Trading Statement

Lancashire Holdings Limited
21 February 2006


                          Lancashire Holdings Limited


Hamilton, Bermuda, 21 February 2006


                LANCASHIRE REPORTS EXCELLENT TRADING CONDITIONS


Lancashire Holdings Limited ('Lancashire' or 'the Company') today released the
following statement on current trading conditions and on operations.


Lancashire writes a diversified portfolio of insurance, reinsurance and
retrocession business on a worldwide basis, with an emphasis on retrocession,
marine and energy and property classes. The classes written by Lancashire
include those most impacted by Hurricanes Katrina, Rita and Wilma in 2005.


Leading into the January renewal season, Lancashire was anticipating significant
upward pricing adjustments and improved terms and conditions. This has been
borne out, with overall trading conditions as expected and in certain areas
better than expected at the time of Company's Initial Public Offering in
December 2005 in lines that Lancashire has chosen to write.


Richard Brindle, Chief Executive Officer and Chief Underwriting Officer,
commented: 'Lancashire has got off to a great start. Trading conditions in the
classes we write have been excellent; the support from the market has been very
encouraging; and our infrastructure and team is well developed. We are binding
business at rates and terms better than anticipated. That said, we believe
conditions will continue to improve further and Lancashire is keeping its powder
dry as well. Gross premium written and expected to be written through March 1 is
approximately $165 million. Underwriting discipline is, and always will be, our
number one focus.'


Richard Brindle continued: 'While the retrocession and energy classes have been
very encouraging, the marine excess of loss class and also the broader property
catastrophe treaty market are not, in our opinion, adequately priced at this
time. Lancashire has therefore avoided these classes so far. There are some
signs of improvement in select zones however, and should we see rates rise to
what we believe are adequate levels, we may consider writing these classes later
in the year. In contrast to property catastrophe treaty business, we have been
encouraged by conditions in the direct property facultative market, and have
begun gradually building a solid book in that class. At this stage, we expect
that total 2006 gross written premium will be broadly in line with total premium
projected in our business plan. We are looking ahead with optimism.'


Neil McConachie, Chief Financial Officer and Chief Operating Officer, commented:
'We have over one billion dollars of clean capital and an A.M. Best rating of A-
(Excellent) with a stable outlook. We will focus on balance sheet strength at
all times, and manage our capital appropriately in tandem with the underwriting
cycle. Our team has grown substantially over the past three months to 18 people,
15 of which are employed in Bermuda. We will deploy our assets in a prudent mix
of investment strategies with our golden rule being capital preservation first.'



There will be a conference call at 1700 UK time (GMT) on [phone].
This conference call will be hosted by Richard Brindle, Chief Executive Officer
and Chief Underwriting Officer, and Neil McConachie, Chief Financial Officer and
Chief Operating Officer. A replay of the conference call will be available for
two weeks until 6 March 2006. The dial in number for replay is [phone]
1970 and the pass code is 1047539#. The replay facility can also be accessed at
www.lancashire.bm.




Lancashire Holdings                     [phone]
Neil McConachie

Financial Dynamics                      [phone]
Rob Bailhache



www.lancashire.bm



About Lancashire


Lancashire was established in 2005 as a new insurance and reinsurance business
to take advantage of the favourable underwriting conditions expected to arise
from the large insured losses incurred in 2004 and 2005.


Lancashire was admitted to AIM on 16 December 2005 following an Offer of Common
Shares to investors. The Common Shares trade on AIM under the ticker symbol LRE.






                   NOTE REGARDING FORWARD-LOOKING STATEMENTS


CERTAIN STATEMENTS MADE IN THIS ANNOUNCEMENT OR 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', '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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