HCC to Acquire 34% Interest in UK’s DeMontfort Group from CNA Surety

October 28, 2004

Houston’s HCC Insurance Holdings, Inc. announced today that it has reached an agreement to acquire the 34 percent interest, currently owned by CNA Surety, in the common shares of the U.K.-based DeMontfort Group of companies.

The agreement covers CNA’s common shares and certain preferred shares and indebtedness of the DeMontfort Group. Terms were not disclosed. The transaction is also subject to execution of a definitive agreement and receipt of UK regulatory approvals. It is expected to close shortly thereafter.

“DeMontfort is an insurance company located near Leicester, England that provides surety and credit insurance to small and medium size companies throughout the UK and Ireland,” HCC explained. “Executive management Jim Davidson and Martyn Ward head up a team of professionals at DeMontfort, which has been in business for 22 years and currently underwrites almost 20 million in annual premium. For more information visit their Web site at www.demontfort.com.”

HCC Chairman and CEO Stephen L. Way commented: “We are very pleased to be able to expand our European presence through this strategic investment in such a well managed and efficient operation and believe that our involvement will help DeMontfort further develop its business and become the leading UK market in their specialty area.”

CNA President and CEO John Welch said that “while we have enjoyed a very positive relationship with the DeMontfort team, refinements in our international strategy led us to conclude that this transaction makes sense. We wish the DeMontfort team and their new partners at HCC continued success.”

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