Grant of Options & Warrants

Lancashire Holdings Limited
08 May 2006


                          LANCASHIRE HOLDINGS LIMITED

                   GRANT OF OPTIONS AND WARRANTS TO DIRECTORS


HAMILTON, Bermuda (8th May 2006) - Lancashire Holdings Limited (the 'Company')
today announces the granting of options over its common shares as of 9 March
2006 to the executive Directors of the Company as follows:

Name of executive    Number of share       Total number of share options held
    Director         options granted          following this notification

Richard Brindle              762,522                       762,522
Neil McConachie              508,348                       508,348

The options were granted pursuant to the Company's Long Term Incentive Plan (the
'Plan') under which the Company may grant from time to time up to 5% of the
Company's fully diluted common share capital, as described in the Company's AIM
Admission Document. Additional options within this maximum 5% were granted on
such date, and may in future be granted, to other employees of the Company on
identical terms.

As set out in the Plan, the options will vest as to 25% on the first
anniversary, 50% on the second anniversary, 75% on the third anniversary and
100% on the fourth anniversary of the date of grant. The options may not be
exercised later than the tenth anniversary of the date of grant although they
may lapse earlier in other circumstances.

The purchase price of the common shares underlying these options is 325.325
pence (GBP), which is the average of the market prices of the 20 trading days
immediately prior to the date of grant.

The Company also granted Management Team Ordinary Warrants and Management Team
Performance Warrants over the Company's common shares on 9 March 2006 to the
following executive Director:

Name of executive        Number of Management Team      Total number of Ordinary Warrants
    Director             Ordinary Warrants granted      following this notification
   
Neil McConachie                  635,434                       1,270,869


Name of executive       Number of Management Team       Total number of Performance Warrants
  Director              Performance Warrants granted         following this notification
                                                                
     Neil                          381,261                             762,522
  McConachie


Additional warrants of both types were granted on such date, and may in future
be granted, to other employees of the Company on identical terms. These grants
of Management Team Ordinary Warrants are within the maximum 5% of the Company's
fully diluted common share capital as described in the Company's AIM Admission
Document. These grants of Management Team Performance Warrants are within the
maximum 3% of the Company's fully diluted common share capital as described in
the Company's AIM Admission Document.

The Management Team Ordinary Warrants will vest as to 25% of the underlying
shares on receipt of the warrant, 25% on 16 December 2006, 25% on 16 December
2007 and 25% on 16 December 2008.

The Management Team Performance Warrants will vest if certain criteria relating
to the book value performance or compound return performance of the Company are
met. In the event the applicable performance criteria are not reached by the
Company at the applicable measurement date, the common shares underlying the
warrants that have not vested will lapse.

The purchase price of the common shares underlying both types of warrants is
US$5.00.

Further details of the terms and conditions of the options and warrants are
available in the AIM Admission Document.


About Lancashire

Lancashire Holdings Limited, through its operating subsidiary, Lancashire
Insurance Company Limited, is a Bermuda-based provider of reinsurance and
insurance and is listed on the Alternative Investment Market of the London Stock
Exchange under the ticker symbol LRE.

Contacts:

Neil McConachie

Chief Financial Officer [phone]


Financial Dynamics

Robert Bailhache [phone]




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