1st Quarter Results

Lancashire Holdings Limited
29 April 2008


                          LANCASHIRE HOLDINGS LIMITED

           Fully converted book value per share grows 5.0% in Q1 2008
                              Combined ratio 61.2%


Hamilton, Bermuda, 29 April 2008

Lancashire Holdings Limited ('Lancashire' or 'the Company') today announces its
first quarter results for the three month period ended 31 March 2008.

In a quarter with extensive industry insurance losses, softening rates and
highly volatile investment markets, Lancashire has produced an excellent return
for shareholders.


Financial highlights for the first quarter of 2008:
     
•    Return on equity of 5.0%, measured as the growth in fully converted book 
     value per share plus dividends. Compound annual return on equity since
     inception is 22.2%;

•    Gross written premiums of $186.7 million. Net written premiums of
     $141.9 million;

•    Loss ratio of 38.9% and a combined ratio of 61.2%;

•    Total annualised investment return of 5.2%, including net investment
     income, realised gains and losses, and unrealised gains and losses;

•    Net income after tax of $84.6 million, or $0.45 diluted earnings per share.

The Company also announces that on 29 April 2008 its Board of Directors approved
a share repurchase program which authorises the Company to repurchase its own
shares by way of market purchases, tender offers, accelerated purchase programs
or privately negotiated transactions, up to an aggregate purchase price of $100
million.



Richard Brindle, Group Chief Executive Officer, commented:

'I am extremely pleased to report a very strong performance by Lancashire.  In
the first quarter the industry suffered a number of severe property risk losses.
  Lancashire is a major insurer in this sector. It is therefore a great
testament to our underwriting team that Lancashire has produced a 39% loss ratio
in such a challenging period. Our estimated loss from the property risk events
in the first quarter is between $20 and $25 million, gross and net. In the
context of losses in this sector estimated at up to six billion dollars,
together with cat losses of approximately three to four billion dollars, this is
solid evidence of our underwriting strength.'

'Losses from the credit crisis are accelerating. The investment markets are
rightly cautious about the financial consequences for insurers writing D&O or E&
O risks, or holding investment classes suffering material write-downs.
Lancashire is not one of these companies. We do not write insurance classes
exposed to credit crisis losses and we maintain a particularly unadventurous
investment portfolio. We made the decision in late 2007 to exit all non-agency
structured product sectors. The carnage of the first quarter confirmed that was
absolutely the right thing to do. Investors should take great comfort that our
balance sheet is stronger than ever.'


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

'Our investment strategy is conservative at the best of times, even more so in
recent months. Rule number one is 'Don't lose your money'. Happily, we achieved
that in the first quarter. The risk profile of our portfolio is unusually low
right now. Thus, our down-side risk to further sudden market shocks is
well-contained. An added bonus is that our short duration stance positions us
well for the possibility of a weakening bond market in the remainder of 2008.'

'Capital requirements are continually assessed. Our stated aim is to maximise
return within agreed tolerances of risk. The trading environment changes quickly
and at this time we are reducing overall enterprise risk, not increasing it.
Maintaining the flexibility to efficiently match capital to the existing
environment is important.  To enhance this flexibility, our board of directors
have authorised a $100 million share repurchase.'


Underwriting results

Gross written premiums increased 3.3% in the first quarter of 2008 compared to
the same period in 2007. The first quarter contains the majority of the
retrocession renewals, a class where rates have held up relatively well.
Subsequent quarters are expected to experience premium reductions. Lancashire is
being highly selective when binding catastrophe-exposed deals. Many such
contracts renew before June 30 and the second quarter 2008 written premiums will
be materially lower than the second quarter of 2007. Many programs continue to
offer an acceptable return on allocated capital. Nonetheless there are also a
growing number of deals currently being placed in the market that don't meet our
requirements. Consequently, Lancashire's gross and net exposure to U.S.
windstorm risk will be materially lower heading into the 2008 hurricane season
than it was in 2007.

Net written premiums decreased 18.7% in the first quarter of 2008 compared to
the same period in 2007. In the three months to 31 March 2008, we purchased a
greater level of reinsurance protection than was purchased in the same period in
2007. In 2008, there is a material increase in reinsurance cover for programs
not exposed to natural catastrophes compared to 2007, reducing potential
earnings volatility from risk losses. Lancashire's gross exposure to natural
catastrophes in general is significantly less than a year ago, particularly with
respect to the U.S. wind and quake perils. This has lessened the need for
reinsurance dedicated to natural catastrophes.  In 2007, a significant amount of
energy premium was ceded to Sirocco Re, the Lancashire sponsored sidecar which
has not been renewed for 2008. As a result, ceded premium in the second quarter
of 2008 will be lower than it was in the second quarter of 2007.

Net earned premiums as a proportion of net written premiums were 119.1% in the
first quarter of 2008 compared to 80.3% in the same period in 2007. This
difference is driven by a portfolio which is now mature compared to a book of
business which was still in the growth phase one year earlier.

The loss ratio of 38.9% for the three months to 31 March 2008 reflects a very
good underwriting performance despite a high level of industry losses in classes
written by Lancashire. $3.2 million   of prior year net reserves were released
in the quarter.


Investments

Net investment income was $17.7 million for the first quarter, an increase of
6.0% over the first quarter of 2007. The increase in investment income is due to
an 18% increase in invested assets and cash year on year, offset by lower
yields.

Total investment return, incorporating net investment income, net realised gains
and losses and net unrealised gains and losses, was $22.7 million in the
quarter, a decrease of 0.9% compared to the first quarter of 2007. Total
investment return was higher than net investment income due primarily to gains
realised from the sale of fixed income assets. Equity markets were weak in the
quarter. Lancashire's small equity portfolio declined 3.8%, performing well on a
relative basis to the 9.5% fall in the S&P 500.

Other operating expenses of $11.7 million in the first quarter of 2008 are $2.3
million lower than that of the first quarter in 2007 primarily due to a one off
credit in the first quarter of 2008 of $2.9 million.


Capital

At 31 March 2008, total capital was $1.431 billion, comprising shareholders'
equity of $1.296 billion and $134.9 million of long-term debt. Leverage was
9.4%. Total capital at 31 March 2007 was $1.362 billion.


Outlook

Lancashire aims to achieve a cross-cycle return of 13% above a risk free rate.
This is unchanged from previous guidance.

Further detail of our 2008 first quarter results can be obtained from our
Financial Supplement. This can be accessed via our website
www.lancashiregroup.com.


Investor Presentation and Earnings Call

There will be an investor conference call on the results at 12.00 UK time / 07:
00 EST on Wednesday 30 April 2008. This call will be hosted by Richard Brindle,
Chief Executive Officer; Simon Burton, Deputy Chief Executive; and Neil
McConachie, Chief Financial Officer and Chief Risk Officer. The call can be
accessed by dialing 0845 146 2004/[phone] with the passcode 42013256.

The call can also be accessed via webcast, please go to our website
(www.lancashiregroup.com) to access.

A replay facility will be available for two weeks until Wednesday 14 May. The
dial in number for the replay facility is 0845 146 2004/ [phone] and the
passcode is 42013256. A replay facility can also be accessed at
www.lancashiregroup.com .


For further information, please contact:

Lancashire Holdings                                   [phone]
Denise O'Donoghue

Financial Dynamics                                    [phone]
Robert Bailhache
Nick Henderson


Investor enquiries and questions can also be directed to
[e-mail] or by accessing the Company's website
www.lancashiregroup.com.


consolidated balance sheet
(unaudited)                                                           march 31, 2008          december 31, 2007
                                                                                  $m                         $m
assets
cash and cash equivalents
                                                                               610.0                      737.3
accrued interest receivable                                                      6.8                        9.8
investments
 - fixed income securities
    - available for sale                                                     1,109.6                    1,069.7
    - at fair value through income                                              23.9                       23.5
 - equity securities, available for sale                                        75.8                       71.6
 - other investments                                                             3.5                        4.4
reinsurance assets
 - unearned premium on premium ceded                                            43.5                       19.6
 - reinsurance recoveries                                                        4.9                        3.6
 - other receivables                                                               -                        8.2
deferred acquisition costs                                                      59.3                       57.8
inwards premium receivable from insureds and cedants                           207.5                      198.2
investment in associate                                                          3.6                       22.9
other assets                                                                    21.3                        8.1

total assets                                                                 2,169.7                    2,234.7

liabilities
insurance contracts
 - loss and loss adjustment expenses                                           236.0                      179.6
 - unearned premiums                                                           378.6                      381.9
 - other payables                                                               10.0                       16.5
amounts payable to reinsurers                                                   33.3                        5.7
deferred acquisition costs ceded                                                 3.8                        3.0
other payables                                                                  76.8                      300.1
long-term debt                                                                 134.9                      132.3

total liabilities                                                              873.4                    1,019.1

shareholders' equity
share capital                                                                   91.1                       91.1
share premium                                                                   48.0                       49.5
contributed surplus                                                            754.8                      754.8
fair value and other reserves                                                   18.2                       20.7
dividends                                                                        0.1                    (239.1)
retained earnings                                                              384.1                      538.6
total shareholders' equity attributable to equity
shareholders                                                                 1,296.3                    1,215.6

total liabilities and shareholders' equity                                   2,169.7                    2,234.7

basic book value per share                                                     $7.11                      $6.67
fully converted book value per share                                           $6.70                      $6.38


consolidated income statement
(unaudited)
                                                                         quarter 1          quarter 1
                                                                              2008               2007
                                                                                $m                 $m

gross premiums written                                                       186.7              180.7
outwards reinsurance premiums                                               (44.8)              (6.1)

net premiums written                                                         141.9              174.6

change in unearned premiums                                                    3.2             (27.6)
change in unearned premiums on premium ceded                                  23.9              (6.8)

net premiums earned                                                          169.0              140.2

net investment income                                                         17.7               16.7
net realised gains and impairments                                             7.5                1.8
share of profit (loss) of associate                                         (0.1)                 1.3
net foreign exchange gains                                                     0.3                1.4
net other investment losses                                                (1.2)                (0.1)

total net revenue                                                            193.2              161.3

insurance losses and loss adjustment expenses                                 66.9               32.0
insurance losses and loss adjustment expenses                                                       
recoverable                                                                (1.2)                    -
net insurance acquisition expenses                                            26.0               20.3
equity based compensation                                                    (1.5)                3.7
other operating expenses                                                      11.7               14.0

total expenses                                                               101.9               70.0

profit before tax and finance costs                                           91.3               91.3

finance costs                                                                  4.9                3.0

profit before tax                                                             86.4               88.3

tax                                                                          1.8                  0.4

profit after tax                                                              84.6               87.9

net loss ratio                                                               38.9%              22.8%
net acquisition cost ratio                                                   15.4%              14.5%
administrative expense ratio                                                  6.9%              10.0%
combined ratio                                                               61.2%              47.3%

basic earnings per share                                                     $0.46              $0.45
diluted earnings per share                                                   $0.45              $0.43

change in fully converted book value per share                                5.0%               7.2%



consolidated cash flow statement                                      quarter 1                 quarter 1
(unaudited)                                                                 2008                      2007
                                                                            $m                         $m
cash flows from operating activities
profit before tax                                                          86.4                       88.3
tax paid                                                                   (0.5)                        -
depreciation                                                                0.3                        0.3
interest expense                                                            2.8                        2.8
interest income                                                           (16.2)                     (16.6)
dividend income                                                            (0.2)                      (0.2)
amortisation of fixed income securities                                    (0.3)                      (0.3)
employee benefit expense                                                   (1.5)                       3.7
foreign exchange                                                            0.2                       (1.1)
share of loss (profit) of associate                                         0.1                       (1.3)
net unrealised losses on other investments                                  0.5                        0.1
net realised gains and impairments on investments                          (7.5)                      (1.8)
net fair value losses on investments at fair value                          0.7                         -
through income
unrealised loss on interest rate swaps                                      1.8                        0.2
reinsurance assets
- unearned premium on premium ceded                                       (23.9)                       6.9
- reinsurance recoveries                                                   (1.3)                        -
- other receivables                                                         8.2                         -
deferred acquisition costs                                                 (1.5)                      (4.2)
other receivables                                                         (15.0)                      (6.4)
inwards premium receivable from insureds and cedants                       (6.3)                      (6.5)
insurance contracts
  - losses and loss adjustment expenses                                    54.5                       30.9
  - unearned premiums                                                      (3.2)                      27.6
  - other payables                                                         (6.1)                       1.5
amounts payable to reinsurers                                              27.6                        4.3
deferred acquisition costs ceded                                            0.8                         -
other payables                                                             23.3                       26.2

net cash flows from operating activities                                   123.7                      154.4
cash flows used in investing activities

interest received                                                            19.3                     14.6
dividends received                                                          0.2                        0.2
purchase of property, plant and equipment                                    -                        (0.8)
dividends received from associate                                          19.2                        0.8
purchase of fixed income securities                                       (886.2)                    (526.3)
purchase of equity securities                                              (9.3)                      (6.7)
proceeds on maturity and disposal of debt securities                       853.9                      316.3
proceeds on disposal of equity securities                                   2.2                       14.6
net proceeds on other investments                                           0.1                        0.6

net cash flows used in investing activities                                (0.6)                     (186.7)

cash flows used in financing activities
interest paid                                                              (2.9)                      (2.8)
dividends paid                                                            (238.2)                       -
shares repurchased                                                        (10.5)                        -

net cash flows used in financing activities                               (251.6)                     (2.8)

net decrease in cash and cash equivalents                                 (128.5)                    (35.1)
cash and cash equivalents at beginning of period                           737.3                      400.1
effect of exchange rate fluctuations on cash and cash                       1.2                        1.6
equivalents
cash and cash equivalents at end of period                                 610.0                      366.6


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 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 AND INDICATIVE PROJECTIONS MADE IN THIS ANNOUNCEMENT AND ON
THE CONFERENCE CALL THAT ARE NOT BASED ON CURRENT OR HISTORICAL FACTS ARE

FORWARD-LOOKING IN NATURE INCLUDING WITHOUT LIMITATION, STATEMENTS CONTAINING
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 ACHIEVMENTS 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 ABSENCE OF LARGE OR UNUSUALLY FREQUENT LOSS EVENTS; 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; 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 SUB-PRIME AND CREDIT CRISIS; A RATING DOWNGRADE OF,
OR A MARKET DECLINE IN, SECURITES 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 JUDGMENT AND REFLECT A COMBINATION OF GROUND-UP
EVALUATIONS, INFORMATION AVAILABLE TO DATE FROM BROKERS AND INSUREDS, MARKET
INTELLIGENCE, INITIAL TENTATIVE LOSS REPORTS AND OTHER SOURCES.  JUDGMENTS IN
RELATION TO FLOOD LOSSES INVOLVE COMPLEX FACTORS POTENTIALLY CONTRIBUTING TO
THIS TYPE 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 OF
THIS DOCUMENT. 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 TO REFLECT ANY CHANGES IN THE GROUP'S EXPECTATIONS OR
CIRCUMSTANCES ON WHICH ANY SUCH STATEMENT IS BASED.



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