Lancashire Holdings Ltd – Releases Q3 2013 Results (Excerpt)

Hamilton, Bermuda – 06 November, 2013 – Lancashire Holdings Limited (“Lancashire” or “the Company”; Ticker: LHL BH) today announces its results for the third quarter of 2013 and the nine month period ended 30 September 2013.

Richard Brindle, Group Chief Executive Officer, commented:

This has been a very active quarter for Lancashire and marks an important stage in the advancement of Lancashire from its beginnings as a Bermuda-based, single platform, specialty insurer and reinsurer to a resilient, relevant provider with multiple balance sheet and distribution capabilities. We now span insurance and reinsurance, Bermuda and London, traditional rated company, collateralised balance sheets and, following the imminent completion of the Cathedral transaction, Lloyd’s. We can provide clients and investors with several different ways to access Lancashire. But at the core remains a total commitment to underwriting expertise and capital management.

The acquisition of Cathedral will be a great boost to our underwriting resources. Peter Scales and John Hamblin have assembled a team of fourteen underwriters there, all of whom are leaders in their business line. Their niche market approach is very similar to Alex Maloney, Paul Gregory and Sylvain Perrier’s teams at Lancashire, which is mirrored again by Darren Redhead and the unique Kinesis offering.

Already we’ve seen a lot of new ideas generated from the interaction between the different teams and I’m highly confident that in the coming years the group will become much more than the sum of its separate parts. Opportunities to expand our presence with existing clients using the different vehicles, as well as opportunities to expand our product range are already under consideration. Peter, John, Alex and Paul will be speaking about some of those later today at our Analyst and Investor presentation.

But be under no illusion that the discipline that has underpinned our success will continue to be as rigorous as ever. There are some bright spots in our markets at present although for many pricing is adequate but under pressure. So we will continue to right-size capital across our balance sheet so that we are matching resources to opportunities and not the other way around. We’re continuing our active capital management with the announcement of a special dividend – the seventh we have declared since inception. In the absence of opportunities to deploy risk capital, and as long as buying back shares would detract from returns, the special dividend will remain a key tool for us.

Our reported results for the quarter are impacted by a number of factors, but a combined ratio below 70% for the year to date again testifies to the resilience of our portfolio and low attritional losses. The Lancashire Group is broader and better balanced than it has ever been, but its fundamental values are unchanged and embedded in everything we do.

Elaine Whelan, Group Chief Financial Officer, commented:

Investment markets, unsurprisingly, remained volatile this quarter and, while the US wind season was quiet, the industry was impacted by losses from the European hail storms and floods. That, combined with some medium sized energy losses, meant that from an operating perspective we had a very average quarter. However, with our August equity issuance in relation to our acquisition of the Cathedral Group, and with our strong multiple, our RoE for the quarter received a substantial boost. That, along with significant foreign exchange gains, again in relation to Cathedral, has produced an exceptional RoE of 7.4% for the quarter, bringing us to 14.7% for the year.

The announcement of our special dividend and dividend equivalent payments of approximately $94.5 million brings our total capital return since inception to $1.8 billion, or 93% of total comprehensive income. Market conditions in 2014 look stable overall for our portfolio. With that outlook we may typically have returned a slightly larger portion of our comprehensive income at this stage but, with our acquisition of Cathedral, we are in the process of re-balancing our capital requirements and reviewing market opportunities as a combined group. As such, we are returning 73% of comprehensive income for the year to date.

As always at Lancashire, reviewing our capital requirements to maximize our risk adjusted returns is a constant activity and we will review our position following the January renewal season.

Dividends

During the third quarter of 2013, the Lancashire Board of Directors paid an interim dividend for 2013 of $0.05 (£0.03) per common share. The dividends and dividend equivalent payments, totaling $10.5 million in aggregate, were paid on 25 September 2013 to shareholders of record on 23 August 2013.

Special dividend

Lancashire announces that its Board of Directors has declared a special dividend for 2013 of $0.45 per common share (approximately £0.28 per common share at the current exchange rate), which will result in an aggregate payment of approximately $81.3 million. The dividend will be paid in Pounds Sterling on 20 December 2013 (the “Dividend Payment Date”) to shareholders of record on 29 November 2013 (the “Record Date”) using the £ / $ spot market exchange rate at 12 Noon London time on the Record Date.

Shareholders interested in participating in the dividend reinvestment plan (“DRIP”) or other services including international payment, are encouraged to contact the Group registrars, Capita Registrars for more details at: http://www.capitaregistrars.com/shareholder.aspx

In addition to the special dividend payment to shareholders, a dividend equivalent payment of approximately $13.2 million in aggregate will be paid on the Dividend Payment Date to holders of share warrants issued by the Company pursuant to the terms of the warrants.

The Group will continue to review the appropriate level and composition of capital for the Group with the intention of managing capital to enhance risk-adjusted returns on equity.

Financial information

Further details of our 2013 third quarter results, including the full text of this release, can be obtained from our website www.lancashiregroup.com

For further information, please contact:

Lancashire Holdings Limited

Christopher Head                    +44 20 7264 4145

chris.head@lancashiregroup.com

Jonny Creagh-Coen               +44 20 7264 4066

jcc@lancashiregroup.com

Haggie Partners                      +44 20 7562 4444

Peter Rigby

(Peter Rigby mobile +44 7803851426)

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