Lancashire Holdings Ltd – Releases 2012 Results (Excerpt)

Hamilton, Bermuda – 21 February, 2013 – Lancashire Holdings Limited (“Lancashire” or “the Company”; Ticker: LHL BH) today announces its results for the fourth quarter of 2012 and the year ended 31 December 2012.

Richard Brindle, Group Chief Executive Officer, commented: “I am pleased to report a solid final quarter and an excellent year for Lancashire. Our RoE of 16.7% for the year represents a strong result. Lancashire has now increased book value per share, including dividends, every year since its inception in 2005 and has achieved an industry beating compound annual return over that period of 19.2%.

The exceptional level of market losses witnessed in 2011 was not repeated in 2012. There were nonetheless material industry losses, including the loss of the Costa Concordia, which in addition to causing tragic loss of life was also the largest insured marine loss in history, and the devastation and injury of Sandy during the fourth quarter, which is likely to be one of the largest insured property losses of all time.

At the beginning of 2012 I expressed a cautious optimism about the insurance pricing environment. That proved justified in our property retrocession and reinsurance lines and in the energy offshore accounts. Otherwise, the rating environment, outside of loss affected accounts in our core lines, remained competitive. On our direct property business, rates, and more importantly terms and conditions, proved frustratingly immune to improvement. Coupled with the cost of capital and reinsurance costs, this led to the hard decision to cease underwriting our direct and facultative book in the summer of 2012.

In recent years we have developed our business by engaging with third party capital providers through both the Accordion and the Saltire facilities. We see such opportunities as a capitalefficient way of generating additional benefits for our shareholders, drawing on Lancashire's underwriting expertise. We are actively engaged in the further development of these types of opportunities under the banner of “Lancashire Capital Management”. We are careful only to develop products we believe in and to ensure that these projects don’t distract us from the “mothership”.

Our success is built on the talent and quality of our people. We have worked hard in 2012 to bring our different disciplines even closer together. In Bermuda our underwriting and actuarial teams now operate in a fully integrated way to assess and price risk. Our fortnightly Risk and Return Committee meeting brings together senior people from underwriting, finance, actuarial, risk and operations to look at all areas of our company. This teamwork drives our success, and I would like to thank all our staff for their commitment and contribution to another excellent year.”

Elaine Whelan, Group Chief Financial Officer, commented: “With our best estimate of our net loss from Sandy at $44.5 million, after reinsurance and reinstatement premium, we produced a strong underwriting result for the fourth quarter with a combined ratio of 71.9%. In the face of continuing uncertainty and volatility in the investment markets, our portfolio held up well, producing a positive total return for the quarter of 0.3%. That brought us to a very satisfactory 3.1% total return for the year. I am therefore delighted to report a healthy RoE for the quarter of 3.1% and for the year of 16.7%.

We enhanced our capital mix by issuing $130 million of ten year unsecured senior debt early in the fourth quarter. While we sought opportunities to put this to work at the 1 January renewals, we have significant excess headroom as markets look broadly flat following the Sandy loss. We are therefore returning a substantial amount of capital in the first quarter. With today’s announcement of our final and special dividends, plus the related dividend equivalent payments, totalling approximately $220 million, we will have returned $1.7 billion or 93.7% of our comprehensive income since inception.

While we remain very well capitalised, to ensure we’re prepared for any eventuality, we will again request shareholder approval for a renewed authority to allot and issue share capital on a non pre-emptive basis at our Annual General Meeting in May.”

The full text of this release and further details of our 2012 fourth quarter results can be obtained from the Company's Financial Supplement. This can be accessed via www.lancashiregroup.com

For further information, please contact:

Lancashire Holdings Limited

Christopher Head

+44 020 7264 4145

chris.head@lancashiregroup.com

Jonny Creagh-Coen

+44 020 7264 4066

jcc@lancashiregroup.com

Haggie Financial +44 020 7417 8989

Peter Rigby (Peter Rigby mobile 07803851426)

Investor enquiries and questions can also be directed to info@lancashiregroup.com or by accessing the Group’s website at: www.lancashiregroup.com.

About Lancashire

Lancashire, through its UK and Bermuda-based operating subsidiaries, is a global provider of specialty insurance and reinsurance products. 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 has its corporate headquarters and mailing address at Level 11, Vitro, 60 Fenchurch Street, London EC3M 4AD, United Kingdom and its registered office at Power House, 7 Par-la-Ville Road, Hamilton HM 11, Bermuda.