with members of the senior management of the Company regarding their assessment of the past and current business operations, financial condition and future prospects of the Company; reviewed the reported price and trading activity for the shares of the Company's common stock; compared certain financial and stock market information for the Company with similar information for certain other companies, the securities of which are publicly traded; reviewed the financial terms of certain recent business combinations in the property and casualty insurance industry and in other industries; and performed such other studies and analyses, and considered such other factors, as it deemed appropriate.

For purposes of rendering the opinion described above, Goldman Sachs, with the consent of the Company, relied upon and assumed the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by Goldman Sachs, without assuming any responsibility for independent verification thereof. In that regard, Goldman Sachs assumed with the consent of the Company that the Forecasts were reasonably prepared on a basis reflecting the best then-currently available estimates and judgments of the management of the Company. Goldman Sachs did not make an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or other off-balance-sheet assets and liabilities) of the Company and Goldman Sachs was not furnished with any such evaluation or appraisal. Goldman Sachs is not an actuary and its services did not include any actuarial determination or evaluation by Goldman Sachs or any attempt to evaluate actuarial assumptions, and Goldman Sachs relied on the Company's actuaries with respect to reserve adequacy. In that regard, Goldman Sachs made no analysis of, and expressed no opinion as to, the adequacy of the loss and loss adjustment expense reserves of the Company. Goldman Sachs assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the merger would be obtained without any adverse effect on the expected benefits of the merger in any way meaningful to its analysis. Goldman Sachs assumed that the merger will be consummated on the terms set forth in the merger agreement, without the waiver or

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modification of any term or condition the effect of which would be in any way meaningful to its analysis.

Goldman Sachs' opinion does not address the underlying business decision of the Company to engage in the merger, or the relative merits of the merger as compared to any strategic alternatives that may be available to the Company; nor does it address any legal, regulatory, tax or accounting matters. Goldman Sachs was not requested to solicit, and did not solicit, interest from other parties with respect to an acquisition of, or other business combination with, the Company or any other alternative transaction. Goldman Sachs' opinion addresses only the fairness from a financial point of view to the holders (other than Tokio Marine and its affiliates) of the shares of the Company's common stock, as of the date of the opinion, and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations upon the scope of review undertaken by Goldman Sachs, of the $78.00 in cash per share of the Company's common stock to be paid to such holders pursuant to the merger agreement. Goldman Sachs did not express any view on, and its opinion does not address, any other term or aspect of the merger agreement or the merger or any term or aspect of any other agreement or instrument contemplated by the merger agreement or entered into or amended in connection with the merger, including the fairness of the merger to, or any consideration received in connection therewith by, the holders of any other class of securities, creditors, or other constituencies of the Company; nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of the Company, or class of such persons, in connection with the merger, whether relative to the $78.00 in cash per share of the Company's common stock to be paid to the holders (other than Tokio Marine and its affiliates) of shares of the Company's common stock pursuant to the merger agreement or otherwise. Goldman Sachs did not express any opinion as to the impact of the merger on the solvency or viability of the Company or Tokio Marine or the ability of the Company or Tokio Marine to pay their respective obligations when they come due. Goldman Sachs' opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to it as of, the date of its opinion and Goldman Sachs assumes no responsibility for updating, revising or reaffirming its opinion based on circumstances, developments or events occurring after the date of its opinion. Goldman Sachs' advisory services and the opinion expressed in its opinion were provided for the information and assistance of the Company's board of directors in connection with its consideration of the merger agreement and such opinion does not constitute a recommendation as to how any holder of shares of the Company's common stock should vote with respect to the merger agreement, the merger, or any other matter. Goldman Sachs' opinion was approved by a fairness committee of Goldman Sachs.

The following is a summary of the material financial analyses delivered by Goldman Sachs to the Company's board of directors in connection with rendering the opinion described above. The following summary, however, does not purport to be a complete description of the financial analyses performed by Goldman Sachs, nor does the order of analyses described represent relative importance or weight given to those analyses by Goldman Sachs. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and are alone not a complete description of Goldman Sachs' financial analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before June 3, 2015, and is not necessarily indicative of current market conditions.

Implied Premia and Multiples Analysis

Premia Analysis.    Goldman Sachs calculated that the $78.00 in cash per share of the Company's common stock to be paid to the holders of shares of the Company's common stock pursuant to the merger agreement represented premia to the historical prices for the shares of the Company's common stock as follows:

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Multiples Analysis.    Goldman Sachs calculated that the $78.00 in cash per share of the Company's common stock to be paid to the holders of shares of the Company's common stock pursuant to the merger agreement represented the following multiples of diluted book value per share, diluted operating earnings per share based on the median estimates from Institutional Brokers' Estimate System, which we refer to as IBES, and diluted operating earnings per share based on the Forecasts.

The results of these analyses are summarized as follows:

Price to Book Value Per Share (which we refer to as the P/BV Multiple)

   

P/BV Multiple (including accumulated other comprehensive income, which we refer to as AOCI)

  1.91x

P/BV Multiple (excluding AOCI)

  2.00x

Tangible P/BV Multiple (including AOCI)

  2.52x

Tangible P/BV Multiple (excluding AOCI)

  2.67x

The P/BV Multiples are calculated based on the total number of fully diluted outstanding shares of the Company's common stock as of March 31, 2015 (as provided by the management of the Company).

Price to Diluted Operating Earnings Per Share (based on the median estimates from IBES)

   

2015E

  19.3x

2016E

  18.8x

 

Price to Diluted Operating Earnings Per Share (based on the Forecasts)

   

2015E

  18.1x

2016E

  16.7x

2017E

  14.5x

Selected Public Comparable Companies Analysis

Goldman Sachs reviewed and compared certain financial information, ratios and public market multiples to corresponding financial information, ratios and public market multiples for the following selected companies in the property and casualty insurance industry:

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Although none of the selected companies is directly comparable to the Company, the companies included were chosen because they are publicly traded companies with operations that, for purposes of analysis, may be considered similar to certain operations of the Company.

The multiples and ratios of the selected companies were based on the closing prices of their respective common shares on June 3, 2015; financial data obtained from SEC filings, Bloomberg, IBES, and SNL Financial; and estimates of the Company from IBES.

With respect to each of the selected companies and the Company, Goldman Sachs calculated, among other things:

The results of these analyses are summarized as follows:

 
  The Company   Selected Companies  
 
  IBES   Forecasts   Median   Range  

Calendarized P/E Multiples 2015E

    14.3x     13.4x     14.8x     10.8x - 24.6x  

Calendarized P/E Multiples 2016E

    13.9x     12.3x     14.1x     10.6x - 31.2x  

 

 
   
  Selected Companies  
 
  The Company  
 
  Median   Range  

P/BV Multiple (excluding AOCI)

    1.48x     1.40x     0.98x - 3.17x  

P/BV Multiple (including AOCI)

    1.41x     1.32x     0.92x - 2.56x  

Illustrative Dividend Discount Model Analysis

Goldman Sachs performed an illustrative dividend discount model analysis on the Company using the Forecasts. Goldman Sachs calculated indications of the net present value of estimated dividend streams and share repurchases for the period beginning with the second quarter of 2015 through 2019 and a range of terminal values, which were calculated using terminal P/BV Multiples (excluding AOCI) of 1.30x to 1.70x and the Company's projected book value as of December 31, 2019 according to the Forecasts, using discount rates ranging from 7.1% to 9.1%, reflecting Goldman Sachs' estimates of the Company's cost of equity. Goldman Sachs then divided such net present values by the total number of fully diluted outstanding shares of the Company's common stock as of March 31, 2015 (as provided by the management of the Company) to calculate the per-share present values. This analysis resulted in illustrative present value indications per share of the Company's common stock ranging from $55.09 to $71.72.

Illustrative Present Value of Future Stock Price Analysis

Goldman Sachs performed illustrative analyses of the present value of the future price per share of the Company's common stock, using the Forecasts. Goldman Sachs calculated an illustrative range of implied present values per share of the Company's common stock as of March 31, 2015 based on hypothetical future share prices for the Company's common stock as of the end of each of the years

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2015 through 2019. For purposes of this analysis, Goldman Sachs derived hypothetical future share prices for the Company's common stock by applying P/BV Multiples ranging from 1.30x to 1.70x to the Company's diluted book value per share (excluding AOCI) for each year-end estimated book value as from 2015 through 2019, as reflected in the Forecasts. Goldman Sachs then discounted these future share prices to March 31, 2015 using a discount rate of 8.11%, reflecting an estimate of the Company's cost of equity. This analysis resulted in a range of illustrative present values per share of the Company's common stock of $50.94 to $67.62.

Goldman Sachs also derived hypothetical future share prices for the Company's common stock by applying next twelve month P/E Multiples ranging from 11.0x to 15.0x to the Company's estimated one-year forward earnings per share for each of the years ending December 31, 2015 through 2019, as reflected in the Forecasts. Goldman Sachs then discounted these future share prices to March 31, 2015 using a discount rate of 8.11%, reflecting an estimate of the Company's cost of equity. This analysis resulted in a range of illustrative present values per share of the Company's common stock of $49.45 to $74.70.

The above present value analyses resulted in a range of illustrative present values per share of the Company's common stock of $49.45 to $74.70.

Selected Precedent Transactions Analysis

Goldman Sachs analyzed certain publicly available information relating to the following acquisitions in the property and casualty insurance industry involving aggregate consideration greater than $1 billion:

Announced
  Acquiror   Target

March 2015

  Endurance Specialty Holdings Ltd.   Montpelier Re Holdings Ltd.

January 2015

  XL Group plc   Catlin Group Limited

November 2014

  RenaissanceRe Holdings Ltd.   Platinum Underwriters Holdings, Ltd.

December 2012

  Markel Corp.   Alterra Capital Holdings Ltd.

December 2011

  Tokio Marine   Delphi Financial Group, Inc.

November 2011

  Alleghany Corporation   Transatlantic Holdings, Inc., which we refer to as the Alleghany transaction.

September 2011

  Nationwide Mutual Insurance Company   Harleysville Mutual Insurance Company and Harleysville Group Inc., which we refer to as the Nationwide transaction.

February 2010

  Fairfax Financial Holdings Limited   Zenith National Insurance Corp.

July 2009

  Validus Holdings, Ltd.   IPC Holdings Ltd.

July 2008

  Tokio Marine   Philadelphia Consolidated Holding Corp.

April 2008

  Liberty Mutual Group   Safeco Corp.

October 2007

  Mapfre S.A.   The Commerce Group Inc.

October 2007

  Munich Re Group   The Midland Company

May 2007

  Liberty Mutual Group Inc.   Ohio Casualty Corp.

While none of the selected transactions is directly comparable to the proposed merger, the target companies in the selected transactions are such that, for purposes of analysis, the selected transactions may be considered similar to the proposed merger.

For each of the selected transactions for which relevant information was publicly available and based on information obtained from Thomson Reuters, Goldman Sachs calculated and reviewed the following:

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The following table presents the results of this analysis:

 
  Low   Median   Mean   High  

GAAP P/BV (excluding AOCI)

    0.92x     1.49x     1.61x     2.75x  

GAAP P/TBV (excluding AOCI)

    0.92x     1.52x     1.66x     2.79x  

From the transactions above, Goldman Sachs, based on its professional judgment, excluded the transactions that were announced prior to 2010, as well as the Alleghany transaction and the Nationwide transaction, and derived a range of multiples of GAAP P/BV (excluding AOCI) of 1.15x to 1.58x and applied that range to the Company's diluted book value per share (excluding AOCI) as of March 31, 2015 of $39.07, as provided by the management of the Company, to derive a range of implied values per share of the Company's common stock of $44.84 to $61.83. Using this same approach, Goldman Sachs derived a range of multiples of GAAP P/TBV (excluding AOCI) of 1.20x to 1.67x and applied that range to the Company's diluted tangible book value per share (excluding AOCI) as of March 31, 2015 of $29.21, as provided by the management of the Company, to derive a range of implied values per share of the Company's common stock of $34.92 to $48.89.

Historical Premium Analysis

Goldman Sachs reviewed publicly available data relating to transactions announced between January 1, 2004 and June 3, 2015 with U.S. targets, involving only cash consideration and having a value in excess of $1 billion and less than $10 billion. For each of the transactions, Goldman Sachs compared, based on information it obtained from Thomson Reuters, the implied premium paid in such transaction to the target company's closing share price one day prior to announcement of the relevant transaction.

The following table represents the results of this analysis:

Year
  Number of
Transactions
  Median Announced
Premium to 1-Day Prior Price
 

2004

    26     24 %

2005

    44     24 %

2006

    78     21 %

2007

    93     21 %

2008

    24     37 %

2009

    16     38 %

2010

    43     34 %

2011

    39     32 %

2012

    39     33 %

2013

    41     28 %

2014

    37     25 %

2015 YTD

    15     17 %

Median

          27 %

Goldman Sachs, based on its professional judgment, applied a selected range of premia from 25% to 35% to the closing price of the Company's common stock on June 3, 2015 of $57.75 to derive a range of implied values per share of the Company's common stock of $72.19 to $77.96.

General

The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Goldman Sachs' opinion. In arriving at its fairness determination, Goldman Sachs

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considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, Goldman Sachs made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. No company or transaction used in the above analyses as a comparison is directly comparable to the Company or the transactions contemplated by the merger agreement.

Goldman Sachs prepared these analyses for purposes of Goldman Sachs providing its opinion to the Company's board of directors that, as of June 10, 2015, and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations upon the scope of review undertaken by Goldman Sachs, the $78.00 in cash per share of the Company's common stock to be paid to the holders (other than Tokio Marine and its affiliates) of shares of the Company's common stock pursuant to the merger agreement was fair, from a financial point of view to such holders. These analyses do not purport to be appraisals nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisers, none of the Company, Goldman Sachs or any other person assumes responsibility if future results are materially different from those forecast.

The merger consideration was determined through arm's-length negotiations between Tokio Marine and the Company and was approved by the Company's board of directors. Goldman Sachs provided advice to the Company during these negotiations. Goldman Sachs did not, however, recommend any specific amount of consideration to the Company or its board of directors or that any specific amount of consideration constituted the only appropriate consideration for the transactions contemplated by the merger agreement.

As described above, Goldman Sachs' opinion to the Company's board of directors was one of many factors taken into consideration by the Company's board of directors in making its determination to approve the merger agreement. The foregoing summary does not purport to be a complete description of the analyses performed by Goldman Sachs in connection with its opinion and is qualified in its entirety by reference to the full text of the written opinion of Goldman Sachs attached as Annex B to this proxy statement.

Goldman Sachs and its affiliates are engaged in advisory, underwriting and financing, principal investing, sales and trading, research, investment management, and other financial and non-financial activities and services for various persons and entities. Goldman Sachs and its affiliates and employees, and funds or other entities they manage or in which they invest or have other economic interests or with which they co-invest, may at any time purchase, sell, hold, or vote long or short positions and investments in securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments of the Company, Tokio Marine, any of their respective affiliates, and third parties or any currency or commodity that may be involved in the transactions contemplated by the merger agreement. Goldman Sachs acted as financial adviser to the Company in connection with, and participated in certain of the negotiations leading to, the transactions contemplated by the merger agreement. Goldman Sachs has provided certain financial advisory and/or underwriting services to the Company and/or its affiliates from time to time for which the Investment Banking Division of Goldman Sachs has received, and may receive, compensation. Goldman Sachs has also provided certain financial advisory and/or underwriting services to Tokio Marine and/or its affiliates from time to time for which the Investment Banking Division of Goldman Sachs has received, and may receive, compensation. During the two-year period ended June 10, 2015, Goldman Sachs provided financial advisory and/or underwriting services to Tokio Marine and/or its affiliates for which the Investment Banking Division of Goldman Sachs received aggregate compensation of approximately $200,000. Goldman Sachs may also in the future provide financial advisory and/or underwriting services to the Company, Tokio Marine,

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and their respective affiliates for which the Investment Banking Division of Goldman Sachs may receive compensation.

The Company's board of directors selected Goldman Sachs as its financial adviser because it is an internationally recognized investment banking firm that has substantial experience in transactions similar to the transactions contemplated by the merger agreement. Pursuant to a letter agreement, effective as of May 8, 2015, the Company engaged Goldman Sachs to act as its financial adviser in connection with the transactions contemplated by the merger agreement. The engagement letter between the Company and Goldman Sachs provides for a transaction fee that is estimated to be approximately $48.5 million, all of which is contingent upon consummation of the transactions contemplated by the merger agreement. In addition, the Company has agreed to reimburse Goldman Sachs for certain of its expenses, including attorneys' fees and disbursements, and to indemnify Goldman Sachs and related persons against various liabilities, including certain liabilities under the federal securities laws.

Financial Projections

The Company does not, as a matter of course, disclose financial projections or other forward-looking information about the Company's future financial performance, earnings or other results. However, the Company's management prepared certain financial projections in connection with the merger and provided such financial projections to Goldman Sachs in connection with its evaluation of the fairness of the merger consideration. The projections set forth below are included in this proxy statement solely because this information was provided to Goldman Sachs, and not to influence your decision as to whether to vote for the proposal to adopt the merger agreement and approve the merger. The inclusion of the financial projections in this proxy statement should not be regarded as an indication that the Company, the Company's board of directors, Goldman Sachs or any other recipient of the financial projections considered, or now considers, them to be reliable predictions of future results, and they should not be relied upon as such. No person has made or makes any representation or warranty to any stockholder regarding the information included in these financial projections or forecasts.

The financial projections are subjective in many respects and reflect numerous judgments, estimates and assumptions that are inherently uncertain, many of which are beyond the Company's control, including estimates and assumptions regarding general economic conditions, the effects of catastrophe losses, volatility in crop prices and crop yields, inherent uncertainties in the loss estimation process, which can adversely impact the adequacy of loss reserves, premium rate levels, loss ratios, loss cost trends and other financial metrics. Important factors that may affect actual results and cause the financial projections not to be accurate include, but are not limited to, risks and uncertainties relating to the Company's business (including its ability to achieve strategic goals, objectives and targets over the applicable periods), industry performance, the regulatory environment, general business and economic conditions, competition and other factors described under "Cautionary Statement Concerning Forward-Looking Information" beginning on page 23 of this proxy statement. In addition, the financial projections do not reflect any events that could affect the Company's prospects, changes in general business or economic conditions or any other transaction or event that has occurred since, or that may occur and that was not anticipated at, the time the financial projections were prepared. The financial projections also cover multiple years and by their nature become subject to greater uncertainty with each successive year. Furthermore, and for the same reasons, the financial projections should not be construed as commentary by the Company's management as to how the Company's management expects the Company's actual results to compare to Wall Street research analysts' estimates, as to which the Company expresses no view. There can be no assurance that the financial projections are or will be accurate or that the Company's future financial results will not vary, even materially, from the financial projections. None of the Company, its affiliates, representatives or agents undertakes any obligation to update or otherwise to revise the financial projections to reflect circumstances existing or arising after

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the date such projections were generated or to reflect the occurrence of future events, even if any or all of the underlying estimates and assumptions are shown to be in error.

Set forth below is a summary of the financial projections prepared by the Company's management and provided to Goldman Sachs in connection with its evaluation of the fairness of the merger consideration.

 
  2015   2016   2017   2018   2019  
 
  ($ in millions)
 

Gross Written Premium

  $ 3,699.7   $ 4,023.8   $ 4,297.0   $ 4,425.9   $ 4,558.7  

Net Written Premium

    2,959.1     3,208.9     3,431.6     3,534.5     3,640.6  

Net Earned Premium

   
2,867.5
   
3,138.8
   
3,360.8
   
3,461.7
   
3,565.5
 

Pretax Net Investment Income

    223.5     232.3     249.3     253.7     266.0  

Net Earnings

    430.7     425.4     465.4     479.3     498.1  

Diluted Earnings per Share

 
$

4.53
 
$

4.68
 
$

5.37
 
$

5.81
 
$

6.35
 

Loss Ratio

   
62.3

%
 
62.7

%
 
62.8

%
 
62.8

%
 
62.8

%

Expense Ratio

    24.0 %   23.8 %   23.3 %   23.3 %   23.3 %

Combined Ratio

    86.3 %   86.5 %   86.1 %   86.1 %   86.1 %

Shareholders' Equity

 
$

3,878.8
 
$

3,901.7
 
$

3,948.7
 
$

4,009.4
 
$

4,084.7
 

Rollforward of Shareholders' Equity (excluding AOCI)(1):

   
 
   
 
   
 
   
 
   
 
 

Beginning of Year

  $ 3,728.3   $ 3,790.9   $ 3,866.4   $ 3,948.6   $ 4,034.5  

(+) Net Earnings

    430.7     425.4     465.4     479.3     498.1  

(–) Dividends

    (112.9 )   (111.4 )   (109.6 )   (107.5 )   (105.2 )

(–) Share Repurchases

    (278.3 )   (266.9 )   (302.4 )   (316.0 )   (334.0 )

(+) Other

    23.1     28.4     28.8     30.1     28.3  

End of Year

  $ 3,790.9   $ 3,866.4   $ 3,948.6   $ 4,034.5   $ 4,121.7  

(1)
AOCI primarily relates to unrealized gains or losses on our investments.

The financial projections should be read together with the historical financial statements of the Company, which have been filed with the SEC. See "Where You Can Find More Information" on page 96. The financial projections were not prepared with a view toward public disclosure or compliance with published guidelines of the SEC, the Public Company Accounting and Oversight Board or the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. Neither our independent registered public accounting firm nor any other independent accountant has compiled, examined or performed any procedures with respect to the prospective financial information contained in the financial projections, nor have they expressed any opinion or given any form of assurance on the financial projections or their achievability, and accordingly assume no responsibility for them. The report of the Company's independent registered public accounting firm incorporated into this proxy statement by reference relates to the Company's historical financial information. It does not extend to the projections above or to any other prospective financial information and should not be read to do so.

There can be no assurance that any projections will be, or are likely to be, realized, or that the assumptions on which the projections are based will prove to be, or are likely to be, correct. You are cautioned not to place undue reliance on this information in making a decision as to whether to vote for the proposal to adopt the merger agreement and approve the merger.

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Merger Financing

The merger is not conditioned upon receipt of financing by Tokio Marine. Tokio Marine has informed us that it expects to use cash on hand together with borrowings to fund the merger.

Interests of HCC's Directors and Executive Officers in the Merger

In considering the recommendation of the Company's board of directors that you vote to adopt the merger agreement and approve the merger, you should be aware that, aside from their interests as stockholders of the Company, the Company's directors and executive officers have interests in the merger that are different from, or in addition to, those of other stockholders of the Company generally. Members of the Company's board of directors were aware of and considered these interests, among other matters, in evaluating and negotiating the merger agreement and the merger, and in recommending to the stockholders of the Company that the merger agreement be adopted and the merger approved. The Company's stockholders should take these interests into account in deciding whether to vote "FOR" the proposal to adopt the merger agreement and approve the merger. These interests are described in more detail below, and certain of them are quantified in the narrative and the table below.

Treatment of Company Equity Awards

As described under "The Merger Agreement—Treatment of Company Equity Awards—" below, equity-based awards held by the Company's directors and executive officers as of the effective time of the merger, which we refer to as the effective time, will be treated at the effective time as follows:

Options.    Each outstanding option to purchase shares of the Company's common stock granted under the Company's 2008 Flexible Incentive Plan, as amended, which we refer to as the Incentive Plan, whether vested or unvested, will, as of the effective time be canceled and will only entitle the holder of the option the right to receive an amount in cash equal to the product obtained by multiplying (1) the total number of shares of the Company's common stock subject to the option by (2) the excess, if any, of the merger consideration of $78.00 per share over the exercise price per share of that option, less any applicable tax withholdings.

Restricted Shares.    Immediately prior to the effective time, the Company will waive any vesting or holding conditions or restrictions applicable to each outstanding restricted share of the Company's common stock granted under the Incentive Plan or the Company's 2014 Stock Promotion Plan, and at the effective time each share will be treated in the same manner as a share of the Company's common stock and will entitle the holder to an amount in cash equal to the merger consideration of $78.00 per share, less any applicable tax withholdings. With respect to any restricted shares of the Company's common stock subject to performance-based vesting, the performance criteria will be deemed to have been achieved based on 100% performance.

Restricted Stock Units.    Each outstanding restricted stock unit granted under the Incentive Plan, whether vested or unvested, will, as of the effective time be canceled and will entitle the holder of the restricted stock unit an amount in cash equal to the product of (1) the total number of shares of the Company's common stock subject to the restricted stock unit and (2) the merger consideration of $78.00 per share, less any applicable tax withholdings.

Quantification of Payments.    For an estimate of the amounts that would be payable to each of the Company's named executive officers on settlement of their unvested equity-based awards, see "—Quantification of Payments and Benefits to the Company's Named Executive Officers" below. The estimated aggregate amount that would be payable to the Company's five other executive officers who are not named executive officers in settlement of their unvested equity-based awards if the merger were completed on July 1, 2015 is $10,883,229. We estimate that the aggregate amount that would be

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payable to the Company's eleven non-employee directors for their unvested equity-based awards if the merger were completed on July 1, 2015 is $0.00.

Treatment of ESPP

The Company will take all actions necessary to cause the Company's 2013 Employee Stock Purchase Plan, which we refer to as the ESPP, not to (a) commence an offering period to purchase the shares of the Company's common stock that would otherwise begin after the end of the offering period in effect as of the date of the merger agreement or (b) accept payroll deductions to be used to purchase shares of the Company's common stock under the ESPP after the end of the offering period in effect as of the date of the merger agreement. Immediately prior to the effective time, in the case of any outstanding purchase rights under the ESPP, the offering period under the ESPP will end, and each participant's accumulated payroll deduction will be used to purchase newly-issued shares of the Company's common stock in accordance with the terms of the ESPP. These purchased shares will be treated in the same manner as shares of the Company's common stock and will entitle the holder to the merger consideration of $78.00 per share, less any applicable tax withholdings. The Company will take all actions necessary to cause the ESPP to terminate immediately after the purchases described in the foregoing sentence, if any, and immediately prior to the effective time.

Employment Agreements

The Company or one of its affiliates is party to an employment or service agreement, which we refer to as an employment agreement, with each of the Company's executive officers. Certain of these employment agreements provide for severance payments and/or benefits in connection with a termination by the Company without "cause" or by the executive for "good reason," each of which we refer to as a qualifying termination, or, in the event of a termination by the executive as a result of a material diminishment of the executive's authority, duties or responsibilities within 12 months of a change in control, which we refer to as a termination in connection with a change in control. For purposes of each of the employment agreements, the merger will constitute a change in control. The following is a summary of the severance payments and/or benefits that would be provided to each of our executive officers, including our named executive officers, in connection with a qualifying termination, a termination in connection with a change in control or a similar termination of employment.

Named Executive Officers

Christopher J.B. Williams.    Mr. Williams is party to an employment agreement with the Company, effective May 1, 2011, as amended. Mr. Williams' employment agreement is scheduled to expire on May 1, 2016. In the event of a qualifying termination, Mr. Williams will be entitled to receive a lump-sum cash severance payment equal to (i) the discounted amount of base salary and deferred compensation that would have been due to him for the greater of 12 months or through the scheduled expiration date of his employment agreement plus (ii) the average annual bonus that was paid to Mr. Williams for the prior two years, or, in the event Mr. Williams terminates his employment for "good reason" (a) prior to the effective time, as a result of him being terminated or replaced as Chief Executive Officer of the Company, including after a change in control or (b) following the effective time, as a result of a change in his position or titles, the aggregate of the base salary and bonus received by Mr. Williams' for the two full calendar years prior to his termination.

Brad T. Irick.    Mr. Irick is party to an employment agreement with the Company, effective May 10, 2010, as amended. Mr. Irick's employment agreement is scheduled to expire on December 31, 2019. In the event of either a qualifying termination or a termination in connection with a change in control, Mr. Irick will be entitled to receive a lump-sum cash severance payment equal to the discounted

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amount of base salary that would have been due to him through the scheduled expiration date of his employment agreement.

William N. Burke.    Mr. Burke is party to an employment agreement with the Company, effective March 24, 2012. Mr. Burke's employment agreement is scheduled to expire on March 24, 2016. In the event of a qualifying termination, Mr. Burke will be entitled to receive a lump-sum cash severance payment equal to (i) the discounted amount of base salary that would have been due to him through the scheduled expiration date of his employment plus (ii) the average annual bonus that was paid to Mr. Burke for the prior two years, or, in the event Mr. Burke terminates his employment for "good reason" (a) prior to the effective time, as a result of him being terminated or replaced as President of the Company, including after a change in control or (b) following the effective time, as a result of a change in his position or titles, the aggregate of the base salary and bonus received by Mr. Burke for the two full calendar years prior to his termination. In the event of a termination in connection with a change in control, Mr. Burke will be entitled to receive a lump-sum cash severance payment equal to the discounted amount of base salary due for the greater of 12 months or the remainder of the term of his employment and will be eligible to receive, at the discretion of the Company's Chief Executive Officer, a bonus payment pursuant to the terms of the Incentive Plan.

Michael J. Schell.    Mr. Schell is party to an employment agreement with the Company, effective June 1, 2007, as amended. Mr. Schell's employment agreement is scheduled to expire on December 31, 2016. In the event of a qualifying termination or a termination in connection with a change in control, Mr. Schell will be entitled to receive (i) a lump-sum cash severance payment equal to (a) the discounted amount of base salary that would have been due to him through the scheduled expiration date of his employment agreement plus (b) an amount, in lieu of benefits other than medical that cease on the date of his termination, equal to $1,600 multiplied by the number of months remaining through the scheduled expiration date of his employment agreement and (ii) any bonus Mr. Schell would have been entitled to receive pursuant to the terms of the Incentive Plan. In addition, Mr. Schell and/or his qualified beneficiaries will be entitled to receive (x) continued health coverage through COBRA at the Company's expense, for as long as such coverage is available and (y) following the period in which continued health coverage through COBRA is available, health benefits that are comparable in the aggregate to those provided under the Company's group health plans in which Mr. Schell and/or his qualified beneficiaries participated at the time of his termination of employment, through reimbursement for the cost of premiums of either an individual health insurance policy or for coverage under an employer plan, through the period ending on, (A) in the case of Mr. Schell or his spouse, the dates he or she becomes eligible for Medicare coverage or (B) in the case of Mr. Schell's qualified beneficiaries, the dates they would have ceased to be eligible for coverage under the Company's group health plan had Mr. Schell remained employed by the Company.

Other Executive Officers

Mark W. Callahan.    Mr. Callahan is party to an employment agreement with the Company, effective April 1, 2015. Mr. Callahan's employment agreement is scheduled to expire on March 31, 2018. In the event of either a qualifying termination or a termination in connection with a change in control, Mr. Callahan will be entitled to receive a lump-sum cash severance payment equal to the discounted amount of base salary that would have been due to him through the scheduled expiration date of his employment agreement.

Barry Cook.    Mr. Cook is party to a service agreement with HCC Service Company Limited (UK) Branch, which we refer to as HCC Service Company UK, effective May 7, 2009, as amended. Mr. Cook's service agreement expires on March 31, 2016. Either party may terminate the service agreement by providing the other with six months' notice in writing. In the event HCC Service Company UK terminates the agreement, other than in connection with Mr. Cook's serious misconduct

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or other events specified in the agreement, Mr. Cook will be entitled to receive his base salary and benefits for the greater of (i) six months or (ii) for the remainder of the term of his employment.

Pamela J. Penny.    Ms. Penny is party to an employment agreement with the Company, effective January 1, 2012, as amended. Ms. Penny's employment agreement expires on March 15, 2016. In the event of either a qualifying termination or a termination in connection with a change in control, Ms. Penny will be entitled to receive a lump-sum cash severance payment equal to the discounted amount of base salary that would have been due to her through the scheduled expiration date of her employment agreement.

Randy D. Rinicella.    Mr. Rinicella is party to an employment agreement with the Company, effective June 1, 2010, as amended. Mr. Rinicella's employment agreement is scheduled to expire on May 31, 2017. In the event of a qualifying termination, Mr. Rinicella will be entitled to receive a lump-sum cash severance payment equal to the discounted amount of base salary that would have been due to him through the scheduled expiration date of his employment agreement. In the event of a termination in connection with a change in control, Mr. Rinicella will be entitled to receive a lump-sum cash severance payment equal to the discounted amount of base salary due for the greater of 12 months or the remainder of the term of his employment.

Daniel A. Strusz.    Mr. Strusz is party to an employment agreement with the Company, effective October 1, 2012, as amended. Mr. Strusz's employment agreement is scheduled to expire on December 31, 2018. In the event of a qualifying termination, Mr. Strusz will be entitled to receive a lump-sum cash severance payment equal to the discounted amount of base salary that would have been due to him through the scheduled expiration date of his employment agreement. In the event of a termination in connection with a change in control, Mr. Strusz will be entitled to receive a lump-sum cash severance payment equal to the discounted amount of base salary due for the greater of 12 months or the remainder of the term of his employment.

Pursuant to each of their respective employment agreements, following a termination of their employment for any reason, each of the Company's executive officers will be subject to a covenant regarding non-competition for a period of two years (or one year, with respect to Messrs. Irick and Cook), a covenant regarding non-solicitation of customers and employees for a period of two years (or one year, with respect to Mr. Cook) and a provision regarding the disclosure of confidential and proprietary information.

Addenda to Employment Agreements

Concurrently with the execution of the merger agreement, at the request of Tokio Marine, each of Messrs. Williams, Irick, Burke, Schell, Callahan and Cook have entered into addenda to their existing employment agreements with the Company that will become effective only upon the closing of the merger. Tokio Marine requested the addenda because it intended to keep existing management in place immediately after the closing of the merger. The addenda provide, among other things, that such executives will continue to serve in their current roles with the Company from and after the effective time, that "good reason" will not be triggered solely as a result of the merger without subsequent action by the Company or Tokio Marine, and that the prong of "good reason" in the existing employment agreements of Messrs. Williams and Burke (which provides for "good reason" in the situation where the applicable executive is terminated or removed from the office he occupies, including following a change in control) will be interpreted to mean a change in the applicable executive's position or titles.

Craig J. Kelbel Employment Agreement.    Mr. Kelbel is party to an employment agreement with the company, effective March 1, 2007, as amended. Mr. Kelbel's employment agreement expired on January 31, 2015 and Mr. Kelbel retired as of such date. Mr. Kelbel currently serves as a consultant to

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the Company and, pursuant to the terms of his employment agreement, will serve as a consultant to the Company for a period equal to the number of whole years after January 1, 2002 in which Mr. Kelbel was a full time employee of the Company and will receive an annual consulting fee of $300,000 for the first year that he serves as a consultant and $75,000 for each year thereafter. Mr. Kelbel is subject to a covenant regarding non-competition and non-solicitation of customers and employees for a period of two years after his retirement and a provision regarding the disclosure of confidential and proprietary information.

Quantification of Payments

For an estimate of the value of the severance payments and/or benefits described above that would be payable to each of the Company's named executive officers in connection with a qualifying termination or a termination in connection with a change in control, see "—Quantification of Payments and Benefits to the Company's Named Executive Officers" below. The estimated aggregate amount of severance payments and/or benefits that would be payable to the Company's five other executive officers under their employment or service agreements if the merger were to be completed and they were to experience a qualifying termination, a termination in connection with a change in control or a similar termination of employment on July 1, 2015 is $5,072,584.

Deferred Compensation

Non-Employee Directors

Our non-employee directors are entitled to defer all or a portion of their cash or stock compensation under the HCC Insurance Holdings, Inc. Nonqualified Deferred Compensation Plan for Non-Employee Directors, which we refer to as the Director DCP. All amounts deferred under the Director DCP are fully vested. Payment of a participant's account balance will be paid at the time and in the form set forth in the participant's deferral election. Certain participant's deferral elections specify for payments of their accounts to be made upon the occurrence of a "change in control," which would include the merger. No separate trust or fund has been created, and all benefits payable under the plan will be paid from the Company's general assets.

Mr. Williams

Mr. Williams is entitled to receive deferred compensation pursuant to the terms of his employment agreement. The Company maintains the HCC Insurance Holdings, Inc. Nonqualified Deferred Compensation Plan for Mr. Williams under which this deferred compensation is paid. Mr. Williams remains eligible to participate in the plan for so long as he remains an employee of the Company. All amounts deferred under the plan are fully vested. Payment of Mr. Williams' account balance will occur within 30 days of his "separation from service" with the Company and will be payable to him in a single lump sum. No separate trust or fund has been created, and all benefits payable under the plan will be paid from the Company's general assets.

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Other Interests

Tokio Marine and the Company have agreed that the Company may establish one or more cash retention programs for employees of the Company and its subsidiaries prior to the effective time. Participants in the retention program will be selected by, and the amounts of each award will be determined by, the Chief Executive Officer of the Company (or his designee) on the date of the merger agreement in consultation with Tokio Marine, subject to certain agreed upon limitations. The cash retention payments will generally be paid to each participant in equal installments upon each of the first, second and third anniversaries of the effective time, in each case, subject to the participant's continued employment by Tokio Marine, the Company or their subsidiaries through the relevant date, except that the retention awards may, in certain circumstances, provide for earlier payment in connection with a participant's qualifying termination. As of the date of this proxy statement, no awards under the cash retention program have been granted, and no determination has been made as to any executive officer who will receive awards or the amounts of such awards.

Indemnification and Insurance

In the merger agreement, Tokio Marine and the Company agreed that, from and after the effective time, each of Tokio Marine and the surviving corporation of the merger will jointly and severally, and Tokio Marine will cause the surviving corporation of the merger to, (1) indemnify and hold harmless, to the fullest extent permitted under applicable law, all past or present directors or officers of the Company or the Company's subsidiaries against any costs or expenses (including attorneys' fees), judgments, fines, losses, claims, damages or liabilities incurred in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, arising out of or pertaining to matters existing or occurring at or prior to the effective time or relating to the enforcement of the indemnification provision in the merger agreement or any other indemnification, exculpation or advancement right of any such directors and officers, and pertaining to the fact that any such director and officer is or was a director or officer of the Company or its subsidiaries, whether asserted or claimed prior to, at or after the effective time and (2) advance expenses as incurred to such persons to the fullest extent permitted under applicable law, provided the person to whom expenses are advanced provides an undertaking to repay such advances if it is ultimately determined that such person is not entitled to indemnification.

At the effective time, the Company will have purchased (to the extent funds from Tokio Marine are advanced to the Company for such purpose) and, following the effective time, the surviving company will maintain a "tail" insurance policy for the extension of the existing directors' and officers' liability insurance policy maintained by the Company as of the date of the merger agreement for a period of at least six years from the effective time. Such "tail" insurance policy will have terms, conditions, retentions and limits of liability that are substantially the same as the Company's existing policies with respect to any matter claimed against a director or officer of the Company or any of our subsidiaries by reason of such director or officer's service at or prior to the effective time (including in connection with the merger agreement or the transactions contemplated thereby) and with respect to claims arising from facts or events that existed or occurred prior to the effective time. Such "tail policy" will contain substantially the same coverage and amount as, and contain terms and conditions no less advantageous, in the aggregate, than, the coverage currently provided by the Company's existing directors' and officers' liability insurance as of the date of the merger agreement. Tokio Marine and the Company will not be required to spend an aggregate amount to purchase such "tail" insurance policy that would be in excess of an amount equal to 300% of the annual premium currently paid by the Company at the date of the merger agreement for such insurance.

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Quantification of Payments and Benefits to the Company's Named Executive Officers

The table below, along with its footnotes, shows the information required by Item 402(t) of Regulation S-K regarding the amount of compensation for each of the Company's named executive officers that is based on or otherwise related to the merger, and assumes, among other things, that each named executive officer will experience a termination in connection with the change in control (or, if otherwise indicated below, a qualifying termination), as indicated below, immediately following the consummation of the merger. Please note that the amounts described and quantified below are estimates based on multiple assumptions that may or may not actually occur or be accurate on the relevant date and do not reflect certain compensation actions that may occur before the effective time. For purposes of calculating the amounts included in the table below, we have assumed July 1, 2015 as the closing date of the merger and a termination of each named executive officer's employment on July 1, 2015 immediately following the effective time.


Golden Parachute Compensation

Name
  Cash ($)   Equity($)(6)   Pension/
NQDC($)
  Perquisites/
Benefits($)
  Other($)   Total($)  

Christopher J.B. Williams

    6,500,000 (2)   19,605,924                 26,105,924  

Brad T. Irick

    2,700,000 (3)   3,241,446                 5,941,446  

William N. Burke

    2,130,000 (4)   6,036,740                 8,166,740  

Michael J. Schell

    2,003,800 (5)   2,241,018         114,413 (7)       4,359,231  

Craig J. Kelbel(1)

                         

(1)
Mr. Kelbel retired on January 31, 2015 and he did not receive any compensation or benefits that will or may be paid or provided in connection with the merger.

(2)
Represents a lump-sum cash severance payment equal to (i) the discounted amount of base salary and deferred compensation that would have been due for 12-months following the termination date ($1,950,000), payable within 30-days following the termination date, plus (ii) the average annual bonus that was paid to Mr. Williams for the prior two years ($4,550,000), payable before March 15 of the year following the year in which the termination date occurs. In the event Mr. Williams terminates his employment for "good reason" as a result of a change in his position or titles, in lieu of the amount described in (ii), Mr. Williams would be entitled to receive the aggregate of the base salary and bonus received by him for the two full calendar years prior to his termination ($11,100,000). The amount included in the table above includes the total amount, with no discount applied and assumes that the termination qualifies as a qualifying termination (the closing of the merger is not a condition to receiving the payments).

(3)
Represents a lump-sum cash severance payment equal to the discounted amount of base salary that would have been due through the scheduled expiration date of his employment agreement, payable within 90 days of the termination date. This severance is payable on a qualifying termination (in which case the closing of the merger is not a condition to receiving the payment) or on a termination in connection with a change in control (in which the payment is a "double-trigger" payment (i.e., it is conditioned upon both the closing of the merger and a qualifying termination of employment)). The amount included in the table above includes the total amount, with no discount applied, and assumes the termination qualifies as a termination in connection with the change in control.

(4)
Represents a lump-sum cash severance payment, equal to the discounted amount of base salary that would have been due for 12-months following the termination date, payable within 30-days following the termination date ($1,000,000). The amount also represents the bonus Mr. Burke would have been entitled to receive under the Incentive Plan had he remained employed by the

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(5)
Represents a lump-sum cash severance payment equal to (i) the discounted amount of base salary that would have been due through the scheduled expiration date of his employment agreement ($1,125,000), payable within 30-days of the termination date, plus (ii) an amount, in lieu of benefits other than medical, equal to $1,600 multiplied by the number of months remaining through the scheduled expiration date of his employment agreement ($28,800), payable within 30-days of the termination date. The amount also represents the bonus Mr. Schell would have been entitled to receive under the Incentive Plan had he remained employed by the Company ($850,000), payable by March 15, 2016. The estimate of the potential bonus that could be due to Mr. Schell is based on his actual bonus for 2014. This severance is payable on a qualifying termination (in which case the closing of the merger is not a condition to receiving the payments) or on a termination in connection with a change in control (in which the payments are "double-trigger" payments). The amount included in the table above includes the total amount, with no discount applied, and assumes the termination qualifies as a termination in connection with the change in control.

(6)
Amount represents the value attributed to unvested stock options, restricted shares and restricted stock units that will be cashed-out in connection with the merger. As described above, (i) prior to the effective time, the Company will waive any vesting or holding conditions or restrictions applicable to each outstanding restricted share of the Company's common stock granted under the Incentive Plan or the Company's 2014 Stock Promotion Plan (assuming 100% performance for any performance-vesting shares), and at the effective time each share will be treated in the same manner as a share of the Company's common stock and will entitle the named executive officer to an amount in cash equal to the merger consideration of $78.00 per share, less applicable tax withholdings, (ii) each outstanding unvested option to purchase shares of the Company's common stock granted under the Incentive Plan will, as of the effective time, be canceled and will entitle the holder of such option the right to receive an amount in cash equal to the product obtained by multiplying (x) the total number of shares of the Company's common stock subject to the option by (y) the excess, if any, of the merger consideration of $78.00 per share over the exercise price per share of that option, less any applicable tax withholdings, and (iii) each outstanding unvested restricted stock unit granted under the Incentive Plan will, as of the effective time, be canceled and will entitle the holder of such restricted stock unit to an amount in cash equal to the product of

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Name
  Restricted
Shares
($)
  Stock
Options
($)
  Restricted
Stock Units
($)
 

Christopher J.B. Williams

    19,605,924          

Brad T. Irick

    3,241,446          

William N. Burke

    4,167,540     1,869,200      

Michael J. Schell

    2,241,018          
(7)
Represents continued health coverage through COBRA, for Mr. Schell and/or his qualified beneficiaries, at Company expense for as long as coverage is available and thereafter reimbursement for a comparable individual policy or for coverage through an employer plan for a period commencing on the date COBRA coverage ends and ending on (i) in the case of Mr. Schell or his spouse, the dates he or she becomes eligible for Medicare coverage or (ii) in the case of Mr. Schell's qualified beneficiaries, the dates they would have ceased to be eligible for coverage under the Company's health plans had Mr. Schell remained an employee. The following assumptions have been used to calculate the value of expected benefits: coverage is provided for health care premiums for Mr. Schell and his spouse until Mr. Schell becomes eligible for Medicare, initial average annual cost of coverage of $17,119 for two adults or $8,910 for individual coverage, and 4.48% health insurance premium trend.

Material U.S. Federal Income Tax Consequences of the Merger

The following is a general discussion of the material U.S. federal income tax consequences to "U.S. holders" and "non-U.S. holders" (in each case, as defined below) of the Company's common stock whose shares are exchanged for cash in the merger. The following discussion is based upon the Internal Revenue Code, which we refer to as the Code, the U.S. Treasury regulations promulgated thereunder and judicial and administrative authorities, rulings and decisions, all as in effect as of the date of this proxy statement. These authorities may change, possibly with retroactive effect, and any such change could affect the accuracy of the statements and conclusions set forth in this discussion. This discussion does not address any state, local or foreign tax consequences, nor does it address any U.S. federal tax considerations other than those pertaining to the U.S. federal income tax. Also note that this summary does not purport to consider all aspects of U.S. federal income taxation that might be relevant to our stockholders. This discussion is not binding on the Internal Revenue Service, which we refer to as the IRS, or the courts and, therefore, could be subject to challenge, which could be sustained. We will not seek any ruling from the IRS with respect to the merger.

The following discussion applies only to holders of shares of the Company's common stock who hold such shares as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment). Further, this discussion does not purport to consider all aspects of U.S. federal income taxation that might be relevant to holders in light of their particular circumstances and does not apply to holders subject to special treatment under the U.S. federal income tax laws (such as, dealers or brokers in securities, commodities or foreign currencies, traders in securities that elect to apply a mark-to-market method of accounting, banks and certain other financial institutions, insurance companies, mutual funds, tax-exempt organizations, holders liable for the alternative minimum tax, partnerships, S corporations or other pass-through entities or investors in such partnerships, S corporations or other pass-through entities, regulated investment companies, real estate investment trusts, controlled foreign corporations, passive foreign investment companies, former citizens or residents of the United States, U.S. expatriates, holders whose functional currency is not the U.S. dollar, holders who hold shares of the Company's common stock as part of a hedge, straddle, constructive sale or conversion transaction or other integrated investment, holders who acquired the

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Company's common stock pursuant to the exercise of employee stock options, through a tax qualified retirement plan or otherwise as compensation, or holders who exercise appraisal rights).

If an entity or arrangement treated as a partnership for U.S. federal income tax purposes holds shares of the Company's common stock, the tax treatment of a partner in such partnership will generally depend on the status of the partner and the activities of the partnership. If you are a partner of a partnership holding shares of the Company's common stock, you should consult your tax advisor regarding the tax consequences of exchanging the shares of the Company's common stock for cash pursuant to the merger.

Holders of the Company's common stock should consult their tax advisors as to the specific tax consequences to them of the receipt of cash in exchange for shares of the Company's common stock pursuant to the merger, including the applicability and effect of the alternative minimum tax and any state, local, foreign and other tax laws.

U.S. Holders

For purposes of this discussion, the term "U.S. holder" means a beneficial owner of shares of the Company's common stock that is:

The receipt of cash by U.S. holders in exchange for shares of the Company's common stock pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes and may also be a taxable transaction under applicable state, local, foreign and other tax laws. In general, a U.S. holder who receives cash in exchange for shares of the Company's common stock pursuant to the merger will recognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference, if any, between (1) the amount of cash received in such exchange and (2) the U.S. holder's adjusted tax basis in such shares. Gain or loss must be determined separately for each block of shares of the Company's common stock (i.e., shares acquired for the same cost in a single transaction) disposed of pursuant to the merger. Such gain or loss generally will be capital gain or loss and generally will be long-term capital gain or loss if the U.S. holder's holding period for such shares is more than one year as of the date of the merger. Long-term capital gains of certain non-corporate U.S. holders, including individuals, are generally subject to U.S. federal income tax at preferential rates. The deductibility of capital losses is subject to limitations.

In addition to regular U.S. federal income tax, a U.S. holder that is an individual, estate or trust and whose income exceeds certain thresholds is subject to a 3.8% Medicare tax on all or a portion of such U.S. holder's "net investment income," which may include all or a portion of such U.S. holder's gain from the disposition of shares of the Company's common stock. U.S. holders that are individuals, estates or trusts should consult their tax advisors regarding the applicability of the Medicare tax to gain from the disposition of shares of the Company's common stock.

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Non-U.S. Holders

The term "non-U.S. holder" means a beneficial owner of shares of the Company's common stock that is not a U.S. holder or an entity that is treated as a partnership for U.S. federal income tax purposes.

Payments made to a non-U.S. holder in exchange for shares of the Company's common stock pursuant to the merger will generally not be subject to U.S. federal income tax unless:

Information Reporting and Backup Withholding

Payments made to U.S. holders in exchange for shares of the Company's common stock pursuant to the merger will be subject to information reporting and may be subject to backup withholding (currently at a rate of 28%). To avoid backup withholding, U.S. holders should timely complete and return IRS Form W-9 (or its successor form), certifying that such U.S. holder is a U.S. person, the taxpayer identification number provided is correct and such U.S. holder is not subject to backup withholding. Certain holders (including, with respect to certain types of payments, corporations) generally are not subject to backup withholding. In general, a non-U.S. holder will not be subject to U.S. federal backup withholding and information reporting with respect to payments made to the non-U.S. holder in exchange for shares of the Company's common stock pursuant to the merger if the non-U.S. holder (i) certifies under penalties of perjury that it is not a United States person (by providing a properly executed IRS Form W-8BEN or other applicable IRS Form W-8BEN-E or W-8BEN, as applicable, or any of the successor forms) and the payor does not have actual knowledge or reason to know that the holder is a "United States person" as defined under the Code, or (ii) such holder otherwise establishes an exemption from backup withholding. Backup withholding is not an additional tax. Holders may use amounts withheld as a credit against their U.S. federal income tax liability or may claim a refund of any excess amounts withheld by timely filing a claim for refund with the IRS.

Regulatory Approvals

Completion of the merger is subject to certain governmental or regulatory clearance procedures, including the early termination or expiration of the waiting period under the HSR Act, adoption of a decision by the European Commission finding the merger to be compatible with the internal market

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and the EEA Agreement pursuant to Council Regulation (EU) No. 139/2004, which we refer to as the EUMR, or the compatibility having been deemed to exist pursuant to the EUMR, and the approval of the insurance regulators of certain jurisdictions.

United States Antitrust Filing

Under the provisions of the HSR Act, transactions such as the merger may not be completed until the expiration of a 30-day waiting period following the filing of completed notification reports with the Antitrust Division and the FTC, unless a request for additional information or documentary material is received from the Antitrust Division or the FTC, or unless early termination of the waiting period is granted by the reviewing agencies. The Company and Tokio Marine filed notification reports under the HSR Act with the Antitrust Division and the FTC on [    ·    ], 2015 and [    ·    ], 2015, respectively. On [    ·    ], 2015, the FTC notified the Company and Tokio Marine that early termination of the waiting period under the HSR Act had been granted.

At any time before or after the merger, the Antitrust Division or the FTC could take action under the antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the merger or seeking divestiture of substantial assets of the Company or Tokio Marine or their subsidiaries. Private parties, foreign competition authorities and state attorneys general also may bring an action under the antitrust laws under certain circumstances. There can be no assurance that a challenge to the merger on antitrust grounds will not be made or, if a challenge is made, of the result.

European Union Merger Control Approval

Under the EUMR, transactions meeting the prescribed turnover thresholds may not be completed until the European Commission has adopted a decision declaring the transaction compatible with the internal market and the EEA Agreement, or such compatibility is deemed to exist by the expiration of the applicable waiting period. [Upon formal filing of the required notification, the European Commission has 25 working days in which to conduct its Phase 1 review of the transaction and to either adopt a clearance decision, or to refer the transaction for an in-depth Phase 2 review.] Tokio Marine filed a case team allocation request with the European Commission on [    ·    ], 2015, and a draft notification on [    ·    ], 2015. Tokio Marine formally notified the merger to European Commission on [    ·    ], 2015. [The Phase 1 review period ends on [    ·    ], 2015 / The Commission adopted a decision pursuant to the EUMR declaring the transaction compatible with the internal market and the EEA Agreement on [    ·    ], 2015.]

Insurance Laws and Regulations

The insurance laws and regulations of the states of California, Indiana, Maryland, Nevada, Oklahoma and Texas, jurisdictions where insurance company subsidiaries of the Company are domiciled or "commercially domiciled," generally require that, prior to the acquisition of control of an insurance company domiciled or "commercially domiciled" in those respective jurisdictions, the acquiring company must obtain the approval of the insurance regulators of those jurisdictions. On or about [    ·    ], 2015, Tokio Marine made the filings requesting such approval with the insurance regulators of the states of California, Indiana, Maryland, Nevada, Oklahoma and Texas.

The insurance law of the state of Texas provides that a person may not acquire control of an entity licensed as an insurance agency in Texas, unless it has filed certain information with the Texas Department of Insurance and received approval for such acquisition or such acquisition has not be disapproved before the 61st day after the date the Texas Department of Insurance receives all such required information. The insurance laws and regulations of multiple states where insurance company subsidiaries of the Company are authorized require the filing of pre-acquisition notifications regarding potential competitive impact of an acquisition of control of an insurance company authorized in those

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jurisdictions in which the requirement to make such notifications is triggered (and not otherwise exempted) under applicable law. Such notifications generally must be made at least 30 days before completion of the acquisition (which period may be terminated earlier by the applicable state's insurance regulator or extended on a one time basis for up to an additional 30 days). On or about [    ·    ], 2015, Tokio Marine made such notifications with the insurance regulators of the states of Alaska, Hawaii, Illinois, New Mexico, Nevada, Pennsylvania, Rhode Island and South Dakota.

Following the merger, members of the Tokio Marine group will become controllers of a number of United Kingdom regulated entities within the HCC group. Under United Kingdom regulatory rules, applications for approval of the change of control must be made to (i) the United Kingdom Prudential Regulation Authority, which we refer to as the PRA, in relation to those members of the HCC group who are regulated jointly by the PRA and the United Kingdom Financial Conduct Authority, which we refer to as the FCA, (ii) the FCA, in relation to those members of the HCC group who are regulated solely by the FCA, and (iii) the Society and Corporation of Lloyd's, which we refer to as Lloyd's, in relation to those members of the HCC group which are a Lloyd's underwriting agent or corporate member of Lloyd's. The PRA and FCA have 60 working days from filing of a complete application to either (i) approve the change of control unconditionally; (ii) approve the change of control subject to conditions; or (iii) object to the change of control. If, during its review, either the PRA or FCA decides it requires further information, the 60 working day timeline can be suspended by up to 30 working days while the information is sought. In relation to Lloyd's underwriting agents, Lloyd's has 3 working days to respond to an initial application for approval of a change of control and raise any immediate issues, or exercise its right to challenge the application. Lloyd's will then undertake detailed due diligence and provide written approval once satisfied with all aspects of the transaction. [Tokio Marine and Tokio Marine & Nichido Fire Insurance Co., Ltd submitted change of control applications to the PRA, FCA and Lloyd's on [    ·    ], 2015, [    ·    ], 2015 and [    ·    ], 2015 respectively.] [On [    ·    ], 2015, [    ·    ], 2015 and [    ·    ], 2015, respectively, each of the PRA, FCA and Lloyd's provided an approval notice to Tokio Marine and Tokio Marine & Nichido Fire Insurance Co., Ltd approving the change(s) of control over which it had jurisdiction.]

The insurance laws and regulations of Bermuda, a jurisdiction where an insurance company subsidiary of the Company is domiciled, generally require that, prior to the acquisition of control of an insurance company domiciled in Bermuda, the acquiring company provide notice to the Bermuda Monetary Authority. Tokio Marine provided such notice on July 1, 2015.

The Insurance Business Act of Japan requires Tokio Marine to file a prior notification with, and Tokio Marine & Nichido Fire Insurance Co., Ltd. to obtain the prior approval of, the Japan Financial Services Agency, which we refer to as the JFSA, in connection with the merger. Each of Tokio Marine and Tokio Marine & Nichido Fire Insurance Co., Ltd. intends to file the necessary notification or application, as applicable, with the JFSA promptly after all other necessary regulatory approvals are obtained.

Although the Company and Tokio Marine do not expect these regulatory authorities to disapprove of the merger, there is no assurance that the Company and Tokio Marine will obtain all required regulatory approvals, or that those approvals will not include terms, conditions or restrictions that may have an adverse effect on the Company or Tokio Marine.

Other than the filings described above, neither the Company nor Tokio Marine is aware of any regulatory approvals required to be obtained, or waiting periods required to expire, to complete the merger. If the parties discover that other approvals or waiting periods are necessary, they will seek to obtain or comply with them. If any additional approval or action is needed, however, the Company or Tokio Marine may not be able to obtain it, as is the case with respect to the other necessary approvals. Even if the Company or Tokio Marine obtain all necessary approvals, and the merger agreement is adopted by the Company's stockholders and approved by the unaffiliated stockholders, conditions may

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be placed on any such approval that could cause either the Company or Tokio Marine to abandon the merger.

Litigation Related to the Merger

HCC is aware of two putative stockholder class actions that have been filed since announcement of the merger: Albert Ari v. Christopher J.B. Williams, et al., No. 15-11159, filed June 16, 2015, and Susan Paskowitz v. Emmanuel T. Ballases et al., No. 15-11171, filed June 18, 2015, which we refer to collectively as the Complaints. The Complaints were filed in the Court of Chancery of the State of Delaware and name as defendants HCC, Tokio Marine, Merger Sub, and each of the members of the Company's board of directors. The Complaints allege, among other things, that Company's directors breached their fiduciary duties to the Company's public stockholders by approving the merger and failing to take steps to maximize the value of HCC. The Complaints also allege that Tokio Marine and Merger Sub aided and abetted the alleged breaches of fiduciary duties. The Complaints seek, among other things, an order enjoining the merger, compensatory damages and an award of attorneys' fees and costs.

The defendants believe that the claims asserted against them in the Complaints are without merit and intend to defend the stockholder actions vigorously.

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THE MERGER AGREEMENT

The summary of the material provisions of the merger agreement below and elsewhere in this proxy statement is qualified in its entirety by reference to the merger agreement, a copy of which is attached to this proxy statement as Annex A. This summary does not purport to be complete and may not contain all of the information about the merger agreement that is important to you. We urge you to read carefully the merger agreement in its entirety as it is the legal document governing the merger and as the rights and obligations of the parties to the merger agreement are governed by the terms of the merger agreement and not by this summary or any other information contained in this proxy statement.

Explanatory Note Regarding the Merger Agreement

The following summary of the merger agreement, and the copy of the merger agreement attached as Annex A to this proxy statement, are intended to provide information regarding the terms of the merger agreement and are not intended to provide any factual information about the Company or modify or supplement any factual disclosures about the Company in its public reports filed with the SEC. In particular, the merger agreement and the related summary are not intended to be, and should not be relied upon as, disclosures regarding any facts and circumstances relating to the Company. The merger agreement contains representations and warranties by each of the parties to the merger agreement that were made only for purposes of that agreement and as of specified dates. The representations, warranties and covenants in the merger agreement were made solely for the benefit of the parties to the merger agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the merger agreement instead of establishing these matters as facts, and may be subject to contractual standards of materiality or material adverse effect that differ from those applicable to investors. Investors are not third-party beneficiaries under the merger agreement and in reviewing the representations, warranties and covenants contained in the merger agreement or any descriptions thereof in this summary, it is important to bear in mind that such representations, warranties and covenants or any descriptions thereof were not intended by the parties to the merger agreement to be characterizations of the actual state of facts or condition of HCC, either of the Tokio Marine Parties, or any of their respective subsidiaries or affiliates. In addition, information concerning the subject matter of the representations, warranties and covenants may change after the date of the merger agreement, which subsequent information may or may not be fully reflected in HCC's public disclosures. For the foregoing reasons, the representations, warranties and covenants or any descriptions of those provisions should not be read alone and instead should be read in conjunction with the other information contained in the reports, statements and filings that HCC publicly files with the SEC.

The Merger

The merger agreement provides that, subject to the terms and conditions of the merger agreement, and in accordance with the DGCL at the effective time, Merger Sub will be merged with and into HCC and, as a result of the merger, the separate corporate existence of Merger Sub will cease, and HCC will continue as the surviving corporation and will become a wholly-owned indirect subsidiary of Tokio Marine. HCC will continue to be governed by the DGCL, and all of its rights, privileges, immunities, powers and franchises will continue unaffected by the merger.

The closing of the merger will occur on the date when the effective time is to occur. The merger will become effective when the certificate of merger has been duly filed with the Delaware Secretary of State or at a later time as agreed to by the parties.

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Effects of the Merger

At the effective time, Tokio Marine will become the sole owner of HCC and its business. Therefore, current HCC stockholders will cease to have direct or indirect ownership interests in HCC or rights as HCC stockholders, will not participate in any future earnings or growth of HCC, will not benefit from any appreciation in value of HCC and will not bear the future risks of HCC's operations.

Following completion of the merger, the Company's common stock will be delisted from the NYSE and deregistered under the Exchange Act. As a result, there will be no public market for shares of the Company's common stock. This will make certain provisions of the Exchange Act, such as the requirement of furnishing a proxy or information statement in connection with stockholders' meetings, no longer applicable to HCC. After the effective time, HCC will also no longer be required to file periodic reports with the SEC on account of shares of the Company's common stock. However, HCC will continue to make securities filings with respect to its publicly-held debt to the extent such filings are required under SEC regulations following the completion of the merger.

The directors of Merger Sub immediately prior to the effective time will be the initial directors of the surviving corporation, each to hold office from the effective time until their respective successors are duly elected and qualified or until their earlier death, resignation or removal in accordance with the certificate of incorporation and bylaws of the surviving corporation or as otherwise provided by applicable law. The officers of the Company immediately prior to the effective time will be the initial officers of the surviving corporation and will, from and after the effective time, hold office until their respective successors are duly appointed and qualified or until their earlier death, resignation or removal in accordance with the certificate of incorporation and bylaws of the surviving corporation or as otherwise provided by applicable law.

At the effective time, the certificate of incorporation of HCC will be amended and restated in its entirety to be in the form of the certificate of incorporation attached as Exhibit A to the merger agreement, and, as so amended and restated, shall be the certificate of incorporation of the surviving corporation until thereafter amended in accordance with its terms or by applicable law. Tokio Marine and the surviving corporation will cause the bylaws of Merger Sub as in effect immediately prior to the effective time to become, in all substantive respects, the bylaws of the surviving corporation, until thereafter amended in accordance with its terms or by applicable law.

When the Merger Becomes Effective

The closing of the merger will take place at the offices of Sullivan & Cromwell LLP, 125 Broad Street, New York, New York 10004, at 9:00 a.m., local time, on a date to be specified by the parties that will be no later than the sixth business day after all of the closing conditions set forth in the merger agreement have been fulfilled or waived (other than those conditions that by their nature are to be satisfied at the closing of the merger, but subject to the fulfillment or waiver of those conditions), unless another date or place is agreed to in writing by Tokio Marine and HCC.

The Merger Consideration and the Conversion of HCC Capital Stock

At the effective time, by virtue of the merger and without any action on the part of the Company, Tokio Marine or the Company's shareholders, each share of the Company's common stock issued and outstanding immediately prior to the effective time will be cancelled and converted into the right to receive $78.00 in cash, without interest, less any applicable withholding taxes, other than:

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The price to be paid for each share of the Company's common stock in the merger will be adjusted appropriately to reflect the effect of any change in the outstanding shares of capital stock of HCC, including if HCC pays a dividend in, splits, combines into a smaller number of shares or issues by reclassification any shares of the Company's common stock (or undertakes any similar act) prior to the effective time.

Each share of common stock of Merger Sub issued and outstanding immediately prior to the effective time will be converted into one fully paid and nonassessable share of common stock of the surviving corporation.

Payment Procedures

Prior to the effective time, Tokio Marine will engage a U.S.-based commercial bank or trust company reasonably acceptable to HCC, which we refer to as the paying agent, for the purpose of exchanging stock certificates for the per share merger consideration. At or prior to the effective time, Tokio Marine will cause to be deposited with the paying agent an amount of cash sufficient for the paying agent to pay an aggregate amount equal to the per share merger consideration multiplied by the number of shares of the Company's common stock (other than restricted shares) issued and outstanding immediately prior to the effective time, which we refer to as the aggregate share consideration, to be paid to HCC stockholders.

Promptly after the effective time (and in no event more than three business days thereafter), Tokio Marine will or will cause the paying agent to send you a letter of transmittal and instructions advising you how to surrender your stock certificates or book-entry shares to the paying agent in exchange for the per share merger consideration.

You will be paid for each of your shares of the Company's common stock that are converted into the right to receive the per share merger consideration after you have surrendered your stock certificates or book-entry shares to the paying agent together with a properly completed letter of transmittal and any other documents that may be reasonably required by the paying agent. The per share merger consideration will be paid as promptly as practicable following the surrender of your stock certificates or book-entry shares to the paying agent.

Interest will not be paid or accrue in respect of any cash payments of the per share merger consideration. Tokio Marine, the surviving corporation and the paying agent will be entitled to reduce the amount of any per share merger consideration paid to you by any applicable withholding taxes.

If you hold stock certificates and the paying agent is to pay some or all of your per share merger consideration to a person other than you, you must have your stock certificates properly endorsed or otherwise in proper form for transfer, and you must pay any transfer or other similar taxes payable by reason of the transfer or establish to the surviving corporation's satisfaction that the taxes have been paid or are not required to be paid.

You should not forward your stock certificates to the paying agent without a letter of transmittal, and you should not return your stock certificates with the enclosed proxy.

If you have lost your stock certificate, or if it has been stolen or destroyed, you will have to provide an affidavit to that fact and, if required by Tokio Marine, post a bond in an amount that Tokio Marine may reasonably direct as indemnity against any claim that may be made against it in respect of the

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stock certificate in order for you to receive the per share merger consideration from the paying agent in exchange for your lost, stolen or destroyed stock certificate.

Upon demand, the paying agent will return to the surviving corporation all funds in its possession one year after the effective time. After that time, if you have not received payment of the per share merger consideration, you may look only to the surviving corporation for payment of the merger consideration.

Treatment of Equity Compensation Awards

Options.    At the effective time, each outstanding option to purchase shares of the Company's common stock granted under the Incentive Plan, whether vested or unvested, will be canceled and will only entitle the holder of the option the right to receive an amount in cash equal to the product obtained by multiplying (1) the total number of shares of the Company's common stock subject to the option by (2) the excess, if any, of the merger consideration of $78.00 per share over the exercise price per share of that option, less any applicable tax withholdings.

Restricted Shares.    Immediately prior to the effective time, the Company will waive any vesting or holding conditions or restrictions applicable to each outstanding restricted share of the Company's common stock granted under the Incentive Plan or the Company's 2014 Stock Promotion Plan and, at the effective time, each restricted share will be treated in the same manner as a share of the Company's the Company's common stock and will entitle the holder to an amount in cash equal to the merger consideration of $78.00 per share, less any applicable tax withholdings. With respect to any restricted shares of the Company's common stock subject to performance-based vesting, the performance criteria will be deemed to have been achieved based on 100% performance.

Restricted Stock Units.    At the effective time, each outstanding restricted stock unit granted under the Incentive Plan, whether vested or unvested, will be canceled and will entitle the holder of the restricted stock unit an amount in cash equal to the product of (1) the total number of shares of the Company's common stock subject to the restricted stock unit and (2) the merger consideration of $78.00 per share, less any applicable tax withholdings.

Representations and Warranties

In the merger agreement, HCC has made customary representations and warranties to the Tokio Marine Parties, subject to certain exceptions in the merger agreement and HCC's disclosure letter that accompanied the merger agreement, with respect to, among other things:

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The representations and warranties of Tokio Marine and Merger Sub are more limited and relate, among other things, to the following:

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Certain of the representations and warranties of the Company and of Tokio Marine and Merger Sub are qualified as to "materiality" or "material adverse effect." For purposes of the merger agreement, "material adverse effect" means, with respect to the Company, a material adverse effect on the financial condition, business or results of operations of the Company and its subsidiaries, taken as a whole. In determining whether there has been or would be a material adverse effect on the Company, there are specified exceptions, including (a) changes in the economy or credit, securities, financial or other capital markets generally, (b) geopolitical conditions, the outbreak or escalation of hostilities, any acts of war (whether or not declared), armed hostilities, sabotage, terrorism or man-made disaster, or any escalation or worsening of any such hostilities, acts of war (whether or not declared), armed hostilities, sabotage, terrorism or man-made disaster; (c) any volcano, tsunami, pandemic, epidemic, hurricane, tornado, windstorm, flood, earthquake or other natural disaster; (d) changes that are the result of factors generally affecting the industries in which the Company and its subsidiaries operate in the geographic areas and product markets in which the Company or any of its subsidiaries operate or underwrite insurance, (e) any loss of, or adverse change in, the relationship, contractual or otherwise, of the Company or any of its subsidiaries with its customers, policyholders, reinsurers, producers, lenders, employees, agents or suppliers caused by the pendency or the announcement of the transactions contemplated by the merger agreement, or the identity of or facts relating to Tokio Marine or any of its affiliates; (f) changes in generally accepted accounting principles in the United States or generally accepted accounting principles in Japan, statutory accounting principles, the rules or policies of the Public Company Accounting Oversight Board or any statute, rule, regulation or other law, or the interpretation of any of the foregoing; (g) any failure by the Company to meet any internal or published estimates, projections, forecasts or predictions of revenues, earnings or other financial or operating metrics for any period ending after the date of the merger agreement and prior to the closing (provided that this exception does not preclude a determination that any change, effect, circumstance or development underlying such failure has resulted in or contributed to a material adverse effect), (h) the suspension of trading in securities on the NYSE or a decline in the price, or change in trading volume, of the Company's common stock on the NYSE (provided that this exception does not preclude a determination that any change, effect, circumstance or development underlying such decline has resulted in or contributed to a material adverse effect), (i) any change or announcement of a potential change in the Company's credit, financial strength or any other rating of the Company or any of its subsidiaries or any of their securities (provided that this exception does not preclude a determination that any change, effect, circumstance or development underlying such change or announcement has resulted in or contributed to a material adverse effect), and (j) the entry into or announcement of the merger agreement or compliance by the Company with its terms or any action taken by or at the written request of Tokio Marine or any of its affiliates; provided that, with respect to (a), (b), (c) and (d) above, to the extent that such change, event, circumstance or development has a materially disproportionate effect on the Company and the Company subsidiaries, taken as a whole, relative to other participants in the specialty insurance industry operating in the same or similar geographic regions in which the Company and its subsidiaries operate or underwrite insurance.

The representations and warranties in the merger agreement do not survive the closing of the merger or the termination of the merger agreement.

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Covenants Regarding Conduct of Business by HCC Pending the Merger

The Company has agreed to covenants in the merger agreement that affect the conduct of its business between the date the merger agreement was signed and the closing date of the merger. Prior to the closing date of the merger (unless Tokio Marine otherwise approves in writing (such approval not to be unreasonably withheld, delayed or conditioned)), subject to specified exceptions, the Company will use its commercially reasonable efforts to cause its business and the business of its subsidiaries to be conducted in the ordinary and usual course and, to the extent consistent therewith, use commercially reasonable efforts to preserve their business organizations intact and maintain existing relations and goodwill with governmental entities, customers, suppliers, third-party payors, agents, distributors, creditors, lessors, employees, reinsurers, "Agents" (as defined in the merger agreement), rating agencies and business associates and use commercially reasonable efforts to keep available the services of its and its subsidiaries' present employees, reinsurers, Agents (as defined in the merger agreement), rating agencies and agents. In addition, absent the written approval of Tokio Marine (such approval not to be unreasonably withheld, delayed or conditioned) and subject to specified exceptions, the Company will not, and will not permit any of its subsidiaries to:

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Acquisition Proposals

Under the terms of the merger agreement, subject to certain exceptions described below, the Company has agreed that neither it nor any of its subsidiaries nor any of the officers or directors of the Company and its subsidiaries will, and the Company shall use its commercially reasonable efforts to cause its and its subsidiaries' employees, investment bankers, attorneys, accountants and other advisors or representatives not to, directly or indirectly, nor shall it authorize any of the officers and directors of it or its subsidiaries to:

Under the merger agreement, an "acquisition proposal" means:

Notwithstanding the general restrictions above, if, at any time prior to obtaining the Company's stockholder approvals, the Company receives a written and unsolicited acquisition proposal and the Company's board of directors determines in good faith, based on the information then available and after consultation with its financial advisor and outside counsel, that the acquisition proposal is, or could reasonably be expected to result in, a superior proposal and that the failure to take the actions

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described below would be inconsistent with the directors' fiduciary duties under applicable law, then the Company may:

Prior to obtaining the Company's stockholder approvals, the Company's board of directors may approve, recommend, or otherwise declare advisable or propose to approve, recommend or declare advisable (publicly or otherwise) an unsolicited written acquisition proposal that the Company's board of directors reasonably believes to be credible if and only to the extent that the Company's board of directors has determined in good faith, based on the information then available and after consultation with its financial advisor and outside counsel, that such acquisition proposal constitutes a superior proposal and that the failure to take such action would be inconsistent with the directors' fiduciary duties under applicable law.

A "superior proposal" is an unsolicited acquisition proposal that would result in any third party (or the stockholders of a third party) becoming the beneficial owner (or owners), directly or indirectly, of (a) more than 50% of the assets (on a consolidated basis) or (b) more than 50% of the total voting power and more than 50% of the number of outstanding shares of the Company's common stock (or of the surviving entity in a merger involving the Company or the resulting direct or indirect parent of the Company or such surviving entity) that the Company's board of directors has determined in its good faith judgment (x) would result in a transaction that, if consummated, would be more favorable to the stockholders of the Company than the merger, taking into account all of the terms and conditions of such proposal and of the merger agreement (including any proposal by Tokio Marine to amend the terms of the merger agreement) and the time likely to be required to consummate such acquisition proposal, and (y) is reasonably capable of being consummated on the terms so proposed, taking into account all financial, regulatory, legal and other aspects of such proposal, including the likelihood of termination and the existence of a financing contingency.

Change in Company's Recommendation

Subject to certain exceptions described below, under the merger agreement, the Company's board of directors and each committee of the Company's board of directors are not permitted to withhold, withdraw, qualify or modify (or publicly propose or resolve to withhold, withdraw, qualify or modify), in a manner adverse to Tokio Marine, its recommendation with respect to the merger, or approve, recommend or otherwise declare advisable (or publicly propose to approve or recommend) any acquisition proposal. We refer to any of the foregoing as a change in Company recommendation.

Subject to certain exceptions described below, under the merger agreement, the Company and the Company's board of directors are not permitted to cause or permit the Company or any of our subsidiaries to enter into any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement or other agreement, with the exception of confidentiality agreements on terms relating to confidentiality not less restrictive to the other party than those contained in the confidentiality agreement between Tokio Marine and the Company, relating to any acquisition proposal.

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Notwithstanding the above, the Company's board of directors may, prior to the time the Company's stockholder approvals have been obtained, make a change in Company recommendation if the Company's board of directors has determined in good faith, based on the information then available and after consulting with its financial advisor and outside legal counsel, that the failure to take such action would be inconsistent with the directors' fiduciary duties under applicable law. However, the Company's board of directors may not take any such action, unless (1) if such change in Company recommendation is in connection with an acquisition proposal, such acquisition proposal constitutes a superior proposal, (2) the Company provides written notice to Tokio Marine at least five business days prior to making such change in Company recommendation, which we refer to as the change in Company recommendation notice period, which notice must, in the case of a superior proposal, specify all material terms and conditions of the superior proposal (including the identity of the party making such superior proposal) and must attach the most current version of any documents evidencing such superior proposal and any material modifications to such superior proposal, and, in any other case, specify in reasonable detail the reasons for such action, and (3) during the change in Company recommendation notice period the Company will, and will cause our financial advisor and outside counsel to, negotiate with Tokio Marine in good faith should Tokio Marine propose to make adjustments in the terms and conditions of the merger agreement to obviate the need for a change in Company recommendation (as determined in the good faith judgment of the Company's board of directors after taking into account any amendments that Tokio Marine agrees to make prior to the end of the change in Company recommendation notice period). Any material amendment to any acquisition proposal will be deemed to be a new acquisition proposal, including for purposes of the change in Company recommendation notice period.

The Company has agreed that it will promptly (and, in any event, within two business days) notify Tokio Marine if any inquiries, proposals or offers with respect to an acquisition proposal are received by, any information or data in connection with an acquisition proposal is requested from, or any discussions or negotiation in connection with an acquisition proposal are sought to be initiated or continued with, the Company or any of its representatives, indicating, in connection with such notice, among other things, the name of the person making the proposal and the material terms and conditions of any proposals or offers. Thereafter, the Company is required to keep Tokio Marine reasonably informed, on a prompt basis, of the status and terms of any such proposals or offers and the status of any such discussions or negotiations, including any change in the Company's intentions as previously notified.

Employee Benefits and Plans

From and after the effective time, Tokio Marine will, or will cause the surviving corporation to, honor all benefit plans and compensation arrangements and agreements in accordance with their terms as in effect immediately before the effective time. Tokio Marine will or will cause the surviving corporation to provide, during the period commencing at the effective time and ending on the later of (i) the 12-month anniversary of the effective time and (ii) December 31, 2016, which we refer to as the protected period, to each employee of the Company and its subsidiaries as of the effective Time, each of whom we refer to as a continuing employee, with (i) base salary or regular wages and short-term incentive compensation opportunities (including cash incentive opportunities of equivalent value with respect to any short-term incentive, or portion thereof, that is paid in the form of equity) that, in each case, are no less favorable than those provided to the continuing employee as of immediately prior to the effective time and (ii) pension, welfare and fringe benefits that are no less favorable in the aggregate than those provided to the continuing employee as of immediately prior to the effective time. Tokio Marine will or will cause the surviving corporation to provide to each continuing employee whose employment terminates during the protected period severance benefits that are no less favorable than the severance benefits provided to the continuing employee under the Company's and its subsidiary's severance arrangements in effect immediately prior to the effective time. To the extent applicable,

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Tokio Marine will cause any employee benefit plans that the employees of the surviving corporation and its subsidiaries are entitled to participate in after the effective time to take into account for purposes of eligibility, vesting, and level of benefits (other than with respect to determining the level of benefits under a defined benefit pension plan), thereunder, except for purposes of qualifying for subsidized early retirement benefits or to the extent it would result in a duplication of benefits, service with the Company and its subsidiaries as if such service were with the surviving corporation, to the same extent such service was credited under a comparable plan of the Company or the applicable subsidiary. With respect to any plan that is a "welfare benefit plan" (as defined in Section 3(1) of ERISA) adopted by the surviving corporation after the effective time, Tokio Marine will cause to be waived any restrictions with respect to any pre-existing condition, actively at work requirements and waiting periods (except to the extent such restrictions were applicable and not satisfied by the continuing employee as of the effective time under the Company's or any of its subsidiaries' then current welfare benefit plan), and any eligible expenses incurred by any continuing employees and their respective covered dependents during the portion of the plan year prior to the commencement of participation by any continuing employee (or covered dependent) shall be taken into account for purposes of satisfying all deductible, coinsurance and maximum out-of-pocket requirements applicable to such person for the applicable plan year as if such amounts had been paid in accordance with such plan.

Prior to the effective time, if requested by Tokio Marine in writing at least 20 business days prior to the effective time, to the extent permitted by applicable laws and the terms of the applicable plan or arrangement, the Company will cause the benefit plans to be amended to the extent necessary to provide that no employees of Tokio Marine and its subsidiaries (excluding the Company and its subsidiaries) will commence participation therein following the effective time, unless Tokio Marine explicitly authorizes such participation.

If the effective time occurs prior to the time that the Company makes annual short-term incentive payments in respect of 2015 performance, Tokio Marine will or will cause the surviving corporation to make such payments in the ordinary course of business consistent with past practice.

Other Covenants and Agreements

HCC and Tokio Marine have made certain other covenants to and agreements with each other regarding various other matters, including:

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Consents and Approvals

The merger agreement provides that Tokio Marine and the Company will cooperate with each other and use their respective reasonable best efforts to take, or to cause to be taken, all actions and do all things reasonably necessary, proper or advisable on its part under the merger agreement and applicable laws to consummate the merger and the other transactions contemplated by the merger agreement as soon as reasonably practicable. The merger agreement provides that each of Tokio Marine and the Company shall, in consultation and cooperation with the other and as promptly as possible following the date of the merger agreement, file (a) with the Antitrust Division the notification and report for, if any, required under the HSR Act with respect to the transactions contemplated by the merger agreement, (b) all appropriate documents, forms, filings or submissions required under any other applicable laws relating to antitrust or anti-competition matters or to the restraint of trade, (iii) all required approval applications to and notification filings with the JFSA and (iv) with applicable insurance regulators, all documents, forms, filings or other submissions required under applicable insurance laws, in each case with respect to the transactions contemplated by the merger agreement.

Conditions to the Merger

The obligations of Tokio Marine, Merger Sub and the Company to complete the merger are subject to the satisfaction or waiver (except where waiver is not permitted by the merger agreement or applicable law) of the following conditions:

Tokio Marine's and Merger Sub's obligation to close is also conditioned on the satisfaction or waiver of the following conditions:

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The Company's obligation to close is also conditioned on the satisfaction or waiver of the following conditions:

Before the closing of the merger, the Company (and, to the extent required by applicable law, the Company's board of directors) or Tokio Marine may each waive any of the conditions to closing of the other party and complete the merger even though one or more of these conditions has not been met, and except where waiver is not permitted by applicable law.

Neither the Company nor Tokio Marine may rely, either as a basis for not consummating the merger or terminating the merger agreement and abandoning the merger, on the failure of the closing conditions if such failure was caused by such party's willful or intentional breach in any material respect of any

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provision of the merger agreement or the failure to use reasonable best efforts to consummate the merger and the other transactions contemplated by the merger agreement.

Termination of the Merger Agreement

HCC and Tokio Marine may terminate the merger agreement by mutual written consent at any time before the consummation of the merger. In addition, with certain exceptions, either Tokio Marine or HCC may terminate the merger agreement at any time before the consummation of the merger (absent willful or intentional breach in any material respect by the terminating party that proximately contributed to the occurrence of the failure of a condition to consummating the merger) if:

Tokio Marine may also terminate the merger agreement if:

HCC may also terminate the merger agreement if:

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Termination Fees

HCC has agreed to pay Tokio Marine a termination fee of $187.5 million in cash in the event that:

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Amendment of the Merger Agreement

Subject to applicable law, Tokio Marine, Merger Sub and the Company have agreed that the merger agreement may be modified or amended by the parties at any time prior to the effective time.

Governing Law and Jurisdiction

The merger agreement is governed by the law of the State of Delaware and provides that any litigation relating to the merger agreement or the transactions contemplated by the merger agreement will be maintained in the Court of Chancery of the State of Delaware and any state appellate court therefrom within the State of Delaware (or, if the Court of Chancery of the State of Delaware declines to accept jurisdiction over a particular matter, any state or federal court within the State of Delaware).

Specific Performance

The parties have agreed that irreparable damage would occur in the event that any of the provisions of the merger agreement were not performed in accordance with their specific terms or were otherwise breached. Accordingly, the parties have agreed that they shall be entitled to an injunction or injunctions to prevent breaches of the merger agreement and to enforce specifically the performance of the terms and provisions of the merger agreement in the Court of Chancery of the State of Delaware and any state appellate court therefrom within the State of Delaware (or, if the Court of Chancery of the State of Delaware declines to accept jurisdiction over a particular matter, any state or federal court within the State of Delaware), without proof of actual damages (and each party waived any requirement for the securing or posting of any bond in connection with such remedy), this being in addition to any other remedy to which such party is entitled at law or in equity. Additionally, if prior to March 31, 2016 (or June 30, 2016, if applicable), any party to the merger agreement brings any proceeding to enforce specifically the performance of the terms and provisions of the merger agreement by any other party, the termination date under the merger agreement shall be automatically extended (a) for the period during which such action is pending, plus ten business days or (b) by such other time period established by the court presiding over such action, as the case may be.

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APPRAISAL RIGHTS

Under the DGCL, you have the right to dissent from the merger and to receive payment in cash for the fair value of your shares of the Company's common stock as determined by the Delaware Court of Chancery, together with interest, if any, as determined by the Court, in lieu of the consideration you would otherwise be entitled to pursuant to the merger agreement. These rights are known as appraisal rights. Stockholders electing to exercise appraisal rights must comply precisely with the provisions of Section 262 of the DGCL, which we refer to as Section 262, in order to perfect their rights. Strict compliance with the statutory procedures is required to perfect appraisal rights under Delaware law.

The following is intended as a brief summary of the material provisions of the Delaware statutory procedures required to be followed by a HCC stockholder in order to dissent from the merger and perfect appraisal rights. All references in this summary to a "stockholder" are to the record holder of shares of the Company's common stock, unless otherwise indicated.

THIS SUMMARY, HOWEVER, IS NOT A COMPLETE STATEMENT OF ALL APPLICABLE REQUIREMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SECTION 262, THE FULL TEXT OF WHICH APPEARS IN ANNEX C TO THIS PROXY STATEMENT. FAILURE TO FOLLOW PRECISELY ANY OF THE STATUTORY PROCEDURES SET FORTH IN SECTION 262 COULD RESULT IN THE LOSS OF YOUR APPRAISAL RIGHTS. MOREOVER, DUE TO THE COMPLEXITY OF THE PROCEDURES FOR EXERCISING THE RIGHT TO SEEK APPRAISAL, STOCKHOLDERS WHO ARE CONSIDERING EXERCISING SUCH RIGHTS ARE ENCOURAGED TO SEEK THE ADVICE OF LEGAL COUNSEL.

Only a holder of record of shares of the Company's common stock is entitled to demand an appraisal of the shares registered in that holder's name. Accordingly, to be effective, a demand for appraisal by a stockholder of the Company's common stock must be made by, or on behalf of, the record stockholder. The demand cannot be made by the beneficial owner if he or she does not also hold shares of the Company's common stock of record. Beneficial owners of shares of the Company's common stock who do not also hold such shares of record may have the registered owner, such as a broker, bank or other nominee, submit the required demand in respect of those shares. If shares of the Company's common stock are owned of record in a fiduciary capacity, such as by a trustee, guardian or custodian, execution of a demand for appraisal should be made by or for the fiduciary, and if the shares of the Company's common stock are owned of record by more than one person, as in a joint tenancy or tenancy in common, the demand should be executed by or for all joint owners. An authorized agent, including an authorized agent for two or more joint owners, may execute the demand for appraisal for a stockholder of record; however, the agent must identify the record owner or owners and expressly disclose the fact that, in executing the demand, he or she is acting as agent for the record owner. In the event a record owner, such as a broker, who holds shares of the Company's common stock as a nominee for others, exercises his or her right of appraisal with respect to the shares of the Company's common stock held for one or more beneficial owners, while not exercising this right for other beneficial owners, we recommend that the written demand state the number of shares of the Company's common stock as to which appraisal is sought. Where no number of shares is expressly mentioned, we will presume that the demand covers all shares held in the name of the record owner. If you hold your shares of the Company's common stock in a brokerage account or in other nominee form and you wish to exercise appraisal rights, you should consult with your broker or the other nominee to determine the appropriate procedures for the making of a demand for appraisal by the nominee.

Section 262 requires that stockholders for whom appraisal rights are available be notified of the availability of appraisal rights not less than 20 days before the stockholders' meeting to vote on the merger in connection with which appraisal rights will be available. A copy of Section 262 must be included with such notice. This proxy statement constitutes our notice to HCC stockholders of the availability of appraisal rights in connection with the merger in compliance with the requirements of

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Section 262 and a copy of the full text of Section 262 is attached hereto as Annex C. If you wish to consider exercising your appraisal rights, you should carefully review the text of Section 262 contained in Annex C to this proxy statement since failure to timely and properly comply with the requirements of Section 262 will result in the loss of your appraisal rights under the DGCL.

If you elect to demand appraisal of your shares, you must satisfy each of the following conditions:

If you fail to comply with any of these conditions and the merger is completed, you will be entitled to receive the merger consideration, but you will have no appraisal rights with respect to your shares of the Company's common stock.

All demands for appraisal pursuant to Section 262 should be addressed to HCC Insurance Holdings, Inc., 13403 Northwest Freeway, Houston, Texas 77040, Attn: Secretary, and must be delivered before the vote on the merger agreement is taken at the special meeting and should be executed by, or on behalf of, the record holder of the shares of common stock.

Within 10 days after the effective time, the surviving corporation must give written notice of the date that the merger has become effective to each stockholder who has properly filed a written demand for appraisal and who did not vote in favor of the merger agreement. At any time within 60 days after the effective time, any stockholder who has demanded an appraisal, and who has not commenced an appraisal proceeding or joined that proceeding as a named party, has the right to withdraw such stockholder's demand for appraisal and to accept the cash payment specified by the merger agreement for his or her shares of common stock; after this period, the stockholder may withdraw such demand for appraisal only with the consent of the surviving corporation. Within 120 days after the effective time, any stockholder who has complied with Section 262 will, upon written request to the surviving corporation, be entitled to receive a written statement setting forth the aggregate number of shares not voted in favor of the merger agreement and with respect to which demands for appraisal rights have been received and the aggregate number of holders of such shares. A person who is the beneficial owner of shares of common stock held in a voting trust or by a nominee on behalf of such person may, in such person's own name, request from the corporation the statement described in the previous sentence. Such written statement will be mailed to the requesting stockholder within 10 days after such

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written request is received by the surviving corporation or within 10 days after expiration of the period for delivery of demands for appraisal, whichever is later. Within 120 days after the effective time, either the surviving corporation or any stockholder who has complied with the requirements of Section 262 and who is otherwise entitled to appraisal rights may file a petition in the Delaware Court of Chancery demanding a determination of the fair value of the shares held by all stockholders entitled to appraisal. A person who is the beneficial owner of shares of the Company's common stock held in a voting trust or by a nominee on behalf of such person may, in such person's own name, file the petition described in the previous sentence. Upon the filing of the petition by a stockholder, service of a copy of such petition shall be made upon HCC, as the surviving corporation. The surviving corporation has no obligation to file such a petition in the event there are dissenting stockholders. Accordingly, the failure of a stockholder to file such a petition within the period specified could nullify the stockholder's previously written demand for appraisal. There is no present intent on the part of HCC to file an appraisal petition, and stockholders seeking to exercise appraisal rights should not assume that HCC will file such a petition or that HCC will initiate any negotiations with respect to the fair value of such shares. Accordingly, stockholders who desire to have their shares appraised should initiate any petitions necessary for the perfection of their appraisal rights within the time periods and in the manner prescribed in Section 262.

If a petition for appraisal is duly filed by a stockholder and a copy of the petition is delivered to the surviving corporation, the surviving corporation will then be obligated, within 20 days after receiving service of a copy of the petition, to file in the office of the Register in Chancery in which the petition was filed a duly verified list containing the names and addresses of all stockholders who have demanded payment for their shares and with whom agreements as to the value of their shares have not been reached by the surviving corporation. The Register in Chancery, if so ordered by the Delaware Court of Chancery, must give notice of the time and place fixed for the hearing of such petition by registered or certified mail to the surviving corporation and to the stockholders shown on the list at the addresses therein stated. Such notice must also be given by one or more publications at least one week before the day of the hearing, in a newspaper of general circulation published in the City of Wilmington, Delaware or such publication as the Delaware Court of Chancery deems advisable. The forms of the notices by mail and by publication must be approved by the Delaware Court of Chancery, and the costs thereof will be borne by the surviving corporation. At the hearing on such petition, the Delaware Court of Chancery will determine the stockholders who have complied with Section 262 and who have become entitled to appraisal rights. The Delaware Court of Chancery may require the stockholders who have demanded appraisal for their shares and who hold stock represented by certificates to submit their stock certificates to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings; if any stockholder fails to comply with that direction, the Delaware Court of Chancery may dismiss the proceedings as to that stockholder.

After determination of the stockholders entitled to appraisal of their shares of the Company's common stock, the Delaware Court of Chancery will appraise the shares, determining their fair value exclusive of any element of value arising from the accomplishment or expectation of the merger, together with interest, if any, to be paid upon the amount determined to be fair value. Unless the Delaware Court of Chancery in its discretion determines otherwise for good cause shown, interest from the effective time through the date of payment of the judgment will be compounded quarterly and will accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective time and the date of payment of the judgment. Upon application by the surviving corporation or by any stockholder entitled to participate in the appraisal proceeding, the Delaware Court of Chancery may, in its discretion, proceed to trial upon the appraisal prior to the final determination of the stockholders entitled to an appraisal. Any stockholder whose name appears on the list filed by the surviving corporation and who has submitted such stockholder's certificates of stock to the Register in Chancery, if such is required, may participate fully in all proceedings until it is finally determined that such stockholder is not entitled to appraisal rights under Section 262.

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When the fair value is determined, the Delaware Court of Chancery will direct the payment of such value, with interest thereon, if any, by the surviving corporation to the stockholders entitled to receive the same, in the case of holders of uncertificated stock forthwith, and in the case of holders of shares represented by certificates upon the surrender to the surviving corporation of the certificates representing such stock.

In determining fair value, the Delaware Court of Chancery is required to take into account all relevant factors. In Weinberger v. UOP, Inc., the Delaware Supreme Court discussed the factors that could be considered in determining fair value in an appraisal proceeding, stating that "proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court" should be considered, and that "[f]air price obviously requires consideration of all relevant factors involving the value of a company."

The Delaware Supreme Court has stated that in making this determination of fair value, the court must consider market value, asset value, dividends, earnings prospects, the nature of the enterprise and any other facts that could be ascertained as of the date of the merger that throw any light on future prospects of the merged corporation. Section 262 provides that fair value is to be "exclusive of any element of value arising from the accomplishment or expectation of the merger." In Cede & Co. v. Technicolor, Inc., the Delaware Supreme Court stated that such exclusion is a "narrow exclusion [that] does not encompass known elements of value," but rather applies only to the speculative elements of value arising from such accomplishment or expectation. In Weinberger, the Delaware Supreme Court also stated that "elements of future value, including the nature of the enterprise, which are known or susceptible of proof as of the date of the merger and not the product of speculation, may be considered."

You should be aware that the fair value of your shares of the Company's common stock as determined under Section 262 could be more than, the same as, or less than the value that you are entitled to receive under the terms of the merger agreement.

Moreover, we do not anticipate offering more than the per share merger consideration to any stockholder exercising appraisal rights and reserve the right to assert, in any appraisal proceeding, that, for purposes of Section 262, the "fair value" of a share of the Company's common stock is less than the per share merger consideration.

Costs of the appraisal proceeding (which do not include attorneys' fees or the fees and expenses of experts) may be imposed upon the surviving corporation and the stockholders participating in the appraisal proceeding by the Delaware Court of Chancery as the Court deems equitable in the circumstances. Upon the application of a stockholder, the Delaware Court of Chancery may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorneys' fees and the fees and expenses of experts, to be charged pro rata against the value of all shares entitled to appraisal. Any stockholder who had demanded appraisal rights will not, after the effective time, be entitled to vote shares subject to that demand for any purpose or to receive payments of dividends or any other distribution with respect to those shares, other than with respect to payment of dividends or other distributions payable to stockholders of record as of a record date prior to the effective time; however, if no petition for appraisal is filed within 120 days after the effective time, or if the stockholder delivers a written withdrawal of his or her demand for appraisal and an acceptance of the terms of the merger within 60 days after the effective time or thereafter with the written approval of HCC, then the right of that stockholder to appraisal will cease. No appraisal proceeding in the Delaware Court of Chancery will be dismissed as to any stockholder without the prior approval of the Court, and such approval may be conditioned upon such terms as the Delaware Court of Chancery deems just; provided, however, that any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party will maintain the right to withdraw its demand for appraisal and to accept the cash that such holder would have received pursuant to the merger agreement within 60 days after the effective time.

In view of the complexity of Section 262, stockholders who may wish to dissent from the merger and pursue appraisal rights should consult their legal advisors.

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CURRENT MARKET PRICE OF COMMON STOCK

The Company's common stock is traded on the NYSE under the symbol "HCC." On [    ·    ], 2015, there were [    ·    ] registered stockholders of the Company's common stock. Below is a summary of the NYSE high and low sales prices of shares of the Company's common stock on the NYSE, as reported in published financial sources as well as the cash dividend paid per share for the periods specified below. The closing sale price of the Company's common stock on the NYSE on June 9, 2015, the last full trading day before the release of media reports regarding Tokio Marine's offer to acquire HCC for $78.00 per share, was $56.69. On [    ·    ], 2015, the closing price for the Company's common stock on the NYSE was $[    ·    ] per share. You are encouraged to obtain current market quotations for the Company's common stock in connection with voting your shares.

 
  Common Stock
Price
   
 
 
  Dividends
Declared
 
 
  High   Low  

2012

                   

Quarter ended March 31

  $ 31.71   $ 26.62   $ 0.155  

Quarter ended June 30

  $ 32.69   $ 29.91   $ 0.155  

Quarter ended September 30

  $ 34.46   $ 30.06   $ 0.165  

Quarter ended December 31

  $ 37.65   $ 33.74   $ 0.165  

2013

                   

Quarter ended March 31

  $ 42.11   $ 37.37   $ 0.165  

Quarter ended June 30

  $ 43.69   $ 40.81   $ 0.165  

Quarter ended September 30

  $ 46.14   $ 41.85   $ 0.225  

Quarter ended December 31

  $ 46.38   $ 42.57   $ 0.225  

2014

                   

Quarter ended March 31

  $ 46.14   $ 41.19   $ 0.225  

Quarter ended June 30

  $ 48.97   $ 44.17   $ 0.225  

Quarter ended September 30

  $ 50.76   $ 46.51   $ 0.295  

Quarter ended December 31

  $ 54.96   $ 47.11   $ 0.295  

2015

                   

Quarter ended March 31

  $ 58.41   $ 51.90   $ 0.295  

Quarter ended June 30

  $ 77.40   $ 56.10   $ 0.295  

Quarter ended September 30 (through [·], 2015)

   
 
   
 
   
 
 

Under the merger agreement, HCC is prohibited from paying dividends other than quarterly cash dividends not to exceed $0.295 per share.


SUBMISSION OF STOCKHOLDER PROPOSALS

If the merger is consummated prior to our 2016 annual meeting of stockholders, we will not have public stockholders, and there will be no public participation in any future meetings of stockholders. However, if the merger is not consummated prior to our 2016 annual meeting of stockholders, we will hold such meeting and will provide notice of or otherwise publicly disclose the date on which such meeting will be held. If we have public stockholders at the time of our 2016 meeting, stockholder proposals will be eligible for consideration for inclusion in the proxy statement and form of proxy for our 2016 annual meeting of the stockholders in accordance with Rule 14a-8 under the Exchange Act and our bylaws, as described below, and the following deadlines apply to the submission of stockholder proposals to be considered at our 2016 annual meeting of stockholders.

Any stockholder who meets the requirements of the proxy rules under the Exchange Act may submit to the Company's board of directors proposals to be considered for submission to the stockholders at, and included in the proxy materials for, our 2016 annual meeting of stockholders. In order to be considered

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for inclusion in the proxy materials to be disseminated by the Company's board of directors, your proposal must comply with the requirements of Rule 14a-8 under the Exchange Act and be received at HCC Insurance Holdings, Inc., 13403 Northwest Freeway, Houston, Texas 77040 no later than December 12, 2015.

Under HCC's Fourth Amended and Restated Bylaws, no matter may be brought before, or acted upon at, any meeting of stockholders except (a) pursuant to the notice of meeting, given by or at the direction of the Company's board of directors, the Chief Executive Officer or the Secretary, (b) otherwise properly brought before the meeting by or at the direction of the Company's board of directors or (c) otherwise properly brought before the meeting by a HCC stockholder who was a stockholder of record at the time of giving of the notice of meeting, who is entitled to vote on such matter at the meeting and who has given timely written notice to the Secretary. To be timely, a stockholder's notice must be delivered or mailed to, and received by, the Secretary at 13403 Northwest Freeway, Houston, Texas 77040 not less than 60 days nor more than 90 days prior to the first anniversary of the preceding year's annual stockholder meeting; provided that in the event that the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the 90th day prior to such annual meeting and not later than the close of business on the later of the 60th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made. The presiding officer of the meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with HCC's Amended and Restated Bylaws, and if he or she should do so determine, such presiding officer shall declare to the meeting that any such business not properly brought before the meeting shall not be transacted.


HOUSEHOLDING ISSUES

The SEC has adopted rules that permit companies and intermediaries (such as a broker, bank or other nominee) to implement a delivery procedure called "householding." Under this procedure, multiple stockholders who reside at the same address may receive a single copy of our proxy materials, including this proxy statement and other proxy materials, unless the affected stockholder has provided contrary instructions to HCC or its broker, bank or other nominee, as applicable. This procedure provides extra convenience for stockholders and cost savings for companies.

Some banks, brokers and other nominees may be participating in the practice of "householding" proxy statements, including this proxy statement. This means that only one notice or one set of proxy materials may have been sent to multiple stockholders in your household. The bank, broker or other nominee will arrange for delivery of a separate copy of this proxy statement promptly upon your written or oral request. HCC also will promptly deliver a separate copy of the notice or proxy materials to you if you contact us at the following address or telephone number: Investor Relations, HCC Insurance Holdings, Inc., 13403 Northwest Freeway, Houston, Texas 77040, telephone (205) 268-3912, fax (205) 268-5547. If you would like to receive separate copies of the proxy materials in the future, or if you are receiving multiple copies and would like to receive only one copy per household, you should contact your bank, broker or other nominee.


DELISTING OF COMPANY COMMON STOCK

If the merger is completed, we expect that the Company's common stock will be delisted from the NYSE and we will no longer file periodic reports with the SEC on account of the Company's common stock. However, we will continue to make securities filings with respect to our publicly-held debt to the extent such filings are required under SEC regulations following the completion of the merger.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table shows the number of shares of the Company's common stock and the Company's common stock equivalents beneficially owned as of July 1, 2015 (unless otherwise noted) by each current director, each of the executive officers named in the Summary Compensation Table, all current directors and executive officers of HCC as a group, and persons we believe to beneficially own 5% or more of the Company's common stock.

Name
  Shares
Beneficially
Owned(2)
  Percent
Beneficially
Owned(3)
 

Directors and Named Executive Officers(1)

             

Emmanuel T. Ballases

    11,379     *  

Lydia I. Beebe

    2,016 (4)   *  

Frank J. Bramanti

    342,012 (5)   *  

William N. Burke

    91,157 (6)   *  

Walter M. Duer

    27,512.48 (7)   *  

Barbara J. Duganier

    1,889     *  

James C. Flagg, Ph. D. 

    15,117 (8)   *  

Thomas M. Hamilton

    4,000 (9)   *  

Brad T. Irick

    54,340 (10)   *  

Craig J. Kelbel

    16,202     *  

John N. Molbeck, Jr. 

    22,133     *  

Susan Rivera

    4,252     *  

Hans D. Rohlf

    (11)   *  

Robert A. Rosholt

    47,575     *  

Michael J. Schell

    55,303     *  

J. Mikesell Thomas

    8,679     *  

Christopher J.B. Williams

    210,440     *  

All Directors and Executive Officers as a group (22 persons)

    1,142,954.48     1.19 %

Other 5% Beneficial Owners

             

T. Rowe Price Associates, Inc.(12)

    8,057,150     8.42 %

100 E. Pratt Street

             

Baltimore, MD 21202

             

The Vanguard Group(13)

    6,543,407     6.84 %

100 Vanguard Blvd.

             

Malvern, PA 19355

             

Eaton Vance Management(14)

    6,319,902     6.60 %

2 International Place

             

Boston, MA 02110

             

BlackRock, Inc.(15)

    5,910,492     6.18 %

40 East 52nd Street

             

New York, NY 10022

             

*
Less than 1%

(1)
The address for the directors, director nominees and Named Executive Officers is 13403 Northwest Freeway, Houston, TX 77040-6094.

(2)
Directors and executive officers have sole voting and investment powers of the shares shown unless otherwise indicated.

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(3)
The calculation of this percentage assumes for each person:
95,644,299 shares of common stock are issued and outstanding as of July 1, 2015 plus, as to that person only, such number of shares that may be acquired by that person as a result of the following two bullet points:


The acquisition by such person of all shares that may be acquired upon the exercise of options to purchase shares that have vested or will vest by August 30, 2015; and

The acquisition by such person of all shares that may be acquired upon the vesting of restricted stock between July 1, 2015 and August 30, 2015.

(4)
Does not include 1,889 shares of common stock that Ms. Beebe has elected to defer under the Director DCP.

(5)
Includes 942 shares owned by Mr. Bramanti's children, of which Mr. Bramanti disclaims beneficial ownership.

(6)
Includes 60,000 shares that Mr. Burke has the right to acquire upon the exercise of options that have vested or will vest by August 30, 2015.

(7)
Includes 2,006.48 shares owned by a family limited partnership.

(8)
Does not include 1,889 shares of common stock that Mr. Flagg has elected to defer under the Director DCP.

(9)
Does not include 19,183.88 shares of common stock that Mr. Hamilton has elected to defer under the Director DCP.

(10)
Includes 20,000 shares that Mr. Irick has the right to acquire upon the exercise of options that have vested or will vest by August 30, 2015.

(11)
Does not include 5,251.04 shares of common stock that Mr. Rohlf has elected to defer under the Director DCP.

(12)
Based on a review of a Schedule 13G report filed on February 13, 2015, T. Rowe Price Associates, Inc. beneficially owned 8,057,150 shares as of December 31, 2014 with sole voting power as to 1,858,850 shares, shared voting power as to zero shares, sole dispositive power as to 8,057,150 shares and shared dispositive power as to zero shares. T. Rowe Price Associates, Inc. states that the securities are owned by various individual and institutional investors, which T. Rowe Price Associates, Inc. serves as an investment advisor with power to direct investments and/or sole power to vote the securities. For purposes of the reporting requirements of the Securities Exchange Act of 1934, T. Rowe Price Associates, Inc. is deemed to be a beneficial owner of such securities; however, T. Rowe Price Associates, Inc. expressly disclaims that it is, in fact, the beneficial owner of such securities.

(13)
Based on a review of a Schedule 13G report filed on February 10, 2015, The Vanguard Group beneficially owned 6,543,407 shares as of December 31, 2014 with sole voting power as to 64,328 shares, shared voting power as to zero shares, sole dispositive power as to 6,486,679 shares and shared dispositive power as to 56,728 shares.

(14)
Based on a review of a Schedule 13G/A report filed on January 13, 2015, Eaton Vance Management beneficially owned 6,319,902 shares as of December 31, 2014 with sole voting power as to 6,319,902 shares, shared voting power as to zero shares, sole dispositive power as to 6,319,902 shares and shared dispositive power as to zero shares.

(15)
Based on a review of a Schedule 13G/A report filed on January 30, 2015, BlackRock, Inc. beneficially owned 5,910,492 shares as of December 31, 2014 with sole voting power as to 5,559,876 shares, shared voting power as to zero shares, sole dispositive power as to 5,910,492 shares and shared dispositive power as to zero shares. The Schedule 13G/A states that various persons have the right to receive, or power to direct the receipt of, dividends from or the proceeds from the sale of our common stock, but that no one person's interest in our common stock is more than 5% of the total outstanding.

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Section 16(a) Beneficial Ownership Reporting Compliance

Our directors and executive officers are required to file reports with the SEC showing changes in their beneficial ownership of the Company's common stock. In addition to reporting transactions such as purchases, sales, and the exercise of stock appreciation rights, the rules require disclosure of certain stock-based awards under our compensation arrangements for our executive officers, even if the officers cannot acquire shares of our stock under the awards until sometime in the future.

We have reviewed copies of these reports and written representations from the individuals who are required to file reports. Based solely upon a review of the copies of such reports furnished to us and written representations from our directors and executive officers, all reports required to be filed in 2014 by persons subject to the reporting requirements of Section 16(a) were filed timely with the exception of Form 4s filed on March 17, 2014 for each of Mr. Williams, Mr. Irick, Mr. Callahan, Mr. Rinicella and Mr. Schell due to a clerical oversight, and all reports required to be filed in 2015 by persons subject to the reporting requirements of Section 16(a) were filed timely with the exception of Form 4s filed on March 18, 2015 for each of Mr. Irick, Mr. Callahan, Mr. Rinicella and Mr. Schell due to the untimely receipt of tax withholding information upon the vesting of restricted stock.

As of the date of this proxy statement, HCC has taken all steps required to cause any dispositions of its equity securities (including derivative securities with respect to the Company's common stock) resulting from the transactions contemplated by the merger agreement to be exempt under Rule 16b-3 promulgated under the Exchange Act for each individual who is subject to the reporting requirements of Section 16(a) of the Exchange Act.

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WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any document we file at the SEC's public reference room located at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. Our SEC filings are also available to the public at the SEC's website at http://www.sec.gov. You also may obtain free copies of the documents we file with the SEC by going to the Investor Relations page of our corporate website at www.hcc.com. Our website address is provided as an inactive textual reference only. The information provided on our website is not part of this proxy statement, and therefore is not incorporated herein by reference.

Statements contained in this proxy statement, or in any document incorporated by reference in this proxy statement regarding the contents of any contract or other document, are not necessarily complete and each such statement is qualified in its entirety by reference to that contract or other document filed as an exhibit with the SEC. The SEC allows us to "incorporate by reference" into this proxy statement documents we file with the SEC. This means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be a part of this proxy statement, and later information that we file with the SEC will update and supersede that information. We incorporate by reference the documents listed below and any documents filed by us pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this proxy statement and before the date of the special meeting (in each case, other than information and exhibits "furnished" to and not "filed" with the SEC in accordance with SEC rules and regulations):

Any person, including any beneficial owner, to whom this proxy statement is delivered may request copies of proxy statements and any of the documents incorporated by reference in this document or other information concerning us, without charge, by contacting the Company at Investor Relations, HCC Insurance Holdings, Inc., 13403 Northwest Freeway, Houston, Texas 77040, by email at InvestorRelations@hcc.com or by visiting the Company's website at www.hcc.com or from the SEC through the SEC's website at the address provided above. Documents incorporated by reference are available without charge, excluding any exhibits to those documents unless the exhibit is specifically incorporated by reference into those documents.

THIS PROXY STATEMENT DOES NOT CONSTITUTE THE SOLICITATION OF A PROXY IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM OR FROM WHOM IT IS UNLAWFUL TO MAKE SUCH PROXY SOLICITATION IN THAT JURISDICTION. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT TO VOTE YOUR SHARES AT THE SPECIAL MEETING. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM WHAT IS CONTAINED IN THIS PROXY STATEMENT. THIS PROXY STATEMENT IS DATED [    ·    ], 2015. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS PROXY STATEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THAT DATE, AND THE MAILING OF THIS PROXY STATEMENT TO STOCKHOLDERS DOES NOT CREATE ANY IMPLICATION TO THE CONTRARY.

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Annex A

EXECUTION VERSION

AGREEMENT AND PLAN OF MERGER

Among

HCC INSURANCE HOLDINGS, INC.,

TOKIO MARINE HOLDINGS, INC.

and

TMGC INVESTMENT (DELAWARE) INC.

Dated as of June 10, 2015


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TABLE OF CONTENTS

 
   
  Page  

 

ARTICLE I

       

 

The Merger; Closing; Effective Time

       

Section 1.1.

 

The Merger

   
A-1
 

Section 1.2.

 

Closing

    A-1  

Section 1.3.

 

Effective Time

    A-1  

 

ARTICLE II

       

 

Certificate of Incorporation and By-Laws
of the Surviving Corporation

       

Section 2.1.

 

The Certificate of Incorporation and By-Laws

   
A-2
 

 

ARTICLE III

       

 

Directors of the Surviving Corporation

       

Section 3.1.

 

Directors

   
A-2
 

Section 3.2.

 

Officers

    A-2  

 

ARTICLE IV

       

 

Effect of the Merger on Capital Stock;
Exchange of Certificates

       

Section 4.1.

 

Effect on Capital Stock

   
A-2
 

Section 4.2.

 

Exchange of Certificates

    A-3  

Section 4.3.

 

Treatment of Stock Plans and Stock Awards

    A-5  

Section 4.4.

 

Adjustments to Prevent Dilution

    A-7  

 

ARTICLE V

       

 

Representations and Warranties

       

Section 5.1.

 

Representations and Warranties of the Company

   
A-7
 

Section 5.2.

 

Representations and Warranties of Parent and Merger Sub

    A-27  

 

ARTICLE VI

       

 

Covenants

       

Section 6.1.

 

Interim Operations

   
A-29
 

Section 6.2.

 

Acquisition Proposals

    A-33  

Section 6.3.

 

Proxy Filing; Information Supplied

    A-36  

Section 6.4.

 

Stockholders Meeting

    A-36  

Section 6.5.

 

Filings; Other Actions; Notification

    A-36  

Section 6.6.

 

Access and Reports

    A-38  

Section 6.7.

 

Stock Exchange Delisting

    A-38  

Section 6.8.

 

Publicity

    A-39  

Section 6.9.

 

Employee Benefits

    A-39  

Section 6.10.

 

Expenses

    A-40  

Section 6.11.

 

Director and Officer Indemnification and Liability Insurance

    A-40  

Section 6.12.

 

Other Actions by the Company

    A-41  

Section 6.13.

 

Parent Vote

    A-41  

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Section 6.14.

 

Pre-Closing Restructuring

    A-42  

Section 6.15.

 

Investments

    A-42  

Section 6.16.

 

Stockholder Litigation

    A-42  

Section 6.17.

 

Senior Notes

    A-42  

Section 6.18.

 

Pre-Closing Capital Certification

    A-42  

 

ARTICLE VII

       

 

Conditions

       

Section 7.1.

 

Conditions to Each Party's Obligation to Effect the Merger

   
A-43
 

Section 7.2.

 

Conditions to Obligations of Parent and Merger Sub

    A-43  

Section 7.3.

 

Conditions to Obligation of the Company

    A-44  

Section 7.4.

 

Frustration of Closing Conditions

    A-44  

 

ARTICLE VIII

       

 

Termination

       

Section 8.1.

 

Termination by Mutual Consent

   
A-44
 

Section 8.2.

 

Termination by Either Parent or the Company

    A-44  

Section 8.3.

 

Termination by the Company

    A-45  

Section 8.4.

 

Termination by Parent

    A-46  

Section 8.5.

 

Effect of Termination and Abandonment

    A-46  

 

ARTICLE IX

       

 

Miscellaneous and General

       

Section 9.1.

 

Survival

   
A-48
 

Section 9.2.

 

Modification or Amendment

    A-48  

Section 9.3.

 

Waiver of Conditions

    A-48  

Section 9.4.

 

Counterparts

    A-48  

Section 9.5.

 

GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL; SPECIFIC PERFORMANCE

    A-48  

Section 9.6.

 

Notices

    A-50  

Section 9.7.

 

Entire Agreement

    A-51  

Section 9.8.

 

No Third Party Beneficiaries

    A-51  

Section 9.9.

 

Obligations of Parent and of the Company

    A-52  

Section 9.10.

 

Transfer Taxes

    A-52  

Section 9.11.

 

Definitions

    A-52  

Section 9.12.

 

Severability

    A-52  

Section 9.13.

 

Interpretation; Construction

    A-52  

Section 9.14.

 

Assignment

    A-53  

Section 9.15.

 

Dates and Dollar Amounts

    A-53  

Exhibit A

 

Certificate of Incorporation of the Surviving Corporation

   
1
 

Annex A

 

Definitions

   
A-A-1
 

A-ii


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AGREEMENT AND PLAN OF MERGER

        AGREEMENT AND PLAN OF MERGER (hereinafter called this "Agreement"), dated as of June 10, 2015, among HCC Insurance Holdings, Inc., a Delaware corporation (the "Company"), Tokio Marine Holdings, Inc., a Japanese corporation ("Parent"), and TMGC Investment (Delaware) Inc., a Delaware corporation and wholly owned indirect Subsidiary of Parent ("Merger Sub").


RECITALS

        WHEREAS, the Board of Directors of the Company has approved and declared advisable this Agreement and the Merger in accordance with the applicable provisions of the General Corporation Law of the State of Delaware (the "DGCL") upon the terms and subject to the conditions set forth in this Agreement.

        WHEREAS, the Board of Directors of Parent and Merger Sub have approved and declared advisable this Agreement and the Merger upon the terms and subject to the conditions set forth in this Agreement.

        WHEREAS, the Company, Parent and Merger Sub desire to make certain representations, warranties, covenants and agreements in connection with this Agreement.

        NOW, THEREFORE, in consideration of the premises, and of the representations, warranties, covenants and agreements contained herein, the parties hereto agree as follows:


ARTICLE I

The Merger; Closing; Effective Time

        Section 1.1.    The Merger.    Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the DGCL, at the Effective Time, Merger Sub shall be merged with and into the Company, and the separate corporate existence of Merger Sub shall thereupon cease (the "Merger"). The Company shall be the surviving corporation in the Merger (sometimes hereinafter referred to as the "Surviving Corporation"), and the separate corporate existence of the Company, with all its rights, privileges, immunities, powers and franchises, shall continue unaffected by the Merger, except as set forth in Article II. The Merger shall have the effects specified in the DGCL.

        Section 1.2.    Closing.    Unless otherwise mutually agreed in writing between the Company and Parent, the closing for the Merger (the "Closing") shall take place at the offices of Sullivan & Cromwell LLP, 125 Broad Street, New York, New York, at 9:00 A.M. on the sixth (6th) Business Day (the "Closing Date") following the day on which the last to be satisfied or waived of the conditions set forth in Article VII (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the fulfillment or waiver of those conditions) shall have been satisfied or waived in accordance with this Agreement. For purposes of this Agreement, the term "Business Day" shall mean any day ending at 11:59 p.m. (Eastern U.S. Time) other than a Saturday or Sunday or a day on which banks are required or authorized to close in the City of New York or Tokyo.

        Section 1.3.    Effective Time.    Subject to the provisions of this Agreement, as soon as practicable on the Closing Date, the Company, Merger Sub and Parent shall file with the Secretary of State of the State of Delaware a certificate of merger, executed in accordance with, and in such form as is required by, the relevant provisions of the DGCL (the "Certificate of Merger"). At or prior to the consummation of the Merger, the parties shall make all other filings and/or notices required under the DGCL in connection with the Merger. The Merger shall become effective upon the filing of the Certificate of Merger in accordance with the DGCL, or at such other later date and time as is agreed between the parties and specified in the Certificate of Merger in accordance with the DGCL (the time at which the Merger becomes effective is herein referred to as the "Effective Time").

A-1


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ARTICLE II

Certificate of Incorporation and By-Laws
of the Surviving Corporation

        Section 2.1.    The Certificate of Incorporation and By-Laws.     (a) The certificate of incorporation of the Company shall be amended at the Effective Time to read in its entirety as set forth in Exhibit A and, as so amended, shall be the certificate of incorporation of the Surviving Corporation (the "Charter") until thereafter amended as provided therein or by applicable Laws and (b) Parent and the Surviving Corporation shall cause the by-laws of Merger Sub as in effect immediately prior to the Effective Time to become, in all substantive respects, the by-laws of the Surviving Corporation (the "By-Laws"), until thereafter amended as provided therein or by applicable Laws.


ARTICLE III

Directors of the Surviving Corporation

        Section 3.1.    Directors.    The Board of Directors of Merger Sub at the Effective Time shall, from and after the Effective Time, be the directors of the Surviving Corporation until their successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Charter and the By-Laws.


        Section 3.2.
    Officers.     The officers of the Company in office immediately prior to the Effective Time will be the initial officers of the Surviving Corporation and shall, from and after the Effective Time, hold office until their respective successors are duly appointed and qualified or until their earlier death, resignation or removal in accordance with the Charter and By-Laws.


ARTICLE IV

Effect of the Merger on Capital Stock;
Exchange of Certificates

        Section 4.1.    Effect on Capital Stock.     At the Effective Time, as a result of the Merger and without any action on the part of the Company, Parent, Merger Sub or the holder of any capital stock of the Company:

A-2


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        Section 4.2.
    Exchange of Certificates.     

A-3


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        Section 4.3.
    Treatment of Stock Plans and Stock Awards.     

A-5


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        Section 4.4.
    Adjustments to Prevent Dilution.     Notwithstanding anything in this Agreement to the contrary, in the event that the Company changes the number of Shares or securities convertible or exchangeable into or exercisable for Shares issued and outstanding prior to the Effective Time as a result of a reclassification, stock split (including a reverse stock split), stock dividend or distribution, recapitalization, merger, issuer tender or exchange offer, or other similar transaction, the Per Share Merger Consideration shall be equitably adjusted.


ARTICLE V

Representations and Warranties

        Section 5.1.    Representations and Warranties of the Company.     Except as set forth in the Company Reports filed on or after January 1, 2014 and prior to the date of this Agreement (excluding any disclosure set forth in the sections titled "risk factors" and "forward-looking statements" or in any other section to the extent the disclosure is a forward-looking statement or cautionary, predictive or forward-looking in nature) or otherwise disclosed to Parent in the corresponding sections or subsections of the letter, dated the date of this Agreement, delivered to Parent by the Company in connection with the execution of this Agreement (the "Company Disclosure Letter") (it being agreed that disclosure of any item in any section or subsection of the Company Disclosure Letter (i) shall be deemed disclosure with respect to any other section or subsection to which the relevance of such disclosure to the applicable representation and warranty is reasonably apparent and (ii) with respect to any disclosure of an item relating to a representation or warranty in which the phrase "Material Adverse Effect" appears shall not be deemed to be an admission that such item constitutes or would reasonably be expected to result in, a Material Adverse Effect), the Company hereby represents and warrants to Parent and Merger Sub that:

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        Section 5.2.
    Representations and Warranties of Parent and Merger Sub.     Parent and Merger Sub hereby jointly and severally represent and warrant to the Company that:

A-27


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ARTICLE VI

Covenants

        Section 6.1.    Interim Operations.     

A-29


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        Section 6.2.    Acquisition Proposals.     

A-33


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        Section 6.3.
    Proxy Filing; Information Supplied.     The Company shall prepare and file with the SEC, as promptly as practicable after the date of this Agreement, a proxy statement in preliminary form relating to the Stockholders Meeting (such proxy statement, including any amendment or supplement thereto, the "Proxy Statement"). The Company agrees, as to it and its Subsidiaries, that (i) the form of the Proxy Statement will comply in all material respects with the applicable provisions of the Exchange Act and the rules and regulations thereunder and (ii) none of the information supplied by it or any of its Subsidiaries fo