Lancashire Holdings Ltd – Transaction In Own Shares During Close Period

Hamilton, Bermuda – 04 January, 2011 - Lancashire Holdings Limited (“Lancashire” or “the Company”; Ticker: LHL BH) announces that, as the Company is entering a close period, in connection with its share buy-back programme which was approved by the shareholders at the 2010 Annual General Meeting held on 4 May 2010 (the “Repurchase Programme”) the Company has entered into an irrevocable non-discretionary arrangement with Numis Securities Limited (“Numis”) to repurchase on its behalf and within certain pre-set parameters, Common Shares of US$0.50 each in the Company from 31 December 2010 until the earlier of the completion of the Repurchase Programme or the Company’s announcement of its annual results for the year ended 31 December 2010.

Numis has been granted the authority to repurchase shares up to an aggregate value, including costs, of $25 million. The repurchased shares will be cancelled.

This arrangement is in accordance with Rules 12.2.1R and 12.4.4R of the Listing Rules and the Company’s general authority to repurchase shares.

The Company confirms that it currently has no unpublished price sensitive information.

For further information, please contact:

This announcement does not constitute an invitation or offer to buy any securities of the Company. None of the securities referred to in this announcement shall be sold, issued, exchanged or transferred in any jurisdiction in contravention of applicable laws.

Numis Securities Limited, which is regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Lancashire Holdings Limited and no one else in relation to the Repurchase Programme, will not regard any other person as a client in relation to the Repurchase Programme and will not be responsible to anyone other than Lancashire Holdings Limited for providing the protections afforded to Lancashire Holdings Limited nor for providing advice in relation to the Repurchase Programme and/or any other matter referred to in this announcement.

This announcement is not an offer in or into the United States.

About Lancashire

Lancashire, through its UK and Bermuda-based insurance subsidiaries, is a global provider of specialty insurance products. The Group companies carry the following ratings:

^{(1)Financial Strength Rating applies to Lancashire Insurance Company Limited and Lancashire Insurance Company (UK) Limited}

^{(2) Long Term Issuer Rating applies to Lancashire Holdings Limited}

Lancashire has capital in excess of $1 billion and its Common Shares trade on the main market of the London Stock Exchange under the ticker symbol LRE. Lancashire is headquartered at Power House, 7 Par-la-Ville Road, Hamilton HM 11, 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

Lancashire Insurance Company (UK) Limited is regulated by the Financial Services Authority in the UK.

Lancashire Marketing Services (Middle East) Limited is authorised and regulated by the Dubai Financial Services Authority.

Lancashire Insurance Company Limited is regulated by the Bermuda Monetary Authority in Bermuda.