Contingent Equity Arrangement

Lancashire Holdings Limited
14 June 2007


                          Lancashire Holdings Limited

14 June 2007

              Lancashire enters into Contingent Equity Arrangement

Lancashire Holdings Limited (the 'Company') announced today that it has entered
into a contingent equity arrangement with a large financial institution.

Under the agreement the Company has an option to issue up to 9,786,000 common
shares (approximately 5% of the Company's issued share capital) at a price per
share equal to the greater of the market value of the shares at the time of
exercise or US$5.00. The agreement expires on November 30, 2007. No common
shares were issued on entering into this agreement. 

Neil McConachie, Chief Financial Officer commented:

'This arrangement provides a committed source of equity capital at a guaranteed
floor price which the Company, at its discretion, can access. While we have no
current plans to exercise the option, the transaction reinforces our strategy to
actively and prudently manage capital through the cycle.'

Neil McConachie added 'We believe our business plan, as a diversified direct
specialty insurance writer, lends itself to strong performance through hard and
soft cycles. We underwrite a diverse worldwide portfolio of short-tail property
risks. Programs are mostly written on a direct basis, and the majority of the
2007 book is not expected to be significantly exposed to natural catastrophes.
We believe this strategy will generate above average returns for shareholders
over time.'

This announcement does not constitute an offer, invitation or inducement to
acquire shares or other securities in the Company in any jurisdiction.

For further information, please contact:

Lancashire Holdings                  [phone]
Neil McConachie

Financial Dynamics                   [phone]
Robert Bailhache
Nick Henderson

Kekst & Company Inc.
Michael Herley                       (1) 212 521 4897
Mark Semer                           (1) 212 521 4802

www.lancashiregroup.com


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 US$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 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.




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