LONDON (Reuters) - Bermuda re/insurer Hardy Underwriting yesterday turned down an improved takeover offer from Lloyd's of London insurer Beazley.

Beazley increases its previous offer for the company by 10 percent, to 330 pence per share, or £174 million ($280 million).

Dublin-based Beazley said yesterday it would walk away unless Hardy agreed to discuss the revised proposal, which was increased from an initial 300 pence last month.

Hardy said the new proposal still "substantially undervalues" the company, describing it as "an attempt to acquire the company opportunistically".

Hardy chief executive Officer Barbara Merry said the new offer was not "materially different" from the first bid, adding that it was "simply not enough".

Beazley chief executive Andrew Horton told Reuters the company now hoped to discuss its latest proposal directly with Hardy's shareholders this week.

"If the shareholders are not happy with 330, or if the shareholders who work with Hardy management don't talk to us, we will be withdrawing our proposal," Horton said.

"We want to have some engagement at the 330 level."

Lloyd's of London insurers have been at the centre of takeover speculation because an unpromising trading environment has weighed on their share prices, opening up potentially attractive acquisition opportunities.

Brit Insurance last month accepted a $1.4 billion offer from buyout firms Apollo Management and CVC Capital Partners after a four-month takeover battle.

Buying Hardy would diversify Beazley's predominantly US-focused business, while also giving it access to more lucrative catastrophe insurance business.

Beazley said a bid at 330 pence would represent a 50 percent premium to Hardy's share price on October 6, the day before its first offer proposal was announced, and would exceed the highest level that Hardy shares have ever traded at.

Hardy shares lost a fifth of their value between the start of the year and Beazley's first approach last month after bigger-than-expected catastrophe claims virtually wiped out its half-year profit.

"Our view remains that a 330 pence offer is unlikely to succeed," Shore Capital analyst Eamonn Flanagan wrote in a note.

"This rating still undervalues Hardy's underwriting track record, the extent of its conservative reserving, and the potential from it recently established platforms in Singapore, the Middle East, and Bermuda."

Beazley also said it was on course for an "excellent" result in 2010 thanks to a focus on writing business at high profit margins. Total premiums for the company rose two percent to $1.35 billion in the first nine months of the year, it said.