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You are cordially invited to attend a special meeting (the âSpecial
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Q: What happens if <strong>the</strong> Merger is not completed?A: If <strong>the</strong> Merger is not completed for any reason, s<strong>to</strong>ckholders will not receive any payment for <strong>the</strong>irsh<strong>are</strong>s in connection with <strong>the</strong> Merger. Instead, unless and until we consummate ano<strong>the</strong>rtransaction similar <strong>to</strong> <strong>the</strong> Merger, we will remain a public company and sh<strong>are</strong>s of <strong>the</strong> Company’scommon s<strong>to</strong>ck will continue <strong>to</strong> be listed and traded on NASDAQ and registered under <strong>the</strong>Exchange Act. Under specified circumstances, we may be required <strong>to</strong> pay Nationwide Mutual atermination fee and/or reimburse Nationwide Mutual for certain of its out-of-pocket expenses asdescribed in <strong>the</strong> section entitled ‘‘The Merger Agreement—Termination Fee.’’Q. Will I owe taxes as a result of <strong>the</strong> Merger?A. Yes, if you recognize taxable gain. The Merger will be a taxable transaction for U.S. federalincome tax purposes <strong>to</strong> U.S. holders of sh<strong>are</strong>s of <strong>the</strong> Company’s common s<strong>to</strong>ck. As a result, <strong>to</strong> <strong>the</strong>extent you recognize taxable gain, <strong>the</strong> cash you receive in <strong>the</strong> Merger in exchange for your sh<strong>are</strong>sof <strong>the</strong> Company’s common s<strong>to</strong>ck will be subject <strong>to</strong> U.S. federal income tax and also may be taxedunder applicable state, local and foreign income and o<strong>the</strong>r tax laws. In general, you will recognizegain or loss equal <strong>to</strong> <strong>the</strong> difference between <strong>the</strong> amount of cash you receive in <strong>the</strong> Merger and <strong>the</strong>aggregate adjusted tax basis of your sh<strong>are</strong>s of <strong>the</strong> Company’s common s<strong>to</strong>ck. Refer <strong>to</strong> <strong>the</strong> sectionentitled ‘‘The Merger—Material U.S. Federal Income Tax Consequences’’ in this proxy statement for amore detailed explanation of <strong>the</strong> tax consequences of <strong>the</strong> Merger. <strong>You</strong> <strong>are</strong> urged <strong>to</strong> consult yourown tax advisor <strong>to</strong> determine <strong>the</strong> particular tax consequences <strong>to</strong> you (including <strong>the</strong> application andeffect of any state, local or foreign income and o<strong>the</strong>r tax laws) of <strong>the</strong> receipt of cash in exchangefor sh<strong>are</strong>s of <strong>the</strong> Company’s common s<strong>to</strong>ck pursuant <strong>to</strong> <strong>the</strong> Merger.Q. Who can help answer my o<strong>the</strong>r questions?A. If you need assistance in submitting your proxy or voting your sh<strong>are</strong>s or need additional copies ofthis proxy statement or <strong>the</strong> enclosed proxy card, you should contact Mark R. Cummins, ExecutiveVice President, Chief Investment Officer and Treasurer, at (215) 256-5000. If your broker holdsyour sh<strong>are</strong>s, you should also call your broker for additional information.Q. Where can I find more information about <strong>the</strong> Company?A. We file reports, proxy statements and o<strong>the</strong>r information with <strong>the</strong> SEC. The filings <strong>are</strong> available <strong>to</strong><strong>the</strong> public at <strong>the</strong> SEC’s website, http://www.sec.gov. Our website,http://www.harleysvillegroup.com/fin/fin_12.html, has copies of <strong>the</strong>se filings as well. Information onour website is not incorporated by reference in this proxy statement. Our sh<strong>are</strong>s of common s<strong>to</strong>ck<strong>are</strong> listed on NASDAQ under <strong>the</strong> symbol ‘‘HGIC’’ and you may inspect our SEC filings at <strong>the</strong>SEC’s public reference facilities. For a more detailed description of <strong>the</strong> information available,please see <strong>the</strong> section entitled ‘‘Where <strong>You</strong> Can Obtain Additional Information’’ in this proxystatement.17