Results Announcement

Lancashire Holdings Limited
21 March 2006


Lancashire Holdings Limited

March 21, 2006



   LANCASHIRE HOLDINGS LIMITED ANNOUNCES AUDITED RESULTS FOR THE PERIOD FROM
         OCTOBER 12, 2005 (DATE OF INCORPORATION) TO DECEMBER 31, 2005


Lancashire Holdings Limited ('Lancashire' or 'the Group') today released its
audited financial results for the period between incorporation and 31st December
2005.

Lancashire was incorporated on 12th October 2005 to take advantage of the
favourable underwriting conditions expected to arise from the large insured
losses incurred by the reinsurance and insurance industry in 2004 and 2005.
Lancashire was admitted to the London Stock Exchange's AIM market on December
16, 2005. The Group commenced underwriting operations prior to 31st December
2005; however its main focus was on the January renewal season. The results for
the period from incorporation to December 31, 2005 therefore largely reflect
set-up costs and operating expenses with little underwriting activity. Results
are as follows:

                                                                           $'000

Gross premiums written                                                     2,638
Net premiums earned                                                           18
Interest income                                                            2,073
Total expenses                                                           (9,973)
Operating loss                                                           (7,882)
Finance costs                                                            (3,670)
Net loss for the period                                                 (11,552)
Basic earnings (loss) per share (dollars per share)                      ($0.24)
Diluted earnings (loss) per share (dollars per share)                    ($0.24)


Lancashire's financial statements are prepared in accordance with International
Financial Reporting Standards ('IFRS'), as endorsed by the European Commission,
and are presented in United States dollars. The Group's Balance Sheet, Income
Statement and Cash Flow Statement are set out below. The consolidated financial
statements were approved by the Board of Directors on March 9, 2006.


Financial Results


A discussion of the financial results prior to December 31, 2005 lacks substance
due to the short period covered by the financial statements and the limited
amount of business written. The focus of the underwriting team since the
capitalization of the Group was on the January renewal season. Business written
up to and including to December 31, 2005 was incidental. Going forwards, the
Company will publish reports for the six month interim period to 30 June, 2006
and for the full year to 31 December, 2006, the latter of which will be sent to
shareholders.


The loss for the period was substantially due to expensing the vested portion of
certain warrants. The remainder relates to financing and incorporation costs.


As noted in the AIM Admission Document, Lancashire has issued warrants to
certain founding shareholders, a financial advisor and certain members of senior
management. Warrants issued to founding shareholders were treated as a capital
transaction and the associated fair value was charged to the share premium
account. The fair value of warrants issued to the financial advisor, for
assistance with incorporation and other start-up services, is treated as a
formation expense with a corresponding credit to share premium with no impact on
shareholder's equity. Management warrants are recognized as an operating expense
in the income statement pro-rata over the vesting period of the instrument with
a corresponding offsetting credit to shareholder's equity. The total amount to
be expensed is determined by reference to the fair value of the awards estimated
at the grant date.


Finance costs incurred comprised debt issuance costs as part of the initial
financing for the Group plus interest incurred. Loan notes denominated in US
dollars and Euros were issued. Interest is based on a margin over Libor and
Euribor respectively.


Outlook


Lancashire writes a diversified portfolio of insurance, reinsurance and
retrocession business on a worldwide basis, via its Bermuda subsidiary,
Lancashire Insurance Company Limited, 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.


The Group issued a Trading Statement on 21st February, 2006 commenting that
Lancashire had been anticipating significant upward pricing adjustments and
improved terms and conditions. This continues to be borne out, with overall
trading conditions as expected and in certain areas better than expected at the
time of Lancashire's Initial Public Offering in December 2005 in lines that the
Group has chosen to write.


Lancashire Holdings Limited
Consolidated Balance Sheet
As at December 31, 2005


                                                                           $'000

Assets

Property, plant and equipment                                                404
Intangible assets: software                                                  305
Deferred acquisition costs                                                   515
Other receivables                                                          2,025
Insurance balances receivable                                              2,118
Cash and cash equivalents                                              1,072,383
Total assets                                                           1,077,750

Liabilities
Unearned premium                                                           2,620
Long-term debt                                                           125,420
Accrued interest payable                                                     431
Other payables                                                             2,185
Total liabilities                                                        130,656


Shareholders' equity

Share capital                                                             97,857
Share premium account                                                    860,789
Retained deficit                                                        (11,552)
Total shareholders' equity attributable to shareholders                  947,094

Total liabilities and shareholders' equity                             1,077,750


The consolidated financial statements were approved by the Board of Directors on
March 9, 2006.


Lancashire Holdings Limited

Consolidated Income Statement

For the period from October 12, 2005 (date of incorporation) to December 31,
2005


                                                                           $'000
Revenue

Gross premiums written                                                     2,638
Premium ceded to reinsurers                                                    -

Net premiums written                                                       2,638

Gross change in unearned premiums                                        (2,620)

Net premiums earned                                                           18

Interest income                                                            2,073

Total revenue                                                              2,091


Expenses
Acquisition costs                                                            (5)
Employee benefits expense                                                (8,645)
Depreciation and amortization                                               (19)
Other operating expenses                                                 (1,304)
Total expenses                                                           (9,973)

Operating loss                                                           (7,882)


Finance costs                                                            (3,670)

Net loss for the period attributable to shareholders                    (11,552)




Basic earnings (loss) per share (dollars per share)                      ($0.24)
Diluted earnings (loss) per share (dollars per share)                    ($0.24)
Book value per share (dollars per share)                                   $4.84


Lancashire Holdings Limited

Consolidated Cash Flow Statement

For the period from October 12, 2005 (date of incorporation) to December 31,
2005


                                                                           $'000

Cash flows from operating activities
Loss before interest income and expense                                 (13,194)
Interest income                                                            2,073
Interest expense                                                           (431)
Loss after interest income and expense                                  (11,552)

Adjustments for non cash items:
Employee benefits expense                                                  8,437
Depreciation and amortisation                                                 19
Foreign exchange losses on financing items                                 (285)

Changes in operational assets and liabilities:
Deferred acquisition costs                                                 (515)
Other receivables                                                        (2,025)
Insurance balances receivable                                            (2,118)
Unearned premium                                                           2,620
Accrued interest payable                                                     431
Other payables                                                             1,242

Net cash flows used in operating activities                              (3,746)

Cash flows from investing activities
Purchase of property, plant and equipment                                  (414)
Purchase of intangible assets: software                                    (314)
Net cash flows used in investing activities                                (728)

Cash flows from financing activities
Proceeds from issue of share capital                                     978,549
Transaction costs from issue of share capital                           (12,178)
Formation expenses                                                      (15,220)
Proceeds from issue of long-term debt                                    125,709
Net cash flows received from financing activities                      1,076,860


Net increase in cash and cash equivalents                              1,072,386
Cash and cash equivalents at beginning of period                               -
Effect of exchange rate fluctuations on cash and cash equivalents            (3)
Cash and cash equivalents at end of period                             1,072,383



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 by the industry 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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