Trading Statement

Lancashire Holdings Limited
22 November 2006

22 November 2006

           LANCASHIRE ANTICIPATES HEALTHY TRADING CONDITIONS IN 2007


Lancashire Holdings Limited ('Lancashire' or 'the Company') today released a
statement on trading conditions, operations and results to date.

Lancashire is a specialty insurance company which underwrites a diverse
worldwide portfolio of short-tail property risks through its licensed
subsidiaries. The Company focuses on property, energy, marine and aviation
classes. Risks are written primarily on a direct basis, constituting
approximately two thirds of bound premium. The portfolio is diversified between
risks exposed to natural catastrophes and a range of classes uncorrelated to
such events. Non-correlating risks represent approximately half of projected
premiums in 2006.

In the majority of classes of risks written by Lancashire, with the exception of
marine, the favourable pricing and terms of 2006 are anticipated to remain
healthy through 2007, particularly in catastrophe-exposed zones. Outside these
zones, there may be some modest weakening but pricing is expected but to remain
broadly acceptable in most classes. Overall, the outlook for 2007 trading
conditions for Lancashire is attractive.


Richard Brindle, Chief Executive Officer and Chief Underwriting Officer
commented:

'Lancashire has enjoyed a very successful year so far. We are extremely pleased
to have developed relationships with a high quality base of insurance clients
across all segments; relationships we aim to develop further in years to come.
As 2006 has progressed we have made large strides in broadening our underwriting
team, creating a sophisticated risk management toolkit and in building support
functions to efficiently service the workflow. We now have 54 staff between
London and Bermuda, including 11 underwriters, which provides Lancashire with
the resources to meet our business needs. This operational readiness, including
our recently launched UK underwriting operation, will enable us to take full
advantage of what we believe will be an attractive trading environment for
Lancashire in 2007.'

'We have been very pleased with the property and energy segments, where we have
experienced robust pricing and favourable loss experience. In the marine sector,
while we have enjoyed a low level of claims, we have consistently been
disappointed with pricing. As such, we have declined to write a large proportion
of what has been presented and premiums are less than expected as a result.
Trading conditions in the AV52 aviation sector have been acceptable albeit not
at the level of property or energy.'

'We are positioning Lancashire to efficiently trade through all market cycles.
We aim to achieve this through active sector selection, by nurturing client
relationships, and by maintaining a nimble capital structure. Throughout, we
will maintain the underwriting discipline that is embedded in our culture.
Toward these ends, we are continually exploring new opportunities to enhance our
core business strategy. We are confident these will further develop the
Lancashire franchise.'


Market commentary by line of business:

In the property line, which currently represents approximately 40% of
Lancashire's total 2006 premium, trading conditions are expected to remain
strong. Year on year prices are expected to hold firm or modestly increase in
certain areas for the direct property and retrocession classes which form the
majority of the segment. The terrorism class, which is a smaller component of
the sector, is broadly priced at acceptable levels but, absent loss events, is
expected to slowly decline in 2007. This trend may be reversed if the U.S.
Terrorism Risk Insurance Extension Act ('TRIEA'), with its 'make available' and
other requirements, is not renewed at the end of 2007.

The energy line also currently contributes approximately 40% of total premium.
Excellent trading conditions in the segment have been driven by the
unprecedented risk adjusted pricing for Gulf of Mexico direct insurance, where
we believe Lancashire is one of the leading industry markets. Despite the lack
of hurricanes in 2006, initial expectations are that pricing and terms for Gulf
of Mexico risks will weaken by a relatively small level in 2007, remaining very
attractive. Outside the Gulf of Mexico, trading conditions are generally
reasonable and this is largely expected to continue.

The marine and aviation lines each currently represent approximately ten percent
of the Lancashire portfolio. As noted in the half year trading statement, marine
has been the most disappointing sector in 2006. At present there appears to be
no impetus for this to change and Lancashire's approach will remain one of
careful risk selection. In terms of the aviation sector, Lancashire focuses on
third party liability resulting from aviation terrorist events ('AV52'). Unlike
the general aviation sector, trading conditions in the niche AV52 class are at
acceptable levels. In the continued absence of a large industry event, AV52
pricing may decline as 2007 progresses but is expected to remain acceptable.


Neil McConachie, Chief Financial Officer commented:

'Lancashire has always employed a robust and transparent approach to risk
management. As of September 30, our modeled exposure to a single 1 in 100 year
occurrence was less than 25% of capital. This does not take into account profits
made during the rest of the year. Following the January renewal season, we will
be in a better position to determine our capital needs. No decisions on the
appropriate amount and structure of capital for 2007 have been made at this
time. At all times we will aim to maximize the risk-adjusted return for our
shareholders and our mantra remains unchanged: We will match capital to the
underwriting opportunities, not the other way around.'

For the third quarter of 2006, the growth in fully converted book value per
share was 5.7% or 25.0% on an annualised basis. In the absence of major losses,
the growth in fully converted book value per share for 2006 is expected to be in
the range of 16% to 20%.

GAAP gross written premium for 2006 is expected to be in the range of $615
million to $625 million depending on market conditions through the end of the
year. This is based on projected bound premium of $675 million to $700 million.
The marine segment has remained largely unattractive and we have declined a
higher than expected number of deals in the second half of the year. AV52
aviation, where a large number of deals are written in the fourth quarter, has
also seen somewhat weaker pricing than we anticipated earlier in the year. GAAP
net written premium is expected to be in the range of $530 million to $540
million. The ratio of net earned premium to net written premium in 2006 is
expected to be approximately 50%. As 2007 progresses, the ratio of net earned
premium to net written premium will rise significantly from that experienced in
our first full year of operations.

At September 30, investments and cash stood at $1.28 billion. Fixed income and
cash comprised 93% of the balance, and equities comprised 7%. The yield on the
fixed income portfolio was 5.3%, the average credit quality was AA+ and duration
was 2.3 years.

Lancashire expects to issue a trading statement in the first quarter of 2007.

Lancashire will be hosting an analyst and investor conference call at 15:30 UK
time / 10:30 EST today to discuss the trading update. The conference call will
be hosted by Richard Brindle, Chief Executive and Chief Underwriting Officer,
Simon Burton, Deputy Chief Underwriting 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 6 December 2006. The dial
in number for the replay facility is [phone] / [phone] and
the passcode is 1143104#.


For further information, please contact:

Lancashire Holdings                         [phone]
Neil McConachie

Financial Dynamics                          [phone]
Robert Bailhache
Nick Henderson


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 dollars 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.lancashire.bm.

                   NOTE REGARDING FORWARD-LOOKING STATEMENTS

CERTAIN STATEMENTS 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', 'ANTICIPA
TES', '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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