SOURCE: Lancashire Holdings Limited

February 21, 2006 02:18 ET

Lancashire Holdings Limited - Trading Statement

Bermuda -- (MARKET WIRE) -- February 21, 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 +44 (0)20 7138 0829. 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 +44 (0)20 7806 1970 and the pass code is 1047539#. The replay facility can also be accessed at www.lancashire.bm.

Lancashire Holdings                     +1 441 278 8950
Neil McConachie

Financial Dynamics                      +44 (0)20 7269 7200
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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