Preliminary Results

Lancashire Holdings Limited
13 February 2008

                          LANCASHIRE HOLDINGS LIMITED

 Lancashire reports 2007 Return on Equity of 31.7% and Combined Ratio of 46.3%



Hamilton, Bermuda, 13 February 2008

Lancashire Holdings Limited ('Lancashire' or 'the Company') today announces its
results for the fourth quarter of 2007 and the twelve month period ended 31
December 2007.

Lancashire produced an exceptional result in 2007, generating net income of
$390.9 million and returning $339.3 million of capital to shareholders. Fully
converted book value per share was $6.38 at 31 December 2007, or approximately
325 pence at the close of business exchange rate on 12 February 2008.

Financial highlights for the fourth quarter of 2007:


•   Return on equity of 7.9%, measured as the growth in fully converted
    book value per share plus dividends;

•   Gross written premiums of $154.3 million, a decrease of 22.5% from the
    fourth quarter of 2006. Net written premiums decreased 24.6%;

•   Loss ratio of 15.7% and a combined ratio of 38.1%;

•   Total annualised investment return of 7.4% for the fourth quarter, including 
    net investment income, realised gains and losses, and unrealised gains
    and losses;

•   Net income after tax of $115.3 million, or $0.57 diluted earnings per share.



Financial highlights for the twelve months to 31 December 2007:

•   Return on equity of 31.7%, measured as the growth in fully converted book 
    value per share plus dividends;

•   Gross written premiums of $753.1 million, an increase of 20.3% from
    2006. Net written premiums increased 21.8%;

•   Loss ratio of 23.9% and a combined ratio of 46.3%;

•   Total investment return of 6.4% for the twelve months to 31 December 2007, 
    including net investment income, realised gains and losses, and unrealised
    gains and losses;

•   Net income after tax of $390.9 million for the twelve months to 31 December 
    2007, or $1.91 diluted earnings per share.



Richard Brindle, Group Chief Executive Officer, commented:

'In only our second year of operations, Lancashire has produced a remarkable set
of results. To have achieved a return of 31.7% for our shareholders is testament
to our people, our risk management and to our disciplined and diversified
underwriting strategy. The success in 2007 was led by our exceptional
underwriting result, evident in a combined ratio of 46.3%. Prior year reserve
releases in 2007 were $4.4 million, benefiting the ratio by 0.7%. Our risk
appetite on investments is low and that was the correct approach in hazardous
markets. Against this background we are pleased to have achieved a total
investment return of 6.4%. Finally, we were delighted to return $339.3 million
back to our shareholders via share repurchases and dividends, fulfilling our
promise to manage capital in line with the underwriting cycle.

'The market is softening across the board; nonetheless there is plenty of
attractive business in the majority of the lines we write. Lancashire writes
direct specialty short-tail insurance, combined with a small amount of
reinsurance. Our approach lends itself to profitable underwriting in softening
markets where risk selection is paramount. As we progress through 2008, absent a
sudden turn in the cycle, we expect that our premiums will decline from 2007.
However we are well positioned to write a profitable book of business in 2008.
We have no plans to compensate by venturing into areas we do not understand; a
dangerous strategy indeed that is all too common in this industry.

'Lancashire's investment approach will continue to be defensive. I am very
pleased to say we believe we have zero insurance exposure from the credit
crisis, a debacle that appears to have very serious financial implications for
the insurance industry. Indeed, the full extent of the implications are yet to
be revealed. We made the decision to exit all non-agency structured products,
which was successfully executed in an orderly manner, and as previously
disclosed we have no exposure to sub-prime. Lancashire has positioned both its
insurance and investment portfolios appropriately for the current environment
and we are confident we can produce a good return for our shareholders in what
may be more challenging times ahead.'



Underwriting results

Gross written premiums decreased 22.5% in the fourth quarter of 2007 compared to
the same period in 2006. In 2007 as a whole, gross written premiums increased
20.3% compared to 2006. In the fourth quarter the decrease in premium was due to
year on year rate reductions in certain classes, particularly aviation AV52.
Overall, the growth in annual premium written was due to our fully operational
platform in our second year including our UK operating platform, which began
underwriting in late 2006.

A de minimus amount of reinsurance was purchased in the fourth quarter. During
2007, a greater amount of premium was ceded than in 2006, partly reflecting the
growth in written premium. Net written premiums decreased 24.6% in the fourth
quarter of 2007 compared to the fourth quarter of 2006, but increased in 2007
compared to 2006. The business of Sirocco Re, the energy sidecar sponsored by
Lancashire in 2006, was commuted effective 31 December. A profit commission
received from Sirocco of $7.8 million was recognized in acquisition costs in the
fourth quarter.

Net earned premiums as a proportion of net written premiums were 105.6% in the
fourth quarter of 2007, and 91.7% for the year.

The loss ratios of 15.7% and 23.9% for the three and twelve months to 31
December 2007, respectively, represent an exceptional underwriting performance
in all segments.



Investments

Net investment income was $22.2 million for the fourth quarter, an increase of
36.2% over the fourth quarter of 2006. Net investment income was $78.4 million
in the twelve months to 31 December 2007, an increase of 44.6% over the same
period in 2006. The increase in investment income is primarily due to high net
operating cashflow, resulting in higher net invested assets.

Total investment return, including net investment income, net realised gains and
losses and net change in unrealised gains and losses, was $30.6 million in the
quarter and $96.6 million for the year. Total investment return boosted by the
8.9% gain from the equity portfolio for the year.

At 31 December 2007 the fixed income portfolio plus managed cash had a duration
of 1.4 years and a credit quality of AA+. The portfolio was comprised of 58.6%
fixed income, 4.1% equities and 37.3% cash.



Capital

At 31 December 2007, total capital was $1.35 billion, comprising shareholders'
equity of $1.216 billion and $132 million of long-term debt. Leverage was 10%.
Shareholders' equity at the year end is net of $100.2 million of share
repurchases during the fourth quarter and the strategic dividend of $239.1
million.

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



Earnings Call

There will be an investor and analyst conference call on the results at 12:00 UK
time / 07:00 EST on Thursday 14 February 2008. This call will be hosted by
Richard Brindle, Chief Executive Officer, Simon Burton, Deputy Chief Executive
Officer and Neil McConachie, Chief Financial Officer.

The call can be accessed by dialing [phone]/ [phone] with
the passcode 5204778. A replay facility will be available for two weeks until
Wednesday 27 February 2008. The dial in number for the replay facility is +44
(0) 20 7806 1970 / [phone] and the passcode is 5204778#.



A replay facility can also be accessed at www.lancashiregroup.com .



For further information, please contact:


Lancashire Holdings                                   [phone]
Neil McConachie

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)
                                                                  december 31, 2007          december 31, 2006
                                                                                 $m                         $m
assets
cash and cash equivalents
                                                                              737.3                      400.1
accrued interest receivable                                                     9.8
                                                                                                           7.5
investments
 - fixed income securities
    - available for sale                                                    1,069.7
                                                                                                         896.3
    - at fair value through income                                             23.5
                                                                                                           -
 - equity securities, available for sale                                       71.6
                                                                                                          70.3
 - other investments                                                            4.4
                                                                                                          11.5
reinsurance assets
 - unearned premium on premium ceded                                           19.6
                                                                                                          19.1
 - reinsurance recoveries                                                       3.6
                                                                                                           -
 - other receivables                                                            8.2                          -
deferred acquisition costs                                                     57.8
                                                                                                          51.5
inwards premium receivable from insureds and cedants                          198.2
                                                                                                         173.7
investment in associate                                                        22.9
                                                                                                          23.2
other assets                                                                    8.1
                                                                                                           9.5
total assets                                                                2,234.7
                                                                                                       1,662.7

liabilities
insurance contracts
 - loss and loss adjustment expenses
                                                                              179.6                       39.1
 - unearned premiums
                                                                              381.9                      325.7
 - other payables
                                                                               16.5                        5.2
amounts payable to reinsurers
                                                                                5.7                        0.8
deferred acquisition costs ceded                                                3.0
                                                                                                           2.5
other payables                                                                300.1
                                                                                                          23.2
long-term debt
                                                                              132.3                      128.6
total liabilities                                                           1,019.1
                                                                                                         525.1

shareholders' equity
share capital
                                                                               91.1                       97.9
share premium
                                                                               49.5                       33.6
contributed surplus
                                                                              754.8                      849.7
fair value and other reserves
                                                                               20.7                        8.7
dividends                                                                   (239.1)
                                                                                                             -
retained earnings                                                             538.6                      147.7
total shareholders' equity attributable to equity
shareholders                                                                1,215.6                    1,137.6

total liabilities and shareholders' equity
                                                                            2,234.7                    1,662.7


basic book value per share
                                                                              $6.67                      $5.81
fully converted book value per share
                                                                              $6.38                      $5.68







consolidated income statement
(unaudited)
                                                       quarter 4         quarter 4          full year        full year
                                                            2007              2006               2007             2006
                                                              $m                $m                 $m               $m

gross premiums written                                     154.3             199.0              753.1            626.0
outwards reinsurance premiums                              (4.1)               0.3             (86.3)           (78.5)

net premiums written                                       150.2             199.3              666.8            547.5

change in unearned premiums                                 36.8            (75.3)             (56.1)          (323.1)
change in unearned premiums on premium ceded              (28.4)            (25.0)                0.5             19.1

net premiums earned                                        158.6              99.0              611.2            243.5

net investment income                                       22.2              16.3               78.4             54.2
net realised gains (losses) and impairments                  2.4               2.0                9.1              0.8
share of profit of associate                                 2.3               1.2                6.2
                                                                                                                 3.2
net foreign exchange gains (losses)                                          (0.1)                2.3
                                                           (1.2)                                                 (1.3)
net other investment income (losses)                       (0.4)                                (2.9)
                                                                             1.8                                 1.8

total net revenue                                          183.9             120.2              704.3            302.2

insurance losses and loss adjustment expenses               27.1              18.8              150.0
                                                                                                                  39.1
insurance losses and loss adjustment expenses              (2.2)                -               (3.7)                -
recoverable
net insurance acquisition expenses                          14.1              15.6               76.5
                                                                                                                  34.9
equity based compensation                                    3.6               6.4               14.4             22.5
other operating expenses                                    21.4               9.1               60.5             33.9

total expenses                                              64.0              49.9              297.7            130.4

profit before tax and finance costs                        119.9              70.3              406.6            171.8

finance costs                                                4.2               2.7               14.7
                                                                                                                  12.3

profit before tax                                          115.7              67.6              391.9            159.5

tax                                                          0.4                                  1.0
                                                                             0.2                                 0.2

profit after tax                                           115.3              67.4              390.9            159.3

net loss ratio                                             15.7%             19.0%              23.9%            16.1%
net acquisition cost ratio                                  8.9%             15.8%              12.5%            14.3%
administrative expense ratio                               13.5%              9.2%               9.9%            13.9%
combined ratio                                             38.1%             44.0%              46.3%            44.3%

basic earnings per share                                   $0.61             $0.34              $2.01            $0.81
diluted earnings per share                                 $0.57             $0.33              $1.91            $0.79

change in fully converted book value per share              7.9%              6.2%              31.7%           17.4 %








consolidated cash flow statement

(unaudited)                                                            twelve months                       twelve
                                                                                 2007                months  2006
                                                                                   $m                          $m
cash flows from operating activities
profit after tax                                                                390.9                       159.3
depreciation                                                                      1.4                         0.6
amortisation of debt securities                                                 (0.7)                       (1.2)
employee benefit expense                                                         14.4                        22.5
foreign exchange                                                                (3.1)                         1.8
share of profit of associate                                                    (6.2)                       (3.2)
net unrealised losses (gains) on derivative financial                             3.3                       (1.8)
instruments
net realised (gains) and impairments on investments                             (9.1)                       (0.8)
net fair value losses on investments at fair value                              (0.4)                           -
through income
unrealised losses on swaps                                                        1.3                         0.9
accrued interest receivable                                                     (2.3)                       (5.6)
reinsurance assets
- unearned premium on premium ceded                                             (0.5)                      (19.1)
- reinsurance recoveries                                                        (3.5)                           -
- other receivables                                                             (8.2)                           -
deferred acquisition costs                                                      (6.3)                      (51.0)
other receivables                                                                 2.4                       (6.0)
inwards premium receivable from insureds and cedants                           (23.8)                     (171.4)
deferred tax asset                                                              (1.2)                       (0.8)
insurance contracts
  - losses and loss adjustment expenses                                         140.0                        39.1
  - unearned premiums                                                            56.2                       323.1
  - other payables                                                               11.3                         3.6
amounts payable to reinsurers                                                     4.9                         2.4
deferred acquisition costs ceded                                                  0.5                         2.5
other payables                                                                   25.8                        18.6
corporation tax payable                                                         (0.2)                         1.0
net cash flows from operating activities                                        586.9                       314.5
cash flows used in investing activities
purchase of property, plant and equipment                                       (1.3)                       (2.6)
investment in associate                                                             -                      (20.0)
dividends received from associate                                                 6.5                           -
purchase of debt securities                                                 (2,143.3)                   (2,086.1)
purchase of equity securities                                                  (30.9)                      (76.1)
proceeds on maturity and disposal of debt securities                          1,960.4                     1,185.6
proceeds on disposal of equity securities                                        36.9                        20.9
net purchase of other investments                                                 5.1                       (9.7)
net cash flows used in investing activities                                   (166.6)                     (988.0)

cash flows used in financing activities

shares repurchased                                                             (89.3)                           -
net cash flows used in financing activities                                    (89.3)                           -

net increase (decrease) in cash and cash equivalents                            331.0                     (673.5)
cash and cash equivalents at beginning of period                                400.1                     1,072.4
effect of exchange rate fluctuations on cash and cash                             6.2                         1.2
equivalents
cash and cash equivalents at end of period                                      737.3                       400.1







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 BYTHE 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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