1st Quarter Results

LANCASHIRE HOLDINGS LIMITED                          

GROWTH IN FULLY CONVERTED BOOK VALUE PER SHARE, ADJUSTED FOR DIVIDENDS, OF 0.9%
                                  IN Q1 2010                                   

                      COMBINED RATIO OF 99.1% IN Q1 2010                       

        FULLY CONVERTED BOOK VALUE PER SHARE OF $7.38 AT 31 MARCH 2010         

                                  5 May 2010                                   

                               Hamilton, Bermuda                               

Lancashire Holdings Limited ("Lancashire" or "the Group") today announces its
financial results for the three month period ended 31 March 2010.

Financial highlights for the first quarter of 2010:

  * Fully converted book value per share of $7.38 at 31 March 2010 compared to
    $7.41 at 31 December 2009. Return on equity, defined as growth in fully
    converted book value per share adjusted for dividends, of 0.9% (Q1 2009:
    2.9%);
   
  * Gross premiums written of $228.0 million (Q1 2009: $142.8 million). Net
    premiums written of $203.5 million (Q1 2009: $99.2 million);
   
  * Reported loss ratio of 77.9% (Q1 2009: 53.6%) and combined ratio of 99.1%
    (Q1 2009: 81.2%). Accident year loss ratio of 86.8% (Q1 2009: 28.9%);
   
  * Net loss from Chile Maule earthquake of $94.5 million after reinstatement
    premiums versus pre-announced range of $65.0 to $125.0 million.
   
  * Total investment return of 1.2% (Q1 2009: 1.1%). Annualised total
    investment return of 5.0% (Q1 2009: 4.6%);
   
  * Net profit after tax of $8.2 million (Q1 2009: $40.7 million), or $0.04
    diluted earnings per share (Q1 2009: $0.22);
   
  * Final dividend of $20.8 million (Q1 2009: $nil) or $0.10 per common share;
    and
   
  * Share repurchases of $12.9 million during the period (Q1 2009: $nil).
   
Richard Brindle, Group Chief Executive Officer, commented:

"It has been a challenging start to 2010. We have witnessed a number of
significant industry losses, including losses from the major earthquake in
Chile in February, and from severe weather around the world. Despite exposure
to these events, we are pleased to report both a respectable combined ratio of
99.1% and return on equity of 0.9% for the quarter. This has been the sixteenth
out of seventeen quarters since inception that we have delivered a positive
return on equity.

Building out our property catastrophe portfolio in the first quarter was the
driving factor behind the 60% increase in our gross premiums written when
compared with the same period in 2009. The increase in our property catastrophe
class will be balanced by a tactical reduction in risk appetite for other
classes in the second quarter and the remainder of the year.

As would be expected given our book of business, Lancashire was impacted by the
total loss of the Deepwater Horizon drilling unit in April. Total industry
losses may end up well over one billion dollars, making this one of the largest
energy claims in recent history. Although Lancashire is one of the major
underwriters of deep water Gulf of Mexico energy insurance, our net loss for
this event is within normal loss expectations.

We previously expressed our view that rates in most classes Lancashire writes
would be at their hardest at the start of the year. Despite the succession of
catastrophes in 2010 so far, we remain concerned that the losses have only
succeeded in slowing down the general decline in prices across many areas of
our portfolio, with the exception of specific parts of the energy sector. If
the downward trend in pricing continues, we would expect to write less business
during the rest of 2010, maintaining our focus on underwriting discipline."

Neil McConachie, President and Group Chief Financial Officer, commented:

"Since the start of the year, we have continued to repurchase shares both
privately and on the public market. Should Lancashire's share price remain
attractive for repurchases, we expect to continue our repurchase programme. At
the same time, in the run-up to hurricane season, we will monitor
opportunities, balancing share repurchases and underwriting exposure to achieve
the best possible return on equity. As we have previously stated, should
trading conditions remain the same or, as we anticipate, gradually deteriorate,
absent a change in our business plan we would expect to return more capital to
shareholders than we generate during 2010."


Lancashire Renewal Price Index for Major Classes

Lancashire's Renewal Price Index ("RPI") is an internal tool that management
uses to track trends in premium rates on a portfolio of insurance and
reinsurance contracts. The RPI is calculated on a per contract basis and
reflects Lancashire's assessment of relative change in price, terms, conditions
and limits and is weighted by premium volume (see the notes at the end of this
announcement for further guidance).

The following RPIs are expressed as an approximate percentage of pricing
achieved on similar contracts written in 2009:

Class                            Q1 2010                                       
                                                                               
Aviation (AV52)                      91%                                       
                                                                               
Gulf of Mexico Energy               100%                                       
                                                                               
Energy Offshore                      98%                                       
Worldwide                                                                      
                                                                               
Marine                              100%                                       
                                                                               
Direct & Facultative                 94%                                       
                                                                               
Property Reinsurance                 97%                                       
                                                                               
Terrorism                            93%                                       
                                                                               
Combined                             96%                                       


Underwriting results

Gross premiums written increased by 59.7% in the first quarter of 2010 compared
with the same period in 2009. The Group's four principal classes, and a
discussion of the key market factors impacting them, are as follows:

Gross Premiums Written

              Q1 / 3 months to 31 March                                         
                                                                                
             2010     2009   Change   Change                                    
                                                                                
               $m       $m       $m        %                                    
                                                                                
Property    152.5     76.0     76.5    100.7                                    
                                                                                
Energy       36.9     28.2      8.7     30.9                                    
                                                                                
Marine       31.8     30.2      1.6      5.3                                    
                                                                                
Aviation      6.8      8.4    (1.6)   (19.0)                                    
                                                                                
Total       228.0    142.8     85.2     59.7                                    

Property gross premiums written increased by 100.7% for the first quarter
compared to the same period in 2009. Price reductions in the first quarter of
2010 were, in general, minor in the property segment. In anticipation of a
declining price environment later in the year, and in conjunction with the
Group's planned expansion of its property catastrophe reinsurance book, a
tactical decision was taken to deploy more of the Group's capital at the
January reinsurance renewals than in prior years. A significant amount of new
business across property retrocession and catastrophe reinsurance was written,
including some large multi-year contracts. Also included in the first quarter
of 2010 is approximately $14.5 million of reinstatement premiums in connection
with the February Chile Maule earthquake. Within the terrorism line of
business, an upturn in construction project investment around the world
resulted in new prospects, primarily driven by lender requirements.

Energy gross premiums written increased by 30.9% for the first quarter of 2010
compared to the same period in 2009. In the energy worldwide offshore line,
while we have declined to renew some accounts where pricing no longer meets the
Group's requirements, there has been increased volume as a result of multi-year
renewals and some new business. There have also been some opportunities within
the energy construction line, now that projects have re-commenced with the
improved oil price and economic outlook. There has been more interest in Gulf
of Mexico coverage as the recovery from the financial crisis continues; but it
is currently too early to establish whether this interest will generate
substantial new business.

Marine gross premiums written increased by 5.3% for the first quarter of 2010
compared to the same period in 2009. Pricing and renewals have been broadly
stable. The increase is largely driven by the timing of certain multi-year
contract renewals and some contract extensions.

Aviation gross premiums written decreased by 19.0% for the first quarter of
2010 compared to the same period in 2009. The reduction was driven primarily by
two factors: reduced flights flown and passengers travelled as a result of the
recent recessionary environment; and the deferral of some larger renewals into
the second quarter of 2010.

*******

Outwards reinsurance premiums decreased by $19.1 million (or 43.8%) in the
first quarter compared to the same period in 2009. This was driven by improved
pricing due to a re-structuring of the Group's risk cover.

*******

Net premiums earned as a proportion of net premiums written were 84.4% in the
first quarter of 2010 compared to 140.3% in the same period in 2009. The
significant increase in premium volumes, plus some larger multi-year deals in
the first quarter of 2010 as compared to 2009, will result in a comparatively
large deferral of earnings to later in 2010 and partially into 2011.

*******

The Group's net loss ratio for the first quarter was 77.9% compared to 53.6%
for the same period in 2009. There was a relatively low level of risk losses
reported in the first quarter of 2010. Modest prior year favourable development
reduced the net loss ratio by 9.8 points but the Chile Maule earthquake in
February 2010 added 63.4 points for the quarter. The table below provides
further detail of development by class, excluding the impact of foreign
exchange revaluations.

Loss Development by Class

                       Q1 2010            Q1 2009                              
                                                                               
                            $m                 $m                              
                                                                               
Property                  11.2               15.4                              
                                                                               
Energy                     1.7             (51.1)                              
                                                                               
Marine                     3.6                1.3                              
                                                                               
Aviation                   0.3                  -                              
                                                                               
Total                     16.8             (34.4)                              

Note: Positive numbers denote favourable development and negative numbers
denote adverse development.

Net prior accident year reserve releases were $16.8 million for the first
quarter of 2010 compared to adverse development of $34.4 million for the same
period in 2009. Excluding the adverse development on Hurricane Ike in the first
quarter of 2009, prior year development was a favourable $5.4 million. The
favourable development in 2010 arises primarily from IBNR releases due to fewer
reported risk losses than expected. The accident year loss ratio for the first
quarter of 2010, including the impact of foreign exchange revaluations, was
86.8% compared to 28.9% for the same period in 2009. The higher ratio in 2010
is due to losses from the Chile Maule earthquake. Excluding the impact of
foreign exchange revaluations, during the first quarter of 2010 previous
accident years developed as follows:

  * 2006 - favourable development of $0.5 million (2009 - $1.3 million);
   
  * 2007 - favourable development of $nil (2009 - $2.9 million);
   
  * 2008 - favourable development of $10.5 million (2009 - $38.6 million
    adverse); and
   
  * 2009 - favourable development of $5.8 million.
   

Investments

Net investment income was $13.7 million for the first quarter of 2010, a
marginal increase of 1.5% from the first quarter of 2009. The increasing
downward pressure on yields kept our investment income consistent with last
year, despite the Group's increased allocation to fixed income investments
versus cash as compared to the prior year. Total investment return, including
net investment income, net realised gains and losses, impairments and net
change in unrealised gains and losses, was $24.7 million for the first quarter
of 2010 compared to $23.5 million for the same period in 2009. While treasury
yields fell in January, resulting in significant unrealised gains for the
Group, yields rose again throughout the rest of the quarter to produce a net
change in unrealised gains and losses of $6.8 million. There were no
impairments recorded in the first quarter compared to $0.4 million for the
first quarter of 2009.

The Group continues to hold a highly conservative investment portfolio,
consistent with its long-held philosophy, with a strong emphasis on preserving
capital. The Group invested approximately 4.0% of its managed portfolio in
emerging market debt in the first quarter of 2010. The corporate bond
allocation, excluding Federal Deposit Insurance Corporation guaranteed bonds,
is now 27.6% of managed invested assets. At 31 March 2010, the managed
portfolio comprised 91.3% fixed income securities and 8.7% cash and cash
equivalents versus the 2009 first quarter allocations of 67.8% fixed income
securities and 32.2% cash and cash equivalents. The Group is not currently
invested in equities, hedge funds or other alternative investments.

Key investment portfolio statistics as at 31 March are:

                                                          2010             2009
                                                                               
Duration                                             2.3 years        1.4 years
                                                                               
Credit quality                                              AA              AA+
                                                                               
Book yield                                                2.9%             2.8%
                                                                               
Market yield                                              2.1%             1.9%


Other operating expenses

Other operating expenses for the quarter, excluding employee remuneration, are
broadly consistent compared to the same period in 2009. Fixed employee
compensation costs were 46% of fixed operating expenses in the first quarter of
2010 compared to 45% for the same period in 2009. The variable component of
employee compensation costs included a reduction of $6.7 million compared to
$2.1 million for the prior year in relation to the final determination of 2009
employee compensation, including deferred stock components.

Equity based compensation was $5.9 million in the first quarter of 2010
compared to $3.0 million in the same period of 2009. Annual restricted stock
awards typically vest over two or three years. The increased 2010 expense as
compared to 2009 reflects two years' worth of restricted stock awards given the
restricted stock program began in 2008. It also includes mark-to-market
adjustments plus charges associated with the revaluation of options due to
amendments made to their strike price as a result of dividend declarations, as
approved by the Group Remuneration Committee in accordance with the rules of
Lancashire's option scheme. The charge for strike price amendments was $1.7
million versus $0.2 million for the same period in the prior year.


Capital

At 31 March 2010, total capital was approximately $1.489 billion, comprising
shareholders' equity of $1.359 billion and $129.3 million of long-term debt.
Leverage was 8.7%. Total capital at 31 March 2009 was $1.446 billion and
leverage was 8.9%.


Repurchase program

The Group continues to repurchase its own shares by way of on and off market
purchases utilising the $162.2 million remaining to be repurchased at 31 March
2010, under the current approved facilities (the "Repurchase Program"). $12.9
million of shares were repurchased during the first quarter of 2010 compared to
$nil in the same period in the prior year.

As previously announced, on 1 April 2010 Lancashire agreed to purchase from
Crestview Partners, L.P., Crestview Offshore Holdings (Cayman), L.P., Crestview
Holdings (TE), L.P., Crestview Partners ERISA, L.P. and Crestview Partners
(PF), L.P for cancellation an aggregate of 4,120,879 issued Common Shares of
$0.50 par value per share ("Common Shares") at a price of $7.28 per share, or
479.7 pence per share. The shares were repurchased in an off market transaction
at a discount to the market price as at the close of business on 31 March 2010
(based on an exchange rate of £1.0/$1.5175).

The Board proposed, and the shareholders have approved at the Annual General
Meeting held on 4 May 2010, a renewal of the Repurchase Program; specifically
by authorising Lancashire to make one or more purchases of its issued Common
Shares up to an aggregate nominal amount equal to approximately 10% of issued
capital with such authority to expire on the conclusion of the 2011 Annual
General Meeting or, if earlier, 15 months from 4 May 2010.


Post Q1 2010 Event

Following the total loss of the Deepwater Horizon drilling unit, Lancashire
expects to incur a net loss of approximately $25.0 million after reinsurance
recoveries. This will be included in the results of the second quarter of 2010.


Dividends

During the first quarter of 2010, the Lancashire Board declared a final
dividend for the 2009 financial year of 10.0 cents per common share. The
dividend, totaling $20.8 million, was paid on 14 April 2010.

Lancashire 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.


Outlook

Lancashire aims to achieve a cross-cycle return of 13% above a risk free rate.
This remains unchanged from previous guidance.


Financial information

Further details of our 2010 first quarter results can be obtained from our
Financial Supplement. This can be accessed via our website 
www.lancashiregroup.com.


Analyst and Investor Earnings Conference Call

There will be an analyst and investor conference call on the results at 1:00pm
UK time / 8:00 am EST on Wednesday 5 May 2010. The call will be hosted by
Richard Brindle, Chief Executive Officer, Neil McConachie, President and Chief
Financial Officer and Alex Maloney, Group Chief Underwriting Officer.

The call can be accessed by dialing [phone] / [phone] with
the passcode 9344201. The call can also be accessed via webcast, please go to
our website (www.lancashiregroup.com) to access.

A replay facility will be available for two weeks until Wednesday 19 May 2010.
The dial in number for the replay facility is [phone] / + 1 347 366
9565 and the passcode is 9344201#. The replay facility can also be accessed at
www.lancashiregroup.com .

For further information, please contact:

Lancashire Holdings                     [phone]                   
                                                                               
Jonny Creagh-Coen                                                              
                                                                               
Haggie Financial                        [phone]                    
                                                                               
Peter Rigby                                                                    
                                                                               
Henny Breakwell                                                                

Investor enquiries and questions can also be directed to
[e-mail] or by accessing the Group website
www.lancashiregroup.com.


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 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

NOTE REGARDING RPI TOOL

LANCASHIRE'S RENEWAL PRICE INDEX ("RPI") IS AN INTERNAL TOOL THAT ITS
MANAGEMENT USES TO TRACK TRENDS IN PREMIUM RATES OF A PORTFOLIO OF INSURANCE
AND REINSURANCE CONTRACTS. THE RPI IS CALCULATED ON A PER CONTRACT BASIS AND
REFLECTS LANCASHIRE'S ASSESSMENT OF RELATIVE CHANGES IN PRICE, TERMS,
CONDITIONS AND LIMITS AND IS WEIGHTED BY PREMIUM VOLUME. THE CALCULATION
INVOLVES A DEGREE OF JUDGEMENT IN RELATION TO COMPARABILITY OF CONTRACTS AND
THE ASSESSMENT NOTED ABOVE. TO ENHANCE THE RPI TOOL, MANAGEMENT OF LANCASHIRE
MAY REVISE THE METHODOLOGY AND ASSUMPTIONS UNDERLYING THE RPI, SO THE TRENDS IN
PREMIUM RATES REFLECTED IN THE RPI MAY NOT BE COMPARABLE OVER TIME.
CONSIDERATION IS ONLY GIVEN TO RENEWALS OF A COMPARABLE NATURE SO IT DOES NOT
REFLECT EVERY CONTRACT IN LANCASHIRE'S PORTFOLIO. THE FUTURE PROFITABILITY OF
THE PORTFOLIO OF CONTRACTS WITHIN THE RPI IS DEPENDENT UPON MANY FACTORS
BESIDES THE TRENDS IN PREMIUM RATES.

NOTE REGARDING FORWARD-LOOKING STATEMENTS:

CERTAIN STATEMENTS AND INDICATIVE PROJECTIONS (WHICH MAY INCLUDE MODELED LOSS
SCENARIOS) MADE THAT ARE NOT BASED ON CURRENT OR HISTORICAL FACTS ARE
FORWARD-LOOKING IN NATURE INCLUDING WITHOUT LIMITATION, STATEMENTS CONTAINING
THE WORDS 'BELIEVES', 'ANTICIPATES', 'PLANS', 'PROJECTS', 'FORECASTS',
'GUIDANCE', 'INTENDS', 'EXPECTS', 'ESTIMATES', 'PREDICTS', 'MAY', 'CAN',
'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, CAPITAL MANAGEMENT PLANS,
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 FACTORS INCLUDE, BUT ARE NOT LIMITED TO: THE NUMBER AND TYPE OF INSURANCE
AND REINSURANCE CONTRACTS THAT WE WRITE; THE PREMIUM RATES AVAILABLE AT THE
TIME OF SUCH RENEWALS WITHIN OUR TARGETED BUSINESS LINES; THE LOW FREQUENCY OF
LARGE EVENTS; UNUSUAL LOSS FREQUENCY; THE IMPACT THAT OUR FUTURE OPERATING
RESULTS, CAPITAL POSITION AND RATING AGENCY AND OTHER CONSIDERATIONS HAVE ON
THE EXECUTION OF ANY CAPITAL MANAGEMENT INITIATIVES; THE POSSIBILITY OF GREATER
FREQUENCY OR SEVERITY OF CLAIMS AND LOSS ACTIVITY THAN OUR UNDERWRITING,
RESERVING OR INVESTMENT PRACTICES HAVE ANTICIPATED; THE RELIABILITY OF, AND
CHANGES IN ASSUMPTIONS TO, CATASTROPHE PRICING, ACCUMULATION AND ESTIMATED LOSS
MODELS; LOSS OF KEY PERSONNEL; A DECLINE IN OUR OPERATING SUBSIDIARIES' RATING
WITH A.M. BEST COMPANY AND/OR OTHER RATING AGENCIES; INCREASED COMPETITION ON
THE BASIS OF PRICING, CAPACITY, COVERAGE TERMS OR OTHER FACTORS; A CYCLICAL
DOWNTURN OF THE INDUSTRY; THE IMPACT OF A DETERIORATING CREDIT ENVIRONMENT
CREATED BY THE FINANCIAL MARKETS; A RATING DOWNGRADE OF, OR A MARKET DECLINE
IN, SECURITIES IN OUR INVESTMENT PORTFOLIO; CHANGES IN GOVERNMENTAL REGULATIONS
OR TAX LAWS IN JURISDICTIONS WHERE LANCASHIRE CONDUCTS BUSINESS; LANCASHIRE OR
ITS BERMUDIAN SUBSIDIARY BECOMING SUBJECT TO INCOME TAXES IN THE UNITED STATES
OR THE UNITED KINGDOM; AND THE EFFECTIVENESS OF OUR LOSS LIMITATION METHODS.
ANY ESTIMATES RELATING TO LOSS EVENTS INVOLVE THE EXERCISE OF CONSIDERABLE
JUDGEMENT AND REFLECT A COMBINATION OF GROUND-UP EVALUATIONS, INFORMATION
AVAILABLE TO DATE FROM BROKERS AND INSUREDS, MARKET INTELLIGENCE, INITIAL AND/
OR TENTATIVE LOSS REPORTS AND OTHER SOURCES. JUDGEMENTS IN RELATION TO LOSS
ARISING FROM NATURAL CATASTROPHE AND MAN MADE EVENTS INVOLVE COMPLEX FACTORS
POTENTIALLY CONTRIBUTING TO THESE TYPES OF LOSS, AND WE CAUTION AS TO THE
PRELIMINARY NATURE OF THE INFORMATION USED TO PREPARE ANY SUCH ESTIMATES.

THESE FORWARD-LOOKING STATEMENTS SPEAK ONLY AS AT THE DATE OF PUBLICATION.
LANCASHIRE HOLDINGS LIMITED EXPRESSLY DISCLAIMS ANY OBLIGATION OR UNDERTAKING
(SAVE AS REQUIRED TO COMPLY WITH ANY LEGAL OR REGULATORY OBLIGATIONS (INCLUDING
THE RULES OF THE LONDON STOCK EXCHANGE)) TO DISSEMINATE ANY UPDATES OR
REVISIONS TO ANY FORWARD-LOOKING STATEMENTS TO REFLECT ANY CHANGES IN THE
GROUP'S EXPECTATIONS OR CIRCUMSTANCES ON WHICH ANY SUCH STATEMENT IS BASED.

consolidated balance sheet

(unaudited)

                                                  march 31,           march 31,
                                                       2010                2009
                                                                               
                                                         $m                  $m
                                                                               
assets                                                                         
                                                                               
cash and cash equivalents                             230.6               731.1
                                                                               
accrued interest receivable                            14.8                 9.3
                                                                               
investments                                                                    
                                                                               
- fixed income securities - available               1,949.1             1,464.8
for sale                                                                       
                                                                               
reinsurance assets                                                             
                                                                               
- unearned premiums on premiums ceded                  21.8                36.6
                                                                               
- reinsurance recoveries                               34.7                53.4
                                                                               
- other receivables                                     0.7                 3.2
                                                                               
deferred acquisition costs                             62.8                57.0
                                                                               
inwards premiums receivable from                      227.7               176.3
insureds and cedants                                                           
                                                                               
other assets                                           39.8                72.1
                                                                               
total assets                                        2,582.0             2,603.8
                                                                               

liabilities                                                                    
                                                                               
insurance contracts                                                            
                                                                               
- loss and loss adjustment expenses                   607.5               564.7
                                                                               
- unearned premiums                                   365.5               326.2
                                                                               
- other payables                                       15.2                16.2
                                                                               
amounts payable to reinsurers                          14.2                21.9
                                                                               
deferred acquisition costs ceded                        2.9                 2.6
                                                                               
other payables                                         88.1               226.4
                                                                               
long-term debt                                        129.3               128.7
                                                                               
total liabilities                                   1,222.7             1,286.7
                                                                               


shareholders' equity                                                           
                                                                               
share capital                                          91.2                91.2
                                                                               
own shares                                           (92.0)              (59.0)
                                                                               
share premium                                           2.4                 2.4
                                                                               
contributed surplus                                   760.7               758.1
                                                                               
accumulated other comprehensive income                 37.2                29.3
                                                                               
other reserves                                         63.4                57.3
                                                                               
dividends                                            (20.8)                   -
                                                                               
retained earnings                                     517.2               437.8
                                                                               
total shareholders' equity                          1,359.3             1,317.1
                                                                               
total liabilities and shareholders'                 2,582.0             2,603.8
equity                                                                         
                                                                               
basic book value per share                            $8.08               $7.62
                                                                               
fully converted book value per share                  $7.38               $7.09


consolidated income statement

(unaudited)

                                              quarter 1           quarter 1     
                                                   2010                2009     
                                                                                
                                                     $m                  $m     
                                                                                
gross premiums written                             228.0               142.8                
                                                                                
outwards reinsurance premiums                     (24.5)              (43.6)                
                                                                                
net premiums written                               203.5                99.2                
                                                                                
change in unearned premiums                       (47.9)                13.4                
                                                                                
change in unearned premiums on                      16.2                26.6                
premiums ceded                                                                  
                                                                                
net premiums earned                                171.8               139.2                
                                                                                
net investment income                               13.7                13.5                
                                                                                
net other investment income                        (0.1)                 0.3                
(losses)                                                                        
                                                                                
net realised gains (losses) and                     4.3                 8.0                
impairments                                                                     
                                                                                
net foreign exchange gains                         (1.7)               (1.6)                
(losses)                                                                        
                                                                                
total net revenue                                  188.0               159.4                
                                                                                
insurance losses                                   133.5                89.1                
                                                                                
insurance losses recoverable                         0.4              (14.5)                
                                                                                
net insurance acquisition expenses                  26.6                26.0                
                                                                                
equity based compensation                            5.9                 3.0                
                                                                                
other operating expenses                             9.8                12.4                
                                                                                
total expenses                                     176.2               116.0                
                                                                                
profit before tax and finance                       11.8                43.4                
costs                                                                           
                                                                                
finance costs                                       (1.7)               (2.4)                
                                                                                
profit before tax                                   10.1                41.0                
                                                                                
tax                                                 (1.9)               (0.3)     
                                                                                
profit after tax                                     8.2                40.7                
                                                                                
net loss ratio                                      77.9%               53.6%                
                                                                                
net acquisition cost ratio                          15.5%               18.7%                
                                                                                
administrative expense ratio                         5.7%                8.9%                
                                                                                
combined ratio                                      99.1%               81.2%                
                                                                                
basic earnings per share                            $0.05               $0.24                
                                                                                
diluted earnings per share                          $0.04               $0.22                
                                                                                
change in fully converted book                       0.9%                2.9%     
value per share                                                                 


consolidated cash flow statement                quarter 1           quarter 1  
                                                                               
(unaudited)                                        2010                2009    
                                                                               
                                                    $m                  $m     
                                                                               
cash flows from operating activities                                           
                                                                               
profit before tax                                  10.1                41.0    
                                                                               
tax paid                                          (1.2)               (0.3)    
                                                                               
depreciation                                       0.7                 0.2     
                                                                               
interest expense                                   1.3                 1.9     
                                                                               
interest and dividend income                      (16.9)              (16.7)   
                                                                               
accretion of fixed income securities               2.3                 2.0     
                                                                               
equity based compensation                          5.9                 3.0     
                                                                               
foreign exchange losses                            1.7                 0.8     
                                                                               
net other investment (income) losses                -                 (0.3)    
                                                                               
net realised (gains) losses and                   (4.3)               (8.0)    
impairments                                                                    
                                                                               
unrealised gain on interest rate                  (0.5)                 -      
swaps                                                                          
                                                                               
changes in operational assets and                                              
liabilities                                                                    
                                                                               
-insurance and reinsurance contracts              103.1                18.6    
                                                                               
-other assets and liabilities                      4.6                115.3    
                                                                               
net cash flows from operating                     106.8               157.5    
activities                                                                     
                                                                               
cash flows used ininvesting                                                    
activities                                                                     
                                                                               
interest and dividends received                    14.1                17.4    
                                                                               
purchase of property, plant and                   (0.3)                 -      
equipment                                                                      
                                                                               
purchase of fixed income securities              (596.4)           (1,072.9)   
                                                                               
proceeds on maturity and disposal of              548.2              1,216.7   
fixed income securities                                                        
                                                                               
proceeds on disposal of equity                      -                  4.6     
securities                                                                     
                                                                               
net proceeds on other investments                  0.6                 0.2     
                                                                               
net cash flowsfrom (used in)                      (33.8)              166.0    
investing activities                                                           
                                                                               
cash flows used in financing                      (1.3)               (2.0)    
activities                                                                     
                                                 (263.0)                -      
interest paid                                                                  
                                                  (16.2)              (1.0)    
dividends paid                                                                 
                                                                               
shares repurchased                                                             
                                                                               
net cash flows used infinancing                  (280.5)              (3.0)    
activities                                                                     
                                                                               
net (decrease) increase in cash and              (207.5)              320.5    
cash equivalents                                                               
                                                                               
cash and cash equivalents at                      440.0               413.6    
beginning of year                                                              
                                                                               
effect of exchange rate fluctuations on cash      (1.9)               (3.0)    
and cash equivalents                                                           
                                                                               
cash and cash equivalents at end of               230.6               731.1    
period