First Quarter Results

Lancashire Holdings Limited
01 May 2007

                          LANCASHIRE HOLDINGS LIMITED

       Lancashire reports excellent results for the first quarter of 2007
                     Fully converted book value grows 7.2%
                            Combined ratio of 47.3%

Hamilton, Bermuda, 1 May 2007

Lancashire Holdings ('Lancashire' or 'the Company') today announces its first
quarter results for the three month period ended 31 March 2007.



Financial Highlights


  • Fully converted book value per share of $6.09 for the end of the first
    quarter of 2007, reflecting growth of $0.41, or 7.2%, over the quarter.


  • Growth in fully converted book value per share of 24.3% in the twelve
    months to March 31, 2007.


  • For the three months ended March 31, 2007, the Company generated operating
    income(1) of $88.1 million, or $0.43 diluted operating earnings per common
    share.


  • Net income after tax was $87.9 million or $0.43 diluted earnings per
    common share in the quarter, compared to net income of $9.3 million or $0.05
    diluted earnings per common share for the same quarter of 2006.



The Company's first quarter 2007 results benefited from light loss activity in
the majority of classes. The first quarter of 2006 was the Company's first
operational quarter after its formation in late 2005 and, as such, year on year
comparisons should be viewed in that context.



Richard Brindle, Group Chief Executive Officer, commented:



'We are very pleased with the results that Lancashire achieved in the first
quarter of 2007.  Since our launch in December 2005, we have become a major
player in the insurance industry by maintaining clear operating principles,
executing a sound business strategy, exploiting competitive advantages, and
actively managing the cycle.



'Our UK underwriting platform, which was launched in the fourth quarter of 2006,
has made a notable contribution to our growing market position over the past
several months.  The increase in submissions in the first quarter of 2007
compared to the same period in 2006 has been very strong, resulting in 60%
growth in our gross written premiums year on year.  As always, we will remain
committed to strong underwriting discipline.



'Substantial premium growth, combined with better than expected loss experience,
was the primary driver behind Lancashire's ROE of 7.2% for the first quarter.
Year on year premium growth in subsequent quarters will likely be lower than
60%; however, our previously stated 2007 ROE estimate of between 20% and 25%,
assuming a normal level of losses, and premium growth estimate of at least 20%,
based on anticipated pricing and terms, remain unchanged.



'Going forward, we remain reasonably optimistic about trading conditions
throughout 2007. In the majority of classes of risks written by Lancashire, with
the exception of marine, favourable 2006 pricing and terms are largely expected
to continue throughout 2007.  In classes not exposed to natural catastrophes,
there may be some modest weakening of trading conditions, but pricing is
expected to remain broadly acceptable in most classes.  We have also seen a
reduction in demand and rate levels for property catastrophe retrocession.
Overall, the outlook for 2007 trading conditions for Lancashire is attractive.



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.'



                                        Lancashire Holdings Limited
                                  summary consolidated income statements
                                  ($ millions, except per share amounts)

                                                                                   q1                    q1
                                                                                 2007                  2006
                                                                          (unaudited)           (unaudited)

gross premiums written                                               $          180.7       $         112.4
outwards reinsurance premiums                                                   (6.1)                     -

net premiums written                                                            174.6                 112.4

change in unearned premiums                                                    (27.6)                (93.6)
change in unearned premiums on premium ceded                                    (6.8)                     -

net premiums earned                                                             140.2                  18.8

net investment income                                                            16.7                  11.5
other investment income                                                         (0.1)                     -
share of profit of associate                                                      1.3                     -

total net revenue                                                               158.1                  30.3

insurance losses and loss adjustment expenses                                    32.0                   4.0
insurance losses and loss adjustment expenses recoverable                           -                     -
net insurance acquisition expenses                                               20.3                   1.9
finance costs                                                                     3.0                   2.5
equity based compensation - share options                                         0.7                   2.2
other operating expenses                                                         14.0                   5.9

total expenses                                                                   70.0                  16.5

net operating income                                                             88.1                  13.8

equity based compensation - warrants                                              3.0                   3.8
net foreign exchange gains (losses)                                               1.4                 (0.6)
net realised gains (losses) and impairments                                       1.8                 (0.1)

profit before tax                                                                88.3                   9.3

tax                                                                               0.4                     -

profit after tax for the period attibutable to equity shareholders   $           87.9       $           9.3

insurance ratios:

net loss ratio                                                                  22.8%                 21.3%
net acquisition cost ratio                                                      14.5%                 10.1%
administrative expense ratio                                                    10.0%                 31.4%
combined ratio                                                                  47.3%                 62.8%

earnings per share:

basic earnings per share                                             $           0.45       $          0.05

diluted earnings per share                                           $           0.43       $          0.05


                                            Lancashire Holdings Limited
                                        summary consolidated balance sheets
                                       ($ millions, except per share amounts)

                                                                  march 31, 2007                   december 31, 2006
                                                                     (unaudited)                           (audited)
assets

cash & cash equivalents                              $                     366.6               $               400.1
accrued interest receivable                                                  9.5                                 7.5
investments
- fixed income securities                                                1,109.7                               896.3
 - equity securities                                                        65.2                                70.3
- other investments                                                         11.1                                11.5
reinsurance assets
 - reinsurance balances receivable                                           0.6                                   -
- unearned premium on premium ceded                                         12.2                                19.1
deferred acquisition costs                                                  55.7                                51.5
inwards premium receivable from insureds and                               
cedants                                                                    179.5                               173.7  
investment in associate                                                     23.6                                23.2
other assets                                                                16.4                                 9.5
total assets                                         $                   1,850.1               $             1,662.7

liabilities

insurance contracts
 - loss and loss adjustment expenses                 $                      70.1               $                39.1
 - unearned premiums                                                       353.3                               325.7
 - other payables                                                            6.7                                 3.6
amounts payable to reinsurers                                                5.1                                 2.4
deferred acquisition costs ceded                                             2.5                                 2.5
other payables                                                              49.9                                23.2
long-term debt                                                             129.0                               128.6
total liabilities                                                          616.6                               525.1

shareholders' equity

share capital                                                               97.9                                97.9
share premium                                                               37.2                                33.6
contributed surplus                                                        849.7                               849.7
fair value and other reserves                                               13.1                                 8.7
retained earnings                                                          235.6                               147.7
total shareholders' equity attributable to           
equity shareholders                                  $                   1,233.5               $             1,137.6    
                                                   

total liabilites and shareholders' equity            $                   1,850.1               $             1,662.7


basic book value per share                           $                      6.30               $                5.81

fully converted book value per share                 $                      6.09               $                5.68



Further detail of our 2007 first quarter results can be obtained from our
Financial Supplement. This can be accessed via our website
www.lancashiregroup.com.



Lancashire will be hosting an analyst and investor conference call at 1:30 UK
time / 8:30 EDT on 2 May 2007 to discuss our trading update. The conference call
will be hosted by Richard Brindle, Group Chief Executive Officer, Simon Burton,
Deputy Chief Executive Officer and Neil McConachie, Chief Financial Officer.



The call can be accessed by dialing [phone] / [phone]. A
replay facility will be available for two weeks until Wednesday 16 May. The dial
in number for the replay facility is [phone] / [phone] and
the passcode is 4900982#.



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




Investor enquiries and questions can also be directed to [e-mail]
or by accessing the Company's website 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 $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', '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 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; 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.



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.



--------------------------


(1) Operating income excludes realized gains and losses, foreign exchange gains
or losses, warrants issued at the IPO and taxes.


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