<PAGE>

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                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                ---------------

                                   FORM 10-K

                                ---------------

(Mark
One)

  [X]            ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934

                                      OR

  [_]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                 For the fiscal year ended September 30, 1999

                        Commission file number 1-12823

                                ---------------
                          LaSalle Re Holdings Limited

            (Exact Name of Registrant as Specified in Its Charter)

                                ---------------

               Bermuda                               Not Applicable
   (State or Other Jurisdiction of                  (I.R.S. Employer
    Incorporation or Organization)                Identification No.)

        Continental Building, 25 Church Street, Hamilton HM 12, Bermuda
                   (Address of Principal Executive Offices)

                        Telephone Number: 441-292-3339
             (Registrant's telephone number, including area code)

                                ---------------

   Securities registered pursuant to Section 12(b) of the Act:

            Title of Each Class        Name of Each Exchange on Which Registered

<TABLE>
      <S>                                   <C>
      Common Shares, par value $1.00 per
       share                                The New York Stock Exchange, Inc.
      Series A Preferred Shares, par value
       $1.00 per share                      The New York Stock Exchange, Inc.
</TABLE>

   Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X]  No [_]

   Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

   The aggregate market value of the shares of all classes of voting stock of
the registrant held by non-affiliates of the registrant on December 1, 1999
was approximately $131,980,541, computed upon the basis of the closing sales
price of the Common Shares on that date. For the purposes of this computation,
shares held by directors (and shares held by any entities in which they serve
as officers) and officers of the registrant have been excluded. Such exclusion
is not intended, nor shall it be deemed, to be an admission that such persons
are affiliates of the registrant.

   As of December 1, 1999, there were outstanding 15,603,570 Common Shares of
$1.00 par value, of the registrant.

                      DOCUMENTS INCORPORATED BY REFERENCE

1. Portions of the registrant's annual report to shareholders for the fiscal
   year ended September 30, 1999 (the "1999 Annual Report") are incorporated
   by reference in Part II of this Form 10-K.

2. Portions of the registrant's definitive proxy statement relating to the
   Annual General Meeting of Shareholders to be held on February 17, 2000 (the
   "2000 Proxy Statement"), to be filed with the Securities and Exchange
   Commission not later than 120 days after the end of the registrant's fiscal
   year pursuant to Regulation 14A, are incorporated by reference in Part III
   of this Form 10-K.

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<PAGE>

                          LASALLE RE HOLDINGS LIMITED

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                           Page
 Item                                                                     Number
 ----                                                                     ------
                                     PART I

 <C>  <S>                                                                 <C>
 1.   BUSINESS.........................................................   10K- 2

 2.   PROPERTIES.......................................................   10K-19

 3.   LEGAL PROCEEDINGS................................................   10K-19

 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..............   10K-19

      EXECUTIVE OFFICERS OF THE COMPANY................................   10K-19

                                    PART II

 5.   MARKET FOR THE COMMON SHARES AND RELATED STOCKHOLDER MATTERS.....   10K-20

 6.   SELECTED FINANCIAL DATA..........................................   10K-21

 7.   MANAGEMENTS' DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
      FINANCIAL CONDITION..............................................   10K-21

 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK........   10K-31

 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA......................   10K-32

 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
      FINANCIAL DISCLOSURE.............................................   10K-58

                                    PART III

 10.  DIRECTORS AND EXECUTIVE OFFICERS.................................   10K-58

 11.  EXECUTIVE COMPENSATION...........................................   10K-58

 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT...   10K-58

 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...................   10K-58

                                    PART IV

 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.   10K-59
</TABLE>

                                     10K-1
<PAGE>

                                    PART I

   Unless the context otherwise requires, references herein to the "Company"
include LaSalle Re Holdings Limited and its subsidiary, LaSalle Re Limited
("LaSalle Re"), and its subsidiaries LaSalle Re Corporate Capital Ltd.
("LaSalle Re Capital") and LaSalle Re (Services) Limited ("LaSalle Re
Services").

Note On Forward-Looking Statements

   Forward-looking statements are statements other than historical information
or statements of current condition. These forward-looking statements are based
on the Company's current plans and objectives for future operations. Some
forward-looking statements may be identified by the use of words or phrases
such as "believes," "anticipates," "intends," "may," "estimates," "expects,"
"plans" and similar expressions. Forward-looking statements are subject to
risks and uncertainties and actual results may vary materially from those
included within the forward-looking statements. Many factors could cause
actual results to differ materially from those in the forward-looking
statements, including the following: catastrophic events of unanticipated
frequency or severity; changes in the demand for or supply of property
catastrophe reinsurance; actions of competitors; consolidation in the
reinsurance industry; decisions or actions of rating agencies; changes in
insurance or tax laws or regulations or governmental interpretations thereof;
fluctuations in interest rates; fluctuations in foreign currency exchange
rates; a major decrease in the cession of business to the Company from CNA
Financial Corporation and its affiliates (collectively, "CNA") or termination
of the existing quota share reinsurance arrangement with CNA; and any failure
of the Company's computer systems or the computer systems of third parties
that are material to the Company's operations (such as the computer systems of
service providers, suppliers and brokers) to process correctly information
relating to dates in and after the year 2000. The Company undertakes no
obligation to release publicly the results of any future revisions it may make
to forward-looking statements to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events.

ITEM 1. BUSINESS

General development of the business

   The Company is a property and casualty reinsurer writing worldwide
specialist products with an emphasis on catastrophe cover. Catastrophe
reinsurance contracts cover unpredictable events such as hurricanes,
windstorms, hailstorms, earthquakes, fires, industrial explosions, freezes,
riots, floods and other man-made or natural disasters. The Company also seeks
to take advantage of pricing opportunities that may occur in other lines of
reinsurance. These lines currently include property risk excess, property pro
rata treaty, casualty, marine, aviation, satellite, terrorism, and political
risk coverages.

   LaSalle Re was incorporated in Bermuda in October 1993 with an initial
capitalization of $373.1 million from institutional and other investors (the
"Founding Shareholders"). It commenced operations on November 22, 1993.
LaSalle Re Holdings Limited was incorporated in Bermuda in September 1995 to
act as an investment holding company for LaSalle Re.

   LaSalle Re has two wholly owned subsidiaries, LaSalle Re Services, which
acts as a representative office for the Company in the United Kingdom, and
LaSalle Re Capital, which was incorporated in Bermuda in November 1996 to
provide capital support to selected syndicates at Lloyd's. LaSalle Re Capital
was accepted as a corporate member ("Corporate Member") of Lloyd's in December
1996 and, with effect from January 1, 1997, has participated in three Lloyd's
syndicates. In November 1995, the Company and LaSalle Re consummated an offer
(the "Exchange Offer") pursuant to which, among other things, the Founding
Shareholders exchanged their capital stock in LaSalle Re for Common Shares of
the Company and, in certain circumstances, Exchangeable Non-Voting Shares of
LaSalle Re. The Exchangeable Non-Voting Shares are held by certain Founding
Shareholders who would otherwise hold, or cause another shareholder to hold,
directly, indirectly or constructively, in excess of 9.9% of the voting power
of the Company or LaSalle Re. The Exchangeable Non-

                                     10K-2
<PAGE>

Voting Shares are exchangeable, at the option of the holder, for Common Shares
on a one-for-one basis, unless the board of directors of the Company (the
"Board") determines such exchange may cause actual or potential adverse tax
consequences to the Company or any shareholder. The Exchangeable Non-Voting
Shares will at all times rank as to assets, dividends and in all other
respects on a parity with the common shares of LaSalle Re, except that they do
not have the right to vote on any matters except as required by Bermuda law
and in connection with certain actions by the Company. The holders of the
Exchangeable Non-Voting Shares constitute the minority holding in LaSalle Re.

   In November 1995, the Company and certain Founding Shareholders consummated
an initial public offering of 4,312,500 Common Shares (the "Initial Public
Offering"). Of these shares, 2,920,500 were sold by Founding Shareholders and
1,392,000 by the Company. The proceeds from the sale of the 1,392,000 shares
sold by the Company were used to enable LaSalle Re to redeem shares of its
capital stock (the "Redemption"). Upon the consummation of the Exchange Offer,
the Initial Public Offering and the Redemption, the Company beneficially owned
100% of the outstanding voting stock, which constituted 63% of the outstanding
capital stock, of LaSalle Re.

   In December 1996, the Company completed a secondary offering of Common
Shares (the "Secondary Offering"). In connection with the Secondary Offering,
certain Founding Shareholders of LaSalle Re exchanged 2,119,110 of their
Exchangeable Non-Voting Shares for Common Shares. As a result of this
exchange, the Company increased its beneficial ownership of the outstanding
capital stock of LaSalle Re from 63% to 73%.

   In March 1997, the Company issued 3,000,000 Series A Preferred Shares in a
public offering (the "Preferred Offering"). The Series A Preferred Shares, par
value $1.00 per share, carry a liquidation preference of $25.00 per share,
plus accrued and unpaid dividends, if any, to the date of liquidation.
Dividends on the Series A Preferred Shares are payable in an amount per share
equal to 8.75% of the liquidation preference per annum (equivalent to $2.1875
per share). Net proceeds from the Preferred Offering after underwriting
discounts and commissions were $72.6 million.

   In May 1997, the Company completed a $100 million tender offer (the "Tender
Offer") whereby it purchased for cancellation 3,703,703 of its Common Shares
at a price of $27.00 per share. The Tender Offer was made to all holders of
Common Shares and Common Share equivalents, which included Exchangeable Non-
Voting Shares and options to purchase Common Shares and Exchangeable Non-
Voting Shares. Pursuant to the Tender Offer, 2,163,538 Exchangeable Non-Voting
Shares were exchanged for Common Shares and 95,679 options for Exchangeable
Non-Voting Shares were exercised and exchanged for Common Shares. As a result
of these exchanges, the Company increased its beneficial ownership of the
outstanding capital stock of LaSalle Re from 73% to 79%. The Company has
continually beneficially owned 100% of the outstanding voting stock of LaSalle
Re.

   With effect from October 1, 1997, the administrative services agreement
("Administrative Services Agreement"), under which Aon Risk Consultants
(Bermuda) Ltd. ("ARC") provided the Company with actuarial and financial
reporting, accounting, office space and other administrative services, was
terminated. All of the personnel assigned to the Company by ARC became
employees of the Company and services performed by ARC were assumed by the
Company. In connection with the termination of the agreement, the Company
agreed to purchase all of the fixed assets owned by ARC and utilized by the
Company for a purchase price of $1.5 million. In addition, the Company agreed
to assume the current leasing agreements.

   Effective on October 1, 1998, the underwriting services agreement (the
"Underwriting Services Agreement") under which CNA (Bermuda) Services Limited
("CNA Bermuda") had provided the Company with underwriting services, was
terminated. On that date, all of the personnel assigned to the Company by CNA
Bermuda became employees of the Company and the underwriting function formerly
performed by CNA Bermuda was assumed by the Company directly. In connection
with the termination of the Underwriting Services Agreement, the Company
entered into an underwriting support services agreement (the "Underwriting
Support Services Agreement") with CNA Re Services Company ("CRSC") and CNA
Bermuda. Under the Underwriting

                                     10K-3
<PAGE>

Support Services Agreement, CRSC and CNA Bermuda provide the Company with
various support services upon request, including (1) underwriting personnel to
assist the Company's underwriting staff on a temporary basis, (2) assistance
with actuarial, financial and statistical analysis and reporting, (3) support
on data processing and other technical matters, (4) access to the CNA
reinsurance underwriting database and technology as pertinent to the Company's
business, (5) advice on insurance industry customs and practices and (6)
advice to the Company's human resources department.

Business segments

   The Company writes property and casualty reinsurance on a worldwide basis
through its operating subsidiary, LaSalle Re. The Company also writes selected
other lines of reinsurance when it believes that market conditions are
favorable. The Company has two reportable segments: reinsurance operations and
Lloyd's. The reinsurance segment provides reinsurance for property catastrophe
and for other lines of business that have similar characteristics, namely high
severity and low frequency. These lines currently include property risk
excess, property pro rata treaty, casualty, marine, aviation, satellite,
terrorism and political risk coverages. The Lloyd's segment is written through
LaSalle Re Capital, which provides capital support to selected Lloyd's
syndicates. The lines of business written by the selected syndicates include
direct and facultative property insurance, marine insurance and reinsurance,
professional indemnity, directors and officers insurance and bankers blanket
bond business.

   Complete financial information about segments is presented in Note 14 to
the Company's consolidated financial statements. The following table sets
forth the Company's gross premiums written and number of contracts written by
business segment and type of reinsurance for the years indicated (dollars in
millions):

<TABLE>
<CAPTION>
                              Year Ended         Year Ended         Year Ended
                          September 30, 1999 September 30, 1998 September 30, 1997
                          ------------------ ------------------ ------------------
                           Gross              Gross              Gross
                          Premiums Number of Premiums Number of Premiums Number of
                          Written  Contracts Written  Contracts Written  Contracts
                          -------- --------- -------- --------- -------- ---------
<S>                       <C>      <C>       <C>      <C>       <C>      <C>
Reinsurance segment:
Property catastrophe
 reinsurance:
  Excess of loss........   $ 81.4     717     $ 82.7     719     $110.4      802
  Pro rata..............     11.1       8       21.6      10       34.4       10
Other lines of business:
  Property--risk excess
   and pro rata.........      4.9      62       10.5      76        9.0       80
  Casualty..............      6.1      26        5.7      28        4.0       36
  Space, marine and
   aviation.............      5.4      31        7.4      47        7.7       35
  Miscellaneous.........      4.4      43        6.3      57        2.1       37
Fronted premiums,
 adjustments,
 reinstatement premiums
 and no claims bonuses..      3.3     --         0.1     --       (10.3)     --
                           ------     ---     ------     ---     ------    -----
                            116.6     887      134.3     937      157.3    1,000
Lloyd's segment:
  LaSalle Re Capital....     22.4     --        21.0     --        14.1      --
                           ------     ---     ------     ---     ------    -----
    Total...............   $139.0     887     $155.3     937     $171.4    1,000
                           ======     ===     ======     ===     ======    =====
</TABLE>

 Reinsurance Segment

 Property Catastrophe

   The largest portion of the Company's business consists of property
catastrophe excess of loss contracts. Property catastrophe excess of loss
reinsurance provides coverage when total losses and loss expenses from a
single occurrence of a covered peril under a portfolio of primary insurance
contracts exceed the attachment point specified in the reinsurance contract
with the primary insurer. Some of the Company's property catastrophe

                                     10K-4
<PAGE>

excess of loss policies limit coverage to one occurrence in a policy year, but
most policies provide for coverage of a second occurrence after the payment of
a reinstatement premium. The Company also writes a minimal amount of aggregate
property catastrophe excess of loss contracts that cover more than one
catastrophe during any one contract year.

   The Company writes property catastrophe pro rata reinsurance treaties when
it believes that rates and volume are attractive. In these programs, the
Company assumes a specified proportion of the exposure under a portfolio of
excess of loss property catastrophe reinsurance contracts written by the
ceding reinsurer and receives an equal proportion of the premium received by
the cedent. The cedent generally receives a ceding commission, based upon the
premiums ceded to the reinsurer, and may also be entitled to receive a profit
commission based on the ratio of losses, loss expenses and the reinsurer's
expenses to premiums ceded. The Company generally requires that its property
catastrophe pro rata contracts have aggregate exposure limits per occurrence
on a zonal basis. The Company usually obtains detailed information concerning
each underlying contract and the exposures underlying the risks it assumes
and, as appropriate, audits the premiums associated with the cessions.
However, the Company is dependent upon the cedent's underwriting, pricing and
claims administration to yield an underwriting profit.

 Other Lines of Business

   The Company's property risk excess of loss contracts cover a cedent's loss
on a single "risk" in excess of the cedent's attachment point, rather than
covering multiple risks as does property catastrophe reinsurance. A "risk" in
this context might mean the insurance coverage on one building or a group of
buildings or the insurance coverage under a single policy, which the reinsured
treats as a single risk. In property pro rata reinsurance treaties, the
Company assumes a proportional part of the original premiums and losses of the
reinsured on non-catastrophe reinsurance contracts. In property pro rata
reinsurance, the reinsurer generally pays the ceding company a ceding
commission. The ceding commission generally is based on the ceding company's
cost of acquiring the business being reinsured (including commissions, premium
taxes, assessments and miscellaneous administrative expenses) and also may
include a profit factor.

   In addition to property risk excess of loss and pro rata treaties, the
Company also writes other lines of reinsurance, which currently include
casualty, marine, aviation, satellite, terrorism and political risk. The
Company's underwriting strategy with respect to these lines of business is to
target those lines which demonstrate relatively low historical levels of
attritional loss. Excess of loss contracts are written above a significant
attachment point and therefore could be impacted only by large market losses
such as the destruction of an oil drilling platform (marine coverage) or an
airline disaster (aviation coverage). Pro rata contracts, where the Company
has proportional responsibility for the first dollar of its cedents' losses,
could be impacted by the cedents' expected loss ratios as well as by large
market losses. Claims on those contracts could arise from physical damage,
casualty and major political and trade crises.

   Casualty excess of loss reinsurance protects cedents from losses that arise
from multiple insureds or from one large severe event. The Company does not
write casualty excess of loss business at a level where frequency of loss is
anticipated. Marine and aviation coverages can be triggered by physical damage
perils and may also entail casualty coverages arising from the same loss
event. Satellite reinsurance protects the reinsured primarily for losses
arising from launch failure and in-orbit breakdown. Terrorism reinsurance
provides coverage against major terrorist incidents involving damage to
property. Political risk includes coverages for losses arising from contract
frustration, confiscation, repatriation and international trade credit
transactions.

 Fronting arrangements, adjustment premiums, reinstatement premiums and no
 claims bonuses

   Fronting is an arrangement whereby the Company issues a contract on a risk
for, and at the request of, the insured with the intent of reinsuring the
entire risk with another reinsurer. The risk assumed by the Company is
primarily credit risk. During the year ended September 30, 1999, the Company
provided fronting arrangements for three companies, of which two had claims
paying ratings of "A-" from Standard & Poor's Ratings Services ("S&P") and the
other had a rating of "A" from A. M. Best Company ("A.M. Best").

                                     10K-5
<PAGE>

   Due to the changing nature of the Company's exposure under an excess of
loss contract, certain contracts contain adjustable premium clauses. The
Company receives an initial deposit premium, with the final premium calculated
at the end of the contract period using a pre-negotiated percentage of the
ceding company's gross net annual premium income. The adjustment premium is
the difference between the initial deposit and the revised premium and can be
either an additional or return premium.

   In addition, the Company receives adjustment premiums on its property
catastrophe pro rata reinsurance treaties. The Company estimates premiums
written using reports received from ceding companies adjusted for previous
years' experiences of actual premiums against estimated premiums. These
estimates are revised during the contract period as more information as to
actual premiums written by the ceding companies is received. Any differences
between the estimate and the revised information are recorded as adjustments
during the period the revised information is received.

   Some excess of loss contracts contain a no claims bonus clause. Where no
claim is made under the contract, the ceding company is entitled to a pre-
determined return premium, which is referred to as a "no claims bonus". A
liability for the "no claims bonus" is established at the same time the gross
written premium is recorded. If a loss occurs, the no claims bonus is reversed
in the period in which the loss is reported to the Company.

 Lloyd's segment

   The Company formed LaSalle Re Capital to provide capital support on an
underwriting year basis to selected Lloyd's syndicates. The Company has
provided capital support to three syndicates for the 1999, 1998 and 1997
underwriting years of approximately $31.9 million ((Pounds)19.4 million),
$27.4 million ((Pounds)16.8 million) and $28.2 million ((Pounds)16.8 million),
respectively. Through this support, for the year ended September 30, 1999, the
Company has written gross premiums of approximately $3.4 million for the 1998
underwriting year and approximately $19.0 million for the 1999 underwriting
year. Capital support does not necessarily equate to premium income, due to
different levels of capital utilization by the syndicates. These syndicates
individually write the following lines of business: direct and facultative
property insurance; marine insurance and reinsurance; and professional
indemnity, directors and officers' insurance and bankers blanket bond
business. LaSalle Re Capital provides capital support to the syndicates
through letters of credit totaling (Pounds)9.8 million ($16.1 million).

 Geographic Diversification

   The Company seeks to diversify its property catastrophe exposures across
geographic zones in order to optimize its spread of risk. For the year ended
September 30, 1999, excluding the premiums written by LaSalle Re Capital,
fronted premiums, adjustment premiums, reinstatement premiums and no claims
bonuses, 53% of the Company's gross premiums written represented U.S.-based
risks. Within the United States, the Company's largest exposure on a zonal
basis is the West Coast, including Hawaii and Alaska. The remaining 47% of
gross premiums written were spread in other territories around the world. This
distribution of risk is subject to change and is dependent upon rates
available in various zones. As a result of long-term relationships between the
Company's management and certain clients and brokers, the Company has
developed a strong base of regional business in the U.S. This business assists
the Company in diversifying its U.S.-based risks and makes more efficient use
of its capital by limiting multi-zone exposures. In the year ended September
30, 1999, this regional business represented a significant component of the
Company's U.S.-based gross premiums written.

                                     10K-6
<PAGE>

   The following table sets forth the percentage of the Company's gross
premiums written allocated to the zone of exposure at the dates indicated
(dollars in millions):


<TABLE>
<CAPTION>
                          September 30, 1999  September 30, 1998  September 30, 1997
                          ------------------- ------------------- -------------------
                                   Percentage          Percentage          Percentage
                           Gross    of Gross   Gross    of Gross   Gross    of Gross
                          Premiums  Premiums  Premiums  Premiums  Premiums  Premiums
Geographic Area           Written   Written   Written   Written   Written   Written
---------------           -------- ---------- -------- ---------- -------- ----------
<S>                       <C>      <C>        <C>      <C>        <C>      <C>
United States...........   $ 60.1     53.0%    $ 64.4     48.0%    $ 75.3     44.9%
Europe (excluding the
 U.K.)..................      9.5      8.4       14.4     10.7       18.6     11.1
United Kingdom..........      9.8      8.6       11.7      8.7       15.2      9.1
Japan...................      2.9      2.6        3.2      2.4        7.0      4.2
Australasia.............      4.5      4.0        3.3      2.5        6.4      3.8
Worldwide(1)............     14.1     12.4       21.8     16.2       20.9     12.5
Worldwide (excluding the
 U.S.)(2)...............      5.4      4.8        7.5      5.6       12.6      7.5
Other...................      7.0      6.2        7.9      5.9       11.6      6.9
                           ------    -----     ------    -----     ------    -----
                            113.3    100.0%     134.2    100.0%     167.6    100.0%
                                     =====               =====               =====
LaSalle Re Corporate
 Capital................     22.4                21.0                14.1
Fronted premiums,
 adjustments,
 reinstatement premiums
 and no claims bonuses..      3.3                 0.1               (10.3)
                           ------              ------              ------
  Total.................   $139.0              $155.3              $171.4
                           ======              ======              ======
</TABLE>
--------
(1) The category "Worldwide" consists of contracts that cover more than one
   zone, at least one of which is in the U.S.
(2) The category "Worldwide (excluding the U.S.)" consists of contracts that
   cover more than one zone (none of which is in the U.S.). The exposure in
   this category for business written to date is predominantly from Europe and
   Japan.

 Program Limits

   Property catastrophe reinsurance is usually arranged in a series of layers,
which form an individual program. The Company may write one or more of these
layers with each layer constituting a separate contract. The following table
sets forth the number of the Company's property catastrophe excess of loss
programs written in the year ended September 30, 1999 by aggregation of
program limits:

<TABLE>
<CAPTION>
                                                                       Number of
                                                                       Programs
                                                                       ---------
      <S>                                                              <C>
      Greater than $30 million but less than $35 million..............      2
      $25-30 million..................................................      3
      $20-25 million..................................................      4
      $15-20 million..................................................      7
      $10-15 million..................................................     16
      $7.5-10 million.................................................     18
      $5-7.5 million..................................................     39
      $2.5-5 million..................................................     70
      Less than $2.5 million..........................................    127
                                                                          ---
        Total.........................................................    286
                                                                          ===
</TABLE>

                                     10K-7
<PAGE>

Underwriting

   The Company's principal underwriting strategy is to underwrite property
catastrophe exposures within clearly defined parameters that permit thorough
analysis and appropriate pricing of each of the Company's reinsurance
contracts. In many cases, this includes analysis of a reinsurance contract
based on the expected incremental return on equity in relation to the
Company's overall portfolio of reinsurance contracts.

   The Underwriting/Actuarial Committee of the Board has set limits on the
Company's aggregate loss exposure. The Company uses various methods to
evaluate and monitor its exposure to loss. The Company diversifies its
property catastrophe exposures worldwide and within each geographic zone and
also maintains exposure limits within each geographic zone. Aggregate
exposures also are controlled and monitored on a real-time basis using
computer-based rating and control systems. The Company participates at
attachment levels that are expected to exceed normal loss frequency. In
addition, the Company regularly reevaluates its pricing to ensure that the
terms and conditions of its business are the best available in the market.

   The Company obtains information from brokers, potential cedents and other
sources, as appropriate, in order to make informed underwriting decisions. A
potential cedent generally is not accepted without a thorough examination of
its historical record, management, overall financial condition, business
strategy, underwriting policies and risk management systems. The Company also
seeks to select clients with disciplined catastrophe management programs. The
Company seeks to build long-term relationships with its clients because the
Company believes that it can underwrite renewal business with greater
precision.

   The Company uses computer-based modeling systems to estimate exposure to
loss and evaluate pricing adequacy of its reinsurance programs. These models
are also used in the analysis of projected return on equity and the monitoring
of aggregate exposures within geographic zones.

   For U.S.-based risks, the Company has developed a proprietary model called
L-CAM(TM) (LaSalle Catastrophe Analysis Model). L-CAM(TM) incorporates the
output of commercially available catastrophe simulation models and the
Company's internally-generated models. The commercially available models
include (1) AIR--CATRADER(TM), which uses market share data derived from zip
code and/or county aggregate data to develop individual contract and portfolio
loss scenarios and (2) RMS--RiskLink(TM), which derives portfolio loss
scenarios based on detailed risk location data provided by the primary
insurer. Models developed by the Company and used in L-CAM(TM) include (1) the
Modified Historical Event Model, which fits a Pareto loss distribution to over
45 years of catastrophe loss data, adjusted for inflation and demographic
shifts, (2) the Market Loss Pricing Model, which uses underwriting-zone market
share information to develop attachment and exhaustion probabilities from
which pricing input is determined, and (3) the Industry Peer Model, which is a
portfolio management tool selecting treaties in force with similar
characteristics for pricing considerations.

   For non-U.S. based property catastrophe risks, the Company has developed a
proprietary model called LASER (LaSalle Excess of Loss Rating). LASER
incorporates the output of commercially available catastrophe simulation
models and the Company's internally-generated models and mathematical
techniques. The commercially available models include (1) AIR--CATRADER(TM),
which uses market share data derived from zip code and/or county aggregate
data to develop individual contract and portfolio loss scenarios and (2) RMS--
RiskLink(TM), which derives portfolio loss scenarios based on detailed risk
location data provided by the primary insurer. Models developed by the Company
and used in LASER include (1) Pareto base layer loss distributions
extrapolated through the primary insurer's excess of loss program structure,
(2) the Historical Claims Index method, which recalibrates portfolio
historical losses, adjusting for growth in premium, inflation and changes in
underlying aggregate sums insured, and (3) Exposure Rating, where probable
maximum losses and return periods are assigned for each catastrophe peril, by
geographic zone, to determine exposure pricing for each vertical layer within
an excess of loss program.

   For the other lines of reinsurance, the Company uses internal rating
techniques that incorporate, among other things, exposure and experience
ratings and thorough analysis of loss ratios and underwriting expenses
associated with the business to be reinsured. The Company carefully structures
the terms and conditions of its contracts to restrict coverage to the specific
perils intended.

                                     10K-8
<PAGE>

   The results of these analyses are measured against the Company's current
portfolio and other known treaties in the market and combined with
management's knowledge of the client and the current reinsurance market
environment. Pricing and participation decisions are then made based on the
estimated exposure of losses and the potential impact of each contract on
incremental return on equity. In addition, the underwriting of all new
exposures is reviewed by the Chief Underwriting Officer of the Company.

   Prior to October 1, 1998, underwriting services were provided to the
Company by CNA Bermuda pursuant to the Underwriting Services Agreement. A
staff of seven professionals with extensive experience in the reinsurance
industry served as the Company's underwriting team in Bermuda. This agreement
was terminated on October 1, 1998. On that date, all of the personnel assigned
to the Company by CNA Bermuda became employees of the Company and the
underwriting function formerly performed by CNA Bermuda was assumed by the
Company directly.

   In connection with the termination of the Underwriting Services Agreement,
the Company entered into an Underwriting Support Services Agreement with CRSC
and CNA Bermuda. Under the Underwriting Support Services Agreement, which
expires on September 30, 2001, CRSC provides underwriting support services to
the Company on a daily or hourly fee basis when and as requested by the
Company. The Company pays CNA Bermuda a $0.3 million annual retainer, which is
credited against CRSC's daily or hourly fees and associated travel expenses.
In recognition of the contribution made by CNA Bermuda to the development of
the Company's business, the Company has agreed, subject to certain conditions,
to pay CNA Bermuda, during the term of the Underwriting Support Services
Agreement, an underwriting profit commission of 1.67% of the aggregate net
underwriting profits of LaSalle Re for each fiscal year for which LaSalle Re's
loss ratio was 70% or less.

Reinsurance Protections Purchased

   The Company utilizes various reinsurance protections to reduce its exposure
to large losses.

   The Company has purchased an excess of loss program which provides coverage
of $75.0 million in excess of the first $75.0 million of losses per occurrence
for a first loss event and $60.0 million excess of $75.0 million per
occurrence on the second loss event and $52.5 million excess of $125.0 million
per occurrence on the third loss event over a three-year period ended December
31, 2001 subject to a maximum aggregate recovery of $187.5 million. Coverage
for the first loss is substantially funded by way of annual and reinstatement
premium obligations. Accordingly, this part of the coverage has been recorded
as a financing arrangement. The coverage is provided by a company that
currently holds a claims paying ability rating of AA from S&P.

   In addition, the Company has a three year quota share arrangement with CNA,
which incepted April 1, 1999. The Company cedes an adjustable proportion of
U.S. property catastrophe premium, net of acquisition costs, to the
arrangement, which was negotiated on normal commercial terms and includes an
override commission and profit commission payable to the Company. CNA has a
claims paying ability rating of A+ from S&P.

   The Company has also purchased other non-proportional excess of loss
protections, which provide for the recovery of losses from reinsurers in
excess of certain retentions that are related to the magnitude of market
losses. The Company reviews the claims paying ability of each reinsurer for
adequacy before each cover is placed. LaSalle Re Capital also participates in
the reinsurance coverages purchased by the syndicates it supports.

   In addition, as part of the Company's capital protection strategy, the
Company entered into a $100 million multi-year Catastrophe Equity Put
("CatEPut") option program effective July 1, 1997. The CatEPut option is a
capital replacement tool that will enable the Company to put up to $100
million of equity, through the issue of convertible preferred shares to the
option writers at pre-negotiated terms, in the event of a major catastrophe or
series of large catastrophes that cause substantial losses to the Company or
its subsidiaries.

                                     10K-9
<PAGE>

Marketing

   The Company markets its reinsurance products worldwide primarily through
reinsurance brokers. By marketing its products primarily through the broker
network, the Company limits the expense of establishing and maintaining
worldwide offices and marketing operations. The Company believes that its
broker relationships permit it to obtain business and monitor developments in
various lines of reinsurance in order to increase its writings when market
conditions in those lines are favorable.

   The Company maintains an office in London, England through LaSalle Re
Services. LaSalle Re Services introduces prospective customers to the Company
and provides an important liaison with brokers in the London market. LaSalle
Re Services assists in the distribution of marketing literature and collects
information for LaSalle Re on demand and developments in the London
reinsurance market. In addition, LaSalle Re Services plays a key role in the
Company's marketing efforts in Europe.

   The Company strives to develop strong relationships with its brokers and
clients. Retention of clients permits the Company to use experience regarding
a client's underwriting practices and risk management systems to underwrite
its own business with greater precision. The Company targets brokers and
clients that it believes will enhance the risk/return composition of its
portfolio, are capable of supplying detailed and accurate underwriting data
and can potentially add diversification to the Company's book of business. In
addition, the Company meets frequently in Bermuda and elsewhere outside of the
United States with brokers and senior representatives of clients and
prospective clients.

   The Company focuses on providing high quality service by promptly
responding to underwriting submissions, designing customized programs and
offering lead terms when circumstances warrant and paying valid claims within
an average of five days. The Company believes that it has established a
reputation with its brokers and clients for high quality service.
Additionally, the Company believes that its level of capital and surplus
offers financial security and demonstrates to brokers and clients a high level
of commitment to property catastrophe reinsurance.

   The Company received 1,941 contract submissions in the year ended September
30, 1999 as compared to 2,022 in the year ended September 30, 1998. The
Company is highly selective in accepting risks, extending coverage on only
887, or 45.7%, of the contract submissions received in the year ended
September 30, 1999. The Company extended coverage on 937 contracts, or 46.3%,
of the contract submissions received in the year ended September 30, 1998.
Subsidiaries and affiliates of Aon Corporation (collectively, "Aon") were
brokers for 18.1% and 17.4% of the Company's gross written premiums in the
years ended September 30, 1999 and 1998, respectively. Guy Carpenter &
Company, Inc., together with its affiliates, generated 20.6% and 17.1% of the
Company's gross premiums written for the years ended September 30, 1999 and
1998, respectively. No other broker accounted for more than 10% of the
Company's gross premiums written for the years ended September 30, 1999 and
1998.

   Consistent with its emphasis on disciplined underwriting practices, the
Company is not obligated to accept any business from Aon or CNA, or any
business recommended by LaSalle Re Services. No intermediary has the authority
to bind the Company on any business.

Reserves

   The Company establishes loss reserves for the ultimate settlement costs of
all losses and loss expenses incurred with respect to business written by it.
United States generally accepted accounting principles ("GAAP") do not permit
the Company to establish reserves with respect to its property catastrophe
reinsurance until an event occurs that may give rise to a claim. As a result,
only loss reserves applicable to losses incurred up to the reporting date may
be set aside, with no allowance for the provision of a contingency reserve to
account for expected future losses.

                                    10K-10
<PAGE>

   The derivation of loss reserves involves the actuarial and statistical
projection at any given time of the Company's expectations of the ultimate
settlement of loss and loss expenses. These loss projections become necessary,
primarily, as a result of time lags associated with reinsurance loss
reporting. These lags are principally attributable both to claimant delays in
reporting to the primary carrier as well as primary and reinsurance company
delays in gathering statistics and subsequently reporting cession details to
the Company. As a result, in addition to the loss estimates reported by
primary insurers on known claims, actuarially projected estimates of reserves
applicable to both the development (growth) of known claims as well as the
emergence of new claims reports related to loss events which have been
incurred but not reported ("IBNR losses") prior to the evaluation date must be
developed. In addition to the impact of reporting lags upon the accuracy of
estimated loss liabilities, other factors have significant impact upon the
ultimate settlement of insured losses, including loss cost inflation, trends
in the amount of insurance purchased to the full value of insured properties
and trends in the size and demographics of insured populations. Loss reserve
estimates are not precise in that they necessarily involve an attempt to
predict the ultimate outcome of future loss reporting and settlement
activities.

   To establish appropriate loss reserves, the Company uses a combination of
data sources and commercially available catastrophe models. These models are
employed upon the occurrence of an event to arrive at estimates of losses to
the Company. In addition, grouped and individual contract data illustrating
the loss development history for prior similar events, as well as actual loss
emergence experience of the underlying insurers, are analyzed to assist in the
determination of suitable loss reserves. The data derived from the industry
sources, and supplemented with the client specific information, are then used
to arrive at estimates of loss emergence patterns and initial estimates of
ultimate loss ratios. These parameters are then applied, on a contract-by-
contract basis, to arrive at estimates of ultimate losses. These loss
estimates are then supplemented with the results derived from the catastrophe
models, and final loss estimates are selected and reduced for losses reported
to the Company to arrive at IBNR losses as of the date of evaluation. The
reserves for LaSalle Re Capital are separately derived primarily from an
analysis using expected loss ratios which is supplemented, when available, by
actuarial evaluations produced for the individual syndicates.

   To establish appropriate loss reserves, the Company uses both proprietary
and commercially available catastrophe models. These models are employed upon
the occurrence of an event to arrive at an estimate of losses to the Company
as a result of the event. Where loss reports have been received from ceding
companies, these reports are used in conjunction with the results produced
from the catastrophe models to determine the appropriate loss reserves for an
event. In addition, loss emergence patterns and initial estimates of ultimate
loss ratios which are derived from a combination of data sources, including
industry sources and the Company's own loss experience and exposure, are
applied to homogenously grouped data to determine estimates of ultimate losses
and hence suitable loss reserves for these groups.

   The reserves are prepared quarterly by the Company's actuary and reviewed
by the Company's executive officers and the Board. To the extent that reserves
develop upward or downward, the results are reflected in the net income in the
period in which the reserve deficiency or redundancy is evaluated. There can
be no assurance that the final loss settlements will not exceed the Company's
loss reserve and have a material adverse effect upon the Company's financial
condition and results of operations in a particular period.

Investments

 Composition of Portfolio

   The Board has implemented a set of investment guidelines designed to meet
the Company's liquidity requirements and return objectives. The guidelines are
intended to be conservative, stressing preservation of principal, yield
enhancement through the identification of value and market inefficiencies,
market liquidity and risk reduction. The primary objective of the investment
portfolio, as set forth in the guidelines, is to maximize investment returns
consistent with these policies. The Company's investment guidelines are
reviewed periodically and are subject to change at the discretion of the
Board.


                                    10K-11
<PAGE>

   The following table summarizes the composition of the Company's investment
portfolio as of September 30, 1999 and 1998 (dollars in millions):

<TABLE>
<CAPTION>
                                                           September 30,
                                                     --------------------------
                                                         1999          1998
                                                     ------------  ------------
                                                      Fair  % of    Fair  % of
      Type of Investment                             Value  Total  Value  Total
      ------------------                             ------ -----  ------ -----
      <S>                                            <C>    <C>    <C>    <C>
      Fixed maturities:
        Non-U.S. government bonds and agencies...... $ 30.6   5.5% $ 38.4   6.3%
        U.S. government bonds and agencies..........   94.1  16.9   141.2  23.3
        Corporate bonds.............................  234.1  42.0   309.0  50.9
        Mortgage-backed securities..................    0.0   0.0    30.2   5.0
        Other debt..................................    5.0   0.9     2.7   0.4
                                                     ------ -----  ------ -----
          Subtotal..................................  363.8  65.3   521.5  85.9
        Cash and cash equivalents...................  193.2  34.7    85.3  14.1
                                                     ------ -----  ------ -----
          Total cash and investments................ $557.0 100.0% $606.8 100.0%
                                                     ====== =====  ====== =====
</TABLE>

 Quality of Portfolio

   The Company's investment guidelines restrict investments in securities
below an "AA" grade rating to 20% of the total portfolio, including managed
cash and cash equivalents, and permit only 10% of the total portfolio to be
invested in securities having a "BBB" grade rating. The guidelines also allow
up to $10 million to be invested in risk based investments such as catastrophe
bonds. These bonds may carry a rating below "BBB". In addition, the guidelines
restrict investments in a single issuer to no greater than 5% of the market
value of the portfolio (except for U.S. and U.K. Government issues) and, with
respect to country of issue, to no greater than 25% of the market value of the
portfolio, except for U.S. and supernational borrowers.

   The following table summarizes the composition of the Company's fixed
maturity portfolio by rating as assigned by S&P or Moody's Investors Services
Inc. ("Moody's") as of September 30, 1999 and 1998 (dollars in millions):

<TABLE>
<CAPTION>
                                    September 30,
                              --------------------------
                                  1999          1998
                              ------------  ------------
                               Fair  % of    Fair  % of
             Rating           Value  Total  Value  Total
             ------           ------ -----  ------ -----
             <S>              <C>    <C>    <C>    <C>
             AAA............. $157.8  43.3% $363.0  69.6%
             AA..............  119.6  32.9    88.1  16.9
             A...............   69.0  19.0    59.5  11.4
             BBB.............   12.4   3.4     2.6   0.0
             BB..............    5.0   1.4     8.3   2.1
                              ------ -----  ------ -----
                              $363.8 100.0% $521.5 100.0%
                              ====== =====  ====== =====
</TABLE>

 Maturity and Duration of Portfolio

   The Company's investment guidelines specify a one to four year duration for
the Company's investment portfolio, reflecting the need to maintain a liquid,
short duration portfolio to assure the Company's ability to pay claims on a
timely basis. The Company currently has a target duration for the portfolio of
three years and, at September 30, 1999, the modified average duration of the
portfolio was 1.8 years. The Company expects to periodically reevaluate the
target duration in light of market conditions, including the level of interest
rates, and estimates of the duration of its liabilities.

                                    10K-12
<PAGE>

   The following table summarizes the contractual maturities of the Company's
fixed maturity portfolio as of September 30, 1999 and 1998 (dollars in
millions):

<TABLE>
<CAPTION>
                                        September 30,
                                  --------------------------
                                      1999          1998
                                  ------------  ------------
                                   Fair  % of    Fair  % of
         Rating                   Value  Total  Value  Total
         ------                   ------ -----  ------ -----
         <S>                      <C>    <C>    <C>    <C>
         Due in less than one
          year................... $ 12.0   3.3% $ 24.8   4.8%
         Due in one to five
          years..................  309.5  85.1   348.9  66.9
         Due in five to ten
          years..................   42.3  11.6   117.6  22.6
                                  ------ -----  ------ -----
                                   363.8 100.0   491.3  94.3
         Mortgage-backed
          securities.............    0.0   0.0    30.2   5.7
                                  ------ -----  ------ -----
                                  $363.8 100.0% $521.5 100.0%
                                  ====== =====  ====== =====
</TABLE>

 Equity Securities/Real Estate

   Pursuant to the Company's investment guidelines, the Company's investment
portfolio may not contain any direct investments in real estate, mortgage
loans or equity securities.

 Foreign Currency Exposures

   As at September 30, 1999, all of the Company's fixed maturity portfolio was
denominated in U.S. dollars. The investment guidelines allow up to 5% of the
market value of the portfolio at the time of purchase to be invested in hedged
international bonds. Under this type of investment, the currency risk is
negated through the use of forward contracts with the Company only being
exposed to the interest rate risk on the bond purchased.

   In an effort to manage other areas of exposure to foreign currency exchange
rate fluctuations, the Company from time to time enters into foreign exchange
contracts. These contracts generally involve the exchange of one currency for
U.S. dollars at some future date. At September 30, 1999 and 1998, the Company
had no principal amounts outstanding under foreign exchange contracts. See
"Quantitative and Qualitative Disclosure About Market Risk."

 Investment Manager

   LaSalle Re has entered into an investment management agreement (the
"Investment Management Agreement") with Aon Advisors (UK) Limited ("Aon
Advisors"). Pursuant to the terms of the Investment Management Agreement, the
Company pays Aon Advisors a flat fee equal to 0.16375% per annum of the assets
under management. Prior to July 1, 1997, the Company paid Aon Advisors a fee
equal to 0.35% per annum of the first $100 million of assets under management,
0.25% per annum of the next $100 million of assets under management in excess
of $100 million and 0.15% per annum of any additional assets under management
in excess of $200 million. The terms of the Investment Management Agreement
were determined in arm's length commercial negotiations. The performance of,
and the fees paid to, Aon Advisors under the Investment Management Agreement
are reviewed periodically by the Investment Committee of the Board.

Competition

   The property catastrophe reinsurance industry is highly competitive. The
Company competes, and will continue to compete, with major U.S. and non-U.S.
insurers and property catastrophe reinsurers, including other

                                    10K-13
<PAGE>

Bermuda-based property catastrophe reinsurers and CNA. Some of these
competitors have greater financial and organizational resources than the
Company. A recent trend in the property catastrophe reinsurance industry has
been the utilization of the capital markets in structuring reinsurance
agreements using catastrophe bonds, swaps and other types of derivative
instruments. There may be established or new companies of which the Company is
not aware who may be planning to enter the property catastrophe reinsurance
market or existing reinsurers who may be planning to raise additional capital.
In addition, Lloyd's began to allow capital from corporate investors in 1994.
Competition in the types of reinsurance business that the Company underwrites
is based on many factors, including rates and other terms and conditions
offered, services provided, ratings assigned by independent rating agencies,
speed of claims payment and reputation, the perceived financial strength and
experience of the reinsurer in the line of reinsurance to be written.

   LaSalle Re currently has a rating of "A" (Excellent) from A.M. Best, which
represents the fourth highest in the rating scale used by A.M. Best. LaSalle
Re currently has a claims paying ability rating from S&P of "A-", which
represents the seventh highest in the rating scale used by S&P. These ratings
are based on factors of concern to cedents and brokers and are not directed
toward the protection of investors. These ratings are neither a rating of
securities nor a recommendation to buy, hold or sell such securities.
Insurance ratings are one factor used by brokers and cedents as a means of
assessing the financial strength and quality of reinsurers. In addition, a
cedent's own rating may be adversely affected by the lack of a rating of its
reinsurer. Therefore, a cedent may elect to reinsure with a competitor of the
Company that has a higher insurance rating. Similarly, the lowering or loss of
a rating in the future could adversely affect the Company's ability to
compete.

   Other than being a corporate member of selected Lloyd's syndicates, the
Company is not licensed or admitted as an insurer in any jurisdiction other
than Bermuda and has no plans to become so licensed or admitted. Because
jurisdictions in the United States do not permit insurance companies to take
credit for reinsurance obtained from unlicensed or non-admitted insurers on
their statutory financial statements unless security is posted, the Company's
reinsurance contracts generally require it to post a letter of credit or
provide other security for outstanding claims and/or unearned premiums. In
order to post these letters of credit, the Company generally is required to
provide the issuing banks with collateral equal to such amounts. As a result
of the size of the Company's capitalization, the Company does not believe that
its non-admitted status in any jurisdiction has, or should have, a material
adverse effect on its ability to compete or obtain business in the property
catastrophe reinsurance market in which it operates, principally because many
of the Company's competitors are not admitted or licensed in United States
jurisdictions. However, there can be no assurance that increased competitive
pressure from current reinsurers and future market entrants or the Company's
non-admitted status will not adversely affect the Company.

Employees

   As of December 1, 1999, the Company employed 32 people. The Company
believes that its employee relations are satisfactory. None of the Company's
employees are subject to collective bargaining agreements, and the Company
knows of no current efforts to implement such agreements at the Company.

Regulation

 Bermuda

   The Insurance Act 1978, as amended, and related regulations (the "Insurance
Act"). As a holding company, the Company is not subject to Bermuda insurance
regulations. However, LaSalle Re and LaSalle Re Capital are regulated by the
Insurance Act, which provides that no person shall carry on an insurance
business in or from within Bermuda unless registered as an insurer under the
Insurance Act by the Minister of Finance. Under the Insurance Act, insurance
business includes reinsurance business. The Minister, in deciding whether to
grant registration, has broad discretion to act as he thinks fit in the public
interest. The Minister is required by the Insurance Act to determine whether
the applicant is a fit and proper body to be engaged in the insurance business
and, in particular, whether it has, or has available to it, adequate knowledge
and expertise. The registration of an

                                    10K-14
<PAGE>

applicant as an insurer is subject to its complying with the terms of its
registration and such other conditions as the Minister may impose at any time.

   The Insurance Act distinguishes between insurers carrying on long-term
business and insurers carrying on general business. There are four
classifications of insurers carrying on general business, with Class 4
insurers subject to the strictest regulation. LaSalle Re is registered as a
Class 4 insurer in Bermuda and is regulated as such under the Insurance Act.

   The Insurance Act imposes on Bermuda insurance companies solvency and
liquidity standards and auditing and reporting requirements and grants to the
Minister powers to supervise, investigate and intervene in the affairs of
insurance companies. Although LaSalle Re Capital is governed by the Insurance
Act, it is exempted from complying with most of the filings required to be
made by insurance companies by section 57 of the Insurance Act.

   Significant aspects of the Bermuda insurance regulatory framework are set
forth below.

   Cancellation of Insurer's Registration. An insurer's registration may be
canceled by the Minister on certain grounds specified in the Insurance Act,
including failure of the insurer to comply with its obligations under the
Insurance Act or, if in the opinion of the Minister after consultation with
the Insurance Advisory Committee appointed by the Minister, the insurer has
not been carrying on business in accordance with sound insurance principles.

   Independent Approved Auditor. Every registered insurer must appoint an
independent auditor who will annually audit and report on the statutory
financial statements and the statutory financial return of the insurer. In the
case of LaSalle Re, both the statutory financial statements and the statutory
financial return are required to be filed annually with the Registrar of
Companies, who is the chief administrative officer under the Insurance Act.
The independent auditor of the insurer must be approved by the Minister and
may be the same person or firm that audits the insurer's financial statements
and reports for presentation to its shareholders.

   Loss Reserve Specialist. As a Class 4 insurer, LaSalle Re is required to
submit an annual loss reserve opinion when filing the annual statutory
financial return. This opinion must be issued by a loss reserve specialist.
The loss reserve specialist, who will normally be a qualified casualty
actuary, must be approved by the Minister.

   Statutory Financial Statements. An insurer must prepare statutory financial
statements annually. The Insurance Act prescribes rules for the preparation
and substance of such statutory financial statements, which include, in
statutory form, a balance sheet, income statement, statement of capital and
surplus and detailed notes thereto. The insurer is required to give detailed
information and analyses regarding premiums, claims, reinsurance and
investments. The statutory financial statements are not prepared in accordance
with GAAP and are distinct from the financial statements prepared for
presentation to the insurer's shareholders under the Companies Act 1981 of
Bermuda (the "Companies Act"), which financial statements may be prepared in
accordance with GAAP. LaSalle Re is required to submit the statutory financial
statements as part of the annual statutory financial return. However, the
statutory financial statements and the statutory financial return do not form
part of the public records maintained by the Registrar.

   Annual Statutory Financial Return. LaSalle Re is required to file annually
with the Registrar a statutory financial return no later than four months
after its financial year end unless specifically extended. The statutory
financial return includes, among other matters, a report of the approved
independent auditor on the statutory financial statements of the insurer; a
declaration of the statutory ratios; a solvency certificate; the statutory
financial statements themselves; the opinion of the approved loss reserve
specialist and certain details concerning ceded reinsurance. The solvency
certificate and the declaration of the statutory ratios must be signed by the
principal representative and at least two directors of LaSalle Re who are
required to state whether the minimum solvency margin and, in the case of the
solvency certificate, the minimum liquidity ratio have been met, and the
independent approved auditor is required to state whether in its opinion it
was reasonable for them to so state

                                    10K-15
<PAGE>

and whether the declaration of the statutory ratios complies with the
requirements of the Insurance Act. The statutory financial return must include
the opinion of the loss reserve specialist in respect of the loss and loss
expense provisions of LaSalle Re. Where LaSalle Re's accounts have been
audited for any purpose other than compliance with the Insurance Act, a
statement to that effect must be filed with the statutory financial return.

   Minimum Solvency Margin. The Insurance Act provides that the statutory
assets of an insurer must exceed its statutory liabilities by an amount
greater than the prescribed minimum solvency margin, which varies with the
type of business and class of registration of the insurer and the insurer's
net premiums written and loss reserve level. As a registered Class 4 insurer,
LaSalle Re is required to maintain a minimum solvency margin equal to the
greatest of (1) $100 million, (2) 50% of its net premiums written (without
deducting more than 25% of gross premiums written when computing net premiums
written) and (3) 15% of its loss and other certain insurance reserves. At
September 30, 1999, LaSalle Re's actual statutory capital and surplus was
$446.9 million, compared to its minimum solvency margin requirement of $100
million.

   Minimum Liquidity Ratio. The Insurance Act provides a minimum liquidity
ratio for general business. An insurer engaged in general business is required
to maintain the value of its relevant assets at not less than 75% of the
amount of its relevant liabilities. Relevant assets include cash and time
deposits, quoted investments, unquoted bonds and debentures, first liens on
real estate, investment income due and accrued, accounts and premiums
receivable and reinsurance balances receivable. There are certain categories
of assets which, unless specifically permitted by the Minister, do not
automatically qualify as relevant assets, such as unquoted equity securities,
investments in and advances to affiliates, real estate and collateral loans.
The relevant liabilities are total general business insurance reserves and
total other liabilities less deferred income tax and sundry liabilities (by
interpretation, those not specifically defined).

   Supervision, Investigation and Intervention. The Minister may appoint an
inspector with extensive powers to investigate the affairs of an insurer if
the Minister believes that an investigation is required in the interest of the
insurer's policyholders or persons who may become policyholders. In order to
verify or supplement information otherwise provided to him, the Minister may
direct an insurer to produce documents or information relating to matters
connected with the insurer's business.

   If it appears to the Minister that there is a risk of the insurer becoming
insolvent or that it is in breach of the Insurance Act or any conditions
imposed upon its registration, the Minister may direct the insurer not to take
on any new insurance business; not to vary any insurance contract if the
effect would be to increase the insurer's liabilities; not to make certain
investments; to realize certain investments; to maintain in or transfer to the
custody of a specified bank, certain assets; not to declare or pay any
dividends or other distributions or to restrict the making of such payments;
and/or to limit its premium income.

   Principal Representative. An insurer is required to maintain a principal
office in Bermuda and to appoint and maintain a principal representative in
Bermuda. For the purpose of the Insurance Act, the principal office of LaSalle
Re is at the Company's offices at 25 Church Street, Hamilton HM 12 Bermuda,
and Clare E. Moran is the principal representative of LaSalle Re. Without a
reason acceptable to the Minister, an insurer may not terminate the
appointment of its principal representative, and the principal representative
may not cease to act as such, unless 30 days' notice in writing to the
Minister is given of the intention to do so. It is the duty of the principal
representative, within 30 days of his reaching the view that there is a
likelihood of the insurer for which he acts becoming insolvent or its coming
to his knowledge, or his having reason to believe, that a reportable "event"
has occurred, to make a report in writing to the Minister setting out all the
particulars of the case that are available to him. Examples of such a
reportable "event" include failure by the reinsurer to comply substantially
with a condition imposed upon the reinsurer by the Minister relating to a
solvency margin or a liquidity or other ratio.

   Class 4 Insurer. LaSalle Re is registered as a Class 4 insurer and, as
such: (1) is required to maintain a minimum statutory capital and surplus
equal to the greatest of $100 million, 50% of its net premiums written
(without deducting more than 25% of gross premiums written when computing net
premiums written) and 15%

                                    10K-16
<PAGE>

of its loss and other insurance reserves; (2) is required to file annually
within four months following the end of the relevant financial year with the
Registrar, inter alia, a statutory financial return together with a copy of
its annual statutory financial statements and an opinion of a loss reserve
specialist in respect of its loss and loss expense provisions; (3) is
prohibited from declaring or paying any dividends during any financial year if
it is in breach of its minimum solvency margin or minimum liquidity ratio or
if the declaration or payment of such dividends would cause it to fail to meet
such margin or ratio (if it has failed to meet its minimum solvency margin or
minimum liquidity ratio on the last day of any financial year, LaSalle Re will
be prohibited, without the approval of the Minister, from declaring or paying
any dividends during the next financial year); (4) is prohibited from
declaring or paying in any financial year dividends of more than 25% of its
total statutory capital and surplus (as shown on its previous financial year's
statutory balance sheet) unless it files (at least 7 days before payment of
such dividends) with the Registrar an affidavit stating that it will continue
to meet the required margins; (5) is prohibited, without the prior approval of
the Minister, from reducing by 15% or more its total statutory capital, as set
out in its previous year's financial statements; and (6) is required, at any
time it fails to meet its solvency margin, within 30 days (45 days where total
statutory capital and surplus falls to $75 million or less) after becoming
aware of that failure or having reason to believe that such failure has
occurred to file with the Minister a written report containing certain
information.

   Certain Other Considerations. As "exempted" companies, the Company, LaSalle
Re and LaSalle Re Capital may not, without the express authorization of the
Bermuda legislature or a license granted by a Minister, participate in certain
business transactions, including: (1) the acquisition or holding of land in
Bermuda (except that required for its business and held by way of lease or
tenancy agreement for a term not exceeding 50 years or that used to provide
accommodation or recreational facilities for its officers and employees and
held with the consent of the Minister for a term not exceeding 21 years); (2)
the taking of mortgages on land in Bermuda in excess of $50,000; or (3) the
carrying on of business of any kind in Bermuda, except in certain limited
circumstances such as doing business with another exempted undertaking in
furtherance of business carried on outside Bermuda.

   The Bermuda government encourages foreign "entities" like the Company that
are based in Bermuda but do not operate in competition with local businesses.
As well as having no restrictions on the degree of non-Bermudian ownership,
the Company, LaSalle Re and LaSalle Re Capital are not currently subject to
taxes on their income or dividends or to any foreign exchange controls in
Bermuda. In addition, there currently is no capital gains tax in Bermuda, and
profits can be accumulated by the Company, LaSalle Re and LaSalle Re Capital,
as required, without limitation under general Bermuda law.

   The Companies Act prohibits a company from declaring or paying a dividend,
or making a distribution out of contributed surplus, if there are reasonable
grounds for believing that (1) the company is, or would after the payment be,
unable to pay its liabilities as they come due; or (2) the realizable value of
the company's assets would thereby be less than the aggregate of its
liabilities and shareholders' equity. This restriction applies to the Company,
LaSalle Re and LaSalle Re Capital as Bermuda exempted companies.

 LaSalle Re Capital

   LaSalle Re Capital became a Corporate Member of Lloyd's in December 1996
and commenced underwriting effective January 1, 1997. LaSalle Re Capital is
only licensed to carry on business related to Lloyd's. As a Corporate Member,
LaSalle Re Capital is subject to the regulatory jurisdiction of the Council of
Lloyd's (the "Council"). Unlike other financial markets in the U.K., Lloyd's
is not currently subject to direct U.K. government regulation under The
Financial Services Act of 1986 (although this position is due to change during
the year 2000 as explained below). Instead, Lloyd's is self regulating by
virtue of The Lloyd's Act of 1982, through bye-laws, regulations and codes of
conduct prescribed by the Council, which governs the market. Under the
Council, there are two boards, the Market Board and the Regulatory Board. The
Market Board is led by working members of the Council and is responsible for
strategy and policy signing. The Regulatory Board is responsible for the
regulation of the market, compliance and the protection of policyholders.

                                    10K-17
<PAGE>

   As a Corporate Member of Lloyd's, LaSalle Re Capital is required to file
audited financial statements and an annual return, which is part of the annual
declaration of compliance process. The annual declaration of compliance sets
out the financial position of the Corporate Member and confirms details of its
directors and controllers. In addition, LaSalle Re Capital is required to file
an audited solvency return either confirming the value of funds at Lloyd's
("FAL") held by the member as at the previous December 31, or that it held no
FAL at that date. Lloyd's will compare the value of a Corporate Member's FAL
derived from the solvency return with its underwriting assets and liabilities
as reported by the syndicates on which it participates. Where a negative
solvency position is disclosed, the Corporate Member is required to provide
sufficient additional funds to cover the shortfall. As at December 1, 1999,
LaSalle Re Capital had filed a solvency return for the 1997 and 1998
underwriting years.

   Regulation of the Lloyd's market is due to change during the year 2000,
once the Financial Services and Markets Bill (the "Bill") has been enacted.
The Bill will implement substantial reform of the regulation of the entire
financial services industry in the United Kingdom and includes provision for
the regulation by the new Financial Services Authority (the "FSA") of the
Society of Lloyd's itself and the Lloyd's market. When the Bill becomes law,
the regulatory functions currently carried out by the Council will be split
into two categories: those that will in future be carried out directly by the
FSA and those in respect of which the FSA will require Lloyd's to continue to
exercise its powers under FSA direction. Within the latter category will be
the prudential supervision of Lloyd's insurance business by the fixing and
monitoring of compliance with solvency requirements. In relation to this and
other areas of delegated authority, the FSA will require Lloyd's to exercise
its powers under the supervision of, and in accordance with standards and
guidance to be prescribed by, the FSA and will monitor Lloyd's to ensure that
it does so.

   Under the terms of its license as a "member of a recognised association of
underwriters" under the Bermuda Insurance Act, LaSalle Re Capital is required
to meet and maintain the solvency requirements of Lloyd's. LaSalle Re Capital
is also required to send to the Bermuda Registrar of Companies, within 30 days
after submission of the annual solvency return and declaration of compliance
to Lloyd's, a copy of those documents together with a copy of the audited
annual statements of each of the syndicates in which LaSalle Re Capital
participates. Further, LaSalle Re Capital must also appoint and maintain a
principal representative in Bermuda.

 United States, United Kingdom and Other

   LaSalle Re is registered as an insurer and is subject to regulation and
supervision in Bermuda. LaSalle Re is not admitted or authorized to do
business in any jurisdiction except Bermuda. The insurance laws of each state
of the United States do not directly regulate the sale of reinsurance within
their jurisdictions by alien insurers, such as LaSalle Re. Nevertheless, the
sale of reinsurance by alien reinsurers, such as LaSalle Re, to insurance
companies domiciled or licensed in United States jurisdictions is indirectly
regulated by state "credit for reinsurance" laws that operate to deny
financial statement credit to ceding insurers unless the non-admitted alien
reinsurer posts acceptable security for ceded liabilities and agrees to
prescribed contract provisions, such as insolvency and intermediary clauses.
The Company conducts its business at its principal offices in Bermuda and does
not maintain an office in the United States, and its personnel do not solicit,
advertise, settle claims or conduct other insurance activities in the United
States. All policies are issued and delivered and premiums are received
outside the United States. The Company does not believe that it is subject to
the insurance laws of any state in the United States. From time to time, there
have been congressional and other initiatives in the United States regarding
the supervision and regulation of the insurance industry, including proposals
to supervise and regulate alien reinsurers. While none of these proposals have
been adopted to date on either the federal or state level, there can be no
assurance that federal or state legislation will not be enacted subjecting the
Company to supervision and regulation in the United States, which could have a
material adverse effect on the Company. In addition, no assurance can be given
that if the Company were to become subject to any laws of the United States or
any state thereof or of any other country at any time in the future, it would
be in compliance with such laws.

                                    10K-18
<PAGE>

   LaSalle Re does not intend to maintain an office or to solicit, advertise,
settle claims or conduct other insurance activities in any jurisdiction other
than Bermuda where the conduct of such activities would require that LaSalle
Re be so admitted. Consistent with this policy, LaSalle Re established LaSalle
Re Services as a subsidiary in the United Kingdom to operate a London "contact
office" at the London Underwriting Center. LaSalle Re Services is not
registered as an insurer in England or in any other jurisdiction. The Company
believes that LaSalle Re Services is not required to be registered as an
insurance company in the United Kingdom, and that the activities of LaSalle Re
Services do not cause the Company to be subject to regulation as an insurance
company in the United Kingdom.

ITEM 2. PROPERTIES

   The Company's executive offices, which are leased, are located in Hamilton,
Bermuda. In addition, the Company leases office space in London, England.

ITEM 3. LEGAL PROCEEDINGS

   None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

   No matters were submitted to a vote of shareholders of the Company during
the fourth fiscal quarter of the fiscal year ended September 30, 1999.

                       EXECUTIVE OFFICERS OF THE COMPANY

   Set forth below are the names, ages, positions and certain other
information concerning the current executive officers of the Company.

<TABLE>
<CAPTION>
      Name                Age                   Position
      ----                ---                   --------
      <C>                 <C> <S>
      Guy D. Hengesbaugh.  41 President and Chief Executive Officer
                              Senior Vice President and Chief Underwriting
      Mark C. Stockton...  40 Officer
      Clare E. Moran.....  31 Senior Vice President, Treasurer and Interim
                              Chief Financial Officer
</TABLE>

   Guy D. Hengesbaugh was promoted to President and Chief Executive Officer of
the Company and LaSalle Re in July 1999. He previously served as Executive
Vice President and Chief Underwriting Officer of the Company since its
organization in September 1995, President and Chief Operating Officer of
LaSalle Re since September 1998, and Executive Vice President and Chief
Underwriting Officer of LaSalle Re from its organization in October 1993 to
September 1998. Mr. Hengesbaugh is a director of LaSalle Re and of R.V.I.
Guaranty Co. Ltd., a Bermuda-based residential insurer. He has 14 years of
experience in underwriting management in Chicago, London and Bermuda.

   Mark C. Stockton was promoted to Senior Vice President and Chief
Underwriting Officer in July 1999. He previously served as a Vice President of
the Company since January 1996. He joined the Company as an Assistant Vice
President and Underwriter in November 1994. Mr. Stockton has 21 years of
experience in the reinsurance industry, working in the London market until his
arrival in Bermuda in 1994. He holds the title of Chartered Insurer and
qualified as an Associate of the Chartered Insurance Institute in 1985.

   Clare E. Moran was promoted to the position of Senior Vice President,
Treasurer and Interim Chief Financial Officer in October 1999. She previously
served as Vice President, Finance, since September 1998. Ms. Moran joined the
Company in July 1995 as Assistant Controller. Prior to joining the Company,
she was employed by KPMG Peat Marwick in Bermuda, where she specialized in
reinsurance and insurance. Miss Moran qualified as a Chartered Accountant in
the U.K. in 1991.

                                    10K-19
<PAGE>

                                    PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
       MATTERS

   The Common Shares are quoted on The New York Stock Exchange under the
symbol "LSH".

   The following table sets forth, for the periods indicated, the high and low
sale prices for the Common Shares as reported by The New York Stock Exchange.

<TABLE>
<CAPTION>
                                                                   High   Low
                                                                  ------ ------
      <S>                                                         <C>    <C>
      Quarter ended December 31, 1998............................ $25.88 $19.50
      Quarter ended March 31, 1999...............................  22.25  14.75
      Quarter ended June 30, 1999................................  18.25  12.12
      Quarter ended September 30, 1999...........................  18.38  13.63

      Quarter ended December 31, 1997............................ $35.63 $32.00
      Quarter ended March 31, 1998...............................  42.00  31.13
      Quarter ended June 30, 1998................................  42.25  34.88
      Quarter ended September 30, 1998...........................  39.06  26.63
</TABLE>

   As of December 1, 1999, there were 158 holders of record of the Common
Shares.

   The following table sets forth for the fiscal quarters of the two most
recent fiscal years all dividends declared during each such period.

<TABLE>
<CAPTION>
             Fiscal year ended                                              Dividend
               September 30,               Fiscal quarter                   per share
             -----------------            ----------------                  ---------
             <S>                          <C>                               <C>
             1999                         First quarter...                   $0.375
                                          Second quarter..                   $0.375
                                          Third quarter...                   $0.375
                                          Fourth quarter..                   $0.000

             1998                         First quarter                      $0.750
                                          Second quarter..                   $0.750
                                          Third quarter...                   $0.750
                                          Fourth quarter..                   $0.750
</TABLE>

   On April 21, 1999, the Company announced its intention to discontinue its
formula-based policy of paying 50% to 60% of the amount by which its net
income (before minority interest) from the prior fiscal year exceeds the
amount of dividends payable on preferred shares of the Company in the current
fiscal year as dividends to holders of Common Shares and Exchangeable Non
Voting shares.

   The actual amount and timing of any future dividends is at the discretion
of the Board and is dependent upon the profits and financial requirements of
the Company, as well as loss experience, business opportunities and any other
factors that the Board deems relevant. In addition, if the Company has funds
available for distribution, it may nevertheless determine that such funds
should be retained for the purposes of replenishing capital, expanding premium
writings or other purposes. There can be no assurance that the Company will
declare or pay any dividends.

   The Company is a holding company whose principal source of income is cash
dividends and other permitted payments from LaSalle Re. The payment of
dividends by LaSalle Re to the Company is restricted under Bermuda law and
regulation, including Bermuda insurance law. Under the Insurance Act, LaSalle
Re is prohibited from paying dividends of more than 25% of its opening
statutory capital and surplus unless it files with the Bermuda Registrar of
Companies an affidavit (at least 7 days before payment of such dividends)
stating that it will continue to meet the required solvency margin and minimum
liquidity ratio requirements and from declaring or paying

                                    10K-20
<PAGE>

any dividends without the prior approval of the Minister of Finance if it
failed to meet its required margins on the last day of the previous fiscal
year. The Insurance Act also requires LaSalle Re to maintain a minimum
solvency margin and minimum liquidity ratio and prohibits dividends which
would result in a breach of these requirements. In addition, LaSalle Re is
prohibited under the Insurance Act from reducing its opening total statutory
capital by 15% or more without the prior approval of the Minister of Finance.

ITEM 6. SELECTED FINANCIAL DATA

   Information with respect to this item may be found in the section captioned
"Selected Financial Data" contained in the 1999 Annual Report.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
       FINANCIAL CONDITION

   The following is a discussion and analysis of the Company's results of
operations and financial condition. This discussion and analysis should be
read in conjunction with the Company's audited consolidated financial
statements and related notes.

Results of Operations

 Year Ended September 30, 1999 Compared with Year Ended September 30, 1998

   Gross premiums written for the year ended September 30, 1999 were $139.0
million compared to $155.3 million for the year ended September 30, 1998, a
decrease of 10.5%. The table below summarizes the Company's gross premiums
written by line of business (expressed in millions of dollars).

<TABLE>
<CAPTION>
                                             Year ended    Year ended
                                            September 30, September 30,
                                                1999          1998      Change
                                            ------------- ------------- ------
<S>                                         <C>           <C>           <C>
Reinsurance segment:
U.S. property catastrophe..................    $ 52.1        $ 55.2     $ (3.1)
International property catastrophe.........      40.4          49.0      ( 8.6)
                                               ------        ------     ------
Total property catastrophe.................      92.5         104.2      (11.7)
Other lines................................      20.8          30.0       (9.2)
Fronted premiums, reinstatements,
 adjustments and no claims bonuses.........       3.3           0.1        3.2
                                               ------        ------     ------
                                                116.6         134.3      (17.7)
Lloyd's segment:
LaSalle Re Capital.........................      22.4          21.0        1.4
                                               ------        ------     ------
Total gross premiums written...............    $139.0        $155.3     $(16.3)
                                               ======        ======     ======
</TABLE>

   The Company's property catastrophe book experienced a reduction in gross
premiums written of $11.7 million for the year ended September 30, 1999
compared to the year ended September 30, 1998. Of this reduction, 73.5% or
$8.6 million related to a decline in the level of gross premiums written on
the international book of business. In turn, $6.9 million of this reduction
resulted from the Company's reduction of its line sizes on two international
quota share contracts. During the year ended September 30, 1999, the Company
experienced a change in the mix of international property catastrophe business
assumed, with the Company reducing its line sizes on pro rata contracts and
increasing gross premiums written from direct business. The Company has placed
an emphasis on accessing clients directly because pro rata contracts have a
less efficient cost structure. The remaining reduction on the property
catastrophe book of business was due to continuing competitive rates. Based on
the Company's experience, rates for U.S. and international property
catastrophe business written in the year ended September 30, 1999 were
approximately 7.5% to 10% and 12.5% to 15%, respectively, below those
experienced in the year ended September 30, 1998. Because of these reduced
rates, premiums were lower in comparison to those written in the year ended
September 30, 1998, and the Company chose not to renew contracts in some cases
where it considered business to be underpriced.

                                    10K-21
<PAGE>

   For the year ended September 30, 1999, gross premiums written in other
lines of business, including LaSalle Re Capital, totaled $43.2 million, or
31.1% of gross premiums written, compared to $51.0 million, or 32.8% of gross
premiums written, for the year ended September 30, 1998. The decrease was
primarily due to reduced gross premiums written in property pro-rata due to
cancelled contracts and a reduction in the line sizes written on satellite
business.

   The reduction in gross premiums written was partly offset by an increase of
$3.3 million in the aggregate level of fronted premiums, reinstatements,
adjustments and no claims bonuses written in the year ended September 30, 1999
compared to the year ended September 30, 1998. This increase was principally
due to fronting arrangements, entered into in the fiscal year ended September
30, 1999, which produced $3.1 million of gross premiums written. These
fronting arrangements were primarily provided for three companies: two of
these companies have claims paying ratings from S&P of "A-"; the other company
is rated "A" by A.M. Best.

   Premiums ceded for the year ended September 30, 1999 were $28.2 million
compared to $7.8 million in the year ended September 30, 1998. Of the $20.4
million increase, $8.1 million was ceded to a property catastrophe quota share
arrangement with CNA Re, $3.0 million related to fronting arrangements and
$5.2 million related to increased premiums ceded through LaSalle Re Capital.
In addition, the Company continued to purchase various reinsurance protections
because of the current pricing environment.

   As a result of the above, net premiums written for the year ended September
30, 1999 were $110.8 million compared to $147.5 million for the year ended
September 30, 1998.

   Net premiums earned for the year ended September 30, 1999 were $126.6
million compared to $154.6 million for the same period in 1998. The decline in
premiums earned of $28.0 million was due to two factors: an increase in ceded
premiums amortized from $6.1 million for the year ended September 30, 1998 to
$18.5 million for the year ended September 30, 1999 and a continued decrease
in the level of gross premiums written on the Company's core property
catastrophe business. Premiums on property catastrophe excess of loss
contracts are earned over the period coverage is provided, which is generally
12 months. Under proportional property catastrophe contracts, with the risks
underlying the contracts incepting throughout the contract period, premiums
are generally earned over 18 months. Premiums on other lines of business are
earned over the period for which coverage is provided, which generally ranges
between 12 months and 60 months. Premiums written by LaSalle Re Capital are
earned over a period of 18-24 months from the inception date of the underlying
contracts.

   Net investment income remained reasonably constant for the years ended
September 30, 1999 and September 30, 1998 at $33.8 million and $34.3 million,
respectively. Annualized investment income as a percentage of the average
market value of invested assets was 5.6% for the year ended September 30, 1999
compared to 6.0% for the year ended September 30, 1998. The decrease in the
investment income generated from the investment portfolio of $2.2 million was
primarily attributable to lower market yields. This decrease was partly offset
by income generated on an equity account maintained in accordance with the
terms of the Company's multi-year excess of loss reinsurance program and
investment income from LaSalle Re Capital.

   Net realized gains on investments were $0.6 million for the year ended
September 30, 1999 compared to $5.6 million for the year ended September 30,
1998. During the year ended September 30, 1999, the Company sold longer
maturity bonds and reinvested the proceeds in shorter maturity bonds and money
market instruments. This measure was designed to protect the total returns on
the portfolio in an increasing yield environment. In this environment, the
unrealized gain on the investment portfolio declined from $13.8 million at
September 30, 1998 to a loss of $4.1 million at September 30, 1999. The
Company anticipates that the measure taken to shorten interest rate sensitive
assets will reduce the potential for significant capital gains while
generating future income returns at money market rates or better. The gains in
the year ended September 30, 1999 resulted primarily from a credit spread
enhancement exercise undertaken during the period. In addition, the Company
realized small gains on the sale of bonds with Far East and Asian exposure.

                                    10K-22
<PAGE>

   The following table sets forth the Company's combined ratios for the years
ended September 30, 1999 and 1998:

<TABLE>
<CAPTION>
                                                     September 30, September 30,
                                                         1999          1998
                                                     ------------- -------------
      <S>                                            <C>           <C>
      Loss and loss expense ratio...................    103.6%         61.8%
      Expense ratio.................................     26.5%         20.4%
      Combined ratio................................    130.1%         82.2%
</TABLE>

   Losses and loss expenses incurred represent losses paid and reserves
established in respect of specific losses and loss expenses reported by
cedents and expected loss development and additions to incurred-but-not-
reported loss reserves.

   The Company incurred losses and loss expenses, net of recoveries, of $131.1
million during the year ended September 30, 1999 compared with $95.5 million
during the year ended September 30, 1998. Of the losses incurred for the year
ended September 30, 1999, a significant portion related to the strengthening
of prior year reserves. Approximately $14.5 million was incurred in respect of
Hurricane Georges, which occurred in September 1998. In addition, the Company
recorded approximately $14 million of additional case reserves for large
reported losses. These losses arose from causes that could not have been
reasonably anticipated when the Company established its incurred-but-not-
reported loss reserves. Included in the additional case reserves was a loss of
$6.5 million on a property stop loss contract. This contract had an incidental
auto warranty coverage component that produced a full limit loss to the
contract. Also included were losses of $4.5 million on auto property damage
stop loss contracts. Given the Company's recent loss experience, the Company
reviewed the assumptions used in setting incurred-but-not-reported loss
reserves. These assumptions have been revised to reflect both new information
and a more prudent reserving philosophy. As a result, the Company recorded an
additional $16 million of incurred-but-not-reported losses during the year
ended September 30, 1999. These reserves relate to all lines of business
written by the Company. Losses and loss expenses, net of recoveries, incurred
on events that occurred during the year ended September 30, 1999 include $6.0
million related to an Australian hailstorm, $6.0 million related to Oklahoma
tornadoes, $6.9 million related to Hurricane Floyd, $2.6 million related to
the Turkish earthquake and $4.1 million related to Typhoon Olga. The main
components of losses and loss expenses incurred during the year ended
September 30, 1998 related to Hurricane Georges and claims derived from
adverse weather conditions, aggregate stop loss protection losses, satellite
failures and various risk losses.

   Effective on October 1, 1998, the Underwriting Services Agreement, under
which CNA Bermuda had provided the Company with underwriting services, was
terminated. On that date, all of the personnel assigned to the Company by CNA
Bermuda became employees of the Company and the underwriting function formerly
performed by CNA Bermuda was assumed by the Company directly. In connection
with the termination of the Underwriting Services Agreement, the Company
entered into an Underwriting Support Services Agreement with CNA Re Services
Company and CNA Bermuda. With effect from October 1, 1998, LaSalle Re has
agreed to pay an annual retainer of $0.3 million and an underwriting profit
commission equal to 1.67% of the aggregate net underwriting profits of LaSalle
Re, where specified conditions are met. For the 1998 fiscal year, LaSalle Re
paid fees under the Underwriting Services Agreement at a rate of 1.5% of the
gross written and collected premium per fiscal year; and an underwriting
profit commission equal to 4.0% of the aggregate net underwriting profits of
LaSalle Re, where specified conditions were met.

   Underwriting expenses as a percentage of net premiums earned were 17.5% for
the year ended Septermber 30, 1999 compared to 14.6% for the year ended
September 30, 1998. The increase in the ratio of 2.9% was primarily due to the
increased amount of amortized ceded reinsurance that reduced net premiums
earned. Underwriting expenses as a percentage of gross premiums earned were
15.5% for the year ended September 30, 1999 compared to 14.1% for the year
ended September 30, 1998.

                                    10K-23
<PAGE>

   As a percentage of gross earned premiums, fees accrued pursuant to the
Underwriting Support Services Agreement decreased from 2.2% for the year ended
September 30, 1998 to 1.0% for the year ended September 30, 1999. This
decrease was offset by the inclusion of the underwriters' compensation cost in
underwriting expenses following their transfer to the Company. This has
increased the ratio of underwriting expenses to gross premiums earned by 1.6%.
For the year ended September 30, 1999, the Company's brokerage, ceding and
profit commissions increased to 12.8% of gross premiums earned from 11.8% for
the corresponding period in 1998. The increase was partly due to the effect of
increased earned premiums on the business underwritten by LaSalle Re Capital,
whose expense ratio was approximately 20%, and an increase in the average cost
of property catastrophe proportional business.

   Operational expenses were $11.4 million for the year ended September 30,
1999 compared to $8.9 million for the year ended September 30, 1998. As a
percentage of net premiums earned, operational expenses were 9.0% during the
year ended September 30, 1999 compared to 5.8% for the year ended September
30, 1998. The increase in operational expenses of $2.5 million was principally
due to an increase in the level of executive compensation booked. During the
year ended September 30, 1999, the Company recorded a credit of $1.5 million
in respect of stock appreciation rights compared to a credit of $0.6 million
during the year ended September 30, 1998. This reduction was offset by
increased compensation costs of approximately $2.1 million, due in part to
additional compensation costs following the change in the CNA Underwriting
Services Agreement, a change in the method of compensating employees and the
payment of severance costs. The remaining increase in expenses of $1.3 million
was due to additional costs relating to travel, staff recruitment, software
modeling and LaSalle Re Capital.

   The Company incurred corporate expenses of $0.8 million during the year
ended September 30, 1999 compared to $0.5 million for the year ended September
30, 1998. The costs incurred in the year ended September 30, 1999 related to
costs associated with the Company's investigation of potential transactions
and the preparation and filing of a registration statement for an offering of
preferred shares. The registration statement was subsequently withdrawn prior
to becoming effective. The costs incurred in the year ended September 30, 1998
related to costs associated with the Company's investigation of potential
transactions.

   Interest expense was $1.7 million for the year ended September 30, 1999
compared to $1.9 million for the year ended September 30, 1998. Interest
expense primarily included financing charges associated with the deposit
portion of LaSalle Re's ceded reinsurance contract and other interest expenses
related to the ongoing commitment fees payable on the Company's credit
facility. As at September 30, 1999, there were no borrowings outstanding under
this facility.

   The Company's losses per Common Share were $(0.61) for the year ended
September 30, 1999 compared to earnings per Common Share of $3.06 for the year
ended September 30, 1998. Losses per Common Share assuming dilution were
$(0.61) for the year ended September 30, 1999 compared to earnings per Common
Share of $2.80 for the year ended September 30, 1998.

                                    10K-24
<PAGE>

 Year Ended September 30, 1998 Compared with Year Ended September 30, 1997

   Gross premiums written decreased 9.4% to $155.3 million for the year ended
September 30, 1998 from $171.4 million for the year ended September 30, 1997.
The table below summarizes the Company's gross premiums written by line of
business (expressed in millions of dollars).

<TABLE>
<CAPTION>
                                             Year ended    Year ended
                                            September 30, September 30,
                                                1998          1997      Change
                                            ------------- ------------- ------
      <S>                                   <C>           <C>           <C>
      Reinsurance segment:
      U.S. property catastrophe............    $ 55.2        $ 71.6     $(16.4)
      International property catastrophe...      49.0          73.1      (24.1)
                                               ------        ------     ------
      Total property catastrophe...........     104.2         144.7      (40.5)
      Other lines..........................      30.0          22.9        7.1
      Reinstatements, adjustments and no
       claims bonuses......................       0.1         (10.3)      10.4
                                               ------        ------     ------
                                                134.3         157.3      (23.0)
      Lloyd's segment:
      LaSalle Re Capital...................     21.00          14.1        6.9
                                               ------        ------     ------
      Total gross premiums written.........    $155.3        $171.4     $(16.1)
                                               ======        ======     ======
</TABLE>

   The overall decrease in gross premiums written was primarily due to a 28.0%
reduction in gross premiums written in the Company's core property catastrophe
business from $144.7 million for the year ended September 30, 1997 to $104.2
million for the year ended September 30, 1998. Of this reduction,
approximately 60.0% related to the international property catastrophe book and
40.0% related to the U.S. property catastrophe book. The reduction was greater
in the international property catastrophe book because the Company reduced its
line sizes on some proportional treaties pursuant to its policy of reducing
aggregate exposures in a declining rate environment. This accounted for
approximately $7.7 million of the decrease in the international property
catastrophe book. Approximately 25% of the decrease in the U.S. property
catastrophe book related to a multi-year contract that was written in the year
ended September 30, 1997 for which no written premium was recorded in the year
ended September 30, 1998. The remaining decrease in the total property
catastrophe book was due to continuing competitive rates. Based on the
Company's experience, rates for property catastrophe business written in the
year ended September 30, 1998 were approximately 15% and 10% below those
experienced in the year ended September 30, 1997 for international and U.S.
property catastrophe business, respectively. Because of these reduced rates,
premiums were lower in comparison to those written in the year ended September
30, 1997, and the Company chose not to renew contracts in some cases where it
considered business to be underpriced. For the year ended September 30, 1998,
the Company experienced a 6.3% reduction in the number of property catastrophe
contracts written from 1,000 in the year ended September 30, 1997 to 937
contracts for the year ended September 30, 1998.

   The decline in gross premiums written by the Company was partially offset
by an increase of $14.0 million in respect of gross premiums written in other
non-property catastrophe lines. The increase was primarily due to increased
gross premiums written by LaSalle Re Capital, which commenced underwriting as
a corporate member of Lloyd's in January 1997, the second quarter of the 1997
fiscal year. For the year ended September 30, 1998, LaSalle Re Capital wrote
gross premiums of $21.0 million compared to $14.1 million for the year ended
September 30, 1997. Also, the Company increased the size of its terrorism and
political risks book, which accounted for approximately $1.0 million of gross
premiums written for the year ended September 30, 1997 compared with
approximately $4.4 million for the year ended September 30, 1998.

   In addition, for the year ended September 30, 1997, $10.3 million relating
to adjustment premiums, reinstatement premiums and no claims bonuses produced
a reduction in gross premiums written. In the year

                                    10K-25
<PAGE>

ended September 30, 1998, there was a positive adjustment to gross premiums
written of $0.1 million. This was principally due to insignificant premium
adjustments and, as a result of increased loss activity, to increased
reinstatement premiums and lower no claims bonuses.

   Premiums ceded for the year ended September 30, 1998 were $7.8 million
compared to $7.7 million for the year ended September 30, 1997. These ceded
premiums related to reinsurance protection purchased by LaSalle Re with effect
from January 1, 1997 and to various reinsurance protections purchased by
LaSalle Re Capital. Ceded premiums amortized increased from $1.9 million in
the year ended September 30, 1997 to $6.1 million for the year ended September
30, 1998. This increase was due primarily to the reinsurance protections
purchased by LaSalle Re Capital, which were amortized in line with the
premiums earned by LaSalle Re Capital.

   Net premiums earned decreased 5.7% to $154.6 million for the year ended
September 30, 1998 from $163.9 million for the year ended September 30, 1997.
This decrease was the result of reduced premiums earned on the Company's core
property catastrophe business that were partially offset by increased earned
premiums on the business written by LaSalle Re Capital.

   Net investment income increased 3.6% to $34.3 million for the year ended
September 30, 1998 from $33.1 million for the year ended September 30, 1997.
This increase was attributable to a larger average investment base compared to
the year ended September 30, 1997. Annualized investment income as a
percentage of the average market value of invested assets was 6.0% for the
year ended September 30, 1998 compared to 6.1% for the year ended September
30, 1997.

   Net realized gains on investments were $5.6 million for the year ended
September 30, 1998 compared to $0.6 million for the year ended September 30,
1997. During the year ended September 30, 1998, the Company realized gains on
investments as part of an exercise undertaken to increase the credit quality
of the portfolio. In addition, during the last quarter of the year ended
September 30, 1998, the Company took advantage of market conditions by
realizing some of the large unrealized gains in the portfolio. The proceeds
from this exercise were reinvested in securities with marginally lower yields.

   Other income was derived from a contract under which the Company provided
certain reinsurance related services. This contract was not renewed on January
1, 1998.

   The following table sets forth the Company's combined ratios for the years
ended September 30, 1998 and 1997:

<TABLE>
<CAPTION>
                                    September 30, September 30,
                                        1998          1997
                                    ------------- -------------
         <S>                        <C>           <C>
         Loss and loss expense
          ratio....................     61.8%         19.0%
         Expense ratio.............     20.4%         23.6%
         Combined ratio............     82.2%         42.6%
</TABLE>

   Losses and loss expenses incurred increased 206.2% from $31.2 million for
the year ended September 30, 1997 to $95.5 million for the year ended
September 30, 1998. This increase was due to an increase in the number of
worldwide catastrophic events that affected the Company during the year ended
September 30, 1998. The largest loss event to affect the Company was Hurricane
Georges, which occurred in September 1998. The Company established a $25
million loss provision for this event that represented 26% of the losses
incurred for the year ended September 30, 1998. In addition, throughout the
year ended September 30, 1998, the Company incurred losses in respect of
various weather-related events, notably U.K. Midland floods ($7.0 million),
Canadian winter freeze ($4.3 million) and various U.S. storms ($2.4 million).
The Company sustained a number of claims relating to aggregate stop loss and
excess of loss contracts, which accounted for approximately $16.8 million, or
18%, of losses incurred. A large percentage of these aggregate losses incurred
in the year ended September 30, 1998 related to losses that had occurred in
prior years. This was due to the extended loss reporting

                                    10K-26
<PAGE>

periods on these contracts, a number of which had a period of 24 months after
the expiry of the contract within which to report losses. Also, as a result of
increasing other lines of business, the Company incurred losses relating to
LaSalle Re Capital ($5.0 million), satellite coverages ($3.0 million), various
risk excess coverages ($3.0 million) and political risks coverages ($1.7
million). As a result of the current year loss activity, the Company increased
the level of incurred-but-not-reported reserves. Losses and loss expenses
incurred during the year ended September 30, 1997 primarily included $12.0
million for floods in Eastern Europe, $6.1 million in respect of various
international windstorms and winter storm activity in the United States and
$4.6 million adverse development on Hurricane Fran (which occurred in
September 1996).

   Underwriting expenses decreased 12.9% from $26.0 million for the year ended
September 30, 1997 to $22.7 million for the year ended September 30, 1998. As
a percentage of net premiums earned, underwriting expenses were 14.6% for the
year ended September 30, 1998 compared to 15.9% for the year ended September
30, 1997. Fees accrued pursuant to the Underwriting Services Agreement as a
percentage of net premiums earned decreased to 2.3% for the year ended
September 30, 1998 from 4.0% for the year ended September 30, 1997. This
decrease was due to the higher loss activity and lower premium earnings in the
year ended September 30, 1998 compared with the year ended September 30, 1997.
The Company's level of brokerage fees and ceding commissions increased to
12.3% of net premiums earned for the year ended September 30, 1998 from 11.8%
of net premiums earned for the year ended September 30, 1997. The increase was
partly due to an increase in earned premiums written by LaSalle Re Capital,
whose expense ratio was approximately 20%, and partly due to an increase in
the average cost of writing proportional business.

   Operational expenses decreased 29.4% from $12.7 million for the year ended
September 30, 1997 to $8.9 million for the year ended September 30, 1998. As a
percentage of net premiums earned, operational expenses were 5.7% during the
year ended September 30, 1998 compared to 7.7% for the year ended September
30, 1997. Effective October 1, 1997, the Administrative Services Agreement
with ARC was terminated and all of the personnel assigned to the Company by
ARC became employees of the Company, with the Company assuming the functions
previously performed by ARC. This generated a reduction in operational
expenses of approximately $2.3 million, as the fees paid to ARC were in excess
of the additional costs assumed by the Company. In addition, the Company
experienced a reduction in executive compensation of approximately $2.4
million, due partly to a decline in the fair value of stock appreciation
rights and partly to reduced bonus provisions. These decreases were offset by
increased costs of $1.0 million relating to LaSalle Re Capital and fees paid
to directors.

   Corporate expenses decreased 72.2% from $1.8 million for the year ended
September 30, 1997 to $0.5 million for the year ended September 30, 1998. The
costs incurred in the year ended September 30, 1998 related to costs
associated with the Company's investigation of potential merger and
acquisition transactions. Corporate expenses for the year ended September 30,
1997 included costs associated with the Secondary Offering, the Preferred
Offering, the Tender Offer, the formation costs of LaSalle Re Capital, the
Company's move to the New York Stock Exchange and fees incurred with respect
to the CatEPut. Corporate expenses do not include the underwriting discounts
associated with the various offerings. These costs were borne by the selling
shareholders in the Secondary Offering. In respect of the Preferred Offering,
the underwriting discount was charged to additional paid-in capital.

   Interest expense increased 11.8% from $1.7 million in the year ended
September 30, 1997 to $1.9 million for the year ended September 30, 1998. The
increase was due to additional financing charges associated with the deposit
portion of LaSalle Re's ceded reinsurance contract in the year ended September
30, 1998. As the contract incepted January 1, 1997, only three quarters of the
annual charge was included in the year ended September 30, 1997. Other
interest expenses related to the annual administration fee and the ongoing
commitment fees payable on the Company's credit facility. As at September 30,
1998, there were no borrowings under this facility.

   Foreign exchange gains in the year ended September 30, 1998 were negligible
at $0.2 million compared to losses of $3.0 million in the year ended September
30, 1997. The losses in the year ended September 30, 1997 resulted from the
unfavorable closing of a sterling forward contract, and an overall
strengthening of the U.S. dollar against the major foreign currencies in which
the Company wrote premiums.

                                    10K-27
<PAGE>

   Earnings per Common Share were $3.06 for the year ended September 30, 1998
and $5.55 for the year ended September 30, 1997. Earnings per Common Share
assuming dilution were $2.80 for the year ended September 30, 1998 and $5.14
for the year ended September 30, 1997. The weighted average number of shares
outstanding used in the calculation of earnings assuming dilution decreased
from 22,998,936 for the year ended September 30, 1997 to 20,919,405 for the
year ended September 30, 1998. The decrease in the weighted average number of
shares outstanding resulted primarily from the repurchase of shares in the
Tender Offer in April 1997.

Liquidity and Capital Resources

   As a holding company, the Company's assets consist primarily of all of the
outstanding voting stock of LaSalle Re. The Company's cash flows depend
primarily on dividends and other permitted payments from LaSalle Re and its
subsidiaries.

   LaSalle Re's sources of funds consist of net premiums written, investment
income and proceeds from sales and redemptions of investments. Cash is used
primarily to pay losses and loss expenses, brokerage, commissions, excise
taxes, administrative expenses and dividends. Under the Insurance Act, LaSalle
Re is prohibited from paying dividends of more than 25% of its opening
statutory capital and surplus unless it files with the Bermuda Registrar of
Companies an affidavit (at least 7 days before payment of such dividends)
stating that it will continue to meet the required minimum solvency margin and
minimum liquidity ratio requirements and from declaring or paying any
dividends without the prior approval of the Bermuda Minister of Finance if it
failed to meet its required margins on the last day of the previous fiscal
year. The Insurance Act also requires LaSalle Re to maintain a minimum
solvency margin and minimum liquidity ratio and prohibits dividends that would
result in a breach of these requirements. In addition, LaSalle Re is
prohibited under the Insurance Act from reducing its opening total statutory
capital by 15% or more without the approval of the Minister of Finance.
LaSalle Re currently meets these requirements. In addition, the payment of
dividends by LaSalle Re is subject to the rights of holders of the
Exchangeable Non-Voting Shares to receive a pro rata share of any dividend and
to its need to maintain shareholders' equity adequate to support the level of
LaSalle Re's reinsurance operations.

   Operating activities provided net cash of $19.6 million for the year ended
September 30, 1999 and $96.0 million for the year ended September 30, 1998.
Cash flows from operations in future years may differ substantially from net
income. Cash flows are affected by loss payments, which, due to the nature of
the reinsurance coverage provided by LaSalle Re, are generally expected to
comprise large loss payments on a limited number of claims and can therefore
fluctuate significantly from year to year. The irregular timing of these large
loss payments can create significant variations in operating cash flows
between periods. LaSalle Re funds these payments from cash flows from
operations and sales of investments.

   As a result of the potential for large loss payments, LaSalle Re maintains
a substantial portion of its assets in cash and investments. As of September
30, 1999, 75.7% of its total assets were held in cash and investments, which
totaled $557.0 million. Cash and cash equivalents were $193.2 million at
September 30, 1999 compared to $85.3 million at September 30, 1998. The
increase was a result of the Company's current investment strategy of selling
longer maturity bonds and reinvesting the proceeds in shorter maturity bonds
and money market instruments, a move designed to protect the total returns on
the portfolio in an increasing yield environment. This has reduced the
modified average duration of the portfolio from 3.1 years at September 30,
1998 to 1.8 years at September 30, 1999.

   As of September 30, 1999, 76.2% of the securities held in the Company's
investment portfolio were fixed-income securities rated "AA" or better and
95.2% were fixed-income securities rated "A" or better by S&P or Moody's. No
single investment comprised more than 5% of the overall portfolio. As at
September 30, 1999, issuers from the Far East and Asia represented 5.1% of the
investment portfolio. These bonds had an insignificant aggregate unrealized
loss and were all rated AAA.

   Reinsurance balances receivable were $93.2 million at September 30, 1999
compared to $86.8 million at September 30, 1998. The increase was due the
inclusion of reinsurance balances receivable related to the

                                    10K-28
<PAGE>

business written by LaSalle Re Capital. At September 30, 1999, these
receivable balances were $46.0 million compared to $28.1 million as at
September 30, 1998. Given the three-year accounting methodology utilized by
Lloyd's, these balances will not be received until after the year 2000.

   Prepaid reinsurance premiums increased from $7.6 million as at September
30, 1998 to $17.3 million as at September 30, 1999. The increase of $9.7
million was primarily due to the new property catastrophe quota share
arrangement with CNA Re, the increased reinsurance protections purchased
through LaSalle Re Capital and an increase in the number of the reinsurance
protections bought by LaSalle Re. At September 30, 1999, the Company had $9.1
million of losses recoverable from reinsurers compared to $nil in 1998.

   Other assets increased from $31.7 million as at September 30, 1998 to $37.6
million as at September 30, 1999. This was primarily due to the associated
profit commission due on the multi-year excess of loss reinsurance contract.

   At September 30, 1999, reserves for unpaid losses and loss expenses were
$146.5 million compared to $97.9 million at September 30, 1998. During the
year ended September 30, 1999, the Company increased its reserves for unpaid
losses and loss expenses following a revision of the assumptions used in
setting incurred-but-not-reported loss reserves. In addition, included in the
reserve for unpaid losses and loss expenses at September 30, 1999 was $18.7
million in respect of the business underwritten by LaSalle Re Capital,
compared to $6.7 million at September 30, 1998. Given the three-year
accounting methodology, these losses will not be settled until after the year
2000.

   The Company has no material commitments for capital expenditures.

   Other liabilities increased from $29.2 million as at September 30, 1998 to
$37.3 million as at September 30, 1999. The increase of $8.1 million was
primarily due to liabilities established for the purchased reinsurance
protections.

   In accordance with the terms of certain reinsurance contracts, the Company
has posted letters of credit in the amount of $21.6 million as of September
30, 1999, as compared to $8.3 million as of September 30, 1998, to support
outstanding loss reserves. In connection with LaSalle Re Capital's support of
three Lloyd's syndicates, with effect from January 1, 1997, the Company posted
letters of credit in the amount of $16.1 million (equivalent to (Pounds)9.8
million). In addition, in connection with the Japanese earthquake swap, the
Company has posted a letter of credit of $3.0 million. All letters of credit
are secured by a lien on the Company's investment portfolio equal to 115% of
the amount of the outstanding letters of credit.

   The Company paid dividends on its Common Shares of $0.75 per share in
October 1998 and $0.375 per share in each of January, April and July 1999. The
Company paid a quarterly dividend of $0.5469 per share to holders of record of
Series A preferred shares in December 1998 and March, June and September 1999.
As of September 30, 1999, dividends due but not yet declared on the Series A
preferred shares amounted to $0.5 million.

   LaSalle Re Capital is committed to provide capital support for the 2000
underwriting year to the same syndicates it supported in prior years. The
total level of support is not expected to change materially from that provided
in 1999.

   The Company has in place a $100 million committed line of credit from a
syndicate of banks. The proceeds from the credit facility may only be used to
buy preferred shares of LaSalle Re that, in turn, may use the proceeds of such
purchase to meet current cash requirements. The facility matures December 1,
2000, and is secured by a pledge ("legal mortgage") of all the voting common
stock of LaSalle Re held by the Company, plus any preferred shares that the
Company may purchase from LaSalle Re with proceeds from the facility. The line
of credit contains various covenants, including limitations on incurring
additional indebtedness; restrictions on the sale or lease of assets not in
the ordinary course of business; maintenance of a ratio of consolidated total
debt to

                                    10K-29
<PAGE>

consolidated tangible net worth of no more than 0.40 to 1.00; maintenance of
tangible net worth at the end of each fiscal year of the greater of $300
million or 70% of net premiums written; maintenance of statutory capital of
LaSalle Re of at least $400 million at the end of calendar year 1999 and
thereafter; and maintenance of a ratio of net premiums written to statutory
capital at the end of any fiscal quarter for the four fiscal quarters then
ended of no more than 1.00 to 1.00 in each case. The Company may pay dividends
and make other restricted payments so long as, after giving effect to such
restricted payments, no event of default has occurred. However, dividends and
restricted payments are limited to 50% of consolidated net income for the
Company's immediately preceding fiscal year less amounts paid on the Series A
preferred shares. As of September 30, 1999, there were no borrowings under the
credit facility.

   The Company's financial condition and results of operations are influenced
by both internal and external forces. Loss payments, investment returns and
premiums may be impacted by changing rates of inflation and other economic
conditions. Cash flows from operations and the liquidity of its investment
portfolio are, in the opinion of the Company, adequate to meet the expected
cash requirements of the Company over the next 12 months.

   In June 1998, the Financial Accounting Standards Board issued SFAS No. 133
"Accounting for Derivative Instruments and Hedging Activities". This statement
is effective for all fiscal quarters of fiscal years beginning after June 15,
2000. Given the limited number of transactions currently entered into by the
Company that are covered by the statement, the Company does not anticipate any
significant changes to its current financial reporting.

   The AICPA issued Statement of Position 98-7, "Deposit Accounting," which is
effective for financial statements with fiscal years beginning after June 15,
1999. The Company does not expect that this standard will have a significant
impact on the current financial reporting.

Year 2000 Issue

   The Company has given priority to making its computer systems ready to
process dates in and after the year 2000 ("Year 2000 ready"). The Company does
not believe that it faces any material Year 2000 issues with respect to its
non-information technology systems.

   The Company has completed its testing of the Year 2000 version of the
Senator underwriting management system and found it to be Year 2000 ready. In
addition, the Company has upgraded the RSG reinsurance system to the Year 2000
version, completed its testing to ensure Year 2000 readiness and has made
corrections of a remedial nature to other software and hardware components and
infrastructure. Furthermore, the Company has reviewed enterprise-wide
spreadsheet and database files for potential Year 2000 problems and has made
corrections where applicable. The Company has budgeted $0.3 million for the
overall Year 2000 effort and has expensed $0.2 million to date.

   The Company distributed a Year 2000 readiness questionnaire to its external
suppliers and brokers. As of December 1, 1999, approximately 98% of suppliers
and brokers, including all of the Company's major suppliers and brokers, had
provided adequate response to this questionnaire. The Company has decided not
to continue its business relationship with those few brokers and suppliers who
have not responded to the Year 2000 readiness questionnaire.

   The Company also assesses the effect of the Year 2000 issue on the business
it underwrites, considering the exposure to Year 2000 related losses on a
contract by contract basis at the time of underwriting.

   The Company's most reasonably likely worst case scenario would be the
failure of the Company's computerized reinsurance systems to process
transactions. As a contingency plan, the Company intends, prior to January 1,
2000, to extract from its computerized reinsurance systems a hard copy of all
information required to initiate a manual system for processing transactions
in the event of a system failure. The Company believes that it would have the
necessary resources to function on a manual basis, if so required.

                                    10K-30
<PAGE>

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

   The Company's major market risk exposure is to changes in interest rates,
primarily in the United States, since the Company has a portfolio of fixed
maturity investments, all of which are denominated in U.S. dollars. A change
in interest rates would affect the fair value of the Company's investments and
would lead to fluctuations in "Accumulated Other Comprehensive Income" on the
balance sheet. The Company limits this risk by setting a maximum portfolio
duration of four years, which is stipulated in the Company's investment
guidelines. It does not use derivative financial instruments to manage market
risk in its U.S. dollar denominated portfolio. The aggregate hypothetical loss
generated from an immediate adverse parallel shift in the treasury yield curve
of 100 basis points would cause a decrease in the total return of 1.8% (1998:
3.1%), which equates to a decrease in the market value of approximately $9.8
million (1998: $18.7 million) on a portfolio valued at $541.1 million at
September 30, 1999 (1998: $594.4 million). This calculation is based on an
immediate time horizon in order to reflect the worst-case scenario. The change
in the aggregate hypothetical loss calculation from 1998 to 1999 is due to the
Company having sold longer maturity bonds and reinvested the proceeds in
shorter maturity bonds and money market instruments during the year ended
September 30, 1999. This measure was designed to protect the total returns on
the portfolio in an increasing yield environment. It is anticipated that the
measure taken to shorten interest rate sensitive assets will reduce the
potential for significant capital gains while generating future income returns
at money market rates or better.

   In addition, the Company has foreign currency risk on both reinsurance
balances receivable and reinsurance balances payable (including payables
relating to losses). The Company does not currently utilize derivative
instruments to manage the Company's exposure to foreign currency movements. In
the past, the Company has used forward contracts to eliminate the risk;
however, given the uncertainty in cash flows, this was not deemed to be an
efficient management technique. As of September 30, 1999, the majority of the
Company's net receivable/payable position was denominated in U.S. dollars. As
at September 30, 1999, the largest foreign currency exposure was sterling, as
the Company had a net payable balance of (Pounds)13.3 million (1998:
receivable $14.1 million). A 5% increase or decrease in the year-end
sterling/U.S. dollar exchange rate would produce a gain or loss, respectively,
of $0.7 million (1998: $1.2 million). The Company has only a limited amount of
net receivable balances in other currencies and, therefore, no other currency
movement has been considered.

                                    10K-31
<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                          LASALLE RE HOLDINGS LIMITED

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                           Page
                                                                          Number
                                                                          ------
<S>                                                                       <C>
INDEPENDENT AUDITORS' REPORTS............................................ 10K-33

CONSOLIDATED BALANCE SHEETS.............................................. 10K-35

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME........... 10K-36

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY............... 10K-37

CONSOLIDATED STATEMENTS OF CASH FLOWS.................................... 10K-38

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS............................... 10K-39
</TABLE>

                                     10K-32
<PAGE>

                         INDEPENDENT AUDITORS' REPORT

The Board of Directors and Shareholders
LaSalle Re Holdings Limited

   We have audited the accompanying consolidated balance sheet of LaSalle Re
Holdings Limited and subsidiaries as of September 30, 1999, and the related
consolidated statements of operations and comprehensive income, changes in
shareholders' equity, and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

   We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.

   In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of LaSalle Re Holdings Limited
and subsidiaries as of September 30, 1999 and the results of their operations
and their cash flows for the year then ended in conformity with accounting
principles generally accepted in the United States of America.

                                          DELOITTE & TOUCHE

November 5, 1999

                                    10K-33
<PAGE>

                         INDEPENDENT AUDITORS' REPORT

The Board of Directors and Shareholders
LaSalle Re Holdings Limited

   We have audited the accompanying consolidated balance sheet of LaSalle Re
Holdings Limited and subsidiaries as of September 30, 1998, and the related
consolidated statements of operations and comprehensive income, changes in
shareholders' equity, and cash flows for the years in the two-year period then
ended. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

   We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

   In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of LaSalle Re
Holdings Limited and subsidiaries as of September 30, 1998, and the results of
their operations and their cash flows for each of the years in the two-year
period ended September 30, 1998, in conformity with accounting principles
generally accepted in the United States of America.

                                          KPMG
                                          Chartered Accountants
Hamilton, Bermuda
October 26, 1998

                                    10K-34
<PAGE>

                          LASALLE RE HOLDINGS LIMITED

                          CONSOLIDATED BALANCE SHEETS

                    Years ended September 30, 1999 and 1998
  (Expressed in thousands of United States Dollars, except share and per share
                                     data)

<TABLE>
<CAPTION>
                                                               1999      1998
                                                             --------  --------
<S>                                                          <C>       <C>
Assets
Cash and cash equivalents................................... $193,151  $ 85,281
Investments held as available for sale at fair value........  363,825   521,476
                                                             --------  --------
 (amortized cost 1999: $369,179; 1998: $503,531)
Total investments and cash..................................  556,976   606,757
Accrued investment income...................................   10,075    11,056
Reinsurance balances receivable.............................   93,163    86,779
 (related party 1999: $(72); 1998: $8,729)
Deferred acquisition costs..................................   11,911    13,444
Prepaid reinsurance premiums................................   17,310     7,584
Outstanding losses recoverable from reinsurers..............    9,100         0
 (related party 1999: $4,100; 1998: $0)
Other assets................................................   37,572    31,670
                                                             --------  --------
Total assets................................................ $736,107  $757,290
                                                             ========  ========
Liabilities
Outstanding losses and loss expenses........................ $146,552  $ 97,942
Unearned premiums...........................................   77,049    83,119
Other liabilities...........................................   37,254    29,241
 (related party 1999: $8,202; 1998: $3,831)
Dividend payable............................................        0    11,366
                                                             --------  --------
Total liabilities...........................................  260,855   221,668
                                                             --------  --------
Minority interest...........................................   93,055   105,569
                                                             --------  --------
Shareholders' equity
Share capital authorized in the aggregate 100,000,000
 shares, par value $1 Preferred shares......................    3,000     3,000
 (par value $1, liquidation preference $25 per share, issued
 & outstanding, 3,000,000 Series A Preferred Shares)
Common shares...............................................   15,600    15,179
 (par value $1 issued & outstanding, 1999: 15,600,262; 1998:
  15,178,791)
Additional paid in capital..................................  293,709   295,578
Accumulated other comprehensive income......................   (4,113)   13,838
Deferred compensation.......................................     (516)        0
Retained earnings...........................................   74,517   102,458
                                                             --------  --------
Total shareholders' equity..................................  382,197   430,053
                                                             --------  --------
Total liabilities, minority interest and shareholders'
 equity..................................................... $736,107  $757,290
                                                             ========  ========
</TABLE>

          See accompanying notes to consolidated financial statements

                                     10K-35
<PAGE>

                          LASALLE RE HOLDINGS LIMITED

         CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

                 Years ended September 30, 1999, 1998 and 1997
  (Expressed in thousands of United States Dollars, except share and per share
                                     data)

<TABLE>
<CAPTION>
                                                    1999      1998      1997
                                                  --------  --------  --------
<S>                                               <C>       <C>       <C>
Revenues
Premiums written................................. $139,010  $155,316  $171,386
 (related party 1999: $8,369; 1998: $16,917;
  1997: $21,408)
Premiums ceded...................................  (28,191)   (7,815)   (7,693)
                                                  --------  --------  --------
 (related party 1999: $8,091; 1998: $0; 1997: $0)
Net premiums written.............................  110,819   147,501   163,693
Change in unearned premiums and prepaid
 reinsurance premiums............................   15,796     7,119       240
                                                  --------  --------  --------
Net premiums earned..............................  126,615   154,620   163,933
Net investment income............................   33,847    34,288    33,109
Net realized gains on investments................      615     5,575       555
Other income.....................................        0        63       188
                                                  --------  --------  --------
 (related party 1999: $0; 1998: $63; 1997: $188)
Total revenues...................................  161,077   194,546   197,785
                                                  --------  --------  --------
Expenses
Losses and loss expenses incurred................  131,147    95,539    31,199
 (net of recoveries of $11,085; 1998 & 1997: $0)
Underwriting expenses............................   22,219    22,661    26,018
 (related party 1999: $3,769; 1998: $6,318; 1997:
  $9,857)
Operational expenses.............................   11,358     8,932    12,656
 (related party 1999: $0; 1998: $44; 1997:
  $6,212)
Corporate expenses...............................      788       517     1,770
Interest expense.................................    1,714     1,881     1,678
Exchange (gains) losses..........................     (470)     (216)    2,996
                                                  --------  --------  --------
Total expenses...................................  166,756   129,314    76,317
                                                  --------  --------  --------
(Loss)/income before minority interest...........   (5,679)   65,232   121,468
Minority interest................................   (2,845)   13,426    24,391
                                                  --------  --------  --------
Net (loss)/income................................ $ (2,834) $ 51,806  $ 97,077
Other comprehensive income
Unrealized (losses) gains on securities..........   (9,638) $ 12,715  $  3,592
Less: reclassification adjustments for (gains)
 losses included in net (loss)/income............   (8,313) $   (912) $    304
                                                  --------  --------  --------
Total other comprehensive (loss)/income..........  (17,951)   11,803     3,896
                                                  --------  --------  --------
Comprehensive (loss)/income...................... $(20,785) $ 63,609  $100,973
                                                  ========  ========  ========
(Loss)/earnings per common share................. $  (0.61) $   3.06  $   5.55
                                                  ========  ========  ========
(Loss)/earnings per common share--assuming
 dilution........................................ $  (0.61) $   2.80  $   5.14
                                                  ========  ========  ========
</TABLE>

          See accompanying notes to consolidated financial statements

                                     10K-36
<PAGE>

                          LASALLE RE HOLDINGS LIMITED

           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

                 Years ended September 30, 1999, 1998 and 1997
  (Expressed in thousands of United States Dollars, except share and per share
                                     data)

<TABLE>
<CAPTION>
                                                    1999      1998      1997
                                                  --------  --------  --------
<S>                                               <C>       <C>       <C>
Preferred shares par value $1
Balance at beginning and end of year............. $  3,000  $  3,000  $  3,000
                                                  ========  ========  ========
Common shares par value $1
Balance at beginning of year..................... $ 15,179  $ 15,074  $ 14,398
Issuance of shares...............................      732       155         1
Share repurchase.................................     (317)      (50)   (3,704)
Exercise of share options........................        6         0         0
Change in minority interest......................        0         0     4,379
                                                  --------  --------  --------
Balance at end of year........................... $ 15,600  $ 15,179  $ 15,074
                                                  ========  ========  ========
Additional paid in capital
Balance at beginning of year..................... $295,578  $299,964  $221,968
Issuance of shares...............................    1,398     1,490    70,177
Share repurchase.................................     (779)     (790)  (44,990)
Change in minority interest......................   (1,068)   (3,274)   54,664
Equity put option premium........................   (1,420)   (1,812)   (1,855)
                                                  --------  --------  --------
Balance at end of year........................... $293,709  $295,578  $299,964
                                                  ========  ========  ========
Accumulated other comprehensive income
Balance at beginning of year..................... $ 13,838  $  2,035  $ (1,861)
Unrealized (loss)/gain in year...................  (17,886)   11,851     4,354
Change in minority interest......................      (65)      (48)     (458)
                                                  --------  --------  --------
Balance at end of year........................... $ (4,113) $ 13,838  $  2,035
                                                  ========  ========  ========
Deferred compensation
Issuance of shares............................... $ (1,092) $      0  $      0
Amortization.....................................      576         0         0
                                                  --------  --------  --------
Balance at end of year........................... $   (516) $      0  $      0
                                                  ========  ========  ========
Retained earnings
Balance at beginning of year..................... $102,458  $105,153  $ 72,943
Net (loss)/income................................   (2,834)   51,806    97,077
Common share dividends...........................  (17,543)  (44,641)  (44,860)
 (1999: $1.125; 1998: $3.00; 1997: $2.84 per
  share)
Preferred share dividends........................   (6,563)   (6,563)   (2,807)
 (1999: $2.19; 1998: $2.19; 1997: $0.94 per
  share)
Share repurchase.................................     (204)     (719)  (33,807)
Exercise of share options........................     (508)     (133)        0
Change in minority interest......................     (289)   (2,445)   16,607
                                                  --------  --------  --------
Balance at end of year........................... $ 74,517  $102,458  $105,153
                                                  ========  ========  ========
    Total shareholders' equity................... $382,197  $430,053  $425,226
                                                  ========  ========  ========
</TABLE>

          See accompanying notes to consolidated financial statements

                                     10K-37
<PAGE>

                          LASALLE RE HOLDINGS LIMITED

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                 Years ended September 30, 1999, 1998 and 1997
  (Expressed in thousands of United States Dollars, except share and per share
                                     data)

<TABLE>
<CAPTION>
                                                1999       1998       1997
                                              ---------  ---------  ---------
<S>                                           <C>        <C>        <C>
Cash flows from operating activities
Net (loss)/income............................ $  (2,834) $  51,806  $  97,077
Adjustments to reconcile net income to cash
 provided by operating activities:
  Minority interest in net (loss)/income.....    (2,845)    13,426     24,391
  Amortization of investment premium.........       516        863      1,725
  Net realized gains on sale of investments..      (615)    (5,575)      (555)
  Unrealized losses/(gains) on foreign
   exchange..................................       193       (594)       937
Changes in:
  Accrued investment income..................       981      1,628      1,527
  Reinsurance balances receivable............    (6,354)    (6,590)   (10,495)
  Deferred acquisition costs.................     1,533     (1,512)    (1,468)
  Prepaid reinsurance premiums...............    (9,726)    (1,747)    (5,837)
  Outstanding losses recoverable from
   reinsurers................................    (9,100)         0          0
  Other assets...............................    (5,916)    (9,156)   (20,981)
  Outstanding losses and loss expenses.......    48,403     52,218     (4,242)
  Unearned premiums..........................    (6,070)    (5,372)     5,596
  Other liabilities..........................    11,387      6,613     10,968
                                              ---------  ---------  ---------
Cash provided by operating activities........    19,553     96,008     98,643
                                              ---------  ---------  ---------
Cash flows from investing activities
Purchase of investments......................  (195,935)  (427,283)  (364,989)
Net sales of short term investments..........         0          0        116
Proceeds on the sale of investments..........   305,671    389,170    282,449
Proceeds on the maturity of investments......    24,710     35,000     79,000
                                              ---------  ---------  ---------
Cash provided by (applied to) investing
 activities..................................   134,446     (3,113)    (3,424)
                                              ---------  ---------  ---------
Cash flows from financing activities
Net proceeds from subscriptions to share
 capital.....................................     1,163      4,802     72,682
Payment of dividends.........................   (44,096)   (63,267)   (54,338)
Share repurchase.............................    (1,346)    (1,560)  (103,442)
Equity put option premium....................    (1,850)    (2,350)    (2,350)
                                              ---------  ---------  ---------
Cash applied to financing activities.........   (46,129)   (62,375)   (87,448)
                                              ---------  ---------  ---------
Net increase in cash and cash equivalents....   107,870     30,520      7,771
Cash and cash equivalents at beginning of
 year........................................    85,281     54,761     46,990
                                              ---------  ---------  ---------
Cash and cash equivalents at end of year..... $ 193,151  $  85,281  $  54,761
                                              =========  =========  =========
</TABLE>

          See accompanying notes to consolidated financial statements

                                     10K-38
<PAGE>

                          LASALLE RE HOLDINGS LIMITED

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 Years ended September 30, 1999, 1998 and 1997
 (Expressed in thousands of United States Dollars, except share and per share
                                     data)

1. General

   The Company was incorporated on September 20, 1995 under the laws of
Bermuda to act as an investment holding company. LaSalle Re Limited ("LaSalle
Re") was incorporated on October 26, 1993 under the laws of Bermuda and
commenced operations on November 22, 1993. LaSalle Re is licensed under the
Insurance Act, 1978 as amended by the Insurance Amendment Act, 1995 of Bermuda
(the "Act") to write insurance business and operates as a multi-line
reinsurance company, with emphasis on property catastrophe business.

   Property catastrophe reinsurance covers unpredictable events such as
hurricanes, windstorms, hailstorms, earthquakes, fires, industrial explosions,
freezes, riots, floods and other man-made or natural disasters. Because the
Company has large aggregate exposures to these risks, the Company expects that
its claims experience will be characterized by relatively low frequency and
high severity claims. The occurrence of claims from catastrophic events is
likely to result in substantial volatility in the Company's financial results
for any particular period. The Company endeavors to manage its exposures to
catastrophic events by limiting the amount of its exposure in each geographic
zone worldwide and requiring that its property catastrophe contracts provide
for aggregate limits and attachment points.

   On August 26, 1994, LaSalle Re incorporated a subsidiary company in the
United Kingdom, LaSalle Re (Services) Limited, to act as a representative
office for the Company. In addition, on June 11, 1996, LaSalle Re incorporated
a subsidiary company in Bermuda, LaSalle Re Corporate Capital Ltd., to provide
capital support to selected Lloyd's syndicates.

   In November 1995, the Company and LaSalle Re consummated an offer (the
"Exchange Offer") pursuant to which, among other things, the founding
shareholders of LaSalle Re (the "Founding Shareholders") exchanged their
capital stock of LaSalle Re for common shares of the Company (the "Common
Shares") and, in certain circumstances, exchangeable non-voting shares of
LaSalle Re (the "Exchangeable Non-Voting Shares"). The Exchange Offer was
accounted for as if it were a pooling of interests of combining enterprises
under common control.

   On November 27, 1995, the Company and certain Founding Shareholders also
consummated an initial public offering of 4,312,500 Common Shares. Of these
shares, 2,920,500 were sold by Founding Shareholders and 1,392,000 by the
Company. The proceeds from the sale of 1,392,000 shares sold by the Company
were used to enable LaSalle Re to redeem shares of its capital stock.

   The consolidated financial statements include the results of the Company
and the Company's share of LaSalle Re and its subsidiaries for all periods
presented.

2. Significant accounting policies

   The accompanying consolidated financial statements are prepared in
accordance with United States generally accepted accounting principles
("GAAP"). The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the reported
and disclosed amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the period. Actual results
could differ from those estimates. The estimates most susceptible to
significant change are those used in determining the liability for unpaid
losses and loss expenses and the amount of ultimate premiums written.

                                    10K-39
<PAGE>

                          LASALLE RE HOLDINGS LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   The following are the significant accounting policies adopted by the
Company:

 (a) Principles of consolidation

   The consolidated financial statements include the financial statements of
LaSalle Re Holdings Limited, LaSalle Re Limited and its subsidiaries, LaSalle
Re (Services) Limited and LaSalle Re Corporate Capital Ltd. All significant
inter-company balances and transactions have been eliminated in consolidation.

 (b) Minority interest

   Minority interest represents the Founding Shareholders' ownership of the
Exchangeable Non-Voting Shares in LaSalle Re. These shares are held by certain
Founding Shareholders who would otherwise hold, or cause another shareholder
to hold, directly, indirectly or constructively, in excess of 9.9% of the
voting power of the Company or LaSalle Re. The Exchangeable Non-Voting Shares
in LaSalle Re are exchangeable, at the option of the holder, for Common Shares
of the Company, on a one-for-one basis, unless the board of directors of the
Company determines such exchange may cause actual or potential adverse tax
consequences to the Company or any shareholder. The Exchangeable Non-Voting
Shares will at all times rank as to assets, dividends and in all other
respects on a parity with the Common Shares of LaSalle Re, except that they do
not have the right to vote on any matters except as required by Bermuda law
and in connection with certain actions by the Company.

   Changes in the minority interest of LaSalle Re as a result of the exchange
of such shares for shares in the Company are recorded at historic cost by
transferring an appropriate portion of the minority interest to the various
components of shareholders' equity. The minority's share of income as recorded
in the income statement is calculated using the minority's ownership
percentage as at the balance sheet date. Minority interest as reported in the
consolidated balance sheets represents the minority's current proportionate
share of LaSalle Re and its subsidiaries' net assets.

 (c) Premiums earned and deferred acquisition costs

   Premiums written are estimated by management based upon reports received
from ceding companies. These estimates are adjusted where a contract contains
a no claims bonus with a provision for the potential liability recorded
simultaneously with the written premium. In addition, estimates are subject to
review with adjustments recorded in the period in which the actual amounts are
determined. Premiums on property catastrophe excess of loss contracts are
earned on a pro rata basis over the period the coverage is provided, which is
generally 12 months. Under pro rata property catastrophe contracts, the risks
underlying the contracts incept throughout the policy period and premiums
generally are earned over an 18 month period. Premiums written by LaSalle Re
Corporate Capital Ltd. are derived from reports submitted to the Company by
the syndicates. These premiums are earned in accordance with the related
underlying risk attachment periods, which average between 18-24 months.
Unearned premiums represent the portion of premiums written which are
applicable to the unexpired terms of the policies in force.

   Acquisition costs, mainly brokerage, commissions, underwriting fees and
excise taxes related to unearned premiums, are deferred and amortized to
income over the period in which the premiums are earned. Future earned
premiums, anticipated losses and loss adjustment expenses and anticipated
investment income related to those premiums are considered in determining the
recoverability of deferred acquisition costs.

 (d) Reinsurance

   In the normal course of business, the Company seeks to reduce its exposure
to losses that may arise from catastrophes and cause unfavorable underwriting
results by reinsuring certain levels of risks with other reinsurers.

                                    10K-40
<PAGE>

                          LASALLE RE HOLDINGS LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   In accordance with Statement of Financial Accounting Standard ("SFAS") No.
113 "Accounting and Reporting for Reinsurance of Short-Duration and Long-
Duration Contracts", contracts providing indemnification against loss or
liability relating to insurance risk have been accounted for as reinsurance.
Reinsurance premiums are reported as prepaid reinsurance premiums and
amortized over the contract period in proportion to the amount of reinsurance
protection provided. Where the contract provides for return premiums, these
are accrued based on loss experience through to the balance sheet date.
Reinsurance contracts, which do not satisfy the conditions for reinsurance
accounting under SFAS No. 113, are accounted for as deposits.

   Amounts recoverable from reinsurers are estimated in a manner consistent
with the claim liability associated with the reinsured policies.

 (e) Losses and loss expenses

   The liability for outstanding losses and loss expenses is based on reports
and individual case estimates received from ceding companies. An amount is
included for losses and loss expenses incurred but not reported on the basis
of reports received from ceding companies and an actuarial analysis, performed
by the Company and reviewed by an independent firm of actuaries. The amount
included as losses incurred in respect of business written by LaSalle Re
Corporate Capital Ltd. is derived from an analysis of expected loss ratios.

   Given the inherent nature of major catastrophic events, considerable
uncertainty underlies the assumptions and associated estimated reserves for
losses and loss expenses. These estimates are reviewed regularly and, as
experience develops and new information becomes known, the reserves are
adjusted as necessary. Such adjustments, if any, are reflected in results of
operations in the period in which they are determined and are accounted for as
changes in estimates. Due to the inherent uncertainty in estimating the
liability for losses and loss expenses, there can be no assurance that the
ultimate liability will not exceed recorded amounts, with a resulting material
effect on the Company. Based on the current assumptions used in calculating
the liability, management believes that the Company's recorded amount is
adequate to meet its future obligations.

   Liabilities are recorded without consideration of potential salvage or
subrogation recoveries that are estimated to be immaterial. Such recoveries,
when realized, are reflected as a reduction of losses incurred.

 (f) Investments

   The Company's investments comprise fixed interest securities and short term
investments, such as certificates of deposit or commercial paper. All
investments are considered to be available for sale under the definition
included in SFAS No. 115 "Accounting and Reporting for Certain Investments in
Debt and Equity Securities". As such, they are reported at fair value with
unrealized gains and losses, net of amounts attributable to the minority
interest, reported as other comprehensive income.

   Purchases and sales of investments are accounted for on the trade date of
the transaction.

 (g) Investment income

   Investment income, net of investment expenses, is accrued to the balance
sheet date and includes amortization of premiums and accretion of discounts
relative to fixed interest securities purchased at prices different to par
value.

   Realized gains or losses on sales of investments are determined on the
basis of specific identification and are included in the consolidated
statements of operations and comprehensive income.

                                    10K-41
<PAGE>

                          LASALLE RE HOLDINGS LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


 (h) Translation of foreign currencies

   The U.S. dollar is the Company's functional currency. Foreign currency
monetary assets and liabilities are translated at exchange rates in effect at
the balance sheet date. Unearned premiums and deferred acquisition costs are
translated at historic exchange rates. Foreign currency revenues and expenses
are translated at the exchange rates in effect at the date of the transaction.
Exchange gains and losses are included in the determination of net income, as
they arise.

   In prior years, the Company has entered into foreign exchange contracts to
manage the currency risks associated with the receipt of non-U.S. dollar
insurance premiums. Realized and unrealized gains and losses on these
contracts were included in the determination of net income as they arose.

 (i) Fair value of financial instruments

   Fair value disclosures with respect to certain financial instruments are
separately included herein, where appropriate.

   The carrying values of other financial instruments, including cash and cash
equivalents, reinsurance balances receivable, accrued investment income,
promissory note receivable and other liabilities, approximate their fair value
due to the short term nature of the balances.

 (j) Other income

   Other income relates to fees earned in respect of reinsurance services
provided.

 (k) Corporate expenses

   Corporate expenses are recorded on an accruals basis.

 (l) Cash and cash equivalents

   For the purposes of the consolidated statements of cash flows, the Company
considers all time deposits, certificates of deposit and commercial paper with
an original maturity of 90 days or less as equivalent to cash.

 (m) Stock incentive compensation plans

   The Company has adopted SFAS No. 123 "Accounting for Stock-Based
Compensation". As allowed under this standard, the Company accounts for stock
option grants in accordance with APB opinion No. 25, "Accounting for Stock
Issued to Employees". Compensation expense for stock option grants is
recognized to the extent that the fair value of the stock exceeds the exercise
price of the option at the measurement date. Any resulting compensation
expense is recorded over the shorter of the vesting or service period.

   Pro forma disclosure of net income and earnings per share as if the fair
value based method of SFAS No. 123 had been adopted is provided in Note 10 to
the consolidated financial statements.

 (n) Earnings per common share

   Earnings per Common Share have been calculated in accordance with SFAS 128
"Earnings per Share". Earnings per Common Share are calculated by dividing net
income available to common shareholders by the

                                    10K-42
<PAGE>

                          LASALLE RE HOLDINGS LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

weighted average number of Common Shares outstanding. For the purposes of this
calculation, the exchangeable non-voting shares of LaSalle Re ("Exchangeable
Non-Voting Shares") are considered outstanding Common Shares of the Company
due to the exchangeable nature of the shares. Earnings per Common Share
assuming dilution is computed by dividing net income available to common
shareholders by the sum of the weighted average number of Common Shares
outstanding and the dilutive potential Common Shares outstanding during the
period of calculation. 1997 calculations have been restated to give effect to
SFAS 128.

 (o) Accounting pronouncements

   In June 1998, the Financial Accounting Standards Board issued SFAS No. 133
"Accounting for Derivative Instruments and Hedging Activities". This statement
is effective for all fiscal quarters of fiscal years beginning after June 15,
2000. Given the limited number of transactions currently entered into by the
Company that are covered by the Statement, the Company does not anticipate any
significant changes to its current financial reporting.

   The AICPA issued Statement of Position, 98-7 "Deposit Accounting" which is
effective for financial statements with fiscal years beginning after June 15,
1999. The Company does not expect that this standard will have a significant
impact on the current financial reporting.

3. Investments and Investment Income

 (a) Investments

   All fixed interest securities and short term investments are considered as
available for sale. The fair values are based on quoted market prices at the
reporting date for those, or similar, investments. As at September 30, 1999
and 1998, the estimated fair values and amortized cost of investments are as
follows:

<TABLE>
<CAPTION>
                                                   Gross      Gross
                                       Amortized Unrealized Unrealized   Fair
      1999                               Cost      Gains      Losses    Value
      ----                             --------- ---------- ---------- --------
      <S>                              <C>       <C>        <C>        <C>
      U.S. government and agencies.... $ 95,584   $    36    $(1,530)  $ 94,090
      Non U.S. government and
       agencies.......................   31,041        21       (395)    30,667
      Corporate.......................  237,527       297     (3,761)   234,063
      Other debt......................    5,027         5        (27)     5,005
                                       --------   -------    -------   --------
                                       $369,179   $   359    $(5,713)  $363,825
                                       ========   =======    =======   ========

<CAPTION>
                                                   Gross      Gross
                                       Amortized Unrealized Unrealized   Fair
      1998                               Cost      Gains      Losses    Value
      ----                             --------- ---------- ---------- --------
      <S>                              <C>       <C>        <C>        <C>
      U.S. government and agencies.... $134,832   $ 6,349    $     0   $141,181
      Non U.S. government and
       agencies.......................   37,239     1,233        (90)    38,382
      Corporate.......................  299,101     9,869         (3)   308,967
      Mortgage-backed securities......   29,649       581          0     30,230
      Other debt......................    2,710        10         (4)     2,716
                                       --------   -------    -------   --------
                                       $503,531   $18,042    $   (97)  $521,476
                                       ========   =======    =======   ========
</TABLE>

   The unrealized loss on investments of $4,113 (1998: gain of $13,838) which
includes an unrealized loss of $5 on cash and cash equivalents is included in
accumulated other comprehensive income in the consolidated balance sheet. This
amount is disclosed net of the minority's interest of $1,246 (1998: $4,107).

                                    10K-43
<PAGE>

                          LASALLE RE HOLDINGS LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   Investments held at September 30, 1999 mature as follows:

<TABLE>
<CAPTION>
                                    Amortized  Fair
                                      Cost     Value
                                    --------- -------
             <S>                    <C>       <C>
             Less than one year....   12,024   12,005
             1-5 years.............  312,265  309,490
             5-10 years............   44,890   42,330
                                     -------  -------
                                     369,179  363,825
                                     =======  =======
</TABLE>

   The following table summarizes the composition of the fair value of
available for sale securities by ratings assigned by Standard & Poor's Ratings
Services or Moody's Investors Services Inc.

<TABLE>
<CAPTION>
                                        1999   1998
                                        -----  -----
             <S>                        <C>    <C>
             AAA.......................  43.3%  69.6%
             AA........................  32.9%  16.9%
             A.........................  19.0%  11.4%
             BBB.......................   3.4%   0.0%
             BB........................   1.4%   2.1%
                                        -----  -----
                                        100.0% 100.0%
                                        =====  =====
</TABLE>

   In the normal course of reinsurance operations, the Company's bankers have
issued letters of credit totaling $21,577 (1998: $8,303) in favor of ceding
insurance companies to secure the Company's obligations under various
reinsurance contracts. In connection with LaSalle Re Corporate Capital Ltd.'s
support of three Lloyd's syndicates, the Company has posted letters of credit
in the amount of $16,137 (1998: $16,616). In addition, in connection with a
swap agreement, the Company has posted a letter of credit of $3,000 (1998:
$3,000). At September 30, 1999, $46,821 (1998: $32,107) of fixed interest
securities have been pledged as collateral for these letters of credit.

 (b) Net investment income

   Net investment income for the years ended September 30, 1999, 1998 and 1997
was derived from the following sources:

<TABLE>
<CAPTION>
                                                      1999     1998     1997
                                                     -------  -------  -------
      <S>                                            <C>      <C>      <C>
      Cash and short term investments............... $ 6,477  $ 3,649  $ 4,342
      U.S. government and agencies fixed interest
       securities...................................   2,046    3,627    5,933
      Non U.S. government and agencies fixed
       interest securities..........................   6,598    7,548    3,531
      Corporate fixed interest securities...........  15,836   19,784   20,456
      Mortgage-backed securities....................   1,092      477        0
      Other.........................................   2,664      154        0
                                                     -------  -------  -------
      Gross investment income.......................  34,713   35,239   34,262
      Investment expenses (Note 12).................    (866)    (951)  (1,153)
                                                     -------  -------  -------
                                                     $33,847  $34,288  $33,109
                                                     =======  =======  =======
</TABLE>

   Net realized gains (losses) comprise $4,082 realized gains and $3,467
realized losses (1998: $6,085 and $510; 1997: $1,881 and $1,326 respectively).

   Proceeds received from the sale of available for sale securities during the
year ended September 30, 1999 were $305,671 (1998: $389,170; 1997: $282,449).

                                    10K-44
<PAGE>

                          LASALLE RE HOLDINGS LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


4. Reinsurance

   The Company utilizes various reinsurance protections to reduce its exposure
to large losses.

   The Company has purchased an excess of loss program which provides coverage
of $75,000 in excess of the first $75,000 (1998: $100,000 in excess of the
first $100,000) of losses per occurrence for a first loss event and $60,000
excess of $75,000 (1998: $100,000 in excess of $100,000) per occurrence on the
second loss event and $52,500 excess of $125,000 (1998: $100,000 in excess of
$150,000) per occurrence on the third loss event over a three-year period
ended December 31, 2001, subject to a maximum aggregate recovery of $187,500
(1998: $300,000).

   Coverage for the first loss is substantially funded by way of annual and
reinstatement premium obligations. Accordingly, this part of the coverage has
been recorded as a financing arrangement. The consideration paid, net of
associated financing charges, is recorded as a deposit (as part of other
assets in the consolidated balance sheet) and is adjusted at the balance sheet
date to reflect the net present value of expected future cash flows under that
portion of the contract. Interest expense includes finance charges of $1,331
(1998: $1,666; 1997: $1,470), which are being amortized over the period of the
contract using the interest method.

   In addition, in 1999, the Company entered into a quota share arrangement
which cedes a proportion of the Company's property catastrophe business to a
founding shareholder. The Company has also purchased other non-proportional
excess of loss protections, which provide for the recovery of losses from
reinsurers in excess of certain retentions and loss warranties.

   The ceding of the reinsurance does not legally discharge the Company from
its liability to its reinsureds, since the Company is required to pay losses
and bear collection risk if the reinsurers fail to meet their obligations
under the reinsurance agreements. The effect of reinsurance on premiums
written and earned is as follows:

<TABLE>
<CAPTION>
                                     1999                1998                1997
                               ------------------  ------------------  ------------------
                               Written    Earned   Written    Earned   Written    Earned
                               --------  --------  --------  --------  --------  --------
      <S>                      <C>       <C>       <C>       <C>       <C>       <C>
      Assumed................. $139,010  $145,080  $155,316  $160,688  $171,386  $165,789
      Ceded...................  (28,191)  (18,465)   (7,815)   (6,068)   (7,693)   (1,856)
                               --------  --------  --------  --------  --------  --------
      Net Premiums............ $110,819  $126,615  $147,501  $154,620  $163,693  $163,933
                               ========  ========  ========  ========  ========  ========
</TABLE>

5. Outstanding losses and loss expenses

   Activity in the liability for losses and loss expenses during the years
ended September 30, 1999, 1998 and 1997 is summarized as follows:

<TABLE>
<CAPTION>
                                                     1999      1998      1997
                                                   --------  --------  --------
      <S>                                          <C>       <C>       <C>
      Balance as of October 1..................... $ 97,942  $ 45,491  $ 49,875
                                                   --------  --------  --------
      Incurred related to:
        Current year..............................   82,537    79,014    22,095
        Prior year events.........................   48,610    16,525     9,104
                                                   --------  --------  --------
                                                    131,147    95,539    31,199
                                                   --------  --------  --------
      Paid related to:
        Current year..............................  (12,821)  (12,934)   (3,216)
        Prior year................................  (78,816)  (30,154)  (32,367)
                                                   --------  --------  --------
                                                    (91,637)  (43,088)  (35,583)
                                                   --------  --------  --------
      Losses recoverable as of September 30.......    9,100         0         0
                                                   --------  --------  --------
      Balance as of September 30.................. $146,552  $ 97,942  $ 45,491
                                                   ========  ========  ========
</TABLE>

                                    10K-45
<PAGE>

                          LASALLE RE HOLDINGS LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   The prior year development in 1999 was due to several factors. Firstly, the
Company increased reserves by $14,500 in respect of Hurricane Georges, which
occurred in September 1998. This followed an increase in the size of the
market loss. Secondly, in March 1999 the Company recorded outstanding loss
reserves totaling approximately $11,000 on three stop loss contracts. These
losses arose from causes which could not have been reasonably anticipated when
incurred but not reported losses were previously established. Thirdly, as a
result of higher than previously anticipated losses on international
catastrophe business, the Company strengthened its incurred but not reported
losses by approximately $16,000 to reflect this trend.

   In 1998 the prior year development related to a loss reported during the
year on a 1996 aggregate stop loss contract. This contract had a period of 24
months after the expiry of the contract within which to report losses.
Following this notification the Company also established reserves for the 1997
renewal of this contract. The prior year development in 1997 relates primarily
to an additional liability on Hurricane Fran, which occurred in September
1996.

   As at September 30, 1999, the Company's gross reserve for incurred but not
reported losses was $68,665 compared to $52,200 at September 30, 1998.

6. Earnings per common share

   The following earnings per Common Share amounts have been disclosed in
accordance with the requirements of SFAS No. 128:

<TABLE>
<CAPTION>
                                               1999        1998        1997
                                            ----------  ----------  ----------
<S>                                         <C>         <C>         <C>
Net (loss)/income.......................... $   (2,834) $   51,806  $   97,077
Add back: minority interest................     (2,845)     13,426      24,391
Less: Series A preferred share dividends...     (6,563)     (6,563)     (3,354)
                                            ----------  ----------  ----------
(Loss) income available to common
 shareholders.............................. $  (12,242) $   58,669  $  118,114
                                            ----------  ----------  ----------
Weighted average number of Common Shares
 outstanding:
  Common Shares............................ 15,628,650  15,145,112  15,567,521
  Exchangeable Non-Voting Shares...........  4,584,505   4,018,146   5,703,212
                                            ----------  ----------  ----------
Weighted average number of Common Shares
 outstanding............................... 20,213,155  19,163,258  21,270,733
                                            ----------  ----------  ----------
(Loss) earnings per Common Share........... $    (0.61) $     3.06  $     5.55
                                            ==========  ==========  ==========
(Loss) income available to common
 shareholders..............................    (12,242) $   58,669  $  118,114
Weighted average number of Common Shares
 outstanding............................... 20,213,155  19,163,258  21,270,733
  Plus: incremental shares from assumed:
    exercise of options....................       Note   1,653,233   1,661,391
    exercise of stock appreciation rights..       Note      80,516      66,812
    contingently issuable shares...........       Note      22,398           0
                                            ----------  ----------  ----------
Adjusted weighted average number of Common
 Shares outstanding........................ 20,213,155  20,919,405  22,998,936
                                            ----------  ----------  ----------
(Loss) earnings per Common Share assuming
 dilution.................................. $    (0.61) $     2.80  $     5.14
                                            ==========  ==========  ==========
</TABLE>

   Note: The incremental shares from assumed exercises of options, stock
appreciation rights and contingently issuable shares have not been included in
the above computation as they have an antidilutive effect on losses per Common
Share.

   As of September 30, 1999, the Company had 1,029,514 options outstanding
(1998: 1,873,782; 1997: 2,550,537) and had granted 340,872 (1998 and 1997:
340,872) stock appreciation rights.

                                    10K-46
<PAGE>

                          LASALLE RE HOLDINGS LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


7. Other assets

   Included in other assets is a promissory note receivable. In connection
with the terms of an employment contract, LaSalle Re advanced $695 for the
purpose of purchasing a property in Bermuda. The advance is evidenced by a
promissory note, which bears interest at the rate of 8% per annum and is
repayable in full at the earlier of the termination date of the individual's
employment contract or the date of sale of the property. Under the employment
contract, LaSalle Re will assume any gain or loss on the disposition of the
property.

   As discussed in Note 4, other assets also include a deposit relating to
funded reinsurance.

8. Share capital and additional paid-in capital

   The authorized share capital of the Company is 100,000,000 shares of par
value $1 each. This aggregate figure includes both common and preferred
shares. As of September 30, 1999 and 1998, the following Common Shares have
been issued and fully paid.

 (a) Common shares

<TABLE>
<CAPTION>
                                               1999        1998
                                            ----------- -----------
             <S>                            <C>         <C>
             Number issued and fully paid.   15,600,262  15,178,791
             Share capital......            $    15,600 $    15,179
             Additional paid in capital.    $   223,426 $   225,295
</TABLE>

A holder of a common share is entitled to one vote for each share held. There
are various restrictions on the ability of certain shareholders to dispose of
their shares.

 (b) Preferred Shares

<TABLE>
<CAPTION>
                                       1999       1998
                                    ---------- ----------
             <S>                    <C>        <C>
             Number issued and
              fully paid...........  3,000,000  3,000,000
             Share capital......... $    3,000 $    3,000
             Additional paid in
              capital.............. $   70,283 $   70,283
</TABLE>

   Series A Preferred Shares, have a par value of $1.00 per share and are
entitled to a liquidation preference of $25.00 per share ($75,000 in total).
Dividends are cumulative at 8.75% of the liquidation preference per annum
(equivalent to an annual rate of $2.1875 per share). On or after March 27,
2007, these shares will be redeemable, in whole or in part, at the option of
the Company at a redemption price of $25.00 per share.

 (c) Catastrophe equity put

   The Company has entered into a $100 million multi-year Catastrophe Equity
Put ("CatEPut") option program which enables the Company to raise up to $100
million of equity, through the issue of convertible Series B Preferred Shares
to the option writers. The preferred shares can be redeemed by the Company at
any time over the five years following their issue. In addition, the option
writers can convert their preferred shares into Common Shares of the Company
at any time after they have been outstanding for five years. Conversion is at
the greater of the book value of the Company at the date of conversion or the
market value of the Common Shares based on the 30-day trading average prior to
conversion. The Company is obligated to pay a net option

                                    10K-47
<PAGE>

                          LASALLE RE HOLDINGS LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

premium of $1,850 (1998: $1,850) per annum. The net option premium is charged
to additional paid in capital, net of the minority's interest of $430 (1998:
$424). In 1998, $422 of the option premium was payable to affiliates of
shareholders of the Company.

9. Shareholder share options

   The Company has issued options to purchase Common Shares to certain
shareholders and their affiliates and LaSalle Re has issued options to
purchase Exchangeable Non-Voting Shares. These options became exercisable on
October 1, 1996 and may be exercised until November 22, 2003.

   During the year ended September 30, 1999, a total number of 909,000 options
were exercised in cashless transactions resulting in the issuance of 653,274
Common Shares. In addition, 268 options were repurchased at a value of $7.97
per option. As at September 30, 1999, 563,078 options to purchase Exchangeable
Non-Voting Shares of LaSalle Re were outstanding.

   During the year ended September 30, 1998, a total number of 177,255 options
were exercised in cashless transactions resulting in the issuance of 132,588
Common Shares. In addition, 454,500 options were exercised at an exercise
price of $6.78, which resulted in the issuance of 454,500 Exchangeable Non-
Voting Shares. As at September 30, 1998, LaSalle Re had 1,472,346 options to
purchase Exchangeable Non-Voting Shares outstanding.

   The original exercise price of the options was $16.67 per share, (which was
equal to the fair value of the Company's shares at the grant date), minus
dividend adjustments. The current exercise price is $6.03. As the options were
granted to certain of the Founding Shareholders and their affiliates as an
inducement to purchase stock in LaSalle Re, no compensation expense has been
recorded in connection with the options.

10. Stock Incentive Compensation and Employee benefit plans

 (a) Stock appreciation rights

   In consideration for entering into an employment agreement with LaSalle Re,
the Company's former Chief Executive Officer and current Chairman of the Board
(the "Executive") was granted a total of 340,872 Stock Appreciation Rights
(SARs) during 1994. Upon exercise, the SARs entitle the Executive to a cash
payment equal to the value of the SARs as of the exercise date. Alternatively,
at the Company's sole discretion, the SARs will entitle the Executive to
either (i) the number of Special Non-Voting Shares of LaSalle Re equal to the
aggregate value of the SARs divided by the fair value of a Common Share at the
exercise date, or (ii) upon payment of the base value for each SAR, the number
of Special Non-Voting Shares of LaSalle Re equal to the number of SARs
exercised.

   The value of each SAR equals the fair market value of a Common Share less
the base value on the exercise date, subject to anti-dilution adjustments. The
fair market value shall be determined by the board of directors of the
Company, but shall be based on the market price of the Common Shares. The base
value of each SAR at the time of issuance was $16.67, minus dividend
adjustments. The current base value is $6.03.

   The number of SARs which can be exercised is dependent upon the internal
rate of return achieved during a predefined period and is based upon the
financial performance of LaSalle Re from inception to November 27, 1995 and
LaSalle Re Holdings Limited's consolidated performance from that date forward.
As at September 30, 1999, the number of SARs exercisable is 92,035. During the
fiscal year ended September 30, 1999, the fair value of the SARs has decreased
and therefore the Company has recorded a reduction in the total liability
relating to the SARs of $1,490 (1998: reduction $548; 1997: charge $1,611).

                                    10K-48
<PAGE>

                          LASALLE RE HOLDINGS LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


 (b) Long term incentive plan

   In November 1995, the Company adopted a Long Term Incentive Plan (the
"Incentive Plan") which permits the award of various incentives to employees
of the Company, related companies and directors of the Company. The maximum
number of shares that may be issued under the Incentive Plan is 1,000,000.

  (i) Share options

   Under the Incentive Plan, the options granted vest ratably in five annual
installments over 5 years from the grant date, except for 85,218 options
granted in 1997 which vest ratably in three annual installments over 3 years
from the date of grant. The options can be exercised over a 10-year period,
commencing on the vesting date. For certain option grants, the Plan has an
anti-dilution provision, which awards the option holder a number of shares of
restricted stock in the event that a dividend, when added to the value of all
cash dividends previously paid within the same fiscal year, exceeds 5% of the
average book value per share for the prior four quarters. As at September 30,
1999, 46,459 shares of restricted stock (1998: 26,995) were awarded. The
restricted stock vests when the underlying options are exercised and is
forfeited if the options expire unexercised. The Company has recorded an
expense of $565 (1998: $374; 1997: $264) relating to compensation on these
options. The following table is a summary of the options granted and
outstanding during 1999, 1998 and 1997.

<TABLE>
<CAPTION>
                                  1999               1998               1997
                            ------------------ -----------------  ----------------
                                      Weighted          Weighted          Weighted
                             Number   average  Number   average   Number  average
                               of     Exercise   of     Exercise    of    Exercise
                             shares    price   shares    price    shares   price
                            --------  -------- -------  --------  ------- --------
   <S>                      <C>       <C>      <C>      <C>       <C>     <C>
   Outstanding--beginning
    of year................  401,436   $24.96  446,436  $ 25.28   163,218  $19.25
   Granted.................  233,000   $25.11   10,000  $ 31.63   283,218  $28.75
   Exercised...............  (19,800)  $19.25        0  $  0.00         0  $ 0.00
   Forfeited............... (148,200)  $27.10  (55,000) $(28.75)        0  $ 0.00
                            --------   ------  -------  -------   -------  ------
   Outstanding--end of
    year...................  466,436   $24.90  401,436  $ 24.96   446,436  $25.28
                            ========   ======  =======  =======   =======  ======
</TABLE>

   Of the 466,436 options outstanding, 78,131 options are presently
exercisable at $19.25, 88,812 are presently exercisable at $28.75 and 2,000
are presently exercisable at $31.63. The remaining options are not presently
exercisable and have a weighted average vesting period of 3.74 years.

   The weighted average fair value of options granted during 1999 is $10.38
(1998: $12.21; 1997:$8.18) per share. The fair value of the option grant in
1999 is estimated on the date of grant using the Black-Scholes option pricing
model with the following assumptions: dividend yield of 4% per annum; expected
volatility of 27%; expected life of 7 years; and a risk free interest rate of
6.2%.

   The Company applies APB Opinion 25 and Related Interpretations in
accounting for the Incentive Plan. Accordingly, a compensation cost has been
recognized based on the intrinsic value of the options at the measurement
date. The net income and earnings per Common Share would have been reduced to
the pro forma amounts indicated below had compensation cost been determined
based on the fair value of the options at the grant date consistent with SFAS
No 123:

<TABLE>
<CAPTION>
                                                        1999     1998    1997
                                                       -------  ------- -------
<S>                                        <C>         <C>      <C>     <C>
Net income................................ As reported $(2,834) $51,806 $97,077
                                           Pro forma   $(3,458) $51,350 $96,647
Earnings per Common Share, assuming
 dilution................................. As reported $ (0.61) $  2.80 $  5.14
                                           Pro forma   $ (0.64) $  2.78 $  5.12
</TABLE>

                                    10K-49
<PAGE>

                          LASALLE RE HOLDINGS LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

  (ii) Share awards

   Pursuant to the provisions of the Incentive Plan awards of restricted stock
vest over 5 years from the date of award with 33 1/3% vested on the third
anniversary date of the award date, 66 2/3% vested on the fourth anniversary
date of the award and 100% vested on the fifth anniversary date of the award.
However, there are 30,000 shares of restricted stock which vest ratably in two
annual installments over 2 years from the date of award. During the restricted
period the employee receives dividends in the form of additional shares of
restricted stock. During 1999 the Company awarded 55,000 shares of restricted
stock (1998:Nil) with a value of $1,423 (1998:$Nil) to certain executive
officers. At the time of the award the market value of the shares is recorded
as deferred compensation and is presented as a separate component of
shareholders' equity. The deferred compensation is charged to the income
statement over the vesting period. For the year ended September 30, 1999 the
Company charged $751 (1998 and 1997: $Nil) in respect of compensation on
restricted stock awards.

   In addition, during the year ended September 30, 1999 pursuant to the
Incentive Plan 1,379 (1998:Nil) Common Shares were awarded to individuals as
of the fifth anniversary date of their hire. At the time of the award the
market value of the shares is recorded as a compensation expense. During the
year ended September 30, 1999 the Company booked a compensation expense of $28
(1998 and 1997: $Nil) on these share awards to employees

 (c) Employee stock purchase plan

   Pursuant to the Employee Stock Purchase Plan (the "Plan"), during the year
ended September 30, 1999 the Company issued 19,459 (1998: 12,687) Common
Shares. Under the Plan, the Company is authorized to sell up to 150,000 Common
Shares at a discount equivalent to 15% of the market price, to employees of
the Company, related companies, directors of the Company and other persons
providing services to those companies. The maximum investment by an employee
under the payroll deduction component of the Plan is $50 per calendar year. In
addition, certain employees are eligible to use up to 100% of their annual
bonus to purchase Common Shares under the Plan. The Company has recorded the
shares issued under the Plan at fair value. No compensation cost has been
recorded on those shares issued to employees of CNA (Bermuda) Services Limited
("CNA Bermuda") as the cost was reimbursed pursuant to the service agreement
with CNA Bermuda. Compensation cost of $59 (1998: $5; 1997: $Nil) has been
recorded on those shares issued to employees and directors of the Company.

11. Minority interest

   At October 1, 1998, the Minority interest of $105,569 represented the
founding shareholders ownership of 4,472,646 outstanding Exchangeable Non-
Voting Shares in LaSalle Re Limited. During the year ended September 30, 1999,
the number of Exchangeable Non-Voting Shares increased due to the exercise of
shareholder stock options and the issuance of further Exchangeable Non-Voting
Shares. These transactions had the effect of increasing the minority interest
percentage in LaSalle Re from 22.8% to 23.3%. At September 30, 1999 there were
4,725,546 outstanding Exchangeable Non-Voting Shares in LaSalle Re Limited,
which represented the minority interest of $93,055.

12. Related party transactions

   In addition to the reinsurance arrangement (note 4), CatEPut transaction
(note 8) and share purchase options (note 9), LaSalle Re has entered into the
following transactions and agreements with companies related to the Founding
Shareholders.

                                    10K-50
<PAGE>

                          LASALLE RE HOLDINGS LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


 (a) Premiums written

   During the year ended September 30, 1999, LaSalle Re assumed premiums
written of approximately $8,369 (1998: $16,917; 1997: $21,408) from a ceding
company related to a shareholder of LaSalle Re. In addition, LaSalle Re
assumed premiums totaling $25,266 (1998: $27,190; 1997: $28,450) through
brokers related to a shareholder of LaSalle Re. Brokerage fees incurred in
respect of this business were approximately $2,526 (1998: $2,719; 1997:
$2,845). Reinsurance balances receivable at the balance sheet date include
$(72) (1998: $8,729; 1997: $13,481) due (to) from such related parties.

 (b) Premiums ceded

   During the year ended September 30, 1999 LaSalle Re ceded premiums of
$8,091 (1998: $0; 1997: $0) to a founding shareholder pursuant to a quota
share contract. The Company recorded $647 (1998: $0; 1997: $0) of override
commission with respect to this contract. Outstanding losses recoverable at
the balance sheet date were $4,100 (1998: $0; 1997: $0). Reinsurance balances
payable at the balance sheet date were $5,314 (1998: $0; 1997: $0).

 (c) Underwriting services

   LaSalle Re was party to an underwriting services agreement with CNA Bermuda
during the period from the incorporation of LaSalle Re until September 30,
1998 at which date the agreement was terminated. Under this agreement, LaSalle
Re granted CNA Bermuda the authority to provide underwriting services and to
underwrite all classes of insurance and reinsurance as agents for LaSalle Re.
LaSalle Re agreed to pay fees, during this period, to CNA Bermuda as follows:

   Prior to October 1, 1998 but on or after January 1, 1996:

      (i)  1.5% of the gross written and collected premium per fiscal year;
  and

       (ii)  An underwriting profit commission equal to 4.0% of the aggregate
  net underwriting profits of LaSalle Re, where certain conditions are met.

   Following the termination of the agreement, all personnel assigned to the
Company by CNA Bermuda became employees of the Company and all underwriting
functions performed by CNA Bermuda are now performed in-house.

   On October 1, 1998, LaSalle Re entered into an underwriting support
services agreement with CNA Re Services Company ("CNA Services"). Under this
Agreement, CNA Services provides certain underwriting support functions to
LaSalle Re but no longer underwrites insurance or reinsurance as agents for
LaSalle Re. With effect from October 1, 1998 LaSalle Re has agreed to pay fees
to CNA Services as follows:

      (i)  An annual retainer of $333; and

       (ii)  An underwriting profit commission equal to 1.67% of the
  aggregate net underwriting profits of LaSalle Re, where certain conditions
  are met.

   The agreement provides for additional fees to be payable if services
provided exceed the retainer. Fees in excess of the retainer are calculated at
daily or hourly rates to be agreed between the parties.

   Fees incurred with respect to the agreements with CNA Bermuda and CNA
Services for the year ended September 30, 1999, were $1,461 (1998: $3,594;
1997: $6,587). At September 30, 1999, $2,693 (1998: $3,658) was payable in
respect of these fees.


                                    10K-51
<PAGE>

                          LASALLE RE HOLDINGS LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


 (d) Administrative services

   LaSalle Re was party to an agreement with Aon Risk Consultants (Bermuda)
Ltd. ("ARC Bermuda") during the period from the incorporation of LaSalle Re
until September 30, 1997 at which date the agreement was terminated. Under
this agreement, ARC Bermuda performed certain actuarial and administrative
services on behalf of the Company. The management fees payable to ARC Bermuda
were as follows:

 Calendar Year

    1996$7,000

    1997 $3,300 and an underwriting profit commission equal to 2.75% of the
         aggregate net underwriting profit of LaSalle Re, where certain
         conditions were met.

   The Company incurred $44 and $6,212 for administrative services for the
year ended September 30, 1998 and 1997 respectively.

 (e) Investment management services

   LaSalle Re is party to an agreement with Aon Advisors (UK) Limited ("Aon
UK") to provide investment management services. Fees are based on a flat fee
structure. Prior to July 1997, fees were based on the average daily balance of
the investment portfolio of the preceding quarter. The average daily balance
was split into various bands, with fees calculated by applying a sliding scale
of basis points to each band.

   The Company has incurred $801 (1998: $850; 1997: $1,057) for services
provided for the year ended September 30, 1999, of which $195 (1998: $215) was
payable at September 30, 1999.

 (f) Claims handling services

   LaSalle Re was party to an agreement with Integrated Runoff Insurance
Services Corporation ("IRISC") whereby IRISC performed certain claims handling
services for LaSalle Re. The contract expired December 31, 1996. The Company
incurred $16 for services provided for the year ended September 30, 1997.

 (g) Reinsurance services

   Effective January 1, 1997, LaSalle Re was party to a fronting agreement
with Hedge Financial Products, an affiliate of CNA. CNA reinsured LaSalle Re
100% for the business fronted. For the year ended September 30, 1998 LaSalle
Re received an administration fee of $63 (1997: $250) for the services
provided. The agreement was not renewed on January 1, 1998.

                                    10K-52
<PAGE>

                          LASALLE RE HOLDINGS LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


13. Geographic Information

   The following table sets forth the Company's gross premiums written and the
percentage thereof allocated to the zone of exposure for the years ended
September 30, 1999, 1998 and 1997:

<TABLE>
<CAPTION>
                                        1999           1998           1997
                                   -------------- -------------- ---------------
                                   Premiums       Premiums       Premiums
                                   Written    %   Written    %   Written     %
                                   -------- ----- -------- ----- --------  -----
<S>                                <C>      <C>   <C>      <C>   <C>       <C>
United States....................    60,074 53.0%   64,352 48.0% $ 75,338  44.9%
Europe (excluding the U.K.)......     9,555  8.4%   14,477 10.7%   18,553  11.1%
United Kingdom...................     9,772  8.6%   11,726  8.7%   15,165   9.1%
Japan............................     2,926  2.6%    3,166  2.4%    6,949   4.2%
Australasia......................     4,457  4.0%    3,263  2.5%    6,472   3.8%
Worldwide........................    14,068 12.4%   21,784 16.2%   20,872  12.5%
Worldwide (excluding U.S.).......     5,399  4.8%    7,499  5.6%   12,579   7.5%
Other............................     7,041  6.2%    7,935  5.9%   11,628   6.9%
                                   -------- ----- -------- ----- --------  -----
                                    113,292  100%  134,202  100%  167,556   100%
                                            =====          =====           =====
Lloyd's..........................    22,389         21,039         14,125
Fronted premiums, reinstatements,
 adjustment premiums and no claim
 bonuses.........................     3,329             75        (10,295)
                                   --------       --------       --------
                                   $139,010       $155,316       $171,386
                                   ========       ========       ========
</TABLE>

                                    10K-53
<PAGE>

                          LASALLE RE HOLDINGS LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


14. Segmental Reporting

   The Company has two reportable segments: reinsurance operations and Lloyds.
The reinsurance segment provides reinsurance for property catastrophe and for
other lines of business which have similar characteristics, namely high
severity and low frequency. The Lloyd's segment is written through LaSalle Re
Corporate Capital Ltd., which provides capital support to selected Lloyd's
syndicates. The lines of business written by the selected syndicates include
direct and facultative property insurance, marine insurance and reinsurance,
professional indemnity, directors and officers insurance and bankers blanket
bond business. Data for the three years ended September 30, 1999, 1998 and
1997 was as follows:

<TABLE>
<CAPTION>
                                                  Reinsurance Lloyd's   Total
                                                  ----------- -------  --------
<S>                                               <C>         <C>      <C>
1999
Gross premiums written...........................  $116,621   $22,389  $139,010
Total revenues...................................   147,804    13,273   161,077
Loss before minority interest....................    (2,090)   (3,589)   (5,679)

Assets...........................................   677,573    58,534   736,107

Losses & loss expense ratio......................     105.5%     86.4%    103.6%
Expense ratio....................................      24.1%     48.5%     26.5%
                                                   --------   -------  --------
Combined ratio...................................     129.6%    134.9%    130.1%
                                                   --------   -------  --------

1998
Gross premiums written...........................  $134,276   $21,039  $155,316
Total revenues...................................   185,026     9,520   194,546
Income before minority interest..................    64,757       475    65,232

Assets...........................................   720,624    36,666   757,290

Losses & loss expense ratio......................      62.3%     54.4%     61.8%
Expense ratio....................................      19.0%     43.8%     20.4%
                                                   --------   -------  --------
Combined ratio...................................      81.3%     98.2%     82.2%
                                                   --------   -------  --------

1997
Gross premiums written...........................  $157,261   $14,125  $171,386
Total revenues...................................   195,066     2,719   197,785
Income (loss) before minority interest...........   121,683      (215)  121,468

Assets...........................................   669,004    17,084   686,088

Losses & loss expense ratio......................      18.3%     62.1%     19.0%
Expense ratio....................................      23.2%     44.7%     23.6%
                                                   --------   -------  --------
Combined ratio...................................      41.5%    106.8%     42.6%
                                                   --------   -------  --------
</TABLE>

15. Commitments and contingencies

 (a) Leasing commitments

   The Company has rented space for its principal executive offices under
lease agreements, which expire in 2001. Total rental expense for the year
ended September 30, 1999 was approximately $328 (1998: $269; 1997: $Nil).
Future minimum rental payments under the leases are expected to be as follows:

<TABLE>
             <S>                                  <C>
             Year ending September 30, 2000...... $299
             Year ending September 30, 2001......  105
                                                  ----
             Total minimum future rentals........ $404
                                                  ====
</TABLE>

                                    10K-54
<PAGE>

                          LASALLE RE HOLDINGS LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


 (b) Financial instruments with off-balance sheet risk

   LaSalle Re has entered into a swap agreement to provide cash flow to a
counterparty in the event of defined earthquake activity in Japan. Receipts to
LaSalle Re which are accounted for as investment income are based on the
notional amount of the swap. As at September 30, 1999, the Company had
recorded $114 (1998: $58) of investment income. The contract exposes LaSalle
Re to a maximum cash outflow of the same notional amount should the defined
seismic event occur. The Company is also exposed to credit loss in the event
of nonperformance by the counterparty to the remittance of interest payments
as required by the swap. The Company does not anticipate nonperformance by the
counterparty. At September 30, 1999, the total notional principal amount of
the swap was $3,000 (1998: $3,000) which is supported by a letter of credit.

   The Company's functional currency is the U.S. dollar, however, as the
Company operates internationally, it has exposure to changes in foreign
currency exchange rates. These exposures include net cash inflows on non-U.S.
dollar denominated insurance premiums.

   To manage the Company's exposure to these risks, the Company may enter into
foreign exchange contracts in the major currencies to which the Company is
exposed. These contracts generally involve the exchange of one currency for
another at some future date. The Company had a notional principal amount
outstanding of approximately $5,518 as at September 30, 1998 (fair value $Nil)
in a contract to sell foreign currencies. No such contracts were outstanding
in 1999 or 1997.

   The Company may also enter into foreign exchange contracts to manage the
exposures relating to known reinsurance losses denominated in foreign
currencies. As at September 30, 1999 the Company had no outstanding foreign
exchange contracts.

 (c) Concentration of credit risk

   The Company has investment guidelines which restrict investments in
securities below an "AA" grade rating to 20% of the total portfolio and only
10% of the total portfolio including managed cash and cash equivalents, can be
invested in "BBB" grade rating. The Company is allowed to invest up to $10,000
in risk based investments and these bonds may carry a rating below "BBB". In
addition, the guidelines restrict investments in a single issuer to no greater
than 5% of the market value of the portfolio (except for U.S. and U.K.
Government issues) and, with respect to country of issue, to no greater than
25% of the market value of the portfolio, except for U.S. and supernational
borrowers.

   A broker, who is unrelated to the Company, arranged more than 20% of the
Company's premiums written for the year ended September 30, 1999 (1998: more
than 17%; 1997: 15%). A broker, who is related to the Company, arranged 18% of
the Company's premiums written for the year ended September 30, 1999 (1998:
17%; 1997: 16%). Approximately 16% (1998: 14%; 1997: 8%) of the Company's
gross premiums written are derived from its participation as a corporate
member of Lloyd's.

16. Credit facility

   The Company has in place a $100 million committed line of credit from a
syndicate of banks. The proceeds from the credit facility may only be used to
buy preferred shares of LaSalle Re that, in turn, may use the proceeds of such
purchase to meet current cash requirements. The facility matures December 1,
2000, and is secured by a pledge ("legal mortgage") of all the capital stock
of LaSalle Re held by the Company, including any preferred shares that may be
issued by LaSalle Re to the Company.

                                    10K-55
<PAGE>

                          LASALLE RE HOLDINGS LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   The line of credit contains various covenants, including limitations on
incurring additional indebtedness; restrictions on the sale or lease of assets
not in the ordinary course of business; maintenance of a ratio of consolidated
total debt to consolidated tangible net worth of no more than 0.40 to 1.00;
maintenance of tangible net worth at the end of each fiscal year of the
greater of $300 million or 70% of net premiums written; maintenance of
statutory capital of LaSalle Re of at least $400 million at the end of
calendar year 1999 and thereafter; and maintenance of a ratio of net premiums
written to statutory capital at the end of any fiscal quarter for the four
fiscal quarters then ended of no more than 1.00 to 1.00 in each case. The
Company may pay dividends and make other restricted payments so long as, after
giving effect to such restricted payments, no event of default has occurred.
Dividends and restricted payments are limited to 50% of consolidated net
income for its immediately preceding fiscal year less amounts paid on the
Series A preferred shares. As of September 30, 1999, there were no borrowings
under the credit facility and the Company was in compliance with all covenants
under the facility.

17. Statutory data

   The Company's ability to pay dividends is subject to certain regulatory
restrictions on the payment of dividends by LaSalle Re. Under the Act, LaSalle
Re is required to prepare statutory financial statements and to file in
Bermuda a statutory financial return together with the statutory financial
statements. LaSalle Re is required to maintain certain measures of solvency
and liquidity.

   The statutory capital and surplus of LaSalle Re at September 30, 1999 was
approximately $446,909 (1998: $506,000) and the minimum required statutory
capital and surplus required by its license as a Class 4 insurer was $100,000
(1998: $100,000).

   The declaration of dividends from retained earnings and distributions from
additional paid in capital is limited to the extent that the above
requirements are met (as well as following certain procedures required under
Bermuda law). At September 30, 1999, there were no restrictions on the
distribution of retained earnings.

18. Taxation

   Under current Bermuda law, the Company is not required to pay taxes in
Bermuda on either income or capital gains. The Company has received an
undertaking from the Minister of Finance in Bermuda that will exempt the
Company, subject to the terms expressed in the said undertaking, from taxation
until the year 2016 in the event of any such taxes being imposed.

   Other than with respect to its Lloyd's business, the Company does not
consider itself to be engaged in a trade or business in the United States and
accordingly does not expect to be subject to United States income taxes.
LaSalle Re Corporate Capital Ltd. is a corporate member of Lloyd's. Pursuant
to a Closing Agreement between Lloyd's and the IRS, LaSalle Re Corporate
Capital Ltd. will be treated as engaged in business in the U.S. and is subject
to U.S. corporate income tax on its net income from U.S. sources. The Company
believes that currently there is no income tax liability.

   LaSalle Re Corporate Capital Ltd. is also subject to U.K. corporation tax,
with the assessment made at the end of thirty six months. Deferred tax assets
and liabilities resulting from the Company's support of syndicates through
LaSalle Re Corporate Capital are currently estimated to be insignificant, but
are subject to change as the results of the syndicates are uncertain.

                                    10K-56
<PAGE>

                          LASALLE RE HOLDINGS LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Concluded)


19. Unaudited quarterly financial data

   Year ended September 30, 1999

<TABLE>
<CAPTION>
                                               First   Second    Third  Fourth
                                              Quarter Quarter   Quarter Quarter
                                              ------- --------  ------- -------
   <S>                                        <C>     <C>       <C>     <C>
   Net premiums earned......................  $35,130 $ 38,055  $32,068 $21,362
   Net investment income and realized gains
    (losses)................................   10,146    8,222    8,691   7,403
   Losses and loss expenses incurred (net of
    recoveries).............................   30,586   50,204   24,789  25,568
   Net income (loss) (before minority
    interest)...............................    6,859  (13,727)   5,458  (4,269)
   Earnings (loss) per common share--
    assuming dilution.......................  $  0.25 $  (0.76) $  0.19 $ (0.29)
</TABLE>

   Year ended September 30, 1998

<TABLE>
<CAPTION>
                                                First  Second   Third  Fourth
                                               Quarter Quarter Quarter Quarter
                                               ------- ------- ------- -------
   <S>                                         <C>     <C>     <C>     <C>
   Net premiums earned........................ $37,919 $41,906 $42,053 $32,742
   Net investment income and realized gains
    (losses)..................................   8,856  10,196   9,247  11,564
   Losses and loss expenses incurred (net of
    recoveries)...............................   8,698  19,938  23,607  43,296
   Net income (loss) (before minority
    interest).................................  29,679  22,023  18,173  (4,643)
   Earnings (loss) per common share--assuming
   dilution................................... $  1.34 $  0.97 $  0.78 $ (0.33)
</TABLE>

                                     10K-57
<PAGE>

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
       FINANCIAL DISCLOSURE

   Effective October 25, 1999, the Company's previous independent auditors,
KPMG, tendered their resignation citing a potential independence issue that
could have arisen in connection with the upcoming audit of the Company's
September 30, 1999 financial statements.

   The audit reports of KPMG on the financial statements of the Company for
the past two years contain no adverse opinion or disclaimer of opinion and
were not qualified or modified as to uncertainty, audit scope or accounting
principles.

   During the Company's two most recent fiscal years and the interim period to
date, there have been no disagreements between KPMG and the Company with
respect to any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure. None of the reportable
events described in Item 304(a)(1)(v) of Regulation S-K occurred with respect
to the Company within the two most recent fiscal years and through the interim
period.

   On October 28, 1999, the Company announced that it had engaged Deloitte &
Touche as its independent auditors, effective October 25, 1999. The engagement
of Deloitte & Touche was recommended by the Company's audit committee,
authorized by its board of directors, and will be presented for shareholder
approval at the Company's next annual general meeting of shareholders.

                                   PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS

   For information regarding the Company's executive officers, see "Executive
Officers of the Company" in Part I. The other information required by this
Item 10 is incorporated by reference to the information contained under the
captions "Election of Directors--Nominees for Election," "--Directors Whose
Terms of Office Will Continue After This Meeting" and "Section 16(a)
Beneficial Ownership Reporting Compliance" in the 2000 Proxy Statement.

ITEM 11. EXECUTIVE COMPENSATION

   The information required for this item is incorporated by reference to the
information contained under the caption "Management" and "Election of
Directors--Director Compensation" in the 2000 Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

   The information required for this item is incorporated by reference to the
information contained under the caption "Beneficial Ownership of Common
Shares" in the 2000 Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

   The information required for this item is incorporated by reference to the
information contained under the caption "Election of Directors--Certain
Transactions" in the 2000 Proxy Statement.

                                    10K-58
<PAGE>

                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

   The following documents are filed as a part of this report:

   (a) Financial Statements and Schedules:

     1. Financial Statements

      See Index to Financial Statements on page 10K-32 of this report,
      which is incorporated herein by reference.

     2. Financial Statement Schedules:

      Schedules have been omitted since the required information is
      presented elsewhere in this report or is not applicable.

     3. Exhibits

      See Index to Exhibits on pages 10K-62 to 10K-66 of this report,
      which is incorporated herein by reference.

   (b) Reports on Form 8-K:

     The following report on Form 8-K was filed during the quarter ended
  September 30, 1999:

      Item ReportedDate of Report

      Changes in Registrant's Certifying AccountantOctober 25, 1999

   (c) Exhibits:

   The Exhibits required by Item 601 of Regulation S-K are listed in the Index
to Exhibits on pages 10K-62 to 10K-66 of this report, which is incorporated
herein by reference. These Exhibits have been omitted from the copies of this
Form 10-K that are being distributed to shareholders. The Company will furnish
a copy of any Exhibit to any shareholder upon written request and upon payment
of a fee to cover the Company's reasonable expenses in furnishing such
Exhibit. Such requests may be made to: Investor Relations Department, LaSalle
Re Holdings Limited, Continental Building, 25 Church Street, Hamilton HM 12,
Bermuda.

                                    10K-59
<PAGE>

                                  SIGNATURES

   Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized, in
Bermuda, on the 15th day of December, 1999.

                                          LaSalle Re Holdings Limited

                                                /s/ Guy D. Hengesbaugh
                                          By __________________________________
                                                 Name: Guy D. Hengesbaugh
                                                Title: President and Chief
                                                     Executive Officer


                               POWER OF ATTORNEY

   Each person whose signature appears below constitutes and appoints Guy D.
Hengesbaugh, Clare E. Moran and Michael A. Conway, or any of them, as such
person's true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, to sign any and all amendments to this
report, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission.

   Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed by the following persons on behalf of the
Registrant and in the capacities indicated and on the 15th day of December,
1999.

<TABLE>
<CAPTION>
                 Signature                                     Title
                 ---------                                     -----


<S>                                         <C>
          /s/ Victor H. Blake               Chairman and Director
___________________________________________
              Victor H. Blake

        /s/ Guy D. Hengesbaugh              President and Chief Executive Officer
___________________________________________   (Principal executive officer)
            Guy D. Hengesbaugh

          /s/ Clare E. Moran                Senior Vice President, Treasurer and
___________________________________________   Interim Chief Financial Officer
              Clare E. Moran                  (Principal financial and accounting
                                              officer)

      /s/ William J. Adamson, Jr.           Director
___________________________________________
          William J. Adamson, Jr.

         /s/ Michael A. Conway              Director
___________________________________________
             Michael A. Conway

         /s/ Robert V. Deutsch              Director
___________________________________________
             Robert V. Deutsch

       /s/ Clement S. Dwyer, Jr.            Director
___________________________________________
           Clement S. Dwyer, Jr.
</TABLE>

                                    10K-60
<PAGE>

<TABLE>
<CAPTION>
                 Signature                                     Title
                 ---------                                     -----

<S>                                         <C>
       /s/ Donald P. Koziol, Jr.            Director
___________________________________________
           Donald P. Koziol, Jr.

          /s/ Lester Pollack                Director
___________________________________________
              Lester Pollack

         /s/ Peter J. Rackley               Director
___________________________________________
             Peter J. Rackley
           /s/ Paul J. Zepf                 Director
___________________________________________
               Paul J. Zepf
</TABLE>


                                     10K-61
<PAGE>

                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
  Exhibit
  Number          Description                      Method of Filing
  -------         -----------                      ----------------
 <C>       <S>                         <C>
  3.1      Memorandum of Association   Incorporated by reference to Exhibit 3.1
                                       to Registration Statement on Form S-1
                                       (No. 33-97304)
  3.2      Bye-Laws                    Incorporated by reference to Exhibit 3.2
                                       to Form 10-Q for the quarterly period
                                       ended March 31, 1998 (File No. 1-12823)
 10.1      Excess Ownership            Incorporated by reference to Exhibit
           Agreement dated November    10.3 to Form 10-Q for the quarterly
           27, 1995 among the          period ended December 31, 1995 (File
           Company, LaSalle Re and     No. 0-27216)
           the Founding Shareholders
 10.2      Amended and Restated        Incorporated by reference to Exhibit
           Shareholders Agreement      10.1 to Form 10-Q for the quarterly
           dated November 27, 1995     period ended December 31, 1995 (File
           among the Company,          No. 0-27216)
           LaSalle Re and the
           Founding Shareholders
 10.3      Amended and Restated        Incorporated by reference to Exhibit
           Option Agreement Dated      10.2 to Form 10-Q for the quarterly
           November 27, 1995 among     period ended December 31, 1995 (File
           the Company, LaSalle Re     No. 0-27216)
           and certain of the
           Founding Shareholders
 10.4      Conversion Agreement        Incorporated by reference to Exhibit
           dated November 27, 1995     10.4 to Form 10-Q for the quarterly
           among the Company,          period ended December 31, 1995 (File No.
           LaSalle Re and holders of   0-27216)
           Exchangeable Non-Voting
           Shares
 10.5      Underwriting Support        Incorporated by reference to Exhibit
           Services Agreement Dated    10.7 to Form 10-K for the fiscal year
           October 1, 1998 among       ended September 30, 1998 (File
           LaSalle Re, CRSC and CNA    No. 1-12823)
           Bermuda
 10.6      Amended and Restated        Incorporated by reference to Exhibit
           Investment Management       10.8 to Registration Statement on Form
           Agreement dated September   S-1 (No. 333-14861)
           21, 1995 among the
           Company, LaSalle Re and
           Aon Advisors
 10.7      Second Amended and          Filed with this document
           Restated Employment
           Agreement dated as of
           July 1, 1999 between
           Victor H. Blake and
           LaSalle Re
 10.8      Employment Agreement        Incorporated by reference to Exhibit
           dated October 1, 1998       10.12 to Form 10-K for the fiscal year
           between Guy D.              ended September 30, 1998 (File
           Hengesbaugh and LaSalle     No. 1-12823)
           Re
 10.9      Employment Agreement        Incorporated by reference to Exhibit
           dated October 1, 1998       10.13 to Form 10-K for the fiscal year
           between Andrew Cook and     ended September 30, 1998 (File
           LaSalle Re                  No. 1-12823)
 10.10     Employment Agreement        Filed with this document
           dated March 1, 1999
           between Robert P.
           Cuthbert and LaSalle Re
 10.11     Separation Agreement        Filed with this document
           dated May 1, 1999 between
           Robert P. Cuthbert and
           LaSalle Re
 10.12     Employment Agreement        Filed with this document
           dated October 1, 1998
           between Mark C. Stockton
           and LaSalle Re
</TABLE>


                                     10K-62
<PAGE>

<TABLE>
 <C>       <S>                         <C>
 10.13     LaSalle Re Holdings         Incorporated by reference to Exhibit
           Limited 1996 Long-Term      10.13 to Registration Statement on Form
           Incentive Plan              S-1 (No. 333-14861)
 10.14     First Amendment to          Incorporated by reference to Exhibit 4.4
           LaSalle Re Holdings         to Registration Statement on Form S-8
           Limited 1996 Long-Term      (No. 333-38653)
           Incentive Plan, dated
           September 25, 1997
 10.15     Second Amendment to         Incorporated by reference to Exhibit
           LaSalle Re Holdings         10.16 to Form 10-K for the fiscal year
           Limited 1996 Long-Term      ended September 30, 1998 (File
           Incentive Plan, dated       No. 1-12823)
           September 25, 1998
 10.16     LaSalle Re Holdings         Incorporated by reference to Exhibit
           Limited Employee Stock      10.14 to Registration Statement on Form
           Purchase Plan               S-1 (No. 333-14861)
 10.17     First Amendment to          Incorporated by reference to Exhibit 4.4
           LaSalle Re Holdings         to Registration Statement on Form S-8
           Limited Employee Stock      (No. 333-38655)
           Purchase Plan, dated
           September 25, 1997
 10.18     Second Amendment to         Incorporated by reference to Exhibit
           LaSalle Re Holdings         10.19 to Form 10-K for the fiscal year
           Limited Employee Stock      ended September 30, 1998 (File No. 1-
           Purchase Plan, dated        12823)
           September 25, 1998
 10.19     Third Amendment to          Incorporated by reference to Exhibit
           LaSalle Re Holdings         10.4 to Form 10-Q for the quarterly
           Limited Employee Stock      period ended March 31, 1999 (File
           Purchase Plan, dated        No. 1-12823)
           February 26, 1999
 10.20     Credit Agreement dated as   Incorporated by reference to Exhibit
           of December 1, 1995 among   10.9 to Form 10-Q for the quarterly
           the Company, several        period ended December 31, 1995 (File
           banks and Chemical Bank,    No. 0-27216)
           as administrative agent
 10.21     First Amendment, dated      Incorporated by reference to Exhibit
           September 25, 1996, among   10.12 to Registration Statement on Form
           the Company, several        S-1 (No. 333-14861)
           banks and Chase Manhattan
           Bank as administrative
           agent, to Credit
           Agreement dated as of
           December 1, 1995 among
           the Company, several
           banks and Chemical Bank,
           as administrative agent
 10.22     Second Amendment, dated     Incorporated by reference to Exhibit
           March 13, 1997,             10.30 to
           among the Company,          Form 10-K for the fiscal year ended
           several banks and Chase     September 30, 1997 (File No. 1-12823)
           Manhattan Bank as
           administrative agent, to
           Credit Agreement dated as
           of December 1,
           1995 among the Company,
           several banks and
           Chemical Bank, as
           administrative agent
 10.23     Third Amendment, dated      Incorporated by reference to Exhibit
           March 16, 1998, among the   10.1 to Form 10-Q for the quarterly
           Company, several banks      period ended March 31, 1998 (File
           and Chase Manhattan Bank    No. 1-12823)
           as administrative agent,
           to Credit Agreement dated
           as of December 1, 1995
           among the Company,
           several banks and
           Chemical Bank, as
           administrative agent
 10.24     Waiver dated as of April    Incorporated by reference to Exhibit
           1, 1999, among the          10.1 to Form 10-Q for the quarterly
           Company, several banks      period ended March 31, 1999 (File
           and Chase Manhattan Bank    No. 1-12823)
           as administrative agent,
           to Credit Agreement dated
           as of December 1, 1995
           among the Company,
           several banks and
           Chemical Bank, as
           administrative agent.
</TABLE>


                                     10K-63
<PAGE>

<TABLE>
 <C>       <S>                          <C>
 10.25     Catastrophe Equity           Incorporated by reference to Exhibit
           Securities Issuance Option   10.31 to Form 10-K for the fiscal year
           Agreement, dated as of       ended September 30, 1997 (File No.
           July 1, 1997 between the      1-12823)
           Company on the one hand
           and European Reinsurance
           Company of Zurich, Allianz
           Aktiengesellschaft,
           Continental Casualty
           Company and CIC-Hilldale,
           Inc. on the other hand
 10.26     Quota Share Arrangement,     Incorporated by reference to Exhibit
           dated as of April 1, 1999,   10.2 to Form 10-Q for the quarterly
           between LaSalle Re and       period ended March 31, 1999 (File
           Continental Casualty         No. 1-12823)
           Company
 10.27     Quota Share Treaty between   Incorporated by reference to Exhibit
           CNA International            10.17 to Registration Statement on Form
           Reinsurance Company          S-1 (No. 333-14861)
           Limited and LaSalle Re in
           respect of 1994
           underwriting year of
           account (London office)
 10.28     Quota Share Treaty between   Incorporated by reference to Exhibit
           CNA International            10.18 to Registration Statement on Form
           Reinsurance Company          S-1 (No. 333-14861)
           Limited and LaSalle Re in
           respect of 1995
           underwriting year of
           account (London office)
 10.29     Quota Share Treaty between   Incorporated by reference to Exhibit
           CNA International            10.19 to Registration Statement on Form
           Reinsurance Company          S-1 (No. 333-14861)
           Limited and LaSalle Re in
           respect of 1996
           underwriting year of
           account (London office)
 10.30     Quota Share Treaty between   Incorporated by reference to Exhibit
           CNA International            10.27 to Form 10-K for the fiscal year
           Reinsurance Company          ended September 30, 1997 (File
           Limited and LaSalle Re in    No. 1-12823)
           respect of 1997
           underwriting year of
           account (London office)
 10.31     Quota Share Treaty between   Incorporated by reference to Exhibit
           CNA International            10.27 to Form 10-K for the fiscal year
           Reinsurance Company          ended September 30, 1998 (File
           Limited and LaSalle Re in    No. 1-12823)
           respect of 1998
           underwriting year of
           account (London office)
 10.32     Quota Share Treaty between   Filed with this document
           CNA International
           Reinsurance Company
           Limited and LaSalle Re in
           respect of 1999
           underwriting year of
           account (London office)
 10.33     Quota Share Treaty between   Incorporated by reference to Exhibit
           CNA International            10.20 to Registration Statement on Form
           Reinsurance Company          S-1 (No. 333-14861)
           Limited and LaSalle Re in
           respect of 1994
           underwriting year of
           account (Amsterdam office)
 10.34     Quota Share Treaty between   Incorporated by reference to Exhibit
           CNA International            10.21 to Registration Statement on Form
           Reinsurance Company          S-1 (No. 333-14861)
           Limited and LaSalle Re in
           respect of 1995
           underwriting year of
           account (Amsterdam office)
 10.35     Quota Share Treaty between   Incorporated by reference to Exhibit
           CNA International            10.22 to Registration Statement on Form
           Reinsurance Company          S-1 (No. 333-14861)
           Limited and LaSalle Re in
           respect of 1996
           underwriting year of
           account (Amsterdam office)
</TABLE>


                                     10K-64
<PAGE>

<TABLE>
 <C>       <S>                          <C>
 10.36     Quota Share Treaty between   Incorporated by reference to Exhibit
           CNA International            10.28 to Form 10-K for the fiscal year
           Reinsurance Company          ended September 30, 1997 (File
           Limited and LaSalle Re in    No. 1-12823)
           respect of 1997
           underwriting year of
           account (Amsterdam office)
 10.37     Quota Share Treaty between   Incorporated by reference to Exhibit
           CNA International            10.28 to Form 10-K for the fiscal year
           Reinsurance Company          ended September 30, 1998 (File No. 1-
           Limited and LaSalle Re in    12823)
           respect of 1998
           underwriting year of
           account (Amsterdam office)
 10.38     Quota Share Treaty between   Filed with this document
           CNA International
           Reinsurance Company
           Limited and LaSalle Re in
           respect of 1999
           underwriting year of
           account (Amsterdam office)
 10.39     LMX Quota Share              Incorporated by reference to Exhibit
           Retrocessional Agreement     10.23 to Registration Statement on Form
           between Continental          S-1 (No. 333-14861)
           Casualty Company and
           LaSalle Re for the 1995
           underwriting year of
           Account
 10.40     LMX Quota Share              Incorporated by reference to Exhibit
           Retrocessional Agreement     10.24 to Registration Statement on Form
           between Continental          S-1 (No. 333-14861)
           Casualty Company and
           LaSalle Re for the 1996
           underwriting year of
           Account
 10.41     LMX Quota Share              Incorporated by reference to Exhibit
           Retrocessional Agreement     10.29 to Form 10-K for the fiscal year
           between Continental          ended September 30, 1997 (File
           Casualty Company and         No. 1-12823)
           LaSalle Re for the 1997
           underwriting year of
           Account
 10.42     LMX Quota Share              Incorporated by reference to Exhibit
           Retrocessional Agreement     10.38 to Form 10-K for the fiscal year
           between Continental          ended September 30, 1998 (File
           Casualty Company and         No. 1-12823)
           LaSalle Re for the 1998
           underwriting year of
           Account
 10.43     LMX Quota Share              Filed with this document
           Retrocessional Agreement
           between Continental
           Casualty Company and
           LaSalle Re for the 1999
           underwriting year of
           Account
 12.1      Statement re computation     Filed with this document
           of ratio of earnings to
           combined fixed charges and
           preferred share dividends
 13.1      Portions of the Annual       Filed with this document
           Report to Shareholders for
           the fiscal year ended
           September 30, 1999
 16.1      Letter re change in          Incorporated by reference to Exhibit 16
           certifying accountant        to Form 8-K filed on October 28, 1999
                                        (File No.  1-12823)
 21.1      Subsidiaries of the          Incorporated by reference to Exhibit
           Registrant                   21.1 to Registration Statement on Form
                                        S-1 (No. 333-14861)
 23.1      Consent of KPMG              Filed with this document
 23.2      Consent of Deloitte &        Filed with this document
           Touche
 24.1      Power of Attorney            Included on signature page
 27.1      Financial Data Schedule      Filed with this document
</TABLE>

                                     10K-65