Transaction in Own Shares during Close Period

LANCASHIRE HOLDINGS LIMITED                          

4 January 2010
Hamilton, Bermuda

                 Transaction in own shares during close period                 

Lancashire Holdings Limited ("the Company"), announces that, as the Company is
entering a close period, in connection with its share buy-back programme which
was approved by the shareholders at the 2010 Annual General Meeting held on 4
May 2010 (the "Repurchase Programme") the Company has entered into an
irrevocable non-discretionary arrangement with Numis Securities Limited
("Numis") to repurchase on its behalf and within certain pre-set parameters,
Common Shares of US$0.50 each in the Company from 31 December 2010 until the
earlier of the completion of the Repurchase Programme or the Company's
announcement of its annual results for the year ended 31 December 2010.

Numis has been granted the authority to repurchase shares up to an aggregate
value, including costs, of $25 million. The repurchased shares will be
cancelled.

This arrangement is in accordance with Rules 12.2.1R and 12.4.4R of the Listing
Rules and the Company's general authority to repurchase shares.

The Company confirms that it currently has no unpublished price sensitive
information.

For further information, please contact:

Lancashire Holdings                                                          
                                                                             
Greg Lunn                              [phone]                       
                                       [e-mail]         
                                                                             
Jonny Creagh-Coen                      [phone]                   
                                       [e-mail] 
                                                                             
Numis Securities Limited               [phone]                   
Charles Farquhar                                                             
                                                                             
Haggie Financial                       [phone]                   
Peter Rigby                            (Peter Rigby mobile [phone])      
Charlotte Ens                                                                

This announcement does not constitute an invitation or offer to buy any
securities of the Company. None of the securities referred to in this
announcement shall be sold, issued, exchanged or transferred in any
jurisdiction in contravention of applicable laws.

Numis Securities Limited, which is regulated in the United Kingdom by the
Financial Services Authority, is acting exclusively for Lancashire Holdings
Limited and no one else in relation to the Repurchase Programme, will not
regard any other person as a client in relation to the Repurchase Programme and
will not be responsible to anyone other than Lancashire Holdings Limited for
providing the protections afforded to Lancashire Holdings Limited nor for
providing advice in relation to the Repurchase Programme and/or any other
matter referred to in this announcement.

This announcement is not an offer in or into the United States.

About Lancashire

Lancashire, through its UK and Bermuda-based insurance subsidiaries, is a
global provider of specialty insurance products. The Group companies carry the
following ratings:

                              Financial        Long Term Issuer Outlook        
                              Strength                                         
                                               Rating (2)                      
                              Rating (1)                                       
                                                                               
A.M. Best                     A-               BBB-             Positive       
                                                                               
Standard & Poor's             A-               BBB              Stable         
                                                                               
Moody's                       A3               Baa2             Stable         

(1)Financial Strength Rating applies to Lancashire Insurance Company Limited
and Lancashire Insurance Company (UK) Limited

(2) Long Term Issuer Rating applies to Lancashire Holdings Limited

Lancashire has capital in excess of $1 billion and its Common Shares trade on
the main market of the London Stock Exchange under the ticker symbol LRE.
Lancashire is headquartered at Power House, 7 Par-la-Ville Road, Hamilton HM
11, 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

Lancashire Insurance Company (UK) Limited is regulated by the Financial
Services Authority in the UK.

Lancashire Marketing Services (Middle East) Limited is authorised and regulated
by the Dubai Financial Services Authority.

Lancashire Insurance Company Limited is regulated by the Bermuda Monetary
Authority in Bermuda.

NOTE REGARDING FORWARD-LOOKING STATEMENTS:

CERTAIN STATEMENTS AND INDICATIVE PROJECTIONS (WHICH MAY INCLUDE MODELED LOSS
SCENARIOS) MADE THAT ARE NOT BASED ON CURRENT OR HISTORICAL FACTS ARE
FORWARD-LOOKING IN NATURE INCLUDING WITHOUT LIMITATION, STATEMENTS CONTAINING
THE WORDS 'BELIEVES', 'ANTICIPATES', 'PLANS', 'PROJECTS', 'FORECASTS',
'GUIDANCE', 'INTENDS', 'EXPECTS', 'ESTIMATES', 'PREDICTS', 'MAY', 'CAN',
'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, CAPITAL MANAGEMENT PLANS,
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 FACTORS INCLUDE, BUT ARE NOT LIMITED TO: THE NUMBER AND TYPE OF INSURANCE
AND REINSURANCE CONTRACTS THAT WE WRITE; THE PREMIUM RATES AVAILABLE AT THE
TIME OF SUCH RENEWALS WITHIN OUR TARGETED BUSINESS LINES; THE LOW FREQUENCY OF
LARGE EVENTS; UNUSUAL LOSS FREQUENCY; THE IMPACT THAT OUR FUTURE OPERATING
RESULTS, CAPITAL POSITION AND RATING AGENCY AND OTHER CONSIDERATIONS HAVE ON
THE EXECUTION OF ANY CAPITAL MANAGEMENT INITIATIVES; THE POSSIBILITY OF GREATER
FREQUENCY OR SEVERITY OF CLAIMS AND LOSS ACTIVITY THAN OUR UNDERWRITING,
RESERVING OR INVESTMENT PRACTICES HAVE ANTICIPATED; THE RELIABILITY OF, AND
CHANGES IN ASSUMPTIONS TO, CATASTROPHE PRICING, ACCUMULATION AND ESTIMATED LOSS
MODELS; LOSS OF KEY PERSONNEL; A DECLINE IN OUR OPERATING SUBSIDIARIES' RATING
WITH A.M. BEST COMPANY AND/OR OTHER RATING AGENCIES; INCREASED COMPETITION ON
THE BASIS OF PRICING, CAPACITY, COVERAGE TERMS OR OTHER FACTORS; A CYCLICAL
DOWNTURN OF THE INDUSTRY; THE IMPACT OF A DETERIORATING CREDIT ENVIRONMENT
CREATED BY THE FINANCIAL MARKETS; A RATING DOWNGRADE OF, OR A MARKET DECLINE
IN, SECURITIES IN OUR INVESTMENT PORTFOLIO; CHANGES IN GOVERNMENTAL REGULATIONS
OR TAX LAWS IN JURISDICTIONS WHERE LANCASHIRE CONDUCTS BUSINESS; LANCASHIRE OR
ITS BERMUDIAN SUBSIDIARY BECOMING SUBJECT TO INCOME TAXES IN THE UNITED STATES
OR THE UNITED KINGDOM; AND THE EFFECTIVENESS OF OUR LOSS LIMITATION METHODS.
ANY ESTIMATES RELATING TO LOSS EVENTS INVOLVE THE EXERCISE OF CONSIDERABLE
JUDGEMENT AND REFLECT A COMBINATION OF GROUND-UP EVALUATIONS, INFORMATION
AVAILABLE TO DATE FROM BROKERS AND INSUREDS, MARKET INTELLIGENCE, INITIAL AND/
OR TENTATIVE LOSS REPORTS AND OTHER SOURCES. JUDGEMENTS IN RELATION TO LOSS
ARISING FROM NATURAL CATASTROPHE AND MAN MADE EVENTS INVOLVE COMPLEX FACTORS
POTENTIALLY CONTRIBUTING TO THESE TYPES OF LOSS, AND WE CAUTION AS TO THE
PRELIMINARY NATURE OF THE INFORMATION USED TO PREPARE ANY SUCH ESTIMATES.

THESE FORWARD-LOOKING STATEMENTS SPEAK ONLY AS AT THE DATE OF PUBLICATION.
LANCASHIRE HOLDINGS LIMITED EXPRESSLY DISCLAIMS ANY OBLIGATION OR UNDERTAKING
(SAVE AS REQUIRED TO COMPLY WITH ANY LEGAL OR REGULATORY OBLIGATIONS (INCLUDING
THE RULES OF THE LONDON STOCK EXCHANGE)) TO DISSEMINATE ANY UPDATES OR
REVISIONS TO ANY FORWARD-LOOKING STATEMENTS TO REFLECT ANY CHANGES IN THE
GROUP'S EXPECTATIONS OR CIRCUMSTANCES ON WHICH ANY SUCH STATEMENT IS BASED.