Kinesis facility executes first 'Special Draw'

LANCASHIRE HOLDINGS LIMITED 19 February 2014London UK THE KINESIS FACILITY EXECUTES ITS FIRST "SPECIAL DRAW" TO UNDERWRITE OFF-CYCLE COLLATERALISED REINSURANCE Lancashire Holdings Limited ("Lancashire" or the "Company") has today announcedthat Kinesis Capital Management Limited ("KCM") has carried out its first"special draw". Investors were invited to subscribe in Kinesis Holdings ILimited ("Kinesis Holdings") to enable its subsidiary Kinesis Reinsurance ILimited ("Kinesis Re") to underwrite fully collateralised reinsurance businessoutside the customary reinsurance market renewal season. This follows thesuccessful fund-raising conducted earlier in the year, which permitted KinesisRe to underwrite its first tranche of fully collateralised multi-classreinsurance agreements incepting around 1 January 2014 with combined aggregatelimits in excess of USD 250 million. Darren Redhead, KCM's Chief Executive Officer, said: "Our stated strategy is to allow investors access to the collateralisedreinsurance market on a regular and opportunistic basis. I am very pleased thatwithin a week of negotiating an indicative order with a client, Kinesis hadsecured firm funding commitments from its existing investors. This dealdemonstrates the flexibility of the new Kinesis facility and our ability tomove rapidly in aligning our investors' capital with the bespoke reinsuranceneeds of our clients. Given the limited size of this first special draw we wereable to work with our advisors to fulfil demand with our existing investors butexpect to be able to further expand our panel of investors later in the year inpreparation for the mid-year reinsurance renewal season." For further information, please contact: Lancashire Holdings LimitedChristopher Head +44 20 7264 4145 [email protected] Jonny Creagh-Coen +44 20 7264 4066 [email protected] Haggie Partners +44 20 7562 4444Peter Rigby (Peter Rigby mobile +44 7803851426) About Lancashire Lancashire, through its UK and Bermuda-based operating subsidiaries, is aglobal provider of specialty insurance and reinsurance products. The Groupcompanies carry the following ratings: Financial Financial Long Term Strength Strength Issuer Rating (1) Outlook(1) Rating (2) A.M. Best A (Excellent) Stable bbb Standard & Poor's A- Stable BBB Moody's A3 Stable Baa2 (1)Financial Strength Rating and Financial Strength Outlook apply to LancashireInsurance Company Limited and Lancashire Insurance Company (UK) Limited. (2) Long Term Issuer Rating applies to Lancashire Holdings Limited. NB: Cathedral benefits from Lloyd's ratings: A.M. Best: A (Excellent); Standard& Poor's: A+ (Strong); and Fitch: A+ (Strong). Lancashire has capital in excess of $1.5 billion and its common shares trade onthe premium segment of the Main Market of the London Stock Exchange under theticker symbol LRE. Lancashire has its corporate headquarters and mailingaddress at Level 11, Vitro, 60 Fenchurch Street, London EC3M 4AD, UnitedKingdom and its registered office at Power House, 7 Par-la-Ville Road, HamiltonHM 11, Bermuda. For more information on Lancashire, visit the Company's website atwww.lancashiregroup.com Lancashire Insurance Company Limited is regulated by the Bermuda MonetaryAuthority in Bermuda. Lancashire Insurance Company (UK) Limited is authorised by the PrudentialRegulation Authority and regulated by the Financial Conduct Authority and thePrudential Regulation Authority in the UK. Kinesis Capital Management Limited and Kinesis Reinsurance I Limited areregulated by the Bermuda Monetary Authority in Bermuda. For more information on Lancashire's subsidiary and Lloyd's segment, CathedralCapital Limited ("Cathedral"), visit Cathedral's website atwww.cathedralcapital.com Cathedral Underwriting Limited is authorised by the Prudential RegulationAuthority and regulated by the Financial Conduct Authority and the PrudentialRegulation Authority in the UK. IMPORTANT NOTICES THIS RELEASE IS FOR INFORMATION ONLY AND DOES NOT CONSTITUTE AN OFFER ORINVITATION TO UNDERWRITE, SUBSCRIBE FOR OR OTHERWISE ACQUIRE OR DISPOSE OF ANYSECURITIES OR INVESTMENT ADVICE IN ANY JURISDICTION. PERSONS NEEDING ADVICESHOULD CONSULT AN INDEPENDENT FINANCIAL ADVISER. THIS RELEASE DOES NOTCONSTITUTE AN OFFER OF SECURITIES TO THE PUBLIC IN THE UNITED STATES, UNITEDKINGDOM OR IN ANY OTHER JURISDICTION. THERE HAS NOT BEEN, AND WILL NOT BE, ANYPUBLIC OFFERING OF SECURITIES IN CONNECTION WITH THE FUND-RAISING CONDUCTED BYKINESIS HOLDINGS REFERRED TO IN THIS RELEASE IN THE UNITED STATES, THE UNITEDKINGDOM OR ANY OTHER JURISDICTION. NOTE REGARDING FORWARD-LOOKING STATEMENTS: CERTAIN STATEMENTS AND INDICATIVE PROJECTIONS (WHICH MAY INCLUDE MODELED LOSSSCENARIOS) MADE IN THIS RELEASE OR OTHERWISE THAT ARE NOT BASED ON CURRENT ORHISTORICAL 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 ORCOMPARABLE TERMINOLOGY. ALL SUCH STATEMENTS OTHER THAN STATEMENTS OF HISTORICALFACTS INCLUDING, WITHOUT LIMITATION, THE GROUP'S FINANCIAL POSITION, RESULTS OFOPERATIONS, PROSPECTS, GROWTH, CAPITAL MANAGEMENT PLANS AND EFFICIENCIES,ABILITY TO CREATE VALUE, DIVIDEND POLICY, OPERATIONAL FLEXIBILITY, COMPOSITIONOF MANAGEMENT, BUSINESS STRATEGY, PLANS AND OBJECTIVES OF MANAGEMENT FOR FUTUREOPERATIONS (INCLUDING DEVELOPMENT PLANS AND OBJECTIVES RELATING TO THE GROUP'SINSURANCE BUSINESS) ARE FORWARD LOOKING STATEMENTS. SUCH FORWARD-LOOKINGSTATEMENTS MAY INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHERIMPORTANT FACTORS THAT COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE ORACHIEVEMENTS OF THE GROUP TO BE MATERIALLY DIFFERENT FROM FUTURE RESULTS,PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKINGSTATEMENTS. THESE FACTORS INCLUDE, BUT ARE NOT LIMITED TO: THE GROUP'S ABILITY TO INTEGRATEITS BUSINESSES AND PERSONNEL, THE SUCCESSFUL RETENTION AND MOTIVATION OF THEGROUP'S KEY MANAGEMENT, THE INCREASED REGULATORY BURDEN FACING THE GROUP, THENUMBER AND TYPE OF INSURANCE AND REINSURANCE CONTRACTS THAT THE GROUP WRITES ORMAY WRITE; THE PREMIUM RATES WHICH MAY BE AVAILABLE AT THE TIME OF SUCHRENEWALS WITHIN ITS TARGETED BUSINESS LINES; THE POSSIBLE LOW FREQUENCY OFLARGE EVENTS; POTENTIALLY UNUSUAL LOSS FREQUENCY; THE IMPACT THAT THE GROUP'SFUTURE OPERATING RESULTS, CAPITAL POSITION AND RATING AGENCY AND OTHERCONSIDERATIONS MAY HAVE ON THE EXECUTION OF ANY CAPITAL MANAGEMENT INITIATIVESOR DIVIDENDS; THE POSSIBILITY OF GREATER FREQUENCY OR SEVERITY OF CLAIMS ANDLOSS ACTIVITY THAN THE GROUP'S UNDERWRITING, RESERVING OR INVESTMENT PRACTICESHAVE ANTICIPATED; THE RELIABILITY OF, AND CHANGES IN ASSUMPTIONS TO,CATASTROPHE PRICING, ACCUMULATION AND ESTIMATED LOSS MODELS; THE EFFECTIVENESSOF ITS LOSS LIMITATION METHODS; THE POTENTIAL LOSS OF KEY PERSONNEL; A DECLINEIN THE GROUP'S OPERATING SUBSIDIARIES' RATING WITH A.M. BEST, STANDARD &POOR'S, MOODY'S OR OTHER RATING AGENCIES; INCREASED COMPETITION ON THE BASIS OFPRICING, CAPACITY, COVERAGE TERMS OR OTHER FACTORS; CYCLICAL DOWNTURNS OF THEINDUSTRY; THE IMPACT OF A DETERIORATING CREDIT ENVIRONMENT FOR ISSUERS OF FIXEDINCOME INVESTMENTS; THE IMPACT OF SWINGS IN MARKET INTEREST RATES ANDSECURITIES PRICES; A RATING DOWNGRADE OF, OR A MARKET DECLINE IN, SECURITIES INITS INVESTMENT PORTFOLIO; CHANGES IN GOVERNMENTAL REGULATIONS OR TAX LAWS INJURISDICTIONS WHERE THE GROUP CONDUCTS BUSINESS; ANY OF LANCASHIRE'S BERMUDIANSUBSIDIARIES BECOMING SUBJECT TO INCOME TAXES IN THE UNITED STATES OR THEUNITED KINGDOM; THE INAPPLICABILITY TO THE GROUP OF SUITABLE EXCLUSIONS FROMTHE NEW UK CFC REGIME; AND ANY CHANGE IN THE UK GOVERNMENT OR UK GOVERNMENTPOLICY WHICH IMPACTS THE NEW CFC REGIME . ALL FORWARD-LOOKING STATEMENTS IN THIS RELEASE SPEAK ONLY AS AT THE DATE OFPUBLICATION. LANCASHIRE EXPRESSLY DISCLAIMS ANY OBLIGATION OR UNDERTAKING (SAVEAS REQUIRED TO COMPLY WITH ANY LEGAL OR REGULATORY OBLIGATIONS INCLUDING THERULES OF THE LONDON STOCK EXCHANGE) TO DISSEMINATE ANY UPDATES OR REVISIONS TOANY FORWARD-LOOKING STATEMENTS TO REFLECT ANY CHANGES IN THE GROUP'SEXPECTATIONS OR CIRCUMSTANCES ON WHICH ANY SUCH STATEMENT IS BASED.