<PAGE>

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

                                  FORM 10-K/A
(Mark One)
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 [FEE REQUIRED]
     For the fiscal year ended September 30, 1999.

                                      OR

[_]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

     For the transition period to September 30, 1999


                        Commission file number 1-12823


                          LASALLE RE HOLDINGS LIMITED


            (Exact Name of Registrant as Specified in Its Charter)

<TABLE>
<S>                                                                                   <C>
                   Bermuda                                                              Not Applicable
       (State or Other Jurisdiction of                                                 (I.R.S. Employer
        Incorporation or Organization)                                                Identification No.)
</TABLE>

        Continental Building, 25 Church Street, Hamilton HM 12, Bermuda
                   (Address of Principal Executive Offices)
      Registrant's Telephone Number, including area code: (441) 292-3339

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

<TABLE>
<S>                                                                         <C>
              Title of Each Class                                           Name of Each Exchange on Which Registered
    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>

        Securities registered pursuant to Section 12(g) of the Act: None


     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 on December 1, 1999 of the voting stock held by
non-affiliates of the registrant was $131,980,541.

     The number of shares outstanding of each of the issuer's classes of common
stock as of December 1, 1999:

<TABLE>
<S>                                                          <C>
                         Class                               Outstanding at December 1, 1999
                         -----                               -------------------------------
               Common Stock, $1.00 par value                           15,603,570
</TABLE>

Certain portions of the registrant's definitive proxy statement relating to its
annual meeting of stockholders scheduled to be held on February 17, 2000 are
incorporated by reference into Part III of this report and certain portions of
the registrant's annual report to stockholders are incorporated by reference
into Parts II and IV of this report.
<PAGE>

                      DOCUMENTS INCORPORATED BY REFERENCE

     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/A.





<PAGE>

                          LASALLE RE HOLDINGS LIMITED

                               TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                           Page
                                                                                           ----
 Item                                                                                     Number
 ----                                                                                     ------
 PART
  I
<S>      <C>                                                                            <C>
1.       BUSINESS....................................................................    10K/A-2

 PART
  II

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

7.       MANAGEMENTS' DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
         FINANCIAL CONDITION.........................................................    10K/A-22


8.       FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.................................    10K/A-33

 PART
  IV

14.      EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K............    10K/A-60
</TABLE>

                                     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.
<PAGE>

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-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.
<PAGE>

  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 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):
<PAGE>

<TABLE>
<CAPTION>
                                                       Year Ended            Year Ended             Year Ended
                                                       ----------            ----------             ----------
                                                   September 30, 1999    September 30, 1998     September 30, 1997
                                                   ------------------    ------------------     ------------------
                                                    Gross     Number      Gross     Number       Gross      Number
                                                    -----     ------      -----     ------       -----      ------
                                                  Premiums      of      Premiums      of       Premiums       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 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
<PAGE>

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").

  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.
<PAGE>

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.

  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>
Geographic Area                                         September 30, 1999     September 30, 1998     September 30, 1997
---------------                                       ---------------------   --------------------   --------------------

                                                                 Percentage             Percentage              Percentage
                                                       Gross     ----------    Gross    ----------     Gross    ----------
                                                       -----      of Gross    --------   of Gross      -----     of Gross
                                                      Premiums    --------    Premiums   --------    Premiums    --------
                                                      --------    Premiums    --------   Premiums    --------    Premiums
                                                      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>
<PAGE>

(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:

                                                                  Number of
                                                                  ---------
                                                                   Programs
                                                                   --------

      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
                                                                         ===

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.
<PAGE>

  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.

  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
<PAGE>

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.

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
<PAGE>

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.

  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
<PAGE>

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.

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

<TABLE>
<CAPTION>
     Type of Investment                                                                   September 30,
     ------------------
                                                                                  1999                    1998
                                                                                  ----                    ----
                                                                           Fair        % of        Fair        % of
                                                                           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%
        Short term investments                                               177.2        31.8        72.9        12.0
        Cash and cash equivalents......................................       15.9         2.9        12.4         2.1
                                                                            ------       -----      ------       -----
           Total cash and investments..................................     $556.9       100.0%     $606.8       100.0%
                                                                            ======       =====      ------       =====
</TABLE>
<PAGE>

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.

  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
<PAGE>

  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 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
<PAGE>

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 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.
<PAGE>

  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 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.
<PAGE>

  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% 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
<PAGE>

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.

  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
<PAGE>

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.

  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.
<PAGE>

Item 6. SELECTED FINANCIAL DATA

Expressed in thousands of United States Dollars, except per share and
operational data

<TABLE>
<CAPTION>
                                                                 Year ended    Year ended    Year ended    Year ended    Year ended
                                                               September 30  September 30  September 30  September 30  September 30
                                                                       1999          1998          1997          1996          1995
<S>                                                            <C>           <C>           <C>           <C>           <C>
Statement of income Data
Gross Premiums written                                             $139,010      $155,316      $171,386      $190,151      $201,916
Net premiums earned                                                 126,615       154,620       163,933       195,141       170,370
Net investment income (including realized gains and losses)          34,462        39,863        33,664        26,428        25,066
Loss and loss expenses incurred                                     131,147        95,539        31,199        51,477        60,397
Underwriting expenses                                                22,219        22,661        26,018        27,268        22,988
Operational expenses                                                 11,358         8,932        12,656        11,114         6,218
Income before minority interest                                      (5,679)       65,232       121,468       129,451       104,448
Minority Interest(1)
(1999: 23%, 1998: 73%, 1997: 21%, a11 other periods: 37%)            (2,845)       13,426        24,391        47,966        38,774
Net income                                                          ($2,834)       51,806        97,077        81,485        65,674
Earnings per Common Share - assuming dilution(2) as restated         ($0.60)        $2.68         $5.14         $5.40         $4.51
Adjusted weighted average number of Common
Shares outstanding(3)                                            20,213,155    20,919,405    22,998,936    23,967,870    23,170,680
Dividends declared per Common Share                                  $1.125         $3.00         $2.84         $0.75         $5.72

Other Data
Loss ratio                                                            103.6%         61.8%         19.0%         26.4%         35.5%
Expense ratio                                                          26.5%         20.4%         23.6%         19.6%         17.1%
Combined ratio                                                        130.1%         82.2%         42.6%         46.0%         52.6%
Return on average equity(4)                                           -2.84%         13.0%         25.4%         29.2%         26.6%

Balance Sheet Data (at end of period)                               556,976      $606,757      $553,043      $537,504      $522,425
Total investments and cash                                          736,107       757,290       686,088       634,374       636,547
Total assets                                                        146,552        97,942        45,491        49,875        66,654
Reserve for losses and loss expenses                                 93,055       105,569        93,355       179,470       147,389
Minority interest                                                   382,197       430,053       425,226       307,448       253,422
Total shareholders' equity                                           $19.69        $23.39        $23.23        $21.42        $17.64
Book value per share(5)
</TABLE>


(1) Minority interest represents those shares in LaSalle Re Limited that are
    held as Exchangeable Non-Voting Shares. These shares are exchangeable, at
    the option of the holder, for Common Shares of the Company on a one-for-one
    basis.

(2) Earnings per Common Share equals income before minority interest and after
    preferred dividends declared and in arrears divided by the adjusted weighted
    average number of Common Shares outstanding.

(3) The adjusted weighted average number of Common Shares outstanding include
    Common Shares and the Exchangeable Non-Voting Shares and the dilutive effect
    of stock options and stock appreciation rights using the treasury stock
    method.

(4) Return on average equity is calculated by dividing net income before
    minority interest and after preferred dividends declared and in arrears by
    the average of the opening and closing sum of common shareholders' equity
    and minority interest. The adjustment in respect of minority interest
    reflects the exchangeable nature of the Exchangeable Non-Voting Shares.

(5) Book value per share is based on the sum of closing common shareholders'
    equity and minority interest divided by Common Shares and Exchangeable
    Non-Voting Shares.
<PAGE>

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     September      Change
                                                                                30,           30,       ----------
                                                                            ------------  ------------
                                                                                1999          1998
                                                                            ------------  ------------
<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.

  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,
<PAGE>

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.

  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>

<PAGE>

  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 on September 21, 1998. The increase was due to an increase in the
estimated size of the market loss for the Hurricane. In order to estimate
potential incurred losses for a major catastrophe event the Company uses "market
loss" data combined with its underwriting observations to estimate incurred loss
positions. On October 7, 1998, Property and Claims Services issued a preliminary
estimate of the insured property damage caused by Hurricane Georges, which was
set at $2.55 billion. As the Company's year-end is September 30, this
information, together with our knowledge of our clients' market share of the
loss and our participation on their contracts, was used as a basis to establish
our losses incurred at that time. In December 1998, this estimate was increased
to $2.95 billion. The increase in this estimate produced additional losses for
the Company primarily because the increase in the size of the loss increased the
number of contracts, which suffered a loss. This is because contracts have
different attachment points such that certain contracts would not have
experienced a loss with an industry loss of $2.55 billion but did experience
either a partial or full loss with a $2.95 billion industry loss.

  In addition, the Company recorded approximately $14 million of additional case
reserves for large reported losses primarily on three specific contracts. These
losses arose from causes that could not have been reasonably anticipated when
the Company established its incurred-but-not-reported loss reserves. In prior
quarters the Company had received no information indicating losses on these
contracts. Loss reserve estimation procedures were applied to grouped data to
estimate incurred but not reported loss reserves and some of these reserves were
implicitly attributed to the three contacts. During the quarter ended March 31,
1999 the Company received loss information which clearly indicated that the
Company would suffer larger losses than those previously implicitly reserved.
This was primarily due to the emergence of two industry issues that related to
extended warranty business and the deterioration of the Lloyds motor insurance
market. The loss emergence on these lines of business were significantly greater
than the Company and the industry would have expected in such a short time
period.

  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 also reviewed
the assumptions used in setting incurred-but-not-reported loss reserves. These
assumptions were revised to reflect both new information and a more prudent
reserving philosophy which resulted in an additional $16 million of incurred-
but-not-reported losses during the year ended September 30, 1999.

  In setting incurred-but-not-reported reserves the Company categorizes its loss
events into two groups: large, defined as an event which generates a loss of
greater than $5.0 million to the Company; and, small which is an event which
generates a loss of less than $5.0 million to the Company. The change in
establishing incurred-but-not-reported reserves primarily related to small
events. Incurred-but-not-reported reserves for small events are derived by the
use of generally accepted actuarial methods. Key assumptions used in these
methods are loss development patterns and expected loss ratios for each class of
business.

  For the period from March to September of 1998, the Company had used the
services of outside consultants to establish loss reserves as the Company was
searching for a replacement actuary. The loss assumptions used by the
consultants relied more heavily on industry information, such as benchmark loss
ratios, than on Company specific information. This approach is believed to
produce reasonable estimates where sufficient company specific
<PAGE>

information is not readily available or where company information lacks
credibility because of its immaturity or other reasons.

  The new information used by the Company to reassess incurred but not reported
loss reserves was derived from LaSalle's detailed analysis of operations and
actual historical results, which produced a set of LaSalle specific expected
loss ratios. These expected loss ratios, in some cases, were significantly
higher than those being used by the consultant. Although those expected loss
ratios were not manifestly unreasonable there was room for a difference of
opinion on the expected loss ratios. The Company took the prudent view that the
Company specific information had high credibility and, consequently, increased
the reserves to those implied by our expected loss ratios.

  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 September 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.

  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
<PAGE>

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 $(0.60) for the year ended
September 30, 1999 compared to earnings per Common Share of $2.99 for the year
ended September 30, 1998. Losses per Common Share assuming dilution were $(0.60)
for the year ended September 30, 1999 compared to earnings per Common Share of
$2.68 for the year ended September 30, 1998.

  Subsequent to the issuance of the Company's 1999 consolidated financial
statements, the Company's management determined that, for purposes of the
calculation of earnings per common share, the exchangeable non-voting shares of
Lasalle Re are not considered to be outstanding common shares of the Company,
but for purposes of calculating consolidated diluted EPS, should be considered
among the potential common shares of the Company. As a result earnings per
common share and earnings per common share - assuming dilution for the years
ended September 30, 1999, 1998 and 1997 have been restated from the amounts
previously reported. The exchangeable non-voting shares have been excluded from
the weighted average number of common shares for purposes of calculating
earnings per common share, and the shares, when dilutive, have been included in
the adjusted weighted average number of common shares outstanding for purposes
of calculating earnings per common share - assuming dilution. See Note 2(p) of
Notes to Consolidated Financial Statements.

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,       Change
                                                           -------------    ------------        ------
                                                               1998              1997
                                                               ----              ----
<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
<PAGE>

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 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:
<PAGE>

<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 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,
<PAGE>

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.

  Earnings per Common Share were $2.99 for the year ended September 30, 1998 and
$6.02 for the year ended September 30, 1997. Earnings per Common Share assuming
dilution were $2.68 for the year ended September 30, 1998 and $5.14 for the year
ended September 30, 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 $19.2 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.
<PAGE>

  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
$556.9 million. Short term investments were $177.2 million at September 30, 1999
compared to $72.9 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 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 to the
inclusion of reinsurance balances receivable related to the 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
<PAGE>

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 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.
<PAGE>

  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.
<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>

<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.

     As discussed in Note 2(p), the accompanying 1999 financial statements have
been restated.

Hamilton, Bermuda                            DELOITTE & TOUCHE
November 5, 1999
(July 13, 2000 as to Note 2(p))
<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.

     As disclosed in Note 2(p), the accompanying 1998 and 1997 financial
statements have been restated.

                                             KPMG
                                             Chartered Accountants

Hamilton, Bermuda
October 26, 1998
Except as to Note 2(p) which is as of July 13, 2000.
<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
                                                                            ------------  -----------
Assets
<S>                                                                         <C>           <C>
Investments held as available for sale at fair value.......................    $363,825      $521,476
  (amortized cost 1999:$369,179; 1998: $503,531
Short term investments at fair value.......................................     177,228        72,919
                                                                               ---------     --------
Total investments..........................................................     541,053       594,395
Cash and cash equivalents..................................................      15,923        12,362
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
<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
                                                                       ------------  ------------  ------------
Revenues
<S>                                                                    <C>           <C>           <C>
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-as restated.........................       $(0.60)        $2.99         $6.02
                                                                          ========      ========      ========
(Loss)/earnings per common share-assuming dilution-as restated.......       $(0.60)        $2.68         $5.14
                                                                          ========      ========      ========
</TABLE>

          See accompanying notes to consolidated financial statements
<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
<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.................................           154            813          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................................        19,191         95,958         98,643
                                                                          ---------      ---------      ---------

Cash flows from investing activities
Purchase of investments..............................................      (195,935)      (427,283)      (364,989)
Net purchases of short term investments..............................      (103,947)       (18,726)        (8,150)
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...................        30,499        (21,839)       (11,690)
                                                                          ---------      ---------      ---------

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............................         3,561         11,744           (495)
Cash and cash equivalents at beginning of year.......................        12,362            618          1,113
                                                                          ---------      ---------      ---------
Cash and cash equivalents at end of year.............................     $  15,923      $  12,362      $     618
                                                                          =========      =========      =========
</TABLE>

          See accompanying notes to consolidated financial statements
<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
<PAGE>

                          LASALLE RE HOLDINGS LIMITED


            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


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.


     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.
<PAGE>

                          LASALLE RE HOLDINGS LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

     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.

     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.
<PAGE>

                          LASALLE RE HOLDINGS LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(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.

(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.
<PAGE>

                          LASALLE RE HOLDINGS LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(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 money market instruments, which form part of the Company's cash
management program and which have an original maturity of 90 days or less as
cash and cash equivalents.

     All other money market instruments that have an original maturity of 90
days or less are disclosed as short-term investments.

(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 weighted average number of Common
Shares outstanding. Earnings per Common Share assuming dilution are computed by
dividing net income available to common shareholders and the shareholders of
exchangeable non-voting shares of LaSalle Re ("Exchangeable Non-Voting Shares")
by the sum of the weighted average number of Common Shares and Exchangeable Non-
Voting Shares outstanding together with 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.
<PAGE>

                          LASALLE RE HOLDINGS LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

     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.

(p) Restatement of earnings per common share

     Subsequent to the issuance of the Company's 1999 consolidated financial
statements, the Company's management determined that, for purposes of the
calculation of earnings per common share, the Exchangeable Non-Voting Shares of
LaSalle Re are not considered to be outstanding Common Shares of the Company
but, for purposes of calculating consolidated diluted EPS, should be considered
among the potential common shares of the Company. As a result, earnings per
Common Share and earnings per Common Share - assuming dilution - have been
restated from the amounts previously reported. The Exchangeable Non-Voting
Shares have been excluded from the weighted average number of Common Shares for
purposes of calculating the earnings per common share, and the shares, when
dilutive, have been included in the adjusted weighted average number of Common
Shares outstanding for purposes of calculating earnings per common share -
assuming dilution.

<TABLE>
<CAPTION>
                                                 1999                             1998                             1997
                                      ---------------------------      ---------------------------      ---------------------------
                                          As                               As                               As
                                      Previously                       Previously                       Previously
                                       reported       As restated       reported       As restated       reported       As restated
                                      ----------      -----------      ----------      -----------      ----------      -----------
<S>                                   <C>             <C>              <C>             <C>              <C>             <C>
At September 30
(Loss) earnings per common
share...........................        $(0.61)         $(0.60)           $3.06           $2.99            $5.55           $6.02
(Loss) earnings per common
share assuming dilution.........        $(0.61)         $(0.60)           $2.80           $2.68            $5.14           $5.14
</TABLE>

(q) Reclassifications

     Certain amounts in the accompanying consolidated financial statements have
been reclassified to conform to the September 30, 1999 presentation.

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
                                                      ---------     ----------      ----------
     1999                                                Cost          Gains          Losses        Fair 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
                                                       ========       =======        =======         ========


                                                                       Gross           Gross
                                                                       -----           -----
                                                      Amortized     Unrealized      Unrealized
                                                      ---------     ----------      ----------
      1998                                               Cost          Gains          Losses        Fair Value
      ----                                               ----          -----          ------        ----------
      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).
<PAGE>

                          LASALLE RE HOLDINGS LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

     Investments held at September 30, 1999 mature as follows:

                                                  Amortized    Fair
                                                  ---------    ----
                                                     Cost      Value
                                                     ----      -----
                 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
                                                   =======    =======

     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.

                                  1999        1998
                                  ----        ----
                 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%
                                  =====       =====

     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).
<PAGE>

                          LASALLE RE HOLDINGS LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


     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).

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:

<PAGE>

                          LASALLE RE HOLDINGS LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


<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>

  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. Not all loss notifications are received by the Company on a timely basis.
It is not uncommon for companies engaged in the international reinsurance
business to experience significant reporting lags. In order to estimate
potential incurred losses for a major catastrophe event the reinsurance market
has traditionally used "market loss" data combined with its underwriting
observations to estimate incurred loss positions. The market loss data is
derived from a number of sources depending on the location of the event. In the
US, Property and Claims Services ("PCS") issue estimates of the insured property
damage from a catastrophic event. Hurricane Georges occurred on September 21,
1998 and on October 7, 1998 PCS issued a preliminary estimate of the insured
property damage, which was set at $2.55 billion. The Company's year-end is
September 30, hence this information, together with our knowledge of our
clients' market share of the loss and our participation on their contracts, was
used as a basis to establish our losses incurred at that time. This estimate was
subsequently increased in December 1998 which had the impact of generating an
increase in losses incurred for Hurricane Georges.

  Secondly, in March 1999, the Company recorded outstanding loss reserves
totaling approximately $11,000 on three stop loss contracts. These losses arose
out of two industry issues relating to extended warranty business and the
deterioration of the Lloyds motor insurance market. This business produced loss
emergence significantly higher than both the Company and the industry would have
expected. These causes 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.
<PAGE>

                          LASALLE RE HOLDINGS LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


6. Earnings per common share

  The following earnings per Common Share amounts, as restated, 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
Less: Series A preferred share dividends..............................             (6,563)             (6,563)              (3,354)
                                                                              -----------         -----------          -----------
(Loss) income available to common shareholders........................        $    (9,397)        $    45,243          $    93,723
                                                                              -----------         -----------          -----------
Weighted average number of Common Shares
 outstanding..........................................................         15,628,650          15,145,112           15,567,521


(Loss) earnings per Common Share......................................        $     (0.60)        $      2.99          $      6.02
                                                                              ===========         ===========          ===========

(Loss) income available to common shareholders........................        $    (9,397)        $    45,243          $    93,723
Add back: Income attributable to minority interest....................             Note 1              Note 1               24,391
                                                                              -----------         -----------          -----------
(Loss) income available to common shareholders and holders of
 exchangeable non-voting shares.......................................        $    (9,397)        $    45,243          $   118,114
                                                                              -----------         -----------          -----------


Weighted average number of Common Shares outstanding..................         15,628,650          15,145,112           15,567,521

 Plus: incremental shares from assumed:
  exchange of exchangeable non-voting shares..........................             Note 1              Note 1            5,703,212
  exercise of options.................................................             Note 1           1,653,233            1,661,391
  exercise of stock appreciation rights...............................             Note 1              80,516               66,812
  contingently issuable shares........................................             Note 1              22,398                    0
                                                                              -----------         -----------          -----------
Adjusted weighted average number of Common Shares outstanding.........         15,628,650          16,901,259           22,998,936
                                                                              -----------         -----------          -----------


(Loss) earnings per Common Share assuming dilution....................        $     (0.60)        $      2.68          $      5.14
                                                                              ===========         ===========          ===========
</TABLE>

  Note 1:The incremental shares from assumed exchanges of exchangeable non-
voting shares, 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.

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.
<PAGE>

                          LASALLE RE HOLDINGS LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

  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 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.
<PAGE>

                          LASALLE RE HOLDINGS LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


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).
<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 shares    Exercise    of shares    Exercise    of shares  Exercise
                                        ---------    --------    ---------    --------    ---------  --------
                                                       price                    price                  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:
<PAGE>

                          LASALLE RE HOLDINGS LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

<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       $ (0.60)    $  2.68    $  5.14
                                                     Pro forma         $ (0.63)    $  2.66    $  5.12
</TABLE>

 (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.
<PAGE>

                          LASALLE RE HOLDINGS LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


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.

(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:
<PAGE>

                          LASALLE RE HOLDINGS LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


      (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.

(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.
<PAGE>

                          LASALLE RE HOLDINGS LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(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.

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>
<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, which is written in Bermuda, provides reinsurance for
property catastrophe and for other lines of business which have similar
characteristics, namely high severity and low frequency. Gross Premiums written
by product type for the three years ended September 30, 1999, 1998 and 1997 were
as follows:

<TABLE>
<CAPTION>
                                                                    1999                  1998                 1997
                                                                    ----                  ----                 ----
Reinsurance segment:
Property catastrophe reinsurance:
<S>                                                  <C>                   <C>                  <C>
  Excess of loss...................................               81,394                82,667              110,299
  Pro rata.........................................               11,108                21,602               34,385
Other lines of business:
  Property--risk excess and pro rata                               4,942                10,485                8,987
  Casualty.........................................                6,080                 5,707                4,019
  Space, marine and aviation.......................                5,385                 7,473                7,686
  Miscellaneous....................................                4,395                 6,271                2,180
Fronted premiums, adjustments, reinstatement
 premiums and no claims bonuses....................                3,317                    71              (10,295)
                                                                --------              --------             --------

Total Gross Premiums written.......................              116,621               134,276              157,261
Change in unearned premium and
 amortized ceded reinsurance.......................               (2,513)               11,132                3,990
                                                                --------              --------             --------

Reinsurance revenues                                            $114,108              $145,408             $161,251
                                                                --------              --------             --------
</TABLE>

  The Lloyd's segment is written in London, 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. An analysis
of the Company's gross premiums written by geographic zone of exposure is
detailed in note 13 to the consolidated financial statements. It is not
practicable to produce a geographic analysis by product revenues. Except as
disclosed in note 12 (a) to the consolidated financial statements the Company
has no customers who provide 10% or more of segmental revenues.

  Data for both segments for the three years ended September 30, 1999, 1998 and
1997 was as follows:
<PAGE>

                          LASALLE RE HOLDINGS LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


<TABLE>
<CAPTION>
1999                                             Reinsurance      Lloyd's         Total
----                                             -----------      -------         -----
<S>                                             <C>             <C>             <C>
Gross Premiums written                               $116,621       $22,389       $139,010
                                                     --------       -------       --------

Reinsurance revenues                                  114,108        12,507        126,615
Investment income                                      33,081           766         33,847
Realized investment gains                                 615             0            615
                                                     --------       -------       --------
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
                                                     --------       -------       --------

Reinsurance revenues                                  145,408         9,212        154,620
Investment income                                      33,980           308         34,288
Realized investment gains                               5,575             0          5,575
Other revenues                                             63             0             63
                                                     --------       -------       --------

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%
                                                     --------       -------       --------
</TABLE>
<PAGE>

                          LASALLE RE HOLDINGS LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

<TABLE>
<CAPTION>
1997
----
<S>                                                 <C>            <C>           <C>
Gross Premiums written                               $157,261       $14,125       $171,386
                                                     --------       -------       --------

Reinsurance revenues                                  161,251         2,682        163,933
Investment income                                      33,072            37         33,109
Realized investment gains                                 555             0            555
Other revenues                                            188             0            188
                                                     --------       -------       --------
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:

                 Year ending September 30, 2000.................    $299
                 Year ending September 30, 2001.................     105
                                                                    ----
                 Total minimum future rentals...................    $404
                                                                    ====

(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.
<PAGE>

                          LASALLE RE HOLDINGS LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


  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.

  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.
<PAGE>

                          LASALLE RE HOLDINGS LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


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.
<PAGE>

                          LASALLE RE HOLDINGS LIMITED

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


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--
  as previously reported....................................    $  0.25     $  (0.76)    $  0.19     $ (0.29)
  Earnings (loss) per common share--assuming dilution--
  as restated...............................................    $  0.25     $  (0.76)    $  0.19     $ (0.31)

</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--
  as previously reported....................................    $  1.34    $  0.97    $  0.78     $ (0.33)
  Earnings (loss) per common share--assuming dilution--
  as restated...............................................    $  1.34    $  0.97    $  0.78     $ (0.40)
</TABLE>
<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:

        Schedule II - Condensed financial information of the registrant is filed
        with this document.  All other 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 Reported                                  Date of Report

        Changes in Registrant's Certifying Accountant  October 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.
<PAGE>

        Schedule II - Condensed Financial Information of the Registrant

                          LaSalle Re Holdings Limited
                                 Balance Sheet
                             (Parent LaSalle Only)
                            (dollars in thousands)

<TABLE>
<CAPTION>
                                                       September 30,
                                                     1999         1998
<S>                                               <C>            <C>
Assets:

Investments in consolidated subsidiaries          $85,110        $84,710
                                                  =======        =======

Liabilities

Inter Company accounts                              8,002          6,990

Shareholders equity                                77,108         77,720
                                                  -------        -------
Total liabilities and shareholders equity         $85,110        $84,710
                                                  =======        =======
</TABLE>

        Schedule II - Condensed Financial Information of the Registrant

                          LaSalle Re Holdings Limited
                               Income Statement
                             (Parent LaSalle Only)
                            (dollars in thousands)

<TABLE>
<CAPTION>
                                            For the year ended September 30,
                                            1999         1998          1997
<S>                                        <C>         <C>            <C>
Dividend income                            $24,106     $51,204        $47,667
Other income                                 1,000       1,000          1,000
                                           -------     -------        -------
Total revenues                              25,106      52,204         48,667
                                           -------     -------        -------

Operational expenses                         1,506       1,246          1,555
Corporate expenses                             788         517          1,770
Interest payable                               211         215            208
                                           -------     -------        -------
Total expenses                               2,505       1,978          3,533
                                           -------     -------        -------
Net Income                                 $22,601     $50,226        $45,134
                                           =======     =======        =======
</TABLE>


<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 amended report to
be signed on its behalf by the undersigned, thereunto duly authorized, in
Bermuda, on the 22nd day of August, 2000.


                              LaSalle Re Holdings Limited


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

  Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this amended report has been signed by the following persons on behalf
of the Registrant and in the capacities indicated and on the 22nd day of August,
2000.

           Signature                                 Title
-------------------------------           ----------------------------

    /s/ Victor H. Blake*              Chairman and Director
-------------------------------
        Victor H. Blake

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

    /s/ Clare E. Moran                Senior Vice President, Treasurer and
-------------------------------       Interim Chief Financial Officer (Principal
        Clare E. Moran                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.

 /s/ Donald P. Koziol, Jr.*           Director
-------------------------------
     Donald P. Koziol, Jr.

   /s/ Peter J. Rackley*              Director
-------------------------------
       Peter J. Rackley

*By:  /s/ Clare E. Moran
    ---------------------------
          Clare E. Moran
         Attorney-in-fact
<PAGE>

                               INDEX TO EXHIBITS


<TABLE>
<CAPTION>
Exhibit
-------
Number                  Description                                   Method of Filing
-------        ------------------------------               ------------------------------------------------
<S>            <C>                                          <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 Agreement dated November    Incorporated by reference to Exhibit 10.3 to
               27, 1995 among the Company, LaSalle Re and   Form 10-Q for the quarterly period ended December
               the Founding Shareholders                    31, 1995 (File No. 0-27216)

10.2           Amended and Restated Shareholders            Incorporated by reference to Exhibit 10.1 to
               Agreement dated November 27, 1995 among      Form 10-Q for the quarterly period ended December
               the Company, LaSalle Re and the Founding     31, 1995 (File No. 0-27216)
               Shareholders

10.3           Amended and Restated Option Agreement        Incorporated by reference to Exhibit 10.2 to
               Dated November 27, 1995 among the            Form 10-Q for the quarterly period ended December
               Company, LaSalle Re and certain of the       31, 1995 (File No. 0-27216)
               Founding Shareholders

10.4           Conversion Agreement dated November 27,      Incorporated by reference to Exhibit 10.4 to
               1995 among the Company, LaSalle Re and       Form 10-Q for the quarterly period ended December
               holders of Exchangeable Non-Voting Shares    31, 1995 (File No. 0-27216)

10.5           Underwriting Support Services Agreement      Incorporated by reference to Exhibit 10.7 to
               Dated October 1, 1998 among LaSalle Re,      Form 10-K for the fiscal year ended September 30,
               CRSC and CNA Bermuda                         1998 (File No. 1-12823)

10.6           Amended and Restated Investment              Incorporated by reference to Exhibit 10.8 to
               Management Agreement dated September 21,     Registration Statement on Form S-1 (No. 333-14861)
               1995 among the Company, LaSalle Re and Aon
               Advisors

10.7           Second Amended and Restated Employment       (1)
               Agreement dated as of July 1, 1999 between
               Victor H. Blake and LaSalle Re

10.8           Employment Agreement dated October 1, 1998   Incorporated by reference to Exhibit 10.12 to
               between Guy D. Hengesbaugh and LaSalle Re    Form 10-K for the fiscal year ended September
                                                            30, 1998 (File No. 1-12823)

10.9           Employment Agreement dated October 1, 1998   Incorporated by reference to Exhibit 10.13 to
               between Andrew Cook and LaSalle Re           Form 10-K for the fiscal year ended September
                                                            30, 1998 (File No. 1-12823)
</TABLE>
<PAGE>

<TABLE>
<S>            <C>                                               <C>
10.10          Employment Agreement dated March 1, 1999          (1)
               between Robert P. Cuthbert and LaSalle Re

10.11          Separation Agreement dated May 1, 1999            (1)
               between Robert P. Cuthbert and LaSalle Re

10.12          Employment Agreement dated October 1, 1998        (1)
               between Mark C. Stockton and LaSalle Re

10.13          LaSalle Re Holdings Limited 1996 Long-Term        Incorporated by reference to Exhibit 10.13 to
               Incentive Plan                                    Registration Statement on Form S-1
                                                                 (No. 333-14861)

10.14          First Amendment to LaSalle Re Holdings            Incorporated by reference to Exhibit 4.4 to
               Limited 1996 Long-Term Incentive Plan, dated      Registration Statement on Form S-8
               September 25, 1997                                (No. 333-38653)

10.15          Second Amendment to LaSalle Re Holdings           Incorporated by reference to Exhibit 10.16 to
               Limited 1996 Long-Term Incentive Plan, dated      Form 10-K for the fiscal year ended September
               September 25, 1998                                30, 1998 (File No. 1-12823)

10.16          LaSalle Re Holdings Limited Employee Stock        Incorporated by reference to Exhibit 10.14 to
               Purchase Plan                                     Registration Statement on Form S-1
                                                                 (No. 333-14861)

10.17          First Amendment to LaSalle Re Holdings            Incorporated by reference to Exhibit 4.4 to
               Limited Employee Stock Purchase Plan, dated       Registration Statement on Form S-8
               September 25, 1997                                (No. 333-38655)

10.18          Second Amendment to LaSalle Re Holdings           Incorporated by reference to Exhibit 10.19 to
               Limited Employee Stock Purchase Plan, dated       Form 10-K for the fiscal year ended September
               September 25, 1998                                30, 1998 (File No. 1-12823)

10.19          Third Amendment to LaSalle Re Holdings            Incorporated by reference to Exhibit 10.4 to
               Limited Employee Stock Purchase Plan, dated       Form 10-Q for the quarterly period ended March 31,
               February 26, 1999                                 1999 (File No. 1-12823)

10.20          Credit Agreement dated as of December 1,         Incorporated by reference to Exhibit 10.9 to
               1995 among the Company, several banks and         Form 10-Q for the quarterly period ended December
               Chemical Bank, as administrative agent            31, 1995 (File No. 0-27216)

10.21          First Amendment, dated September 25, 1996,        Incorporated by reference to Exhibit 10.12 to
               among the Company, several banks and Chase        Registration Statement on Form S-1 (No. 333-14861)
               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
 </TABLE>
<PAGE>

<TABLE>
<S>            <C>                                               <C>
10.22          Second Amendment, dated March 13, 1997,           Incorporated by reference to Exhibit 10.30 to
               among the Company, several banks and Chase        Form 10-K for the fiscal year ended
               Manhattan Bank as administrative agent, to,       September 30, 1997 (File No. 1-12823)
               Credit Agreement dated as of December 1,
               1995 among the Company, several banks and
               Chemical Bank, as administrative agent

10.23          Third Amendment, dated March 16, 1998,            Incorporated by reference to Exhibit 10.1 to
               among the Company, several banks and Chase        Form 10-Q for the quarterly period ended March 31,
               Manhattan Bank as administrative agent, to        1998 (File No. 1-12823)
               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 1, 1999, among the       Incorporated by reference to Exhibit 10.1 to
               Company, several banks and Chase Manhattan        Form 10-Q for the quarterly period ended March 31,
               Bank as administrative agent, to Credit           1999 (File No. 1-12823)
               Agreement dated as of December 1, 1995
               among the Company, several banks and
               Chemical Bank, as administrative agent.

10.25          Catastrophe Equity Securities Issuance Option     Incorporated by reference to Exhibit 10.31 to
               Agreement, dated as of July 1, 1997 between       Form 10-K for the fiscal year ended September
               the Company on the one hand and European          30, 1997 (File No. 1-12823)
               Reinsurance Company of Zurich, Allianz
               Aktiengesellschaft, Continental Casualty
               Company and CIC-Hilldale, Inc. on the other
               hand

10.26          Quota Share Arrangement, dated as of April 1,     Incorporated by reference to Exhibit 10.2 to
               1999, between LaSalle Re and Continental          Form 10-Q for the quarterly period ended March 31,
               Casualty Company                                  1999 (File No. 1-12823)

10.27          Quota Share Treaty between CNA International      Incorporated by reference to Exhibit 10.17 to
               Reinsurance Company Limited and LaSalle Re        Registration Statement on Form S-1 (No. 333-14861)
               in respect of 1994 underwriting year of account
               (London office)

10.28          Quota Share Treaty between CNA International      Incorporated by reference to Exhibit 10.18 to
               Reinsurance Company Limited and LaSalle Re        Registration Statement on Form S-1 (No. 333-14861)
               in respect of 1995 underwriting year of account
               (London office)

10.29          Quota Share Treaty between CNA International      Incorporated by reference to Exhibit 10.19 to
               Reinsurance Company Limited and LaSalle Re        Registration Statement on Form S-1 (No. 333-14861)
               in respect of 1996 underwriting year of account
               (London office)

10.30          Quota Share Treaty between CNA International      Incorporated by reference to Exhibit 10.27 to
               Reinsurance Company Limited and LaSalle Re        Form 10-K for the fiscal year ended September
               in respect of 1997 underwriting year of account   30, 1997 (File No. 1-12823)
               (London office)
</TABLE>
<PAGE>

<TABLE>
<S>            <C>                                               <C>
10.31          Quota Share Treaty between CNA International      Incorporated by reference to Exhibit 10.27 to
               Reinsurance Company Limited and LaSalle Re        Form 10-K for the fiscal year ended September
               in respect of 1998 underwriting year of account   30, 1998 (File No. 1-12823)
               (London office)

10.32          Quota Share Treaty between CNA International      (1)
               Reinsurance Company Limited and LaSalle Re
               in respect of 1999 underwriting year of account
               (London office)

10.33          Quota Share Treaty between CNA International      Incorporated by reference to Exhibit 10.20 to
               Reinsurance Company Limited and LaSalle Re        Registration Statement on Form S-1 (No. 333-14861)
               in respect of 1994 underwriting year of account
               (Amsterdam office)

10.34          Quota Share Treaty between CNA International      Incorporated by reference to Exhibit 10.21 to
               Reinsurance Company Limited and LaSalle Re        Registration Statement on Form S-1 (No. 333-14861)
               in respect of 1995 underwriting year of account
               (Amsterdam office)

10.35          Quota Share Treaty between CNA International      Incorporated by reference to Exhibit 10.22 to
               Reinsurance Company Limited and LaSalle Re        Registration Statement on Form S-1 (No. 333-14861)
               in respect of 1996 underwriting year of account
               (Amsterdam office)

10.36          Quota Share Treaty between CNA International      Incorporated by reference to Exhibit 10.28 to
               Reinsurance Company Limited and LaSalle Re        Form 10-K for the fiscal year ended September
               in respect of 1997 underwriting year of account   30, 1997 (File No. 1-12823)
               (Amsterdam office)

10.37          Quota Share Treaty between CNA International      Incorporated by reference to Exhibit 10.28 to
               Reinsurance Company Limited and LaSalle Re        Form 10-K for the fiscal year ended September
               in respect of 1998 underwriting year of account   30, 1998 (File No. 1-12823)
               (Amsterdam office)

10.38          Quota Share Treaty between CNA International      (1)
               Reinsurance Company Limited and LaSalle Re
               in respect of 1999 underwriting year of account
               (Amsterdam office)

10.39          LMX Quota Share Retrocessional Agreement          Incorporated by reference to Exhibit 10.23 to
               between Continental Casualty Company and          Registration Statement on Form S-1 (No. 333-14861)
               LaSalle Re for the 1995 underwriting year of
               Account

10.40          LMX Quota Share Retrocessional Agreement          Incorporated by reference to Exhibit 10.24 to
               between Continental Casualty Company and          Registration Statement on Form S-1 (No. 333-14861)
               LaSalle Re for the 1996 underwriting year of
               Account
 </TABLE>
<PAGE>

<TABLE>
<S>            <C>                                               <C>
10.41          LMX Quota Share Retrocessional Agreement          Incorporated by reference to Exhibit 10.29 to
               between Continental Casualty Company and          Form 10-K for the fiscal year ended September
               LaSalle Re for the 1997 underwriting year of      30, 1997 (File No. 1-12823)
               Account

10.42          LMX Quota Share Retrocessional Agreement          Incorporated by reference to Exhibit 10.38 to
               between Continental Casualty Company and          Form 10-K for the fiscal year ended September
               LaSalle Re for the 1998 underwriting year of      30, 1998 (File No. 1-12823)
               Account

10.43          LMX Quota Share Retrocessional Agreement          (1)
               between Continental Casualty Company and
               LaSalle Re for the 1999 underwriting year of
               Account

12.1           Statement re computation of ratio of earnings to  (1)
               combined fixed charges and preferred share
               dividends

16.1           Letter re change in certifying accountant         Incorporated by reference to Exhibit 16 to Form
                                                                 8-K filed on October 28, 1999 (File No. 1-12823)


21.1           Subsidiaries of the Registrant                    Incorporated by reference to Exhibit 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 & Touche                      Filed with this document

27.1           Financial Data Schedule                           (1)
</TABLE>

(1) Filed with the Company's initial filing of its Annual Report on Form 10-K
    for the fiscal year ended September 30, 1999.