Statement re Hurricanes Gustav and Ike and Inve...

Lancashire Holdings Limited                          


13 October 2008
Hamilton, Bermuda


          Preliminary Loss Estimates for Hurricanes Gustav and Ike 
                       and Comments on Investments   
                                

Lancashire Holdings Limited ("Lancashire" or "the Company") today announced
that it currently estimates that Hurricanes Gustav and Ike will have a combined
net negative impact on its financial results of approximately US$150 million.
Net negative impact includes the sum of gross claims and claims expenses,
reinsurance recoveries and reinstatement premium. Hurricane Gustav is expected
to contribute less than US$5 million to the total estimate. Of the US$150
million impact, approximately US$125 million relates to offshore losses. This
assumes an offshore industry loss of approximately US$3 billion. These amounts
are based on management's estimates following a review of the Company's
potential exposures and discussions with certain counterparties. Lancashire's
actual ultimate net losses from these events may vary materially from these
preliminary estimates as additional information emerges.

Lancashire also announced that its estimated annualized total investment return
is a positive 1.2% for the nine months to September 30, 2008. Total investment
return includes net investment income, realised gains and losses, impairments,
and unrealised gains and losses.

Richard Brindle, Group Chief Executive Officer, commented:

"In the third quarter, Lancashire has been thoroughly tested on both sides of
the balance sheet by two large hurricanes in the Gulf of Mexico and by the
worst financial crisis since the Great Depression."

"Hurricane Gustav was a Category Three hurricane, generating losses more or
less in-line with that typically expected of that storm category. Gustav passed
over a significant number of oil platforms however Lancashire's loss was
minimal. In contrast to Gustav, Ike was a remarkable storm. Despite officially
being a Category Two hurricane, Ike demonstrated the destructive potential more
commonly expected of Category 4 or 5 storms while offshore. It was enormously
wide, with the second highest measure of integrated kinetic energy of any U.S.
hurricane in the past forty years. Hurricane force winds were experienced by
any one location for an unusually long period of time, resulting in the
destruction of at least 52 oil platforms, compared to 47 in Hurricane Katrina.
This was a very large loss event indeed for the offshore energy industry but we
anticipate our losses will be underweight our market share. We are also
encouraged by what we believe will be a significant hardening of this sector in
2009."

Neil McConachie, Chief Financial Officer and Chief Risk Officer, commented:

"The continuing turmoil in the financial markets can only be described as
extraordinary. Since inception, Lancashire's investment strategy has been
highly conservative, with the primary aims being to preserve liquidity and
limit downside risk. That philosophy has served us well, particularly in recent
weeks. Lancashire has no holdings of alternative investments such as hedge
funds, has a very small allocation to U.S. equities, has no holdings in
non-agency structured products and has a large allocation to cash. At June 30,
2008 the average duration of the fixed income portfolio and managed cash was
1.3 years and the average credit quality was AA+. Our investment strategy will
remain very defensive for the foreseeable future."

The make-up by asset class of Lancashire's investment portfolio at June 30,
2008 is set out in the table below:

Consolidated investment portfolio at fair value
(shown in millions of U.S. dollars, except percentages)

                                                        june 30, 2008         %
                                                                               
type of investment                                                             
                                                                               
short term investments                          $                61.3      3.3%
                                                                               
U.S. treasuries                                                 402.9     21.6%
                                                                               
other government bonds                                           15.6      0.8%
                                                                               
U.S. government agency mortgage backed                          261.2     14.0%
securities                                                                     
                                                                               
non-agency structured products                                      -         -
                                                                               
corporate bonds                                                 269.9     14.5%
                                                                               
convertible debt securities                                      11.6      0.6%
                                                                               
total fixed income securities, available for                  1,022.5     54.8%
sale                                                                           
                                                                               
equity securities, available for sale                            83.0      4.5%
                                                                               
alternative investments                                             -         -
                                                                               
fixed income securities, at fair value through                   20.9      1.1%
income statement                                                               
                                                                               
other investments                                                 4.0      0.2%
                                                                               
managed cash                                                    734.7     39.4%
                                                                               
total investments                              $              1,865.1    100.0%
                                                                               

For further information, please contact:

Lancashire Holdings                                                            

Jonny Creagh-Coen                       [phone]                   
Neil McConachie                         [phone]                        
Greg Lunn                               [phone]                        

About Lancashire

Lancashire, through its UK and Bermuda-based insurance subsidiaries, is a
global provider of specialty insurance products. Its insurance subsidiaries
carry the Lancashire group rating of A minus (Excellent) from A.M. Best with a
stable outlook. Lancashire has capital in excess of $1 billion dollars and its
Common Shares trade on AIM under the ticker symbol LRE. Lancashire is
headquartered at Mintflower Place, 8 Par-La-Ville Road, Hamilton HM 08,
Bermuda. The mailing address is Lancashire Holdings Limited, P.O. Box HM 2358,
Hamilton HM HX, Bermuda. For more information on Lancashire, visit the
Company's website at www.lancashiregroup.com.


                   NOTE REGARDING FORWARD-LOOKING STATEMENTS                   

CERTAIN STATEMENTS MADE IN THIS ANNOUNCEMENT THAT ARE NOT BASED ON CURRENT OR
HISTORICAL FACTS ARE FORWARD-LOOKING IN NATURE INCLUDING, WITHOUT LIMITATION,
STATEMENTS CONTAINING WORDS 'BELIEVES', 'ANTICIPATES', 'PLANS', 'PROJECTS',
'INTENDS', 'EXPECTS', 'ESTIMATES', 'PREDICTS', 'MAY','WILL', 'SEEKS', 'SHOULD'
OR, IN EACH CASE, THEIR NEGATIVE OR COMPARABLE TERMINOLOGY. ALL STATEMENTS
OTHER THAN STATEMENTS OF HISTORICAL FACTS INCLUDING, WITHOUT LIMITATION, THOSE
REGARDING THE GROUP'S FINANCIAL POSITION, RESULTS OF OPERATIONS, LIQUIDITY,
PROSPECTS, GROWTH, BUSINESS STRATEGY, PLANS AND OBJECTIVES OF MANAGEMENT FOR
FUTURE OPERATIONS (INCLUDING DEVELOPMENT PLANS AND OBJECTIVES RELATING TO THE
GROUP'S INSURANCE BUSINESS) ARE FORWARD-LOOKING STATEMENTS. SUCH
FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND
OTHER IMPORTANT FACTORS THAT COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR
ACHIEVEMENTS OF THE GROUP TO BE MATERIALLY DIFFERENT FROM FUTURE RESULTS,
PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING
STATEMENTS. THESE FORWARD-LOOKING STATEMENTS SPEAK ONLY AS AT THE DATE OF THIS
ANNOUNCEMENT OR OTHER INFORMATION CONCERNED. LANCASHIRE HOLDINGS LIMITED
EXPRESSLY DISCLAIMS ANY OBLIGATION OR UNDERTAKING (SAVE AS REQUIRED TO COMPLY
WITH ANY LEGAL OR REGULATORY OBLIGATIONS (INCLUDING THE AIM RULES)) TO
DISSEMINATE ANY UPDATES OR REVISIONS TO ANY FORWARD-LOOKING STATEMENTS
CONTAINED HEREIN TO REFLECT ANY CHANGES IN THE GROUP'S EXPECTATIONS WITH REGARD
THERETO OR ANY CHANGE IN EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH ANY SUCH
STATEMENT IS BASED.