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THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the contents of this document, you should immediately seek your own personal financial advice from your stockbroker, bank manager, solicitor, accountant or other independent financial adviser duly authorised under the Financial Services and Markets Act 2000 if you are in the United Kingdom or, if not, another appropriately authorised independent financial adviser. The whole text of this document should be read. This document comprises a prospectus relating to Lancashire Holdings Limited (the ‘‘Company’’ or ‘‘LHL’’) prepared in accordance with the Prospectus Rules made under section 73A of the Financial Services and Markets Act 2000, as amended (the ‘‘FSMA’’). This document has been filed with, and approved by, the Financial Services Authority pursuant to section 87A of FSMA and has been made available to the public in accordance with paragraph 3.2 of the Prospectus Rules. Application has been made to the UK Listing Authority for all the share capital of the Company to be admitted to the Official List of the UK Listing Authority and to the London Stock Exchange for the Company to be admitted to trading on the London Stock Exchange’s main market for listed securities (together ‘‘Admission’’). Admission to the Official List of the UK Listing Authority, together with admission to trading on the London Stock Exchange’s main market for listed securities, constitutes admission to official listing on a stock exchange. It is expected that Admission will become effective and that dealings will commence at 8.00 am on 16 March 2009. The Directors of the Company and the Company accept responsibility for the information contained in this document. To the best of the knowledge and belief of the Directors and the Company (who have taken all reasonable care to ensure that such is the case), the information contained in this document is in accordance with the facts and contains no omission likely to affect the import of such information. This document should be read in its entirety. In particular, your attention is drawn to the section of this document headed ‘‘Risk Factors’’ for a discussion of certain risk factors that should be considered in connection with an investment in Common Shares. Merrill Lynch International, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting as sponsor to the Company in relation to the matters described in this document and is not acting for any other person and will not be responsible to any other person for providing the protections afforded to customers of Merrill Lynch International nor for advising them on the contents of this document or any other matter in relation to this Prospectus. LANCASHIRE HOLDINGS LIMITED (incorporated and registered in Bermuda under registration number 37415) Prospectus relating to Admission to the Official List and to trading on the London Stock Exchange Sponsor Merrill Lynch International 182,503,063 Common Shares are being admitted to the Official List pursuant to the Admission. The Company will not receive any proceeds in connection with the Admission. The distribution of this document in jurisdictions other than the UK may be restricted by law and therefore persons into whose possession this document comes should inform themselves about and observe such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. This document does not constitute an offer to sell or issue, or the solicitation of an offer to buy or subscribe for, shares in any jurisdiction in which such offer or solicitation is unlawful. This document does not constitute an offer or an invitation to any person to subscribe for or to purchase any Common Shares. The Common Shares have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the ‘‘Securities Act’’), or qualified for sale under the laws of any state of the United States or under the applicable laws of any of Canada, Australia or Japan, and, subject to certain exceptions, may not be offered or sold in the United States or to any national, resident or citizen of Canada, Australia or Japan. Neither this document nor any copy of it may be sent to or taken into the United States, Canada, Australia or Japan nor may it be distributed to any Canadian person. The distribution of this document in jurisdictions other than the UK may be restricted by law and therefore persons into whose possession this document comes should inform themselves about and observe such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. No person has been authorised to give any information or make any representations other than those contained in this document and, if given or made, such information or representations must not be relied upon as having been authorised. Neither the delivery of this document nor any sale made under this document shall, in any circumstances, create any implication that there has been no change in the affairs of the Company since the date of this document and that the information contained in this document is correct as of any time subsequent to the date of this document. THE UNITED STATES FEDERAL TAX ADVICE CONTAINED HEREIN IS WRITTEN IN CONNECTION WITH THE ADMISSION OF THE COMMON SHARES, AND IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED BY ANY PERSON, FOR THE PURPOSE OF AVOIDING US TAX PENALTIES. PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THEIR PARTICULAR CIRCUMSTANCES CONCERNING THE US FEDERAL, STATE, LOCAL AND NON-US TAX CONSEQUENCES OF OWNING COMMON SHARES. TABLE OF CONTENTS Page PART I – SUMMARY 3 PART II – RISK FACTORS 8 PART III – INFORMATION ON THE GROUP 23 PART IV – MANAGEMENT AND CORPORATE GOVERNANCE 32 PART V – OPERATING AND FINANCIAL REVIEW 36 PART VI – FINANCIAL INFORMATION 55 PART VII – REGULATION 107 PART VIII – ADDITIONAL INFORMATION 116 2 PART I SUMMARY The following information should be read as an introduction to, and in conjunction with, the full text of this document. Any decision to invest in the Common Shares should be based on consideration of this document as a whole. Where a claim relating to the information contained in a prospectus is brought before a court, a plaintiff investor might, under the national legislation of the European Economic Area States, have to bear the costs of translating the Prospectus before the legal proceedings are initiated. Civil liability attaches to those persons who are responsible for this summary, including any translation of this summary, but only if this summary is misleading, inaccurate or inconsistent when read together with the other parts of this document. 1. INTRODUCTION Lancashire Holdings Limited (‘‘LHL’’) is the holding company of the Lancashire group of companies incorporated in Bermuda on 12 October 2005. LHL is a specialty provider of insurance and reinsurance on a global basis. It specialises predominantly in property specialty insurance and has subsidiaries in Bermuda, London and Dubai. LHL writes risks primarily within property, energy, marine and aviation segments of the market and has a group rating from A.M. Best of A- (excellent). On 16 December 2005, LHL’s shares were admitted to trading on AIM, a market operated by the LSE. A secondary listing on the Bermuda Stock Exchange was approved on 21 May 2007. 2. OVERVIEW OF THE GROUP Lancashire writes a diversified book of business, mostly on a direct basis, in four principal lines: property, energy, marine and aviation. In 2008, gross premiums written for risks exposed to natural catastrophes represented approximately 35 per cent. of total written premium. In 2008, the percentage of Lancashire’s business written in the four principal lines by gross premium volume was as follows: * Property 47.5 per cent. * Energy 29.0 per cent. * Marine 12.3 per cent. * Aviation 11.2 per cent. Lancashire writes mostly direct risks. A small proportion (approximately 17 per cent. of 2008 gross premium) relates to reinsurance risks. 3. KEY STRENGTHS Lancashire has established a strong three year record and considers that its key strengths are in the following areas: * Strong underwriting track record: the Group’s overriding goal is to create a superior risk adjusted return over time. The Group had a combined ratio of 44.3, 46.3 and 86.3 per cent. for 2006, 2007 and 2008, respectively. * Strong underwriting team: the Group’s underwriting team is highly experienced. Team leaders in major lines of business have, on average, almost twenty years’ experience and, in the opinion of the Directors, are well matched to the lines of business written. * Underwriting discipline: the Group’s priority is excellence in underwriting and the pricing thereof, which Lancashire has demonstrated by pro-actively moving into and out of certain business lines as terms and pricing fluctuate. * Focus on shareholder returns: since inception, Lancashire has returned a total of US$397.3 million to shareholders via a share buy-back programme and a strategic dividend, which represents 93 per cent. of cumulative earnings as at 31 December 2008. * Strong investment performance: the Group has a conservative investment philosophy and has produced a total investment return of 6.1 per cent., 6.4 per cent. and 3.1 per cent. for 2006, 2007 and 2008 respectively. * Financial strength: as at 31 December 2008, Lancashire’s total capital was US$1.404 billion and its average annual investment performance since inception was 5.1 per cent. The Group has a rating of A- (excellent) from A.M. Best. * Distribution strength: the Group maintains good relationships with the largest global broking firms as well as individual brokers, which it believes is an important factor in achieving effective distribution of its products.

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