Hardy Underwriting Bermuda Ltd. yesterday rejected a $250 million takeover bid from Beazley plc.

Hardy, which moved its domicile from London to Bermuda in 2008, said its board voted unanimously to reject the approach.

Beazley said yesterday it had offered 300 pence a share for London-listed Hardy on October 6, a 36 percent premium to the October 5 share price. And the Dublin-based insurer said it was still interested in buying.

Hardy chief executive officer Barbara Merry told The Royal Gazette that the Hardy board met over the weekend to discuss the approach.

"We decided that 300 pence was far too low and so that valuation was rejected," Ms Merry said.

Beazley said it was "surprised and disappointed by the outright rejection" of its offer.

Ms Merry said: "We certainly did not reject the approach out of hand, we gave it a good deal of consideration."

Factors the Hardy board took into account included the strategic plan the company was implementing, the quality of its underwriting team and future prospects, she added.

Beazley put out a statement yesterday saying it was still interested in buying the Bermuda company and fellow Lloyd's of London insurer.

"Beazley remains committed to establishing a constructive dialogue with Hardy's board and shareholders with the intention of agreeing a recommended transaction," Beazley said in the statement.

Beazley, which has operations in Europe, Asia and Australia and also manages a US admitted insurance company, said it believes the two groups are highly compatible.

The offer is "an attempt to acquire the company opportunistically, when valuations of listed Lloyd's companies are at a cyclical low", Hardy said in a statement yesterday.

Hardy's shares soared more than 19 percent on the London Stock Exchange yesterday in response to the news. The stock closed on 290 pence, up 46.8 pence.

Beazley is the fifth-biggest publicly traded Lloyd's insurer and Hardy is the smallest by market value.

Small size was not stunting Hardy's progress, Ms Merry insisted.

"We have been growing satisfactorily," she said. "If you look at what we have experienced over the last few years, it has been achieved without any compromise of our underwriting standards.

"We've continued to outperform the sector and have maintained our record of 30 years of positive results.

"We think we've done very well in implementing our growth plan."

The company has expanded globally from its Lloyd's roots, first into Bermuda, where it established a reinsurance platform last year.

Hardy has also established a joint venture in Bahrain and opened an office in Singapore earlier this month.

Ms Merry said she expected the company to achieve "modest growth" next year and said the company had all the capital it needed to achieve that.

Mark Williamson, of KBC Peel Hunt, one of the firms advising Hardy in these dealings, told Reuters: "Beazley has made a cheeky approach to acquire Hardy ... that contains little detail on why the acquisition would make sense and what it would add to shareholders," Mr. Williamson said.

"I don't believe that this is a situation of two plus two makes five; I think it may well be three. The implication has to be that the only logic is that it sees the opportunity to pick a quality asset up on the cheap and on this basis it makes no sense for shareholders to accept such an offer."

Joy Ferneyhough, a London-based analyst at Execution Noble Ltd., told Bloomberg News:

"We see a deal as possible rather than probable. With insurance pricing looking to be softer again in 2011 and 2012, excluding extraordinary losses, a multiple much above this initial offer would have to be seriously considered."

The announcement comes five days after the death of Beazley co-founder and deputy chairman Andrew Beazley, who succumbed to cancer.