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

                                    FORM 10-K

 (Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934 [FEE REQUIRED]
    For the fiscal year ended December 31, 2001.

                                       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_________

                         Commission file number 1-12823

                           LaSalle Re Holdings Limited

             (Exact Name of Registrant as Specified in Its Charter)
           Bermuda                                            Not Applicable
(State or Other Jurisdiction of                              (I.R.S. Employer
Incorporation or Organization)                              Identification No.)

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

       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
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]

     There was no voting stock held by non-affiliates on March 15, 2002.

     The number of shares outstanding of each of the issuer's classes of common
stock as of March 15, 2002:

         Class                              Outstanding at March 15, 2002
         Common Stock, $1.00 par value                         20,432,043


<PAGE>




                           LASALLE RE HOLDINGS LIMITED

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

Item                                                                                                Page Number
----                                                                                                -----------

                                                    PART I

<S>        <C>                                                                                           <C>
  1.       BUSINESS.................................................................................     3

  2.       PROPERTIES...............................................................................     18

  3.       LEGAL PROCEEDINGS........................................................................     18

  4.       SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS......................................     18

                                                    PART II

  5.       MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
           STOCKHOLDER MATTERS......................................................................     18

  6.       SELECTED FINANCIAL DATA..................................................................     19

  7.       MANAGEMENTS' DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
           AND FINANCIAL CONDITION..................................................................     20

  7A.      QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK................................     31

  8.       FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA..............................................     32

  9.       CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.....     32

                                                   PART III

10.        DIRECTORS AND EXECUTIVE OFFICERS.........................................................     33

11.        EXECUTIVE COMPENSATION...................................................................     33

12.        SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
           MANAGEMENT...............................................................................     37

13.        CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...........................................     38

                                                    PART IV

14.        EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
           8-K......................................................................................     38
</TABLE>


                                        i


<PAGE>


                                     PART I

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

Note On Forward-Looking Statements

In connection with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, the Company sets forth below cautionary
statements identifying important risks and uncertainties that could cause its
actual results to differ materially from those that might be projected,
forecasted or estimated in its "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, made by or on behalf of the Company in this Annual Report
on Form 10-K and in press releases, written statements or documents filed with
the Securities and Exchange Commission, or in its communications and discussions
with investors and analysts in the normal course of business through meetings,
telephone calls and conference calls. Such statements may include, but are not
limited to, projections of premium revenue, investment income, other revenue,
losses, expenses, earnings, cash flows, plans for future operations, common
shareholders' equity (including book value per share), investments, financing
needs, capital plans, dividends, plans relating to products or services of the
Company and estimates concerning the effects of litigation or other disputes, as
well as assumptions for any of the foregoing and generally expressed with words
such as "believes", "estimates", "expects", "anticipates", "plans", "projects",
"forecasts", "goals", "could have", "may have", and similar expressions.

Forward-looking statements involve known and unknown risks and uncertainties,
which may cause the Company's results to differ materially from such
forward-looking statements. These risks and uncertainties include, but are not
limited to, the following:

-        Changes in the level of competition in the United States and
         international reinsurance or primary insurance markets that affect the
         volume or profitability of the Company's property/casualty business.
         These changes include, but are not limited to, changes in the intensity
         of price competition, the entry of new competitors, existing
         competitors exiting the market and the development of new products by
         new and existing competitors;

-        Changes in the demand for reinsurance, including changes in ceding
         companies' risk retentions and changes in the demand for excess and
         surplus lines insurance coverages;

-        Changes in reinsurance purchasing and distribution patterns;

-        The ability of the Company to execute its strategies in its
         property/casualty operations;

-        Catastrophe losses in the Company's United States and international
         property/casualty businesses;

-        Adverse development on property/casualty claims and claims expense
         liabilities related to business written in prior years, including, but
         not limited to, evolving case law and its effect on environmental and
         other latent injury claims, changing government regulations, newly
         identified toxins, newly reported claims, new theories of liability or
         new insurance and reinsurance contract interpretations;

-        Changes in inflation that affect the profitability of the Company's
         current property/casualty business or the adequacy of its
         property/casualty claims and claims expense liabilities related to
         prior years' business;


                                       1
<PAGE>



-        Lower than estimated retrocessional or reinsurance recoveries on unpaid
         losses, including, but not limited to, losses due to a decline in the
         creditworthiness of the Company's retrocessionaires or reinsurers;

-        Changes in the Company's retrocessional arrangements;

-        Increases in interest rates, which may cause a reduction in the market
         value of the Company's fixed income portfolio, and its common
         shareholders' equity;

-        Decreases in interest rates which may cause a reduction of income
         earned on cash flow from operations and the reinvestment of the
         proceeds from sales or maturities of existing investments;

-        Changes in the composition of the Company's investment portfolio;

-        Credit losses on the Company's investment portfolio;

-        Adverse results in litigation matters;

-        The passage of federal or state legislation subjecting the Company to
         United States taxation or regulation;

-        A contention by the United States Internal Revenue Service that the
         Company is subject to United States taxation;

-        The impact of mergers and acquisitions;

-        Gains or losses related to changes in foreign currency exchange rates;

-        Changes in the Company's capital needs;

-        The ability of Trenwick Group Ltd. to refinance or repay its
         outstanding indebtedness; and

-        Changes in the financial strength ratings.

In addition to the factors outlined above that are directly related to the
Company's businesses, the Company is also subject to general business risks,
including, but not limited to, adverse legislation and regulation, adverse
publicity or news coverage, changes in general economic factors and the loss of
key employees.

The facts set forth above should be considered in connection with any
forward-looking statement contained in this Annual Report on Form 10-K. The
important factors that could affect such forward-looking statements are subject
to change, and the Company does not intend to update any forward-looking
statement or the foregoing list of important factors. By this cautionary note
the Company intends to avail itself of the safe harbor from liability with
respect of forward-looking statements provided by Section 27A and Section 21E
referred to above.



                                       2
<PAGE>



ITEM 1. BUSINESS

General development of the business

The Company was incorporated in Bermuda in September 1995 to act as an
investment holding company for LaSalle Re, which was incorporated in Bermuda in
October 1993 and commenced operations on November 22, 1993.

On September 27, 2000, the Company, LaSalle Re, Trenwick Group Ltd. ("Trenwick")
and Trenwick Group Inc. completed a business combination. Under the terms of the
business combination, the common shareholders of the Company, LaSalle Re and
Trenwick Group Inc. exchanged their shares on a one-for-one basis for shares in
Trenwick. Following this transaction, the Company became a wholly owned
subsidiary of Trenwick.

In connection with the Trenwick/LaSalle business combination, the Company
changed its year end from September 30 to December 31 to be consistent with
Trenwick. Consequently, the data presented in the Form 10-K is for the twelve
months ended December 31, 2001, the twelve months ended December 31, 2000, the
three months ended December 31, 1999 and the twelve months ended September 30,
1999.

Trenwick is the Bermuda holding company which, including the Company, has five
principal operating units. Trenwick America Reinsurance Corporation provides
reinsurance to U.S. insurance companies for property and casualty risks.
Trenwick International Limited underwrites facultative reinsurance and specialty
insurance on a worldwide basis. Canterbury Financial Group Inc. underwrites
specialty property and casualty primary insurance programs through managing
general agents. Chartwell Managing Agents Limited manages underwriting
syndicates at Lloyds.

LaSalle Re 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. It 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 has three wholly owned subsidiaries: LaSalle Re Services (currently
inactive), which acted as a representative office for the Company in the United
Kingdom up until the completion of the Trenwick/LaSalle business combination,
LaSalle Re Capital, which was incorporated in Bermuda in November 1996 to
provide capital support to selected syndicates at Lloyd's; and LaSalle Re
Barbados, which was incorporated in Barbados in 2001 and acts as an investment
holding company.

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 syndicates. 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 multi-peril crop and political risk coverages. The Lloyd's syndicates'
segment, currently in run-off was written through LaSalle Re Capital, which
provided capital support to selected Lloyd's syndicates. The lines of business
written by the selected syndicates included direct insurance and facultative
property reinsurance, marine insurance and reinsurance, professional indemnity,
directors and officers insurance and bankers blanket bond


                                       3
<PAGE>



business. Effective for the 2001 underwriting year at Lloyd's, LaSalle Re
Capital withdrew its capital support from all Lloyd's syndicates.

Complete financial information about segments is presented in Note 3 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 ended December 31, 2001 and 2000,
the three month period ended December 31, 1999 and the fiscal year ended
September 30, 1999 (dollars in millions):


<TABLE>
<CAPTION>
                                               2001 Year              2000 Year            1999 Period            1999 Year
                                          Gross        Number     Gross      Number     Gross      Number     Gross       Number
                                         Premiums        of      Premiums      of      Premiums      of      Premiums       of
                                         Written     Contracts   Written   Contracts   Written   Contracts    Written   Contracts
                                         -------     ---------   -------   ---------   -------   ---------    -------   ---------
<S>                                       <C>           <C>       <C>         <C>        <C>         <C>      <C>          <C>
Reinsurance segment:
Property catastrophe reinsurance:
     Excess of loss.................      $101.5        646       $78.1       661        $1.0        18       $ 81.4       717
     Pro rata.......................         3.2          2         2.5         3          --        --         11.1         8
Other lines of business:
     Property--risk excess and pro
     Rata...........................         8.9         43         6.4        53         0.5         2          4.9        62
     Casualty.......................         2.0         20         2.2        17         0.2         1          6.1        26
     Space, marine and aviation.....         3.6          8         3.8        24                                5.4        31
     Miscellaneous..................         6.3         28         3.9        24         1.2         4          4.4        43
Fronted premiums, adjustments,
   reinstatement premiums and no
   claims bonuses...................        14.8         --         4.7        --         4.1        --          3.3        --
                                            -----       ---       -----       ---         ---       ---        -----       ---
                                           140.3        747       101.6       782         7.0        25        116.6       887
                                           ======       ===       =====       ===         ===       ===        =====       ===
Lloyd's segment:

     LaSalle Re Capital (in run-off)         5.2                   28.6                   3.3                   22.4
                                          ------                 ------                 -----                 ------
          Total.....................      $145.5                 $130.2                 $10.3                 $139.0
                                          ======                 ======                 =====                 ======

</TABLE>

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 an accumulation of catastrophes in a year
rather than one occurrence.

The Company writes a limited number of property catastrophe pro rata reinsurance
treaties. 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, on occasions may audit 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.



                                       4
<PAGE>


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 its insurance and 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 property pro rata treaties, the
Company also writes other lines of reinsurance, which currently include casualty
clash, marine, aviation, satellite, terrorism, multi-peril crop 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 should 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 clash 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. Multi-peril crop
includes coverage for agricultural losses associated with severe drought and
floods.

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 December 31, 2000, the Company provided fronting
arrangements for three reinsurers. During 2001, this business was insignificant.

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 or minimum deposit, 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 equal to the difference between the initial deposit or minumum deposit and
the revised 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.



                                       5
<PAGE>



The Company typically receives and pays reinstatement premiums on its assumed
and ceded contracts when a catastrophic event occurs that results in a loss.
Coverage is reinstated over the remaining life of the contracts. As a result of
the September 11th terrorist attacks, the Company received gross reinstatement
premiums of $14.4 million and paid ceded reinstatement premiums of $19.3 million
in 2001. The net decrease on net premiums earned due to reinstatement premiums
for 2001 was $10.2 million.

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

Lloyd's syndicates segment

The Company formed LaSalle Re Capital to provide capital support on an
underwriting year basis to selected Lloyd's syndicates. These syndicates
individually write the following lines of business: direct insurance and
facultative property reinsurance; marine insurance and reinsurance; and
professional indemnity, directors and officers' insurance and bankers blanket
bond business. Following the Trenwick/LaSalle business combination, the Company
withdrew its capital support for the 2001 underwriting year. This decision is in
line with the Company's strategy of returning to its core business of property
catastrophe reinsurance.

The Company has provided capital support to three syndicates for the 2000 and
1999 underwriting years of approximately $21.3 million ((pound)14.6 million) and
$28.3 million ((pound)19.4 million), respectively. Through this support and as
at December 31, 2001, the Company has written gross premiums of approximately
$18.6 million for the 2000 underwriting year and approximately $32.9 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. LaSalle Re Capital provides capital support to the syndicates
through letters of credit totaling $16.1 million ((pound)9.8 million). During
the year ended December 31, 2001, the 1998 underwriting year on which LaSalle Re
Capital participated was closed and settled. The net result from the 1998
underwriting year was a loss of $5.8 million to the Company.

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
December 31, 2001, excluding the premiums written by LaSalle Re Capital, fronted
premiums, adjustment premiums, reinstatement premiums and no claims bonuses, 50%
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 50% of gross premiums written
was 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.



                                       6
<PAGE>



The following table sets forth the percentage of the Company's gross premiums
written for the years ended December 31, 2001 and 2000, the three month period
ended December 31, 1999 and the fiscal year ended September 30, 1999 allocated
to the geographic region in which the risks originate: (dollars in millions):

<TABLE>
<CAPTION>

 Geographic Area                       2001 Year                 2000 Year                 1999 Period                1999 Year
                                             Percentage                Percentage                Percentage               Percentage
                                  Gross       of Gross      Gross       of Gross      Gross       of Gross       Gross     of Gross
                                 Premiums     Premiums     Premiums     Premiums    Premiums      Premiums     Premiums    Premiums
                                 Written      Written      Written      Written      Written       Written      Written    Written
                                 -------      -------      -------      -------      -------       -------      -------    -------
<S>                                <C>          <C>        <C>            <C>        <C>            <C>          <C>         <C>
United States...................   $62.4        49.7%      $ 51.4         53.0%      $  0.7         24.1%        $ 60.1      53.0%
Europe (excluding
  the U.K.).....................    10.8         8.6          4.8          5.0           --           --            9.5       8.4
United Kingdom..................     9.1         7.3          7.0          7.2          0.1          3.5            9.8       8.6
Japan...........................    10.7         8.5          4.9          5.1          0.4         13.8            2.9       2.6
Australasia.....................     5.9         4.7          3.0          3.1          0.2          6.9            4.5       4.0
Worldwide(1)....................    17.0        13.6         16.8         17.3          1.2         41.4           14.1      12.4
Worldwide (excluding
  the U.S.)(2)..................     2.9         2.3          2.9          3.0           --           --            5.4       4.8
Other...........................     6.7         5.3          6.1          6.3          0.3         10.3            7.0       6.2
                                   -----       -----       ------        -----          ---        -----          -----     -----
                                   125.5       100.0%        96.9        100.0%         2.9        100.0%         113.3     100.0%
                                               =====                     =====                     =====                    =====
LaSalle Re Capital..............     5.2                     28.6                       3.3                        22.4
Fronted premiums, adjustments,
  reinstatement premiums and
  no claims bonuses.............    14.8                      4.7                       4.1                         3.3
                                  ------                   ------                     -----                      ------
     Total......................  $145.5                   $130.2                     $10.3                      $139.0
                                  ======                   ======                     =====                      ======
</TABLE>

(1) The category "Worldwide" consists of contracts that cover more than one
    zone, at least one of which is in the U.S.

(2) The category "Worldwide (excluding the U.S.)" consists of contracts that
    cover more than one zone (none of which is in the U.S.). The exposure in
    this category for business written to date is predominantly from Europe and
    Japan.

Program limits

Property catastrophe reinsurance is usually arranged in a series of layers,
which form an individual program. The Company may write one or more of these
layers with each layer constituting a separate contract. The following table
sets forth the number of the Company's property catastrophe excess of loss
programs written in the year ended December 31, 2001 by aggregation of program
limits:

                                                                  2001 Year
                                                                 -----------
            Greater than $25 million........................          2
            $20-25 million..................................          1
            $15-20 million..................................         13
            $10-15 million..................................         20
            $7.5-10 million.................................         23
            $5-7.5 million..................................         40
            $2.5-5 million..................................         76
            Less than $2.5 million..........................         84
                                                                    ---
                 Total......................................        259
                                                                    ===



                                       7
<PAGE>


Underwriting

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

The Company sets limits on its aggregate loss exposure and 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
re-evaluates its pricing to ensure that the terms and conditions of its business
are competitive within the market.

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

The Company uses proprietary modeling systems as well as commercially available
catastrophe simulation models to estimate exposure to loss and evaluate the
pricing adequacy of its reinsurance programs. These models also assist in the
monitoring of aggregate exposures within geographic zones.

The commercially available models include: (1) AIR-CATRADER 3.8, 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 4.1, which
derives portfolio loss scenarios based on detailed risk location data provided
by the primary insurer.

The results of all analyses are measured against the Company's current portfolio
and other available external market information; and it is 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
marginal return on equity. In addition, the underwriting of all new exposures is
reviewed by the Chief Underwriting Officer and/or the President of the Company.

On October 1, 1998 the Company entered into an Underwriting Support Services
Agreement with CNA Re Services Company ("CRSC") and CNA Bermuda. Under the
Underwriting Support Services Agreement, which expired on September 30, 2001,
CRSC provided underwriting support services to the Company on a daily or hourly
fee basis when and as requested by the Company. Between the closing of the
Trenwick/LaSalle business combination and September 30, 2001, the Company did
not use the support services provided under the Underwriting Support Services
Agreement.

Reinsurance protections purchased

The Company utilizes various reinsurance protections to reduce its exposure to
large losses. The Company reviews the claims paying ability of each reinsurer
for adequacy before each cover is placed.

In 2001, the Company has purchased three excess of loss programs which provide
coverage of $20.0 million in excess of the first $30.0 million of losses per
occurrence, $5.0 million in excess of the first $50.0 million of losses per
occurrence and $25.0 million in excess of the first $75.0 million of losses per
occurrence.



                                       8
<PAGE>



During 1999, the Company purchased an excess of loss program which provided
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. This
contract was canceled effective December 31, 2000.

In addition, in 1999 and 2000, the Company had a quota share arrangement with
CNA. This arrangement was canceled effective December 31, 2000. Under this
arrangement, the Company ceded an adjustable proportion of U.S. property
catastrophe premium, net of acquisition costs, which was negotiated on normal
commercial terms and included an override commission and profit commission
payable to the Company.

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.
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
utilized a Catastrophe Equity Put ("CatEPut") option program since July 1, 1997.
The CatEPut option was a capital replacement tool that enabled the Company to
put a pre-arranged amount 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. After the Trenwick/LaSalle business combination,
although the CatEPut remained in effect with the same triggers, the issuer of
the convertible preferred shares changed from LaSalle to the publicly traded
Trenwick. Accordingly, although the CatEPut will be triggered by loss experience
at the Company, the capital will be received by Trenwick.

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

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



                                       9
<PAGE>


Subsidiaries and affiliates of Aon Corporation (collectively, "Aon") were
brokers for 26.7% and 23.3% of the Company's gross written premiums in the years
ended December 31, 2001 and December 31, 2000 respectively. Guy Carpenter &
Company, Inc., together with its affiliates, generated 26.1% and 19.8% of the
Company's gross premiums written for the years ended December 31, 2001 and
December 31, 2000 respectively. Willis Faber North America, Inc., together with
its affiliates, generated 10.7% and 5.4% of the Company's gross premiums written
for the years ended December 31, 2001 and December 31, 2000, respectively. No
other broker accounted for more than 10% of the Company's gross premiums written
for the years ended December 31, 2001 and December 31, 2000.

Consistent with its emphasis on disciplined underwriting practices, the Company
was not obligated to accept any business from any broker. No intermediary has
the authority to bind the Company on any business.

Reserves

The Company establishes loss reserves for the estimated ultimate settlement
costs of all losses and loss expenses incurred with respect to business written
by it. United States generally accepted accounting principles, sometimes
referred to as U.S. 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 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.



                                       10
<PAGE>


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 Chief Actuary of Trenwick and
reviewed by the Company's executive officers. 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 Company has implemented a set of investment guidelines designed to meet its
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 portfolio includes two sections: a shareholder portfolio
and a reserve portfolio. The shareholder portfolio has a longer time horizon
than the reserve portfolio.

Quality of portfolio

The Company's investment guidelines requires the securities held in the
shareholder portfolio and the reserve portfolio to maintain an average quality
of A+ and AA, respectively. In addition, the shareholder portfolio and the
reserve portfolio will not invest in securities below A- and BB+, respectively.

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 two and
one half to three years and, at December 31, 2001, the modified average duration
of the portfolio was 2.7 years. The Company expects to periodically re-evaluate
the target duration in light of market conditions, including the level of
interest rates, and estimates of the duration of its liabilities.



                                       11
<PAGE>


The table below sets forth the distribution of the Company's debt securities
available for sale at year end 2001 by type, maturity and quality rating.

                            Debt Security Investments
            (Amounts expressed in thousands of United States dollars)

<TABLE>
<CAPTION>
                                                               Average
                                                               Maturity                Fair           Amortized
                                                               in Years                Value            Cost
                                                           -----------------     ---------------    -------------
<S>                                                              <C>                   <C>              <C>
     Type
     U.S. and U.K. federal government
        securities, including agencies                           2.2                   54,869           52,803
     Other foreign government securities                         1.0                   25,186           24,448
     Mortgage and other asset-backed securities                  2.8                  119,411          117,991
     Corporate and other debt securities                         6.0                  307,812          307,232
                                                           -----------------     ---------------    -------------
     Total debt securities                                       4.4                  507,278          502,474

     Maturity
     Due in one year or less                                                           74,539           73,125
     Due in one year through five years                                               301,211          292,821
     Due in five years through ten years                                               74,569           74,416
     Due after ten years                                                               56,959           62,112
                                                                                 ---------------    -------------
     Total debt securities                                                            507,278          502,474

</TABLE>

<TABLE>
<CAPTION>
                                                            Investment Grade            Non-investment Grade
                                                       --------------------------    --------------------------
Quality                                                 Fair Value        Cost        Fair Value        Cost
                                                       ------------    ----------    ------------   -----------
<S>                                                       <C>           <C>            <C>           <C>
U.S. and U.K. federal government
  securities, including agencies                          $ 54,869      $ 52,803        $    --        $    --
Other foreign government securities                         25,186        24,448             --             --
Mortgage and other asset-backed securities                 119,411       117,991             --             --
Corporate and other debt securities                        274,914       268,841         32,898         38,391
                                                         ---------     ---------      ---------      ---------
Total investment grade and
  non-investment grade debt securities                    $474,380      $464,083        $32,898        $38,391
                                                         =========     =========      =========      =========
Percentage of total debt securities                           93.5%         92.4%           6.5%           7.6%

Investment Grade Quality (fair value)                      Aaa            Aaa             A             Baa
                                                         ---------     ---------      ---------      ---------
U.S. and U.K. federal government
  securities, including agencies                          $ 54,869      $     --        $    --        $    --
Other foreign government securities                             --       $25,186             --             --
Mortgage and other asset-backed securities                 119,411            --             --             --
Corporate and other debt securities                         95,888        63,000         83,048         32,978
                                                         ---------     ---------      ---------      ---------
Total investment grade and
  non-investment grade debt securities                    $270,168       $88,186        $83,048        $32,978
                                                         =========     =========      =========      =========
Percentage of total debt securities                           53.2%         17.4%          16.4%           6.5%

Non-investment Grade Quality (fair value)                  Ba/B          Caa/Ca           P1         Not rated
                                                         ---------     ---------      ---------      ---------
Mortgage and other asset-backed securities                $     --      $     --        $    --        $    --
Corporate and other debt securities                         32,898            --             --             --
                                                         ---------     ---------      ---------      ---------
Total non-investment grade debt securities                 $32,898      $     --        $    --        $    --
                                                         =========     =========      =========      =========
Percentage of total debt securities                            6.5%          0.0%           0.0%           0.0%

</TABLE>



                                       12
<PAGE>


Equity securities/Real estate

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

Foreign currency exposures

As at December 31, 2001, all of the Company's debt securities were denominated
in U.S. dollars.

In an effort to manage other areas of exposure to foreign currency exchange rate
fluctuations, the Company may from time to time enter into foreign exchange
contracts. These contracts generally involve the exchange of one currency for
U.S. dollars at some future date. At December 31, 2001 and 2000, the Company had
no principal amounts outstanding under foreign exchange contracts. See
"Quantitative and Qualitative Disclosure About Market Risk."

Investment manager

Effective January 1, 2001, the Company appointed Wellington Management Company
LLP to act as its investment manager. Prior to this, LaSalle Re had an
investment management agreement with Aon Advisors (UK) Limited which terminated
December 31, 2000.

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 existing and newly formed
Bermuda-based property catastrophe reinsurers. 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. 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 Company and
is assigned "A-" financial strength rating by Standard & Poor's. These ratings
are based on factors of interest to cedents and brokers and are not directed
toward the protection of investors. These ratings are neither a rating of
securities nor a recommendation to buy, hold or sell such securities. Insurance
ratings are one factor used by brokers and cedents as a means of assessing the
financial strength and quality of reinsurers. In addition, a cedent's own rating
may be adversely affected by the lack of a rating of its reinsurer. Therefore, a
cedent may elect to reinsure with a competitor of the Company that has a higher
insurance rating. Similarly, the lowering or loss of a rating in the future
could adversely affect the Company's ability to compete.

Other than being a corporate member of selected Lloyd's syndicates, the Company
is not licensed or admitted as an insurer in any jurisdiction other than Bermuda
and has no plans to become so licensed or admitted. Because jurisdictions in the
United States do not permit insurance companies to take credit for reinsurance
obtained from unlicensed or non-admitted insurers on their statutory financial
statements unless security is posted, the Company's reinsurance contracts
generally require it to post a letter of credit or provide other security for
outstanding claims and/or unearned premiums. In order to post these letters of
credit, the Company




                                       13
<PAGE>


generally is required to provide the issuing banks with collateral to cover 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 March 1, 2001, the Company employed 25 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 and tax matters

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.

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 Supervisor of
Insurance, who is the chief administrative officer under the Insurance



                                       14
<PAGE>



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 Supervisor.

Annual statutory financial return. LaSalle Re is required to file annually with
the Supervisor 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 December 31, 2001, LaSalle Re's actual
statutory capital and surplus was $430.5 million, compared to its minimum
solvency margin requirement of $100 million.

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



                                       15
<PAGE>


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 Guy
Hengesbaugh 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
Supervisor, 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 Supervisor an affidavit stating that it will continue to meet the required
margins; (5) is prohibited, without the prior approval of the Minister, from
reducing by 15% or more its total statutory capital, as set out in its previous
year's financial statements; and (6) is required, at any time it fails to meet
its solvency margin, within 30 days (45 days where total statutory capital and
surplus falls to $75 million or less) after becoming aware of that failure or
having reason to believe that such failure has occurred to file with the
Minister a written report containing certain information.

Certain other considerations. As "exempted" companies, the Company, LaSalle Re
and LaSalle Re Capital may not, without the express authorization of the Bermuda
legislature or a license granted by a Minister, participate in certain business
transactions, including: (1) the acquisition or holding of land in Bermuda
(except that required for its business and held by way of lease or tenancy
agreement for a term not exceeding 50 years or that used to provide
accommodation or recreational facilities for its officers and employees and held
with the consent of the Minister for a term not exceeding 21 years); (2) the
taking of mortgages on land in




                                       16
<PAGE>


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.
Lloyd's operates under a self-regulatory regime under the Lloyd's Act 1982 and
has the power to set, interpret and change the rules which govern the operation
of the Lloyd's market, Lloyd's prescribes, in respect of its managing agents and
corporate members, certain minimum standards relating to their management and
control, solvency and various other requirements. In addition, Lloyd's imposes
restrictions against persons becoming controllers and major shareholders of
managing agents and corporate members without the consent of Lloyd's first
having been obtained.

In 2000, the Financial Services and Markets Bill established the Financial
Services Authority as a single regulator to supervise securities, banking and
insurance business, including Lloyd's. In 2001, the Financial Services Authority
gained wider authorization and intervention powers in relation to Lloyd's as
part of the implementation of the Financial Services and Markets Act.

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.

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 Supervisor 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.




                                       17
<PAGE>



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.

ITEM 2. PROPERTIES

The Company's executive offices are located in approximately 10,000 square feet
of leased office space in Hamilton, Bermuda. Management believes the Company's
current office space is adequate for its needs.

ITEM 3. LEGAL PROCEEDINGS

The Company and its subsidiaries are at times party to various legal proceedings
generally arising in the normal course of its business. The Company does not
believe that the eventual outcome of any such proceeding will have a material
effect on its financial condition or business. Pursuant to the Company's
reinsurance arrangements, disputes are generally required to be finally settled
by arbitration.

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

No matters were submitted to a vote of shareholders of the Company during the
fourth fiscal quarter of the calendar year ended December 31, 2001.

                                     PART II

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

Following the business combination with Trenwick, the Company's Common Shares,
which were quoted on The New York Stock Exchange under the symbol "LSH", were
delisted. There is no established public trading market for the Company's Common
Shares, all of which are owned by Trenwick.



                                       18
<PAGE>


In the year ended September 30, 1999, the Company paid a quarterly dividend of
$0.375 on its common stock for the first three quarters of the year. No further
dividends on common stock were paid by the Company while its common stock was
publicly held. The Company paid a quarterly dividend of $.547 on its Series A
preferred shares in each of the four quarters of 2001, 2000 and 1999.

ITEM 6.  SELECTED FINANCIAL DATA

     Expressed in thousands of United States Dollars, except other data. The
2001 and 2000 years relates to a December 31 year end and the 1999, 1998, 1997
and 1996 years relates to September 30 year end.

<TABLE>
<CAPTION>
                                         2001 Year     2000 Year     1999 Period    1999 Year     1998 Year     1997 Year
                                         ---------     ---------     -----------    ---------     ---------     ---------
<S>                                       <C>          <C>             <C>          <C>           <C>           <C>
Statement of Income Data

Gross premiums written                    $145,532     $130,163        $10,307      $139,010      $155,316      $171,386
Net premiums earned                         97,542      108,096         30,391       126,615       154,620       163,933
Net investment income (including
realized gains and losses)                  46,495       35,756          8,588        34,462        39,863        33,664
Claims and claims expenses incurred        122,981       80,586         46,642       131,147        95,539        31,199
Policy acquisition costs                    20,887       21,270          5,878        19,844        22,661        26,018
Underwriting expenses                       11,771       13,342          4,533        13,733         8,932        12,656
Income (loss)  before minority
interest                                   (11,245)      24,104        (19,831)       (5,679)       65,232       121,468
Minority interest(1)                                        839         (4,990)       (2,845)       13,426        24,391
Net income (loss)                          (11,245)      23,265        (14,841)       (2,834)       51,806        97,077
Common dividends declared                    7,500        1,500             --        17,543        44,641        44,860

Other Data

Loss ratio                                  126.1%        74.6%         153.5%        103.6%         61.8%         19.0%
Expense ratio                                33.5%        32.0%          34.3%         26.5%         20.4%         23.6%
Combined ratio                              159.6%       106.6%         187.8%        130.1%         82.2%         42.6%

Balance Sheet Data (at end of
period)

Total investments and cash                507,278      $499,666       $559,591      $556,976      $606,757       $553,043
Total assets                              802,320       725,495        726,168       736,107       757,290        686,088
Reserve for losses and loss expenses      280,487       174,763        190,352       146,552        97,942         45,491
Minority interest                              --            --         86,906        93,055       105,569         93,355
Total shareholders' equity                437,596       464,091        361,960       382,197       430,053        425,226
</TABLE>


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




                                       19
<PAGE>


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

The following discussion highlights material factors affecting the Company's
results of operations for the three years ended December 31, 2001, December 31,
2000 and September 30, 1999. This discussion and analysis should be read in
conjunction with the audited consolidated financial statements and notes thereto
of the Company contained in Item 8 of this Form 10-K.

Results of Operations - Years Ended December 31, 2001 and 2000

<TABLE>
<CAPTION>
                                                       2001 Year           2000 Year             Change
                                                       ---------           ---------             ------
                                                                        (in thousands)

<S>                                                     <C>                 <C>                 <C>
Underwriting loss                                       $(58,115)           $ (7,102)           $(51,013)
Net investment income                                     38,928              37,444               1,484
Interest expense                                              --              (1,173)              1,173
Corporate expenses                                            --              (3,255)              3,255
                                                        --------            --------            --------
Operating income (loss)                                  (19,187)             25,914             (45,101)
Net realized investment (losses) gains                     7,567              (1,688)              9,255
Goodwill accretion                                           488                 122                 366
Foreign currency losses                                     (113)               (244)                131
                                                        --------            --------            --------
Income (loss) before minority interest                   (11,245)             24,104             (35,349)
Minority interest in net (income) loss of
   subsidiary                                                 --                (839)                839
                                                        --------            --------            --------
Net income (loss)                                        (11,245)             23,265             (34,510)
Dividends on preferred stock                              (6,563)             (6,563)                 --
                                                        --------            --------            --------
Net income (loss) available to common
   shareholders                                         $(17,808)           $ 16,702            $(34,510)
                                                        ========            ========            ========
</TABLE>

The operating loss of $19.2 million in 2001 represented a $45.1 million decrease
over the operating income of $25.9 million recorded in 2000. This decrease was
primarily due to the deterioration of underwriting results caused by losses
incurred related to Tropical Storm Alison ($8.0 million) and the September 11th
terrorist attacks ($141.8 million gross and $86.8 million net of reinsurance
recoverable). The adverse effect of the underwriting performance primarily
generated the decrease in net income of $34.5 million.

Underwriting income (loss)

<TABLE>
<CAPTION>
                                                       2001 Year            2000 Year              Change
                                                       ---------            ---------              ------
                                                                        (in thousands)

<S>                                                    <C>                  <C>                   <C>
Net premiums earned                                    $ 97,542             $108,096              $(10,554)
                                                       --------             --------              --------

Claims and claims expenses incurred                    (122,981)             (80,586)              (42,395)
Acquisition costs and underwriting expenses             (32,676)             (34,612)                1,936
                                                       --------             --------              --------
Total underwriting costs and expenses                  (155,657)            (115,198)              (40,459)
                                                       --------             --------              --------
Net underwriting loss                                  $(58,115)            $ (7,102)             $(51,013)
                                                       ========             ========              ========

Loss ratio                                               126.1%                74.6%                 51.5%
Underwriting expense ratio                                33.5%                31.9%                  1.6%
                                                       --------             --------              --------
Combined ratio                                           159.6%               106.5%                 53.1%

</TABLE>



                                       20
<PAGE>


The underwriting loss of $58.1 million in 2001 represented a $51.0 million
increase compared to the underwriting loss of $7.1 million in the 2000 year. The
underwriting loss in 2001 included losses of $122.0 million on current year loss
events and net additions to prior years' reserves of $1.0 million. Of this
$123.0 million total loss incurred, $22.1 million relates to Lloyd's syndicates
which are now in run-off. The underwriting loss in 2000 included both losses of
$60.2 million on current year loss events and additions to prior years' reserves
of $20.4 million.

The effect of losses from the September 11th terrorist attacks is an increase in
the underwriting loss of $97.8 million resulting from increase in claims and
claims expenses incurred of $86.8 million and a decrease in net premiums earned
of $10.2 million due to net reinstatement premiums on assumed and ceded
contracts. This effect on the combined ratio was 96.4 percentage points
principally from increases in the loss ratio.

Premiums written

Gross premiums written for 2001 were $145.5 million compared to $130.2 million
for 2000, an increase of $15.3 million or 11.8%. Details of gross premiums
written are provided below.

<TABLE>
<CAPTION>
                                                         2001 Year          2000 Year         Change
                                                         ---------          ---------         ------
                                                                         (in thousands)
<S>                                                      <C>                 <C>              <C>
Worldwide property catastrophe reinsurance               $140,331            $101,570         $38,761
Lloyd's syndicates                                          5,201              28,593         (23,392)
                                                         --------            --------         -------
Total                                                    $145,532            $130,163         $15,369
                                                         ========            ========         =======

</TABLE>

The increase in worldwide property catastrophe reinsurance gross premium
writings for 2001 compared to 2000 resulted primarily from reinstatement
premiums of $14.4 million generated by reinstated coverages on assumed contracts
impacted by losses from the September 11th terrorist attacks.

The decrease in Lloyd's sydicates gross written premiums for 2001 compared to
2000 is expected as all of the Lloyd's sydicates business underwritten by the
Company prior to the combination with Trenwick has not been renewed in 2001 and
has been classified as runoff.

Premiums earned

<TABLE>
<CAPTION>
                                                         2001 Year          2000 Year          Change
                                                         ---------          ---------          ------
                                                                         (in thousands)
<S>                                                      <C>                <C>               <C>
Gross premiums written                                   $ 145,532          $ 130,163         $ 15,369
Change in gross unearned  premiums                           4,992              9,966           (4,974)
                                                         ---------          ---------         --------
Gross premiums earned                                      150,524            140,129           10,395
                                                         ---------          ---------         --------

Premiums ceded                                             (50,453)           (31,631)         (18,822)
Change in premiums ceded                                    (2,529)              (402)          (2,127)
                                                         ---------          ---------         --------
Amortized ceded premiums                                   (52,982)           (32,033)         (20,949)
                                                         ---------          ---------         --------
Net premiums earned                                      $  97,542          $ 108,096         $(10,554)
                                                         =========          =========         ========
</TABLE>

Gross premiums ceded for 2001 were $50.5 million compared to $31.6 million for
2000. This increase was primarily due to reinstated covers of $19.3 million on
ceded contracts following the September 11th terrorist attacks.

Net premiums earned in 2001 were $97.5 million compared to $108.1 million for
2000. The decrease in net premiums earned is primarily due to the increase in
ceded premiums.



                                       21
<PAGE>


Claims and claims expenses

Claims and claims expenses for 2001 were $123.0 million, a increase of $42.4
million compared to claims and claims expenses of $80.6 million for 2000. The
increase is due to losses associated with the September 11th terrorist attacks.
The Company's incurred losses related to the September 11th terrorist attacks
are based upon estimates of its ultimate exposure derived from a manual
assessment of its outstanding policies. The assessment included market share
analysis, probable maximum loss analysis, independent risk modeling analysis and
cedent loss estimates. The Company's primary exposure for this event relates to
commercial property damage, which includes business interruption and incidental
workers' compensation coverage, and catastrophe aviation coverage. The Company's
estimated loss from the September 11th terrorist attacks is $141.8 million gross
and $86.8 million net of reinsurance recoverable. The reinsurance recoverable of
$55.0 million related to the terrorist attacks is from companies which have
financial strength ratings from A.M. Best of "A" or better. In addition to
losses incurred related to the September 11th terrorist attack, the Company
incurred losses of $8.0 million associated with Tropical Storm Alison. Claims
and claims expenses incurred in 2000 included $6.5 million of catastrophe losses
relating to U.K. floods and an increase of $20.4 million in prior period
occurrences, principally losses relating to two storms, Martin and Anatol, which
hit Europe in late December 1999.

Underwriting expenses

                                       2001 Year        2000 Year        Change
                                       ---------        ---------        ------
                                                     (in thousands)
Policy acquisition costs                $20,886          $21,270        $  (384)
Underwriting expenses                    11,790           13,342         (1,552)
                                        -------          -------        -------
Total underwriting expenses             $32,676          $34,612        $(1,936)
                                        =======          =======        =======
Underwriting expense ratio                 33.5%            31.9%           1.6%
                                        =======          =======        =======

Total underwriting expenses, comprising policy acquisition costs and
underwriting expenses, for 2001 decreased by $1.9 million compared to total
underwriting expenses for 2000. Policy acquisition costs as a percentage of net
premiums earned were 21.4% for 2001 compared to 19.7% for 2000. The increase in
the ratio occurred principally because of an increase in the amount of amortized
ceded premiums. As a percentage of gross premiums earned, policy acquisition
costs were 13.9% in 2001 compared to 15.2% in 2000. The decrease of 1.3% was
primarily due to the Company deriving less premiums from LaSalle Re Capital
which has a higher expense ratio than the rest of the business.

Underwriting expenses for 2001 were $11.8 million compared to $13.3 million for
2000, a decrease of $1.5 million. The decrease is primarily due to a reduction
in overall salary costs.

Net investment income

                                      2001 Year       2000 Year          Change
                                      ---------       ---------          ------
                                                    (in thousands)
Average invested assets               $ 491,861       $ 508,081        $(16,220)
Average annualized yields                   7.5%            7.0%            0.5%
Investment income - portfolio            37,016          35,691           1,325
Investment income - non-portfolio         2,548           2,667            (119)
Investment expenses                        (636)           (914)            278
                                      ---------       ---------        --------
Net investment income                 $  38,928       $  37,444        $  1,484
                                      =========       =========        ========

Net investment income for 2001 was $38.9 million compared to $37.4 million for
2000. The increase in net investment income in 2001 was primarily due to changes
in the allocation of investments to higher yielding debt securities following a
change in investment managers.



                                       22
<PAGE>


Interest expense

Interest expense was $1.1 million in 2000. There were no interest expense
charges in 2001. Interest expense in 2000 included financing charges associated
with a ceded reinsurance contract and other interest expenses related to the
commitment fees payable on the Company's credit facility which was canceled
effective the end of September, 2000.

Corporate expenses

The Company did not record any corporate expenses for 2001. The expenses of $3.3
million for 2000 relate primarily to the Company's decision to cancel the
implementation of new reinsurance software and costs related to the
Trenwick/LaSalle business combination.

Non-operating income and expenses

Net realized gains on investments were $7.6 million during 2001, compared to net
realized losses of $1.7 million for 2000. The gains in 2001 resulted from a
change in investment managers and a consequential re-positioning of the
portfolio to reflect a new investment philosophy.

The Company recorded minimal foreign currency losses in 2001 and 2000.

Results of Operations - Year Ended December 31, 2000 and Fiscal Year Ended
                        September 30, 1999

<TABLE>
<CAPTION>
                                                     2000 Year             1999 Year             Change
                                                     ---------             ---------             ------
                                                                        (in thousands)
<S>                                                   <C>                  <C>                  <C>
Underwriting loss                                     $ (7,102)            $(38,109)            $ 31,007
Net investment income                                   37,444               33,847                3,597
Interest expense                                        (1,173)              (1,714)                 541
Corporate expenses                                      (3,255)                (788)              (2,467)
                                                      --------             --------             --------
Operating income (loss)                                 25,914               (6,764)              32,678
Net realized investment (losses) gains                  (1,688)                 615               (2,303)
Goodwill accretion                                         122                    0                  122
Foreign currency (losses) gains                           (244)                 470                 (714)
                                                      --------             --------             --------
Income (loss) before minority interest                  24,104               (5,679)              29,783
Minority interest in net (income) loss of
   subsidiary                                             (839)               2,845               (3,684)
                                                      --------             --------             --------
Net income (loss)                                       23,265
Dividends on preferred stock                            (6,563)              (6,563)                  --
                                                      --------             --------             --------
Net income (loss) available to common
   shareholders                                       $ 16,702             $ (9,397)            $ 26,099
                                                      ========             ========             ========
</TABLE>

Operating income of $25.9 million in 2000 represented a $32.7 million increase
over the operating loss of $6.8 million recorded in fiscal year 1999. This
improvement was principally due to better underwriting results in 2000, which
was due to a decrease in prior year reserve strengthening to both catastrophe
and non-catastrophe business. The effect of the improved underwriting
performance primarily generated the increase in net income of $26.1 million.



                                       23
<PAGE>


Underwriting income (loss)

<TABLE>
<CAPTION>
                                                     2000 Year             1999 Year              Change
                                                     ---------             ---------              ------
                                                                        (in thousands)
<S>                                                  <C>                   <C>                   <C>
Net premiums earned                                  $ 108,096             $ 126,615             $(18,519)
                                                     ---------             ---------             --------

Claims and claims expenses incurred                    (80,586)             (131,147)              50,561
Acquisition costs and underwriting expenses            (34,612)              (33,577)              (1,035)
                                                     ---------             ---------             --------
Total underwriting costs and expenses                 (115,198)             (164,724)              49,526
                                                     ---------             ---------             --------
Net underwriting loss                                $  (7,102)            $ (38,109)            $ 31,007
                                                     =========             =========             ========

Loss ratio                                                74.6%                103.6%               (29.0%)
Underwriting expense ratio                                31.9%                 26.5%                 5.4%
                                                     ---------             ---------             --------
Combined ratio                                           106.5%                130.1%               (23.6%)

</TABLE>

The underwriting loss of $7.1 million in 2000 represented a $31.0 million
decrease compared to the underwriting loss of $38.1 million in the 1999 fiscal
year. The underwriting loss in 2000 included both losses of $60.2 million on
current year loss events and additions to prior years' reserves of $20.4
million. The underwriting results for the 1999 fiscal year included both losses
of $82.5 million relating to current year events and additions to prior year
loss reserves of $48.6 million.

The decrease in the combined ratio in 2000 compared to fiscal year 1999 resulted
primarily from an improvement in the loss ratio due to lower catastrophe losses
in the 2000 year and reduced additions to prior year loss reserves.

Premiums written

Gross premiums written for 2000 were $130.2 million compared to $139.0 million
for the 1999 fiscal year, a decrease of $8.8 million or 6%. Details of gross
premiums written are provided below.

<TABLE>
<CAPTION>
                                                     2000 Year           1999 Year             Change
                                                     ---------           ---------             ------
                                                                      (in thousands)
<S>                                                   <C>                 <C>                 <C>
Worldwide property catastrophe reinsurance            $101,570            $116,621            $(15,051)
Lloyd's syndicates
   runoff                                               28,593              22,389               6,204
                                                      --------            --------            --------
Total                                                 $130,163            $139,010            $ (8,847)
                                                      ========            ========            ========
</TABLE>

The decrease in worldwide property catastrophe reinsurance gross premium
writings for 2000 compared to the 1999 fiscal year resulted primarily from the
non-renewal of certain accounts following a re-evaluation of LaSalle Re
Limited's worldwide aggregate exposures. The most significant reduction in
aggregate exposures came from a reduction in accounts covering European risks.

The increase in Lloyd's gross written premiums for 2000 compared to the 1999
fiscal year primarily arose from new information concerning premium estimates
for the 1999 and 1998 underwriting years of account. All of the Lloyd's business
underwritten by the Company prior to the combination with Trenwick has not been
renewed as of December 31, 2000 and has been classified as runoff.





                                       24
<PAGE>


Premiums earned

                                      2000 Year        1999 Year        Change
                                      ---------        ---------        ------
                                                    (in thousands)
Gross premiums written                $ 130,163        $ 139,010       $ (8,847)
Change in gross unearned premiums         9,966            6,070          3,896
                                      ---------        ---------       --------
Gross premiums earned                   140,129          145,080         (4,951)
                                      ---------        ---------       --------

Premiums ceded                          (31,631)         (28,191)        (3,440)
Change in premiums ceded                   (402)           9,726        (10,128)
                                      ---------        ---------       --------
Amortized ceded premiums                (32,033)         (18,465)       (13,568)
                                      ---------        ---------       --------
Net premiums earned                   $ 108,096        $ 126,615       $(18,519)
                                      =========        =========       ========

Gross premiums ceded for 2000 were $31.6 million compared to $28.2 million for
the 1999 fiscal year. The increase in amortized ceded premiums of $13.6 million
was primarily attributable to a full year's cessions to the CNA property
catastrophe quota share arrangement in 2000. The facility originally incepted
April 1, 1999. In addition the Company also purchased several new protections in
2000.

Net premiums earned in 2000 were $108.1 million compared to $126.6 million for
the 1999 fiscal year. The decrease in net premiums earned is due to the increase
in amortized ceded premiums.

Claims and claims expenses

Claims and claims expenses for 2000 were $80.6 million, a decrease of $50.6
million compared to claims and claims expenses of $131.1 million for the 1999
fiscal year. The reduction in claims and claims expenses incurred was due to a
reduced number of catastrophe losses in 2000 and a reduction in prior year
reserve strengthening. Claims and claims expenses incurred in 2000 included $6.5
million of catastrophe losses relating to U.K. floods and an increase of $20.4
million in prior period occurrences, principally losses relating to two storms,
Martin and Anatol, which hit Europe in late December 1999.

During the 1999 fiscal year, claims and claims expenses incurred included $25.6
million in losses from various catastrophes including Hurricane Floyd, the
Australian hailstorm and Oklahoma tornadoes. During the same year, the Company
recorded additions to prior year reserves of $14.0 million in respect of
Hurricane Georges, which occurred in September 1998, due to an increase in
market estimates of the damage caused by the hurricane. The Company also
incurred $16.0 million of additional reserves in the 1999 fiscal year following
the completion of an evaluation of its catastrophe reserving methodology. In
addition, the Company recorded approximately $14.0 million of additional
reserves in the 1999 fiscal year relating to contracts written in prior years,
including contracts which had incidental extended warranty coverages.

Underwriting expenses

                                       2000 Year       1999 Year         Change
                                       ---------       ---------         ------
                                                     (in thousands)
Policy acquisition costs                 $21,270         $19,844        $ 1,426
Underwriting expenses                     13,342          13,733           (391)
                                         -------         -------        -------
Total underwriting expenses              $34,612         $33,577        $ 1,035
                                         =======         =======        =======

Underwriting expense ratio                  31.9%           26.5%           5.4%
                                         =======         =======        =======

Total underwriting expenses, comprising policy acquisition costs and
underwriting expenses, for 2000 increased by $1.0 million compared to total
underwriting expenses for the 1999 fiscal year. Policy acquisition costs as a
percentage of net premiums earned were 19.7% for 2000 compared to 15.7% for the
1999 fiscal



                                       25
<PAGE>




year. The increase in the ratio occurred principally because of an increase in
the amount of amortized ceded premiums. As a percentage of gross premiums earned
policy acquisition costs were 15.2% compared to 13.7%. The remaining increase of
1.5% was primarily due to the Company deriving more premiums from LaSalle Re
Capital which has a higher expense ratio than the rest of the business at 20%.

Underwriting expenses for the year 2000 and the 1999 fiscal year remained
comparable at 9.5%.

Net investment income

<TABLE>
<CAPTION>
                                      2000 Year        1999 Year         Change
                                      ---------        ---------         ------
                                                    (in thousands)
<S>                                   <C>              <C>             <C>
Average invested assets               $ 508,081        $ 575,571       $(67,490)
Average annualized yields                   7.0%             5.7%           1.3%
Investment income - portfolio            35,691           32,778          2,913
Investment income - non-portfolio         2,667            1,935            732
Investment expenses                        (914)            (866)           (48)
                                      ---------        ---------       --------
Net investment income                 $  37,444        $  33,847       $  3,597
                                      =========        =========       ========
</TABLE>

Net investment income for 2000 was $37.4 million compared to $33.8 million for
the 1999 fiscal year. The principal reason for the increase in net investment
income in 2000 was the increase in market yields.

Interest expense

Interest expense was $1.2 million for 2000 a decrease of $0.5 million from the
1999 fiscal year. Interest expense included financing charges associated with a
ceded reinsurance contract and other interest expenses related to the commitment
fees payable on the Company's credit facility which was canceled effective the
end of September, 2000.

Corporate expenses

Corporate expenses were $3.3 million for 2000 compared to $0.8 million for 1999.
The increase in the expense was due to the write off of a new reinsurance system
following the cancellation of the implementation. The Company had originally
capitalized the system and intended to depreciate the asset once the system was
in operation.

Non-operating income and expenses

Net realized losses on investments were $1.7 million during 2000, compared to
net realized gains of $0.6 million for the 1999 fiscal year. Both the losses and
gains were made as a result of security sales executed pursuant to an investment
policy designed to protect the total returns on the portfolio.

The Company recorded foreign currency losses of $0.2 million for 2000, compared
to foreign currency gains of $0.4 million for the 1999 fiscal year due to the
decline in the value of European currencies against the US dollar.

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.



                                       26
<PAGE>



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 Supervisor 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.

Operating activities produced a net cash inflow of $51.9 million for the year
ended December 31, 2001 compared to $10.7 million for the year ended December
31, 2000. The increase was partially from the collection of a deposit of
approximately $27.4 million on the Company's multi year reinsurance contract
which was cancelled effective December 31, 2000. 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. Loss payments
following the September 11th terrorist attack have not been significant in 2001.
Loss payments from this event are expected to be significant in 2002 and 2003.

As a result of the potential for large loss payments, LaSalle Re maintains a
substantial portion of its assets in cash and debt securities. As of December
31, 2001, 68% of its total assets were held in cash and investments, which
totaled $543.7 million compared to 69% at December 31, 2000 or $499.7 million.
The increase in cash and investments of $44.0 million was primarily due to the
reinvestment of surplus cash flows. To further mitigate the uncertainty
surrounding the amount and timing of potential liabilities and to minimize
interest rate risk, LaSalle Re maintains a short average duration for its
investment portfolio. The Company has decreased the modified average duration of
the portfolio from 2.9 years at December 31, 2000 to 2.7 years at December 31,
2001.

As of December 31, 2001, 73% of the debt securities held in the Company's
investment portfolio were rated "AA" or better and 87% were rated "A" or better
by Standard and Poor's or Moody's. No single investment comprised more than 5%
of the overall portfolio.

Premiums receivable were $86.2 million at December 31, 2001 compared to $77.2
million at December 31, 2000. The increase was due to reinstatement premiums
generated by reinstated coverages on assumed contracts impacted by losses from
the September 11th terrorist attacks.

Other assets decreased from $30.3 million as at December 31, 2000 to $3.2
million at December 31, 2001. The decrease is related to collection of the
deposit on the Company's multi-year reinsurance contract.

At December 31, 2001, reserves for unpaid claims and claims expenses were $280.5
million compared to $174.8 million at December 31, 2000. Included in the reserve
for unpaid claims and claims expenses at December 31, 2001, was an amount of
$42.1 million compared to $37.2 million at December 31, 2000 in respect of the
business underwritten by LaSalle Re Capital. At December 31, 2001, reinsurance
recoverable balances were $57.2 million compared to $6.4 million as at December
31, 2000. The increase in unpaid claims and claims expenses and reinsurance
recoverable balances of $105.7 million and $50.8 million, respectively was due
to the impact on net losses incurred following the September 11th terrorist
attacks.



                                       27
<PAGE>



The reduction in unearned premium by $5.0 million from December 31, 2000 to
December 31, 2001 was primarily caused by the change in the mix of business in
the 2001 year.

The negative goodwill of $11.9 million as of December 31, 2001 relates to the
Trenwick/LaSalle business combination. The Company has adopted the push-down
basis of accounting for the purchase of the minority interest in LaSalle Re in
its financial statements.

In July 2001, the Financial Accounting Standards Board issued a statement
covering goodwill which is required to be adopted at the beginning of 2002. See
Note 11 of Notes to the Consolidated Financial Statements for details.

In accordance with the terms of certain reinsurance contracts, the Company has
posted letters of credit in the amount of $72.1 million as of December 31, 2001
as compared to $20.5 million as of December 31, 2000 to support outstanding loss
reserves. In connection with LaSalle Re Capital's support of three Lloyd's
syndicates, the Company posted letters of credit in the amount of $14.3 million
(equivalent to (pound)9.8 million). All letters of credit are secured by a lien
on the Company's investment portfolio equal to approximately 115% of the amount
of the outstanding letters of credit.

The Company paid a quarterly dividend of $0.5469 per share to holders of record
of Series A preferred shares in March, June, September and December of 2001. As
of December 31, 2001, dividends due but not yet declared on the Series A
preferred shares amounted to $0.5 million. In addition, the Company paid common
dividends to Trenwick in 2001 totalling $7.5 million.

The Company has no material commitments for capital expenditures.

In connection with the Company's Trenwick/LaSalle business combination, the
Company cancelled its stand alone committed line of credit for $100 million
effective September 27, 2000.

Concurrent with the Trenwick/LaSalle business combination, Trenwick entered into
an amended and restated $490 million credit agreement with various lending
institutions. The agreement consists of both a $260 million revolving credit
facility and a $230 million letter of credit facility. The revolving credit
facility has subsequently been converted into a four-year term loan. The primary
obligors are two of Trenwick's subsidiary companies. Guarantees are provided by
the Company with respect to these obligations. The letter of credit facility is
scheduled to expire in November 2002. The term loan facility is subject to
scheduled principal amortization over the four-year period in accordance with
the following schedule: 2002, 22.5%; 2003, 27.5%; 2004, 32.5%; 2005, 17.5%. The
applicable interest rate on borrowings under the credit facility is generally
2.5% above the London Interbank Offered Rate and was 4.7% at year end 2001.

A portion or all of the term loan must be repaid in the event of equity
issuances, asset sales or debt issuances by Trenwick or its subsidiaries. At
year end 2001, $195.0 million of term loans were outstanding, and $230.0 million
of letters of credit were outstanding under the credit facility.

The credit agreement contains general covenants and restrictions as well as
financial covenants relating to, among other things, Trenwick's minimum interest
coverage, debt to capital leverage, minimum earned surplus, maintenance of a
minimum A.M. Best Company rating of A- and tangible net worth. As of year end
2001, Trenwick was in compliance with the credit agreement covenants.

The financial covenants relating to interest coverage, risk based capital and
tangible net worth (each as defined by the financial covenants in the credit
agreement) were revised downward in an amendment to the credit agreement
executed following the September 11th terrorist attacks. The amendment set
Trenwick's minimum interest coverage ratio at 1.5 to 1 for the fourth quarter of
2001, 2.0 to 1 for the first quarter of 2002 and 2.5



                                       28
<PAGE>



to 1 thereafter. Trenwick's interest coverage ratio at December 31, 2001 was 2.0
to 1. The amendment adjusted downward the minimum risk-based capital requirement
for Trenwick's subsidiary, Chartwell Insurance Company, from 300% to 225%
through December 31, 2001. Thereafter, the minimum risk-based capital for
Chartwell Insurance Company returns to 300%. The risk based capital for
Chartwell Insurance Company as of December 31, 2001 was 257%. The amendment
lowered the base minimum tangible net worth Trenwick must maintain from $560
million to $425 million until the reporting of quarterly results of operations
as of March 31, 2002, which are due no later than May 15, 2002. After May 15,
2002, Trenwick minimum tangible net worth reverts to $560 million. Trenwick's
tangible net worth as of December 31, 2001 was $428 million. If Trenwick is
unable to meet the credit agreement's financial covenants at the end of the
first quarter of 2002, it may be required to repay the outstanding indebtedness
and collateralize the outstanding letters of credit issued under the credit
agreement through additional financing, asset sales, subsidiary dividends or
similar transactions.

Trenwick's ability to refinance its existing debt obligations or raise
additional capital is dependent upon several factors, including financial
conditions with respect to both the equity and debt markets and the ratings of
its securities as established by the rating agencies. Following Trenwick's
claims and claims expense liability reserve increase in the second quarter of
2001 and the losses it sustained in the September 11th terrorist attacks, its
senior debt ratings were downgraded by Standard & Poors Corporation to BBB- and
by Moody's Investors Service to Ba2. Trenwick's ability to refinance its
outstanding debt obligations, as well as the cost of such borrowings, could be
adversely affected by these ratings downgrades or if its ratings were downgraded
further.

Should the two Trenwick subsidiary companies or Trenwick be unable to meet the
loan repayments as they fall due, and such repayments are not refinanced, the
Company would become liable for such repayments under the terms of the
guarantees. No liability for any such amounts has been reflected in the
Company's financial statements. Because the two Trenwick subsidiary companies
and Trenwick are holding companies, their principal source of funds consists of
permissible dividends, tax allocation payments and other statutorily permissible
payments from their respective operating subsidiaries. As a result of recent
losses incurred by Trenwick's operating subsidiaries, their cash distribution
capacities have been significantly reduced.

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.

Critical Accounting Policies

The accounting policies described below are those the Company considers critical
in preparing its consolidated financial statements. These policies include
significant estimates made by management using information available at the time
the estimates are made. However, as described below, these estimates could
change materially if different information or assumptions were used. The
descriptions below are summarized and have been simplified for clarity. A more
detailed description of the significant accounting policies used by the Company
in preparing its financial statements is included in the Notes to the
Consolidated Financial Statements and the note references are included below.

Unpaid Claims and Claims Expenses

The Company establishes liability reserves for claims and claims expenses that
have been reported but not paid and claims and claims expenses that have been
incurred but not reported under its reinsurance contracts. These liability
reserves are developed using actuarial principles and assumptions which consider
a number of factors, including industry information, contact reviews and
historical claims and claims expense patterns, which are described in the Notes
to the



                                       29
<PAGE>


Consolidated Financial Statements. An extensive degree of judgment is used in
this estimation process. Because the future cannot be predicted with certainty,
the actual future claims and claims expense payments are usually different from
the previously recorded liability reserve estimates. Sometimes the differences
are significant. Any adjustments to the Company's liability reserves for claims
and claims expenses are included in the Company's results of operations in the
period in which the need for the adjustment becomes known. Due to the
considerable variability of the reinsurance business underwritten by the
Company, adjustments to its liability reserves for claims and claims expenses
may occur each quarter and are sometimes significant.

In particular, the Company cautions that the claims and claims expense liability
reserves related to the September 11th terrorist attacks remain subject to
future adjustment. Because of the scope and uniqueness of these events, standard
loss modeling and assessment methodologies have limited relevance. As a result,
the Company's expected losses reflect the industry's and the Company's current
estimates. As additional information regarding the claims and claims expenses
related to the September 11th terrorist attacks becomes available, the Company
may be required to adjust its estimate in the future. Also see Note 4 of Notes
to the Consolidated Financial Statements.

Reinsurance Recoverable Balances

The Company purchases reinsurance to reduce its exposure on catastrophic losses.
The Company estimates the amount of uncollectable receivables from its
reinsurers each period and establishes an allowance for uncollectable amounts if
necessary. The amount of the allowance is based on the age of unpaid amounts,
information about the creditworthiness of the Company's reinsurers, and other
relevant information. Estimates of uncollectable reinsurance amounts are revised
each period, and changes are recorded in the period they become known. A
significant change in the level of uncollectable reinsurance amounts would have
a significant effect on the Company's results of operations. Also see Note 4 of
Notes to the Consolidated Financial Statements.

Investments

Investments are classified as available for sale and recorded at fair value, and
unrealized investment gains and losses are reflected in shareholders' equity.
Investment income is recorded when earned, and capital gains and losses are
recognized when investments are sold. Investments are reviewed periodically to
determine if they have suffered an impairment of value that is considered other
than temporary. If investments are determined to be impaired, a capital loss is
recognized at the date of determination.

Testing for impairment of investments also requires significant management
judgment. The identification of potentially impaired investments, the
determination of their fair value and the assessment of whether any decline in
value is other than temporary are the key judgment elements. The discovery of
new information and the passage of time can significantly change these
judgments. Revisions of impairment judgments are made when new information
becomes known, and any resulting impairment adjustments are made at that time.
The current economic environment and recent volatility of securities markets
increase the difficulty of determining fair value and assessing investment
impairment. The same influences tend to increase the risk of potentially
impaired assets.

The Company seeks to match the maturities of invested assets with the payment of
expected liabilities. By doing this, the Company attempts to make cash available
as payments become due. If a significant mismatch of the maturities of assets
and liabilities were to occur, the impact on the Company's results of operations
could be significant. Also see Note 5 of Notes to the Consolidated Financial
Statements.



                                       30
<PAGE>



Goodwill

The Company has negative goodwill from prior acquisitions. Under generally
accepted accounting principles in effect through December 31, 2001, these
liabilities were accreted over their estimated useful lives. See Note 11 of
Notes to the Consolidated Financial Statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The following sections address the significant market risks associated with the
Company's business activities as of December 31, 2001 and 2000. The Company's
primary market risk exposures are foreign currency exchange risk and interest
rate risk.

With respect to the Company's investment portfolio, the risk management strategy
is to place its investments with high credit quality issuers and to limit the
amount of credit exposure with respect to particular ratings categories and any
one issuer. The Company selects investments with characteristics such as
duration, yield, currency and liquidity to reflect the underlying
characteristics of related estimated claim liabilities.

As of December 31, 2001, the Company's exposure to high yield investments was
limited. While these investments are more susceptible to credit risk, their
total market value represents approximately 6% of total investments and cash,
and therefore management believes that the exposure to credit risk is not
material. The Company has no derivatives and its investments do not contain
terms that may result in potential losses due to leverage.

Foreign Currency Exchange Rate Risk

Foreign currency risk is the risk that the Company will incur economic losses
due to adverse changes in foreign currency exchange rates. This risk arises from
the Company's cash deposits denominated in foreign currencies.

The Company's reinsurance operations have exposures to movements in various
currencies, particularly the British pound sterling and Euro, as some of its
business is denominated in those currencies. Therefore, changes in currency
exchange rates affect the Company's balance sheet, statement of operations and
statement of cash flows.

Management estimates that a 10% immediate unfavorable change in each of the
foreign currency exchange rates to which the Company is exposed at year end 2001
would have decreased the fair value of the Company's foreign denominated net
assets by approximately $1.3 million. At year end 2000, the same 10% shift in
foreign currency exchange rates would have resulted in a potential loss in fair
value of approximately $2.8 million.

Interest Rate Risk

The Company's debt security investments are subject to interest rate risk.
Increases and decreases in prevailing interest rates generally translate into
decreases and increases in the fair value of debt security investments on the
Company's outstanding variable rate debt. Additionally, the fair value of
interest rate sensitive instruments may be affected by the creditworthiness of
the issuer, a prepayment option, relative values of alternative investments,
liquidity of the investment and other general market conditions.

The Company monitors its sensitivity to interest rate risk by evaluating the
change in its financial assets and liabilities relative to hypothetical
increases and decreases in interest rates. It is assumed that the changes occur
immediately and uniformly to each category of instrument containing interest
rate risks. The hypothetical




                                       31
<PAGE>


changes in market interest rates reflect what could be deemed best or worst case
scenarios. Significant variations in market interest rates could produce changes
in the timing of repayments due to prepayment options available. The fair value
of such instruments could be affected and therefore actual results might differ
from those reflected in this summary.

A 100 basis point increase in market interest rates would have resulted in an
estimated pre-tax loss in the fair value of these instruments of $9.9 million
and $31.1 million at year end 2001 and 2000, respectively. Similarly, a 100
basis point decrease in market interest rates would have resulted in an
estimated pre-tax gain in the fair value of these instruments of $9.8 million
and $28.2 million at year end 2001 and 2000, respectively.

The Company has not experienced unrealized gains or losses to the extent
indicated above.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information called for by this item can be found in the Consolidated
Financial Statements and Notes thereto on pages F-1 - F-26.

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

Following the Trenwick/LaSalle business combination, the independent auditor for
Trenwick was PricewaterhouseCoopers LLP and the independent auditor for the
Company was Deloitte & Touche. Trenwick and the Company determined that it was
in their best interest to utilize a single independent auditor. As a result, the
Company determined not to retain Deloitte & Touche as the Company's independent
auditor after the 1999 fiscal year. Instead, the Company decided to retain
PricewaterhouseCoopers as its independent auditor. The decision to change
independent auditors was approved by the Company's Board of Directors.

The audit reports of Deloitte & Touche on the financial statements of the
Company for the fiscal year ended and as of September 30, 1999 and for the three
months ended and as of December 31, 1999 did not contain an adverse opinion or
disclaimer of opinion or were qualified or modified as to uncertainty, audit
scope, or accounting principles.

During the Company's fiscal year ended September 30, 1999 and the interim period
to December 22, 2000, there were no disagreements between Deloitte & Touche and
the Company with respect to any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure. None of the
reportable events described in Item 304(a)(1)(v) of Regulation S-K occurred with
respect to the Company during the fiscal year ended September 30, 1999 and
through the interim period to December 22, 2000.

During the two most recent fiscal years and the subsequent interim period to
December 22, 2000, neither the Company nor anyone on behalf of the Company
consulted with PricewaterhouseCoopers regarding either the application of
accounting principles to a specified transaction, either completed or proposed,
or the type of audit opinion that might be rendered on the financial statements
of the Company or any matter that was either the subject of a disagreement,
within the meaning of Item 304(a)(1)(v) of Regulation S-K, or any reportable
event, as that term is defined in Item 304(a)(1)(v) of Regulation S-K.



                                       32
<PAGE>



                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS

In connection with the Trenwick/LaSalle business combination, all of the
external directors of LaSalle Re Holdings resigned their directorships and, in
certain cases, became directors of Trenwick, leaving Guy Hengesbaugh as the sole
director. Trenwick appointed a second director of the Company following the
Trenwick/LaSalle business combination who resigned in January 2002. As such,
Trenwick appointed James F. Billett, Jr. a director in January 2002.

Guy D. Hengesbaugh aged 43 has been a director of the Company since February
2000. Mr. Hengesbaugh has been President and Chief Executive Officer of the
Company since July 1, 1999. Prior to this he had served as President and Chief
Operating Officer of the operating company, LaSalle Re, a position he had held
since September 17, 1998. Mr. Hengesbaugh had served as Executive Vice President
and Chief Underwriting Officer of the Company since its organization in
September 1995 and Executive Vice President and Chief Underwriting Officer of
LaSalle Re since its organization in October 1993. Prior to joining the Company,
Mr. Hengesbaugh was with CNA in Chicago and London. Up to September 30, 1998,
Mr. Hengesbaugh was an employee of CNA Bermuda and his services were made
available to the Company pursuant to the Underwriting Services Agreement. Upon
termination of this agreement, with effect from October 1, 1998, Mr. Hengesbaugh
became an employee of the Company.

James F. Billett, Jr., 58, has been a director of the Company since January
2002. Mr. Billett has served as Chairman of the Board and Chief Executive
Officer of Trenwick since August 2000. Mr. Billett served as the Chairman of the
Board and Chief Executive Officer of Trenwick Group Inc. and its predecessor
from 1978 until the Trenwick/LaSalle business combination and served as
President of Trenwick Group Inc. from 1988 until the Trenwick/LaSalle business
combination. He is Chairman of the Executive Committee. Mr. Billett was formerly
a Vice President of General Reinsurance Corporation.

ITEM 11. EXECUTIVE COMPENSATION

The following table sets forth, in summary form, the compensation earned by the
CEO or a Named Executive Officer of the Company during the 2001 year.

The 2001 and 2000 years ended December 31, 2001 and December 31, 2000,
respectively. As the Company changed its fiscal year end following the
Trenwick/LaSalle business combination, the 1999 period is for the year ended
September 30, 1999. Mr. Stockton resigned from the Company in September 2001 and
Ms. Moran resigned from the Company in January 2002.

<TABLE>
<CAPTION>
                                                                                           Restricted    Securities
   Name and principal                Fiscal                                Other annual      stock       underlying     All other
        position                      year      Salary         Bonus       compensation      awards(1)     options     compensation
        --------                      ----      ------         -----       ------------      ------        -------     ------------
<S>                                   <C>       <C>          <C>             <C>             <C>           <C>           <C>
Guy D. Hengesbaugh
   Chief Executive
   Officer and                        2001      468,900           --         120,000(3)      224,992       31,690        51,575(4)
   President (effective               2000      450,000      386,364(2)      165,710(3)           --           --        56,376(4)
   July 1, 1999)                      1999      412,500      477,273(2)      146,798(3)      109,626           --        50,031(4)

Mark C. Stockton
   Senior Vice
   President and
   Chief Underwriting                 2001      283,250           --          82,500(6)       74,997       10,563        18,883(7)
   Officer (effective                 2000      275,000      115,227(5)      122,415(6)           --           --        27,500(7)
   July 15, 1999)                     1999      240,000      157,045(5)       94,214(6)       21,262           --        24,000(7)

Clare E. Moran
   Senior Vice
   President and Chief
   Financial Officer
   (effective October                 2001      162,000           --          90,000(9)       51,929        7,313        16,200(10)
   1, 2000)                           2000      155,000       62,091(8)       85,053(9)           --           --        15,500(10)
</TABLE>



                                       33
<PAGE>

(1)  Amounts reflect restricted shares awarded as follows on March 1, 2001,
     based on the closing price per share on such date of $21.30: Mr.
     Hengesbaugh, 10,563 shares, Mr. Stockton, 3,521 shares, and Ms. Moran,
     2,438 shares. The restricted shares vest in equal annual installments over
     five years from the date of award, beginning in 2002. Dividends are paid on
     restricted shares at the same rate as paid to all shareholders and, as
     permitted those amounts have not been included in this table

     On October 1, 1998, Mr. Hengesbaugh received a restricted stock award of
     25,000 common shares. Mr. Hengesbaugh's award vests at the rate of 331/3%
     on the third, fourth and fifth anniversaries of the grant date. Dividends
     on these restricted shares were paid in additional shares of restricted
     stock, based on the closing price of a common share of the Company on the
     NYSE on the dividend payment date. Mr. Hengesbaugh received as dividends
     446, 570 and 640 additional restricted shares on December 18, 1998, March
     19, 1999 and June 18, 1999, respectively.

     During the 1999 fiscal year, Messrs. Hengesbaugh and Stockton and Ms. Moran
     received restricted stock awards as set forth below pursuant to the amended
     anti-dilution provisions of stock options granted on November 27, 1995 (the
     "1995 Options") and May 19, 1997 (the "1997 Options"). These restricted
     stock awards were made to compensate for the dilutive effect of certain
     dividends paid by the Company and vest only upon the exercise of the
     options to which they relate. The 1995 Options and 1997 Options vested in
     their entirety following the Trenwick/LaSalle business combination.

<TABLE>
<CAPTION>
                                                       Number of shares        Number of shares awarded
                                                      awarded with respect           with respect
      Name                     Date of award          to the 1995 options         to the 1997 options
      ----                     -------------          -------------------         -------------------
<S>                            <C>                           <C>                       <C>
Guy D. Hengesbaugh             March 20, 1998                 5,557                     3,071
                               June 19, 1998                  1,061                     1,008
                               September 18, 1998               184                       114
                               December 18, 1998                121                        75
                               March 19, 1999                 1,086                     1,030
                               June 18, 1999                  1,303                     1,237

Mark C. Stockton               December 18, 1998                 --                        42
                               March 19, 1999                    --                       572
                               June 18, 1999                     --                       687

Clare E. Moran                 December 18, 1998                 --                        16
                               March 19, 1999                    --                       229
                               June 18, 1999                     --                       275

</TABLE>

The values shown in the Summary Compensation Table for all restricted stock
awards, including any additional restricted shares awarded as dividends, have
been calculated by multiplying the number of shares by the closing price of a
common share of the Company on the NYSE on each grant or dividend date, as
applicable.



                                       34
<PAGE>


The aggregate total of unvested restricted share holdings of each of the named
executives as of December 31, 2001, at the then-applicable market price per
share of $10.17 were:

                                     Unvested
      Name                           Restricted Shares         Value ($)
      ----                           -----------------         ---------

Guy D. Hengesbaugh                         53,076               539,782
Mark C. Stockton                                0                     0
Clare E. Moran                              3,890                39,561

(2)  Mr. Hengesbaugh earned a bonus of $136,364 under a cash incentive bonus
     agreement and an additional merit cash bonus of $250,000 for 2000.

(3)  Includes housing expenses of $120,000 for each of 2001, 2000 and fiscal
     1999.

(4)  Consists of $46,575, $45,000 and $41,250 for monthly pension contributions
     for 2001, 2000 and 1999 respectively. For 2001, also includes $5,000 paid
     in respect of compensation consulting services. For 2000, also includes
     $6,376 for life insurance covering Mr. Hengesbaugh and $5,000 paid in
     respect of compensation consulting services. For fiscal 1999, also includes
     $6,681 for life insurance covering Mr. Hengesbaugh and $2,100 paid in
     respect of pension and compensation consulting services.

(5)  Mr. Stockton earned a bonus of $62,727 under a cash incentive bonus
     agreement and an additional merit cash bonus of $52,500 for 2000.

(6)  Includes housing expenses of $82,500 for 2001 and includes housing expenses
     of $76,500 for 2000.

(7)  Consists of $18,883 and $27,500 paid in connection with monthly pension
     contributions for 2001 and 2000, respectively.

(8)  Ms. Moran earned a bonus under a cash incentive bonus agreement of $ 34,091
     for 2000. Ms. Moran also received a merit cash bonus of $28,000 for 2000.

(9)  Includes housing expenses of $90,000 for 2001 and includes housing expenses
     of $49,500 for 2000.

(10) Consists of $16,200 and $15,500 paid in connection with monthly pension
     contributions for 2001 and 2000, respectively.



                                       35
<PAGE>


The following table sets forth information with respect to stock option grants
to the named executives in 2001. The options, granted during 2001, to the named
executives pursuant to Trenwick's equity incentive plans become exercisable in
five equal annual installments beginning one year from the date of grant, but
become immediately exercisable in full in the event of a change in control of
Trenwick. They are subject to termination prior to their expiration date in the
event of termination of the grantee's employment.

                        Option Grants in Last Fiscal Year

<TABLE>
<CAPTION>
                                                                                                       Potential Realizable Value at
                             Number of      Percent of Total                                               Assumed Annual Rates
                             Securities        Option/SARs                                              of Stock Price Appreciation
                             Underlying         Granted to         Exercise or                             for Option Term ($)
                            Options/SARs      Employees in         Base Price        Expiration             -------------------
Name                         Granted (#)     Fiscal Year (%)        ($/Share)           Date                 5%              10%
-----                        -----------     ---------------        ---------           ----                ---              ---
<S>                            <C>                <C>                 <C>             <C>                 <C>             <C>
Guy D. Hengesbaugh             31,690             5.0                 21.30           03/01/11            425,248         1,073,245
Mark C. Stockton               10,563             1.7                 21.30           03/01/11            141,744           357,737
Clare E. Moran                  7,313             1.1                 21.30           03/01/11             98,133           247,669

</TABLE>

The following table sets forth information for each individual who served as the
CEO or a named executive officer of the Company with regard to the number of
Trenwick common shares underlying unexercised stock options and the value of
such stock options at the end of the fiscal year. There were no unexercised
stock appreciation rights for these in dividends.

                           2001 Year-End Option Values

<TABLE>
<CAPTION>
                                           Number of securities
                                          underlying unexercised            Value of unexercised
                                               options/SARs               in-the-money options/SARs
                                           at December 31, 2001               at December 31, 2001
Name                                    Exerciseable/Unexerciseable       Exerciseable/Unexerciseable
----                                    --------------------------        ---------------------------

<S>                                           <C>                                     <C>
Guy D. Hengesbaugh                            118,000/31,690                          $0/$0
Mark C. Stockton                                    0/0                               $0/$0
Clare E. Moran                                 20,000/7,313                           $0/$0

</TABLE>

Effective October 1, 1999, LaSalle entered into an amended employment agreement
with Guy D. Hengesbaugh to reflect Mr. Hengesbaugh's promotion to the position
of President and Chief Executive Officer. The agreement provides for automatic
renewal on a daily basis, so that the remaining term of the agreement will
always equal two years. If either party gives notice of termination, the
agreement will expire two years after that notice is given. The agreement
provides for an annual salary of $450,000 which effective March 1, 2001 was
increased to $468,900. In addition, Mr. Hengesbaugh is entitled to an annual
non-discretionary bonus based in part on the amount by which LaSalle Re's return
on equity for that year exceeds 10% per annum, and is also eligible to receive a
discretionary bonus. The agreement provides Mr. Hengesbaugh with various
benefits, including disability and pension benefits, automobile allowance, club
membership, housing and living allowance and reimbursement of reasonable
business expenses. The agreement also includes a non-competition and
non-solicitation covenant that will generally apply for a period of 12 months
following the termination of Mr. Hengesbaugh's employment.

Effective October 1, 1998, LaSalle entered into an employment agreement with
Mark Stockton, who served as Senior Vice President and Chief Underwriting
Officer until September, 2001. The agreement provided for automatic renewal on a
daily basis, so that at the remaining term of the agreement will always equal
one year. If either party gave notice of termination, the agreement expired one
year after that notice was given. The



                                       36
<PAGE>



agreement provided for an annual base salary of $230,000, which effective March
1, 2001 was increased to $275,000 by action of Trenwick's Compensation
Committee. In addition, Mr. Stockton was entitled to an annual non-discretionary
bonus based in part on the amount by which LaSalle Re's return on equity for
that year exceeded 10% per annum, and was also eligible to receive a
discretionary bonus. The agreement provided Mr. Stockton with various benefits,
including disability and pension benefits, automobile allowance, club
membership, housing and living allowance and reimbursement of reasonable
business expenses. The agreement also included a non-competition and
non-solicitation covenant that generally applied for a period of 24 months
following the termination of Mr. Stockton's employment. Mr. Stockton resigned
from the Company in September 2001.

Effective October 1, 1998, LaSalle entered into an employment agreement with
Clare Moran, who served as Senior Vice-President, Treasurer and Chief Financial
Officer. The agreement provided for automatic renewal on a daily basis, so that
the remaining term of the agreement always equaled one year. If either party
gave notice of termination, the agreement expired one year after that notice was
given. The agreement provided for an annual base salary of $125,000, which
effective March 1, 2001, was increased to $162,000 by action of Trenwick's
Compensation Committee. In addition, Ms. Moran was eligible for a discretionary
annual bonus. The agreement provided Ms. Moran with various benefits, including
disability and pension benefits, automobile allowance, housing and living
allowance and reimbursement of reasonable business expenses. The agreement also
included a non-competition and non-solicitation covenant that generally applied
for a period of 12 months following the termination of Ms. Moran's employment.
Ms. Moran resigned from the Company in January 2002.

Since the completion of the Trenwick/LaSalle business combination, the Company's
directors have not been compensated for any services provided to LaSalle as a
director.

Since the completion of the Trenwick/LaSalle business combination, the
Compensation Committee of the Board of Directors of Trenwick has established the
compensation and compensation policies for Trenwick's subsidiaries, including
the Company. The report of the Compensation Committee of the Board of Directors
of Trenwick is incorporated herein by reference to the section captioned "Report
of the Compensation Committee on the Compensation of Executive Officers of
Trenwick" of Trenwick's proxy statement for its 2002 Annual General Meeting of
Shareholders.

In addition, since the completion of the Trenwick/LaSalle business combination,
the Company's Common Shares are no longer registered under Section 12 of the
Securities Exchange Act of 1934. Accordingly, no share price information is
available to provide the basis for a performance graph.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The Company is a wholly owned subsidiary of Trenwick. The following table
discloses the Chief Executive Officer's and the named executive officer's
ownership in the Company's parent, Trenwick, at March 14, 2002.

<TABLE>
<CAPTION>

Name of beneficial owner               Number of Common Shares (1)    Percentage of class
------------------------               ---------------------------    -------------------

<S>                                              <C>                         <C>
Guy D. Hengesbaugh(2)                            140,067                     *
Mark C. Stockton                                       0                     *
Clare E. Moran(3)                                 20,000                     *
Directors and Executive officers
as a Group                                       160,067                     *

</TABLE>

*Less than 1%



                                       37
<PAGE>



(1)  Based on the most recent information available to the Company. Includes
     shares of restricted stock that would vest if the holder were to exercise
     certain options pursuant to which such restricted shares were granted as
     anti-dilution adjustments, which options are exercisable within 60 days of
     February 28, 2002. Also excludes 26,656 shares of restricted stock and
     dividend entitlements which were originally awarded to Mr. Hengesbaugh, on
     October 1, 1998, all of which will vest more than 60 days after March 14,
     2002.

(2)  Includes options to purchase 124,338 common shares which are exercisable
     within 60 days of March 14, 2002.

(3)  Includes options to purchase 20,000 common shares which are exercisable
     within 60 days of March 14, 2002.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Underwriting services agreement and underwriting support services agreement

Effective on October 1, 1998, 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, which expired on September 30, 2001, CRSC provided
underwriting support services to the Company on a daily or hourly fee basis when
and as requested by the Company. The Company paid CNA Bermuda a $333,333 annual
retainer, which was credited against CRSC's daily or hourly fees and associated
travel expenses. In recognition of the contribution made by CNA Bermuda to the
development of the Company's business, the Company agreed, subject to certain
conditions, to pay CNA Bermuda an underwriting profit commission of 1.67% of the
aggregate net underwriting profits of LaSalle Re for each fiscal year during the
term of the Underwriting Support Services Agreement for which the Company's loss
ratio was 70% or less.

While the current Underwriting Support Services Agreement did not terminate
until September 30, 2001, the Company did not utilize the agreement since the
Trenwick/LaSalle business combination. The Company accrued and expensed all fees
payable under the agreement during the year ended December 31, 2000. This
amounted to $786,000.

Loan to an executive officer

The Company loaned Mr. Hengesbaugh $142,321 in 2001 to finance a portion of the
purchase price of a home in Bermuda. The loan is evidenced by a demand
promissory note and interest is payable at the rate of 8% per annum.

                                     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 F-1 of this report,
               which is incorporated herein by reference.



                                       38
<PAGE>



          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

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

            10.2      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)

            10.3      Employment Agreement dated October 1, 1998       Incorporated by reference to Exhibit 10.12 to
                      between Mark C. Stockton and LaSalle Re*         Form 10-K for the fiscal year ended September
                                                                       30, 1999 (File No. 1-12823)

            10.4      Employment Agreement dated October 1, 1998       Incorporated by reference to Exhibit 10.6 to Form
                      between Clare E. Moran and LaSalle Re*           10-K for the year ended December 31, 2000 (File No.
                                                                       1-12823)

            10.5      Amendment to Employment                          Incorporated  by  reference  to Exhibit 10.7 to Form
                      Agreement dated as of June 1, 1999 between       10-K for the year  ended  December  31,  2000  (File
                      Clare E. Moran and LaSalle Re*                   No.1-12823)

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

            10.7      Quota Share Treaty between CNA International     Incorporated by reference to Exhibit 10.32 to
                      Reinsurance Company Limited and LaSalle Re       Form 10-K for the fiscal year ended September
                      in respect of 1999 underwriting year of account  30, 1999 (File No. 1-12823)
                      (London office)

            10.8      Quota Share Treaty between CNA International     Incorporated by reference to Exhibit 10.38 to
                      Reinsurance Company Limited and LaSalle Re       Form 10-K for the fiscal year ended September
                      in respect of 1999 underwriting year of account  30, 1999 (File No. 1-12823)
                      (Amsterdam office)


            10.9      LMX Quota Share Retrocessional Agreement         Incorporated by reference to Exhibit 10.43 to
                      between Continental Casualty Company and         Form 10-K for the fiscal year ended September 30,
                      LaSalle Re for the 1999 underwriting year of     1999 (File No. 1-12823)
                      Account

</TABLE>


                                       39
<PAGE>


<TABLE>
<CAPTION>
          Exhibit
           Number     Description                                      Method of Filing
           ------     -----------                                      ----------------

<S>                   <C>                                              <C>
            12.1      Statement re computation of ratio of earnings    Incorporated by reference to Exhibit 12.1 to
                      to combined fixed charges and preferred share    Form 10-K for the fiscal year ended September 30,
                      dividends                                        1999

            16.1      Letter re change in certifying accountant        Incorporated by reference to Exhibit 16 to Form 8-K
                                                                       filed on December 22, 2000 (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)

</TABLE>


            * Management contract or compensatory plan or arrangement.

     (b) Reports on Form 8-K:

          The Company did not file any Current Reports on Form 8-K during the
          quarter ended December 31, 2001



                                       40
<PAGE>




                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, in Bermuda, on
the18th day of March, 2002.

                                         LASALLE RE HOLDINGS LIMITED

                                         /S/ GUY D. HENGESBAUGH
                                         ----------------------

                                         By  Name: Guy D. Hengesbaugh
                                            Title: Director, President
                                                   and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this report has been signed by the following persons on behalf of the Registrant
and in the capacities indicated and on the 18th day of March 2002.

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

       /S/ GUY D. HENGESBAUGH        Director, President and Chief Executive
       -----------------------       Officer (Principal Executive officer and
         Guy D. Hengesbaugh          Chief Financial Officer)

     /S/ JAMES F. BILLETT, JR.       Director
     -------------------------
        James F. Billett, Jr.



                                       41
<PAGE>


                           LASALLE RE HOLDINGS LIMITED

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                        Page
                                                                       Number
                                                                       ------

INDEPENDENT AUDITORS' REPORTS .......................................   F-2


CONSOLIDATED BALANCE SHEETS .........................................   F-5



CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME ..............................................................   F-6


CONSOLIDATED STATEMENTS OF CASH FLOWS ...............................   F-7


CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS'
EQUITY CONSOLIDATED STATEMENTS OF CASH FLOWS ........................   F-8


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ..........................   F-9




                                      F-1
<PAGE>


                          INDEPENDENT AUDITORS' REPORT




To the Board of Directors
and Shareholders of
LaSalle Re Holdings Limited



In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations and comprehensive income, of changes in
shareholders' equity and of cash flows present fairly, in all material respects,
the financial position of LaSalle Re Holdings Limited and its subsidiaries at
December 31, 2001 and 2000, and the results of its operations and its cash flows
for each of the years then ended, in conformity with accounting principles
generally accepted in the United States of America. 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 audits. We
conducted our audits of these financial statements in accordance with auditing
standards generally accepted in the United States of America which 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, assessing the accounting principles used and
significant estimates made by management and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.





PricewaterhouseCoopers

Hamilton, Bermuda
February 28, 2002





                                      F-2
<PAGE>


                          INDEPENDENT AUDITORS' REPORT


The Board of Directors and Shareholders
LaSalle Re Holdings Limited

We have audited the consolidated balance sheet of LaSalle Re Holdings Limited
and subsidiaries as of December 31, 1999 (not presented separately herein), and
the related accompanying consolidated statements of operations and comprehensive
loss, changes in shareholders' equity, and cash flows for the period from
October 1, 1999 to December 31, 1999. 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 December 31, 1999 and the results of their operations and
their cash flows for the period from October 1, 1999 to December 31, 1999 in
conformity with accounting principles generally accepted in the United States of
America.

As discussed in Note 9, the accompanying 1999 financial statements were
restated.



Hamilton, Bermuda                               DELOITTE & TOUCHE
November 10, 2000.




                                      F-3
<PAGE>


                          INDEPENDENT AUDITORS' REPORT


The Board of Directors and Shareholders
LaSalle Re Holdings Limited

We have audited the consolidated balance sheet of LaSalle Re Holdings Limited
and subsidiaries as of September 30, 1999 (not presented separately herein), and
the related accompanying 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 9, the accompanying 1999 financial statements were
restated.



Hamilton, Bermuda                                        DELOITTE & TOUCHE
November 5, 1999
(July 13, 2000 as to Note 9)




                                      F-4
<PAGE>


                           LaSalle Re Holdings Limited
                           Consolidated Balance Sheet
           (Amounts expressed in thousands of United States dollars,
                 except share and per share data) December 31,
                                  2001 and 2000


                                                               2001       2000
                                                             --------   --------
ASSETS:
Debt securities available for sale, at fair value            $507,278   $476,445
Cash and cash equivalents                                      36,431     23,221
Accrued investment income                                      12,192     14,770
Premiums receivable                                            86,227     77,242
Reinsurance recoverable balances                               57,179      6,431
Prepaid reinsurance premiums                                    8,206     10,735
Deferred policy acquisition costs                               4,933      7,616
Trenwick Group Ltd. advances                                   11,651      4,002
Trenwick Group Ltd. loan                                       75,000     75,000
Reinsurance deposits and other assets                           3,223     30,033
                                                             --------   --------

Total assets                                                 $802,320   $725,495
                                                             ========   ========

LIABILITIES:
Unpaid claims and claims expenses                            $280,487   $174,763
         Unearned premium income                               34,937     39,929
         Reinsurance balances payable                          24,892     21,561
 Negative goodwill                                             11,585     12,073
         Other liabilities                                     12,824     13,078
                                                             --------   --------

Total liabilities                                             364,725    261,404
                                                             --------   --------

SHAREHOLDERS' EQUITY:
Series A preferred shares, $1.00 par value, 3,000,000
  shares issued and outstanding, at liquidation value          75,000     75,000
Common shares, $1.00 par value, 20,432,043
   shares issued and outstanding                               20,432     20,432
Additional paid in capital                                    292,039    292,039
Retained earnings                                              45,320     70,628
Accumulated other comprehensive income                          4,804      5,992
                                                             --------   --------

Total shareholders' equity                                    437,595    464,091
                                                             --------   --------

Total liabilities and shareholders' equity                   $802,320   $725,495
                                                             ========   ========



The accompanying notes are an integral part of these statements.


                                      F-5
<PAGE>



                           LaSalle Re Holdings Limited
          Consolidated Statement of Operations and Comprehensive Income
            (Amounts expressed in thousands of United States dollars)
                     Years Ended December 31, 2001 and 2000,
  Three Month Period Ended December 31, 1999 and Year Ended September 30, 1999

<TABLE>
<CAPTION>
                                                  2001         2000        1999        1999
                                                  Year         Year       Period       Year
                                               ---------    ---------    --------    ---------
<S>                                              <C>         <C>          <C>         <C>
 REVENUES:
 Net premiums earned                             $97,542     $108,096     $30,391     $126,615
 Net investment income                            38,928       37,444       8,588       33,847
 Net realized investment gains (losses)            7,567       (1,688)         --          615
 Negative goodwill accretion                         488          122          --           --
                                               ---------    ---------    --------    ---------
 Total revenues                                  144,525      143,974      38,979      161,077
                                               ---------    ---------    --------    ---------

 EXPENSES:
 Claims and claims expenses incurred             122,981       80,586      46,642      131,147
 Policy acquisition costs amortization            20,886       21,270       5,878       19,844
 Underwriting expenses                            11,790       13,342       4,533       13,733
 General and administrative expenses                  --        3,255       1,383          788
 Interest expense                                     --        1,173         346        1,714
 Foreign currency losses (gains)                     113          244          28         (470)
                                               ---------    ---------    --------    ---------
 Total expenses                                  155,770      119,870      58,810      166,756
                                               ---------    ---------    --------    ---------

Income (loss) before minority interest           (11,245)      24,104     (19,831)      (5,679)
 Minority interest in
  subsidiary net income (loss)                        --          839      (4,990)      (2,845)
                                               ---------    ---------    --------    ---------
 Net income (loss)                               (11,245)      23,265     (14,841)      (2,834)

 Preferred share dividends                         6,563        6,563       1,641        6,563
                                               ---------    ---------    --------    ---------
 Net income (loss) available to
  common shareholders                           $(17,808)     $16,702    $(16,482)     $(9,397)
                                               =========    =========    ========    =========
 COMPREHENSIVE INCOME (LOSS):
 Net income (loss)                              $(11,245)     $23,265    $(14,841)     $(2,834)
 Other comprehensive income (loss):
    Net unrealized investment gains (losses)      (1,188)      14,401      (3,429)     (17,886)
                                               ---------    ---------    --------    ---------
 Comprehensive income (loss)                    $(12,433)     $37,666    $(18,270)    $(20,720)
                                               =========    =========    ========    =========
</TABLE>


The accompanying notes are an integral part of these statements.


                                      F-6
<PAGE>



                           LaSalle Re Holdings Limited
                      Consolidated Statement of Cash Flows
            (Amounts expressed in thousands of United States dollars)
                     Years Ended December 31, 2001 and 2000,
  Three Month Period Ended December 31, 1999 and Year Ended September 30, 1999

<TABLE>
<CAPTION>
                                                  2001         2000         1999         1999
                                                  Year         Year        Period        Year
                                                ---------    ---------    --------    ---------
<S>                                              <C>          <C>          <C>         <C>
OPERATING ACTIVITIES:
Premiums collected, net of acquisition costs     $124,528     $113,228     $22,609     $114,315
Ceded premiums paid, net of acquisition costs     (20,711)     (26,009)     (7,050)     (21,326)
Claims and claims expenses paid                   (68,838)     (93,094)    (12,048)     (93,622)
Claims and claims expenses recovered                  617       11,263         531        1,985
Underwriting expenses paid                        (20,504)     (23,721)        500      (13,736)
                                                ---------    ---------    --------    ---------
Cash from (for) underwriting activities            15,092      (18,333)      4,542      (12,384)
Net investment income received                     37,044       34,128       5,756       34,828
Other income received, net of expenses                  9           --          --           --
General and administrative expenses paid               --       (3,255)     (1,383)        (788)
Interest expense paid                                  --       (1,173)       (346)      (1,714)
                                                ---------    ---------    --------    ---------
                                                                                          8,569
Cash from operating activities                     52,145       11,367       8,569       19,942
                                                ---------    ---------    --------    ---------
INVESTING ACTIVITIES:
Debt securities sales                             288,365      257,462      49,980      305,671
Debt securities maturities                         68,162       73,000      10,000       24,710
Debt securities purchases                        (381,399)    (251,838)    (62,430)    (299,882)
Trenwick Group Ltd. loan                               --      (75,000)         --           --
                                                ---------    ---------    --------    ---------
Cash from (for) investing activities              (24,872)       3,624      (2,450)      30,499
                                                ---------    ---------    --------    ---------
FINANCING ACTIVITIES:
Common share sales                                     --          430          74          412
Share and option repurchases                           --       (3,176)         --       (1,346)
Equity put option premium payments                     --         (825)       (611)      (1,850)

Preferred share dividends paid                     (6,563)      (6,563)     (1,641)      (6,563)
Common share dividends paid                        (7,500)      (1,500)         --      (37,533)
                                                ---------    ---------    --------    ---------
Cash for financing activities                     (14,063)     (11,634)     (2,178)     (46,880)
                                                ---------    ---------    --------    ---------

Change in cash and cash equivalents                13,210        3,357       3,941        3,561

Cash and cash equivalents,
  beginning of period                              23,221       19,864      15,923       12,362
                                                ---------    ---------    --------    ---------
Cash and cash equivalents, end of period          $36,431      $23,221     $19,864      $15,923
                                                =========    =========    ========    =========
</TABLE>


The accompanying notes are an integral part of these statements.



                                      F-7
<PAGE>



                           LaSalle Re Holdings Limited
                      Consolidated Statement of Changes in
              Shareholders' Equity (Amounts expressed in thousands
                   of United States dollars except share data)
                     Years Ended December 31, 2001 and 2000,
  Three Month Period Ended December 31, 1999 and Year Ended September 30, 1999


<TABLE>
<CAPTION>
                                                        2001          2000        1999         1999
                                                        Year          Year       Period        Year
                                                      ---------    ---------    ---------    ---------
<S>                                                    <C>          <C>          <C>          <C>
Shareholders' equity, beginning of period              $464,091     $361,960     $382,197     $430,053

Preferred and common shares:
Common shares sold under employee stock
  purchase plans                                             --          247           37          300
Common shares issued on exercise of options
  and warrants                                               --            8           --          660
Common shares issued under employee
  compensation plan                                          --            7           --           81
Restricted common shares awarded                             --           --           --        1,092
Common shares repurchased                                    --           --           --       (1,097)
Exercise of options to acquire shares in subsidiary          --          105           --           --

Compensation recognized under employee plans                 --          243           22            4

Equity put option cost recognized, net of
  applicable minority interest                               --         (630)        (469)      (1,420)
Minority interest change                                     --         (684)          10       (1,068)
Common share issued to acquire minority interest
  in subsidiary                                              --       77,863           --           --
Acquisition costs                                            --       (1,596)          --           --

Deferred compensation under share award plan
Compensation deferred, net of applicable
  minority interest                                          --          310           --       (1,092)
Compensation expense recognized, net of
  applicable minority interest                               --          208           69          576
Acquisition of minority interest                             --          (73)          --           --
Minority interest change                                     --            2           --           --

Retained earnings
Net income (loss)                                       (11,245)      23,265      (14,841)      (2,834)

Preferred share dividends declared                       (6,563)      (6,563)      (1,641)      (6,563)
Common share dividends declared                          (7,500)      (1,500)          --      (17,543)
Shares repurchased on exercise of share options              --       (2,439)          --         (712)
Minority interest change                                     --         (176)           5         (289)

Accumulated other comprehensive income
Other comprehensive income (loss)                        (1,188)      14,401       (3,429)     (17,886)
Acquisition of minority interest                             --         (891)          --           --
Minority interest change                                     --           24           --          (65)
                                                      ---------    ---------    ---------    ---------
Shareholders' equity, end of period                    $437,595     $464,091     $361,960     $382,197
                                                      =========    =========    =========    =========
</TABLE>


The accompanying notes are an integral part of these statements.


                                      F-8
<PAGE>


                           LaSalle Re Holdings Limited
                   Notes to Consolidated Financial Statements
                    (Amounts expressed in thousands of United
                         States dollars except share and
                           per share data) Years Ended
                           December 31, 2001 and 2000,
  Three Month Period Ended December 31, 1999 and Year Ended September 30, 1999

Note 1
Organization
and Basis of
Presentation

     Organization

     LaSalle Re Holdings Limited (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 to write insurance business and
     operates as a multi-line reinsurance company, with emphasis on property
     catastrophe business.

     On August 26, 1994, LaSalle Re incorporated a subsidiary company in the
     United Kingdom, to act as a representative office for the Company. In
     addition, on June 11, 1996, LaSalle Re incorporated a subsidiary company in
     Bermuda, to provide capital support to selected Lloyd's syndicates.
     Following the Trenwick/LaSalle business combination, the Company closed its
     UK representative office and ceased to actively participate as a corporate
     member in Lloyd's.

     On September 27, 2000, the Company completed a business combination with
     Trenwick Group Ltd. ("Trenwick") and Trenwick Group Inc. Under the terms of
     the business combination, the common shareholders of the Company, Trenwick,
     Trenwick Group Inc., and the minority shareholders of LaSalle Re Limited
     exchanged their shares on a one-for-one basis for shares in Trenwick.
     Following this transaction, the Company became a wholly owned subsidiary of
     Trenwick.

     In connection with the business combination, the Company changed its year
     end from September 30 to December 31 to be consistent with Trenwick.
     Consequently, the data presented in these financial statements is for the
     twelve months ended December 31, 2001, December 31, 2000, the three months
     ended December 31, 1999 and the twelve months ended September 30, 1999.

     Basis of presentation

     We include the accounts of LaSalle Re Holdings Limited and its subsidiaries
     in these financial statements after elimination of significant
     inter-company accounts and transactions. We have reclassified certain items
     in prior financial statements to conform to current presentation.

     We prepared these consolidated financial statements in conformity with
     accounting principles that are generally accepted in the United States of
     America, sometimes referred to as U.S. GAAP. In preparing these financial
     statements, we are required to make estimates and assumptions that affect
     the reported amounts of assets and liabilities and disclosure of contingent
     assets and liabilities at the date of the financial statements, as well as
     the reported amounts of revenues and expenses during the reporting periods.
     Actual amounts will differ from these estimates.

     We translate foreign currency monetary assets and liabilities at the rates
     of exchange at the balance sheet dates. We translate foreign currency
     revenues and expenses at the exchange rates in effect at the date of the
     transaction. We include exchange gains and losses in net income as they
     arise.


                                      F-9
<PAGE>


     We accounted for the business combination between the Company, Trenwick
     Group Inc. and LaSalle Re as a purchase by the Company of the minority
     interest in LaSalle Re. Accordingly in these financial statements we have
     eliminated the minority interest in net income of LaSalle Re from October1,
     2000.

     Other significant accounting policies are presented in italics within the
     appropriate footnotes.

Note 2
Business
Combinations

     As described above, following shareholder and regulatory approval, Trenwick
     issued 36,668,599 of its common shares on a one-for-one, tax-free basis to
     the former shareholders of the Company (15,634,394 shares, including 26,656
     restricted shares issued under share award plans), the minority
     shareholders of LaSalle Re, then a 77.5% owned subsidiary of the Company
     (4,797,649 shares), and the former shareholders of Trenwick Group Inc.
     (16,236,551 shares, including 224,331 restricted shares issued under share
     award plans).

     We accounted for the acquisition of the minority interest in LaSalle Re as
     a purchase. Under the purchase basis of accounting, we allocated the
     purchase price ($77,207) to the identifiable assets acquired and
     liabilities assumed, based on their estimated fair values at the date of
     acquisition and recorded the overallocated excess ($12,196) as negative
     goodwill. Pending changes in accounting for negative goodwill and its
     accretion are described in Note 11.

Note 3
Segment
And Geographic
Information

     Segment Information

     The Company conducts its business in two segments: worldwide property
     catastrophe reinsurance and Lloyd's syndicates. The worldwide property
     catastrophe 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. The
     Lloyd's syndicates are in runoff.

     The following tables present business segment financial information for the
     Company at year end 2001 and 2000 and for the other periods presented:

                                                    2001       2000
     Total assets:                                  Year       Year
                                                  --------   --------
     Worldwide property catastrophe reinsurance   $765,697   $658,448
     Lloyd's syndicates                             36,623     67,047
                                                  --------   --------
     Total assets                                 $802,320   $725,495
                                                  ========   ========

<TABLE>
<CAPTION>
                                                    2001         2000         1999         1999
                                                    Year         Year        Period        Year
                                                  ---------    ---------    --------    ---------
<S>                                                <C>          <C>          <C>         <C>
     Total revenues:
     Worldwide property catastrophe reinsurance    $128,455     $120,470     $35,855     $147,808
     Lloyd's syndicates                              16,070       23,504       3,124       13,269
                                                  ---------    ---------    --------    ---------
     Total revenues                                $144,525     $143,974     $38,979     $161,077
                                                  =========    =========    ========    =========

     Net income (loss):
     Worldwide property catastrophe reinsurance       $(593)     $33,279    $(13,576)        $755
     Lloyd's syndicates                             (10,652)     (10,014)     (1,265)      (3,589)
                                                  ---------    ---------    --------    ---------
     Net income (loss)                             $(11,245)     $23,265    $(14,841)     $(2,834)
                                                  =========    =========    ========    =========
</TABLE>


                                      F-10
<PAGE>

     Geographic Information

     The following table presents the Company's gross premiums written allocated
     to the geographic region in which the risks originate:

<TABLE>
<CAPTION>
                                             2001       2000      1999       1999
                                             Year       Year      Period     Year
                                           --------   --------   -------   --------
<S>                                         <C>        <C>          <C>     <C>
     Gross premiums written:
     United States                          $62,429    $51,385      $719    $60,074
     United Kingdom                          14,301     35,615     3,337     32,161
     Europe, excluding United Kingdom        10,823      4,821        --      9,555
     Australia, New Zealand and Far East     16,498      7,872       647      7,383
     Worldwide                               41,481     30,470     5,604     29,837
                                           --------   --------   -------   --------
     Gross premiums written                $145,532   $130,163   $10,307   $139,010
                                           ========   ========   =======   ========
</TABLE>

Note 4
Underwriting
Activities

     Premiums

     We estimate premiums written based upon reports received from ceding
     companies. We adjust these estimates when a contract contains a no claims
     bonus with a provision for the return premium recorded simultaneously with
     the written premium. In addition, we review estimates with adjustments
     recorded in the period in which the actual amounts are determined. We
     recognize reinstatement premiums at the time a loss occurs when coverage is
     reinstated. We earn premiums on property catastrophe excess of loss
     contracts 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. We
     estimate premiums written for LaSalle Re Corporate Capital Ltd. from
     reports submitted to the Company by the syndicates. We earn these premiums
     in accordance with the related underlying risk attachment periods, which
     average between 18-24 months. We earn reinstatement premiums over the
     remaining life of the contract. Unearned premiums represent the portion of
     premiums written which are applicable to the unexpired terms of the
     policies in force.

     The components of premiums written and earned are as follows:

                                  2001         2000         1999         1999
                                  Year         Year         Period       Year
                                ---------    ---------    --------    ---------
     Assumed premiums written    $145,532     $130,163     $10,307     $139,010
     Ceded premiums written       (50,453)     (31,631)       (897)     (28,191)
                                ---------    ---------    --------    ---------
     Net premiums written         $95,079      $98,532      $9,410     $110,819
                                =========    =========    ========    =========

     Assumed premiums earned     $150,524     $140,129     $37,460     $145,080
     Ceded premiums earned        (52,982)     (32,033)     (7,069)     (18,465)
                                ---------    ---------    --------    ---------
     Net premiums earned          $97,542     $108,096     $30,391     $126,615
                                =========    =========    ========    =========

     Policy Acquisition Costs

     Policy acquisition costs primarily consist of commissions and brokerage
     expenses incurred at policy or contract issue date. These costs vary with
     and are primarily related to the acquisition of business. We defer and
     amortize policy acquisition costs over the period in which the related
     premiums are earned. We periodically review deferred policy acquisition
     costs to determine that they do not exceed recoverable amounts after
     allowing for anticipated investment income.


                                      F-11
<PAGE>


     The components of policy acquisition costs are as follows:

<TABLE>
<CAPTION>
                                              2001                2000                1999             1999
                                              Year                Year               Period            Year
                                             --------            --------            ------           -------
<S>                                           <C>                 <C>                <C>              <C>
     Gross policy acquisition
        costs deferred                        $18,317             $21,379            $9,319           $21,317
     Ceded policy acquisition
       costs deferred                            (114)               (963)               --                --
                                             --------            --------            ------           -------
     Net policy acquisition costs
       deferred                               $18,203             $20,416            $9,319           $21,377
                                             ========            ========            ======           =======

     Policy acquisition costs
       Expensed                               $20,886             $21,270            $5,878           $19,844
                                             ========            ========            ======           =======
</TABLE>

     Claims and Claims Expenses

     We record claims and claims expenses as incurred so as to match claims and
     claims expense costs with premiums over the contract periods. The amount
     provided for unpaid claims and claims expenses consists of any unpaid
     reported claims and claims expenses and estimates for incurred but not
     reported claims and claims expenses, net of salvage and subrogation. The
     estimates for claims and claims expenses incurred but not reported are
     developed based on industry information, contract reviews, historical
     claims and claims expense experience and an actuarial evaluation of
     expected claims and claims expense experience. Any adjustments to these
     estimates are reflected in income when known. The amount included as claims
     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
     claims and claims expenses. We review these estimates and, as experience
     develops and new information becomes known, the reserves are adjusted as
     necessary. We reflect such adjustments, if any, in results of operations in
     the period in which they are determined and account for as changes in
     estimates. Due to the inherent uncertainty in estimating the liability for
     claims and claims expenses, there can be no assurance that the ultimate
     liability will not exceed recorded amounts, with a resulting material
     effect on the Company. We believe based on the current information
     available used in estimating the liability, that the Company's recorded
     amount is adequate to meet its future obligations.

     The components of net claims and claims expenses incurred are as follows:

<TABLE>
<CAPTION>
                                                                        2001            2000           1999            1999
                                                                        Year            Year          Period           Year
                                                                      ---------        -------       --------        ---------
<S>                                                                    <C>             <C>            <C>             <C>
     Gross claims and claims expenses incurred                         $174,347        $79,973        $55,849         $142,232
     Ceded claims and claims expenses incurred                          (51,366)           613         (9,207)         (11,085)
                                                                      ---------        -------       --------        ---------
     Net claims and claims expenses incurred                           $122,981        $80,586        $46,642         $131,147
                                                                      =========        =======       ========        =========
</TABLE>

     The following table presents a reconciliation of the beginning and ending
     balances of net liabilities for unpaid claims and claims expenses. The
     gross liabilities for unpaid claims and claims expenses at period ends are
     as reflected in the balance sheet. The net liabilities for unpaid claims
     and claims expenses are after deductions for reinsurance recoverable on
     unpaid claims and claims expenses, also as reflected in the balance sheet.


                                      F-12
<PAGE>


<TABLE>
<CAPTION>
                                                                       2001            2000            1999             1999
                                                                       Year            Year           Period            Year
                                                                     ---------       ---------       ---------       ---------
<S>                                                                   <C>             <C>             <C>              <C>
     Net unpaid claims and claims expenses,
       beginning of period                                            $168,332        $172,576        $137,452         $97,942
                                                                     ---------       ---------       ---------       ---------

     Provision, net of reinsurance recoverable:
       Claims incurred in the current period                           121,981          60,149          50,244          82,537
       Claims incurred prior to the current period                       1,000          20,437          (3,602)         48,610
                                                                     ---------       ---------       ---------       ---------
       Total provision                                                 122,981          80,586          46,642         131,147
                                                                     ---------       ---------       ---------       ---------

     Payments, net of reinsurance:
        Claims incurred in the current period                           (7,824)         (6,374)           (899)        (12,821)
        Claims incurred prior to the current period                    (60,397)        (78,456)        (10,619)        (78,816)
                                                                     ---------       ---------       ---------       ---------
        Total payments                                                 (68,221)        (84,830)        (11,518)        (91,637)
                                                                     ---------       ---------       ---------       ---------

     Foreign currency translation adjustment to
       Net unpaid claims and claims expenses                               216              --              --              --
                                                                     ---------       ---------       ---------       ---------

     End of period:
       Net unpaid claims and claims expenses                           223,308         168,332         172,576         137,452
       Reinsurance recoverable on unpaid
     claims
         and claims expenses                                            57,179           6,431          17,776           9,100
                                                                     ---------       ---------       ---------       ---------
       Gross unpaid claims and claims expenses                        $280,487        $174,763        $190,352        $146,552
                                                                     =========       =========       =========       =========
</TABLE>

     The increase in the Company's incurred claims were primarily the result of
     losses relating to the September 11th terrorist attacks. There was minimal
     prior year development on a net basis in 2001. Adverse development
     associated with Lloyd's syndicates segment was off set by favorable
     development on catastrophic large losses which occurred prior to 2001.

     The prior year development for the 2000 year was due primarily to
     additional incurred claims from European Storms Martin and Anatol. Both of
     these storms occurred in December 1999. The increase in the Company's
     incurred claims followed an increase in the market estimate of the size of
     the insured claims. This was due to new information emerging following the
     elapse of time from the date of loss.

     The favorable development on prior period claims reserves for the 1999
     period related primarily to a reduction in the claims emanating from an
     earthquake in Turkey. This was due to a reduction in the size of industry
     estimates relating to the loss which were used to originally estimate the
     Company's potential incurred loss.

     The prior year development for the 1999 year was due to several factors.
     Firstly, the Company increased reserves by $14,500 in respect of Hurricane
     Georges, which occurred in September 1998. This followed an increase in the
     size of the market loss. Secondly, in March 1999, the Company recorded
     outstanding claim reserves totaling approximately $11,000 on three stop
     loss contracts. These claims arose out of two industry issues relating to
     extended warranty business and the deterioration of the Lloyd's 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 claims were previously established. Thirdly, as a result of higher
     than previously anticipated claims on international catastrophe business,
     the Company strengthened its incurred but not reported claims



                                      F-13
<PAGE>


     by approximately $16,000 to reflect this trend. This methodology was
     continued going forward when establishing estimates.

     Reinsurance

     We enter into reinsurance and retrocessional agreements to reduce our
     exposure on large catastrophic losses. We expense reinsurance premiums on a
     pro-rata basis over the period the coverage is provided. We classify
     reinsurance contracts, which do not meet insurance accounting risk transfer
     requirements as deposits. We treat these deposits as financing transactions
     and credit or charge interest income or interest expense to them according
     to contract terms. We pay reinstatment premiums on certain reinsurance and
     retrocessional agreements when a catastrophic event occurs to reinstate
     coverage over the remaining life of the contract.

     In 2001, the Company has purchased three excess of loss programs which
     provide coverage of $20,000 in excess of the first $30,000 of losses per
     occurrence, and $5,000 in excess of the first $50,000 of losses per
     occurrence and $25,000 in excess of the first $75,000 of losses per
     occurrence.

     During 1999 and 2000, the Company purchased an excess of loss reinsurance
     program which provided various limits for first, second and third loss
     occurrences. This contract was cancelled effective December 31, 2000.

     In addition, the Company had a quota share arrangement which ceded a
     proportion of the Company's property catastrophe business to a founding
     shareholder (see Note 13). 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.

     Reinsurance recoverable balances

     The components of reinsurance recoverable balances at year end 2001 and
     2000 are as follows:

                                                  2001           2000
                                               -------         ------


     Paid claims                               $    --         $  311
     Unpaid claims and claims expenses          57,179          6,120
                                               -------         ------
     Reinsurance recoverable balances          $57,179         $6,431
                                               =======         ======


     There was no allowance for doubtful accounts on reinsurance recoverable
     balances at year end 2001 or 2000.

     Reinsurance agreements provide for recovery of a portion of certain claims
     and claims expenses from reinsurers. The Company remains liable in the
     event that the reinsurer is unable to meet its obligation. See Note 13 for
     further details.


                                      F-14
<PAGE>

Note 5
Investing
Activities

     Debt Security Investments

     We have classified debt securities as "available for sale" and reported
     them at estimated fair value using quoted market prices or broker dealer
     quotes.

     Fair value and amortized cost or cost of debt securities at year end 2001
     and 2000 follow:

<TABLE>
<CAPTION>
                                                                      2001                         2000
                                                            -----------------------       -----------------------
                                                              Fair           Fair
                                                             Value           Cost           Value          Cost
                                                            --------       --------       --------       --------
<S>                                                         <C>            <C>            <C>            <C>
     U.S. and U.K. federal government securities,
     including agencies                                     $ 54,869       $ 52,803       $100,890       $ 98,910
     Other foreign government securities                      25,186         24,448         57,629         56,660
     Mortgage and other asset-backed securities              119,411        117,991             --             --
     Corporate and other debt securities                     307,812        307,232        317,926        314,883
                                                            --------       --------       --------       --------
     Debt securities fair value and amortized cost          $507,278       $502,474       $476,445       $470,453
                                                            ========       ========       ========       ========
</TABLE>

     Certain of the Company's investments are pledged as security for letters of
     credit. See Note 6.

     Gross unrealized gains and losses on debt securities at year end 2001 and
     2000 follow:

<TABLE>
<CAPTION>
                                                                     2001                         2000
                                                            ----------------------         ---------------------
                                                             Gains          Losses         Gains         Losses
                                                            -------        -------         ------        -------
<S>                                                          <C>           <C>             <C>             <C>
     U.S. and U.K. federal government
       securities, including agencies                       $ 2,066             --         $2,092        $  (112)
     Other foreign government securities                        738             --          1,111           (142)
     Mortgage and other asset-backed securities               1,444            (24)            --             --
     Corporate and other debt securities                      7,235         (6,655)         5,174         (2,131)
                                                            -------        -------         ------        -------
     Debt securities gross gains and losses                 $11,483        $(6,679)        $8,377        $(2,385)
                                                            =======        =======         ======        =======
</TABLE>

     The fair value and amortized cost for debt securities are shown below by
     contractual maturity periods, except mortgage-backed and asset-backed
     securities which are included based on expected maturity dates. Actual
     maturities will differ from contractual maturities because borrowers
     generally have the right to prepay obligations.

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

     Due in one year or less                  $ 74,539            $ 73,125
     Due after one year through five years     301,211             292,821
     Due after five years through ten years     74,569              74,416
     Due after ten years                        56,959              62,112
                                              --------            --------
     Debt securities total maturities         $507,278            $502,474
                                              ========            ========


     Net Investment Income and Net Investment Gains (Losses)

     We recognize investment income, consisting principally of interest, when
     earned, net of investment expenses. In computing interest income, we
     amortize premiums and accrete discounts on debt securities utilizing the
     interest method. We adjust the amortization and accretion for
     mortgage-backed and other asset-backed securities, when sufficient
     information exists to



                                      F-15
<PAGE>


     estimate the probability and timing of their prepayments, to the amount
     that would have existed had the new effective yield been applied since the
     acquisition of the security.

     We generally limit investments in debt securities that are rated below
     investment grade, as these investments are subject to a higher degree of
     credit risk than investment grade securities. We monitor the
     creditworthiness of the portfolio, including below investment grade
     securities, and we write down investments when fair values decline for
     reasons other than changes in interest rates or other perceived temporary
     conditions. We determine realized gains or losses on disposition of
     investments on the basis of specific identification.

     Sources of net investment income follow:

<TABLE>
<CAPTION>
                                            2001        2000        1999       1999
                                            Year        Year       Period      Year
                                          --------    --------    -------    --------
<S>                                        <C>         <C>         <C>        <C>
     Debt securities interest              $31,224     $28,007     $6,100     $26,299
     Cash and cash equivalents interest      1,104       7,546      2,332       6,477
     Intercompany investment income          4,688          --         --          --
     Other investment income                 2,548       2,805        375       1,937
                                          --------    --------    -------    --------
     Gross investment income                39,564      38,358      8,807      34,713
     Other investment expenses                (636)       (914)      (219)       (866)
                                          --------    --------    -------    --------
     Net investment income                 $38,928     $37,444     $8,588     $33,847
                                          ========    ========    =======    ========
</TABLE>


     Net realized gains (losses) on sales of investments and their effect on net
     income follow:

                                                2001       2000          1999
                                                Year       Year          Year
                                              -------     -------      -------

     Debt securities realized gains            $7,840        $538       $4,082
     Debt securities realized losses             (273)     (2,226)      (3,467)
                                              -------     -------      -------
     Net realized investment gains (losses)     7,567      (1,688)         615
     Applicable minority interest                  --        (450)         144
                                              -------     -------      -------
     Net realized investment gains (losses)
       included in net income                  $7,567     $(1,238)        $471
                                              =======     =======      =======

     The Company did not write down the value of any securities during the 2001
     and 2000 years, the 1999 period or the 1999 year as any declines were
     viewed to be temporary.

     Net unrealized gains (losses) on investments and their effect on other
     comprehensive income (loss) follow:

<TABLE>
<CAPTION>
                                                     2001       2000        1999       1999
                                                     Year       Year       Period     Year
                                                   -------    --------    -------    --------

<S>                                                 <C>        <C>        <C>        <C>
Debt securities net gains (losses)                  $6,379     $12,197    $(4,471)   $(22,684)
Applicable minority interest                            --         966      1,042       5,269
                                                   -------    --------    -------    --------
Net investment gains (losses) included in
  comprehensive income                               6,379      13,163     (3,429)    (17,415)
Less net realized investment gains (losses)
  included in net income (loss)                      7,567      (1,238)        --         471
                                                   -------    --------    -------    --------
Net unrealized investment gains (losses)
   included in other comprehensive income (loss)   $(1,188)    $14,401    $(3,429)   $(17,886)
                                                   =======    ========    =======    ========
</TABLE>



                                      F-16
<PAGE>


     Net Unrealized Investment Gains

     We calculate unrealized investment gains (losses) as the difference between
     recorded values (fair value) and amortized cost or cost. We include net
     unrealized investment gains and losses, in shareholders' equity as
     accumulated other comprehensive income.


Note 6
Financing
Activities

     Letters of Credit

     In the normal course of reinsurance operations, the Company's bankers have
     issued letters of credit totaling $72,138 at year end 2001 in favor of
     ceding insurance companies to secure the Company's obligations under
     various reinsurance contracts. In connection with the support of three
     Lloyd's syndicates, the Company has posted letters of credit in the amount
     of $14,255 at year end 2001. At year end 2001, $99,351 of debt securities
     were pledged as collateral for these letters of credit.

     Minority interest

     Prior to the Trenwick/LaSalle business combination, the minority interest
     disclosed in the financial statements represented founding shareholders'
     ownership of exchangeable non-voting shares in LaSalle Re. These shares
     were held by certain founding shareholders who would otherwise have held,
     or caused 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 were
     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 determined such exchange would cause actual or potential adverse
     tax consequences to the Company or any shareholder. The exchangeable
     non-voting shares at all times ranked as to assets, dividends and in all
     other respects on a parity with the common shares of LaSalle Re, except
     that they did not have the right to vote on any matters except as required
     by Bermuda law and in connection with certain actions by the Company.

     Share Capital

     At year end 2001, the authorized share capital of Company was 100,000,000
     shares of par value $1.00 each, which includes both preferred and common
     shares. At year end 2001 and 2000, the Company had 3,000,000 Series A
     preferred shares and 20,432,043 common shares which were fully paid, issued
     and outstanding.

     The 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 aggregate). Under
     certain circumstances, the preferred shares may be redeemed in whole at a
     redemption price of $26.00 per share ($78,000 aggregate). Dividends on the
     preferred shares, are cumulative at 8.75% of the liquidation preference per
     annum ($2.1875 per share). On or after March 27, 2007, the preferred shares
     may be redeemed, in whole or in part, at a redemption price of $25.00 per
     share; if redeemed before this date, the Company will have to pay a
     premium.

     Shareholder stock options

     Prior to the Trenwick/LaSalle business combination, the Company had issued
     options to purchase common shares to certain shareholders and their
     affiliates and LaSalle Re had issued options to purchase exchangeable
     non-voting shares. These options became exerciseable on October 1, 1996 and
     were exerciseable until November 22, 2003. 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.

     During the 2000 year, a total number of 27,270 options to purchase
     exchangeable non-voting shares were exercised for cash and 81,308 in
     cashless transactions resulting in the issuance of 80,678



                                      F-17
<PAGE>


     common shares. In addition 454,500 exchangeable non-voting shares were
     repurchased at a value of $6.89. There were no outstanding options at year
     end 2000.

     Catastrophe Equity Put

     The Company entered into a multi-year Catastrophe Equity Put in July 1997,
     which was renewed through December 2000. The CatEPut enabled the Company to
     exercise an option to raise equity through the insurance of convertible
     preferred shares 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. On January 1, 2001, the publicly traded
     entity Trenwick assumed the benefits and obligations attaching to the
     CatEPut. Accordingly, although the CatEPut will be triggered by loss
     experience at the Company, the capital will be received by Trenwick. The
     CatEPut triggers remained the same but the value of the securities issuable
     upon its exercise was reduced to $55,000.

Note 7
Income
Taxation

     The Company is incorporated under the laws of Bermuda and is subject to
     Bermuda taxation. Under current Bermuda law, it is not required to pay any
     income or capital gains taxes in Bermuda. Furthermore, they have received
     an undertaking from the Bermuda Minister of Finance that, in the event of
     any income or capital gains taxes being imposed, they will be exempt from
     those taxes until 2016.

     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. A Bermuda subsidiary is a corporate member of Lloyd's. Pursuant to a
     Closing Agreement between Lloyd's and the U.S. Internal Revenue Service,
     the subsidiary 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.

     The Bermuda subsidiary 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 insignificant, but are subject
     to change as the results of the syndicates are uncertain.

Note 8
Employee
Benefits and
Compensation
Arrangements

     Retirement Plans

     We recognize expenses for employee retirement plans as they are incurred.

     The Company has a defined contribution plan for its full-time employees;
     the plan is administered by an independent life insurance company. The
     Company contributes 10% of an eligible employee's total compensation to the
     plan; employee contributions can be made to the plan subject to a maximum
     of 10% of the employee's total compensation.

     The Company's expenses for employee retirement plans for the 2001 and 2000
     years, and the 1999 period and year were $378, $287, $33, $200,
     respectively.

     Restricted Common Share Awards

     We recorded deferred compensation for the fair value of restricted common
     share awards and presented deferred compensation as a separate, offsetting
     component of shareholders' equity. We recognized compensation expense over
     the vesting period of the restricted common shares.

     The only awards of restricted stock were granted during the 1999 year. The
     Company granted two separate awards of restricted stock to certain
     executive officers. The first vested over 5 years from


                                      F-18
<PAGE>


     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. The second award of
     restricted stock vested ratably in two annual installments over 2 years
     from the date of award. During the restricted period the employee received
     dividends in the form of additional shares of restricted stock.

     Following the completion of the Trenwick/LaSalle business combination on
     September 27, 2000 all outstanding restricted common stock in the Company
     was exchanged for common stock in Trenwick and the associated deferred
     compensation at that time was offset against additional paid in capital.

     Employee Share Purchase Plan

     We recorded shares sold to employees in connection with employee share
     purchase plans at fair value; we recognized compensation expense for the
     difference between fair value and the discounted sales price.

     On September 27, 2000 following the Trenwick/LaSalle business combination,
     the Company's Employee Stock Purchase Plan (the "Plan") was cancelled.
     Under the Plan, the Company was 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 was $50 per
     calendar year. In addition, certain employees were eligible to use up to
     100% of their annual bonus to purchase common shares under the Plan. Prior
     to cancellation, LaSalle Re Holdings issued 21,532, 3,390 shares and 19,459
     shares, respectively, under the plan during the 2000 year, and the 1999
     period and year, and recognized $47, $7 and $59, respectively, of
     compensation expense.

     Share Options

     We granted options for a fixed number of common shares to employees and
     non-employee directors. These options had an exercise price equal to the
     market value of the shares at the date of grant. The current accounting
     standard establishes a fair value based method of accounting for
     stock-based compensation plans; however, it permits an entity to continue
     to apply the accounting provisions of a previous standard and make pro
     forma disclosures of net income and earnings per share, as if the fair
     market value based method had been applied. We continued to account for the
     share option grants in accordance with the previous standard and have
     included the pro forma disclosures required by the fair value based method
     below.

     All options granted vested ratably in five annual installments over 5 years
     from the grant date and could be exercised over a 10-year period,
     commencing on the vesting date except for 85,218 options granted in 1997
     which vested ratably in three annual installments from the date of grant.
     All outstanding options originally granted in 1995 and 1997, which totaled
     295,436, automatically vested upon the completion of the Trenwick/LaSalle
     business combination. For certain option grants, there was an anti-dilution
     provision, which awarded 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, exceeded 5% of the
     average book value per share for the prior four quarters. For the 2001 and
     2000 year and the 1999 period, no shares of restricted stock were awarded.
     For the 1999 year, 46,459 shares of restricted stock were awarded.

     For the 2000 year, the 1999 period and the 1999 year, the Company recorded
     compensation expense on these options of $317, $27 and $565, respectively.



                                      F-19
<PAGE>

<TABLE>
<CAPTION>
                                                      2000        1999        1999
                                                      Year       Period       Year
                                                    --------   ----------   --------
<S>                                                  <C>          <C>        <C>
     Number of shares:
     Options outstanding, beginning of period        459,436      466,436    401,436
     Options granted                                      --           --    233,000
     Options canceled                                     --       (7,000)  (148,200)
     Options exercised                                    --           --    (19,800)

     Options transferred to Trenwick                (459,436)          --         --
                                                    --------   ----------   --------
     Options outstanding, end of period                   --      459,436    466,436
                                                    ========   ==========   ========

     Options exercisable, end of period                   --      237,986    168,943
                                                    ========   ==========   ========

     Range of exercise price:

     Options granted                                      --           --   $19 - $26

     Options exercised                                    --           --   $19 - $20

     Options outstanding, end of period                   --    $19 - $32   $19 - $32

     Options exercisable, end of period                   --    $19 - $32   $19 - $32
                                                    ========   ==========   ========

     Weighted average exercise price:
     Options granted                                      --           --     $23.87
     Options exercised                                    --           --     $19.25
     Options outstanding, end of period                   --       $24.89     $24.90
     Options exercisable, end of period                   --       $24.10     $24.39
                                                    ========   ==========   ========
</TABLE>


     Pro Forma Information

     All of the outstanding share options were issued at an exercise price equal
     to fair market value on the date of grant; therefore no compensation
     expense has been recognized for these grants. Had the fair value based
     method described above been applied, net income (loss) would have been the
     pro forma amounts shown below:

<TABLE>
<CAPTION>
                                                           2000 Year  1999 Period  1999 Year
                                                           ---------  -----------  ---------
<S>                                                        <C>         <C>         <C>
     Net income (loss) available to common shareholders:
       As reported                                         $(23,265)   $(14,841)   $(2,834)
                                                           ========    ========    =======
       Pro forma                                           $(23,419)   $(14,944)   $(3,458)
                                                           ========    ========    =======
</TABLE>

     The pro forma adjustments relating to options granted from 1995 to 2000 are
     based on a fair value method using the Black-Scholes option pricing model;
     no effect has been given to options granted prior to 1995. The
     Black-Scholes option valuation model was developed for use in estimating
     the fair value of options which have no vesting restrictions and are fully
     transferable. In addition, option valuation models require the input of
     highly subjective assumptions including the expected share price
     volatility. Because the Company's share options have characteristics
     significantly different from those of traded options, and because changes
     in the subjective input assumptions can materially affect the fair value
     estimate.

     Stock Appreciation Rights

     Under a plan now terminated, we recorded a liability for stock appreciation
     rights at each period end based on the excess of the current fair value of
     the underlying common stock over the fair value at the time of grant. We
     recognized compensation expense for adjustments to the liability.


                                      F-20
<PAGE>

     In consideration for entering into an employment agreement, the Company
     granted stock appreciation rights ("SAR's") to its former chairman and
     chief executive officer. The number of SAR's was dependent upon the
     financial performance of the Company over a set period of time and the
     value of each was dependent upon the fair market value of a common share.
     Following the exchange of shares in connection with the Trenwick/LaSalle
     business combination, the value of each SAR became dependent upon the fair
     market value of Trenwick's publicly traded common stock, therefore the
     liability was assumed by Trenwick. For the 2000 year, the 1999 period and
     the 1999 year, the Company (decreased) increased the total liability by
     ($964), $242 and ($1,490) respectively.

Note 9
Earnings Per
Share
Common
Share

     As of September 27, 2000, the Company became a wholly owned subsidiary of
     Trenwick. As the Company no longer has publicly held common shares, it no
     longer presents earnings per common share.

Note 10
Insurance
Regulation

     LaSalle Re, the Company's insurance subsidiary, is subject to Bermuda
     insurance regulations, which mandate minimum solvency margins and liquidity
     ratios. LaSalle Re must maintain a minimum statutory capital and surplus
     level of the greater of $100,000, 50% of net premiums written ($47,478 for
     2001), or 15% of net loss reserves ($33,496 at year end 2001). In addition,
     Bermuda insurance regulations restrict the payment of dividends from
     retained earnings or additional paid-in-capital which exceed certain
     thresholds without prior approval from the Bermuda Minister of Finance. At
     year end 2001, there were no restrictions on the distribution of retained
     earnings. Statutory capital and surplus of LaSalle Re was $430,463 and
     $453,766 at year end 2001 and 2000, respectively; statutory net income
     (loss) was $(13,757), $9,992 and $(7,013) for the 2001 year, the fifteen
     months ended December 31, 2000 and the 1999 year, respectively.

Note 11
Negative
Goodwill

     Negative goodwill represents the unamortized excess of the fair value over
     the purchase price of identifiable net assets of acquired entities. Through
     the 2001 year, we accreted negative goodwill on a straight-line basis over
     twenty-five years.

     In July 2001, the Financial Accounting Standards Board issued a statement
     covering goodwill which is required to be adopted at the beginning of 2002.
     The new statement changes the income statement recognition of negative
     goodwill from a periodic accretion method to an immediate recognition
     approach. Implementation of this statement will result in a cumulative
     effect in a change of accounting principle.

Note 12
Fair Value of
Financial
Instruments

     We define the fair value of a financial instrument as the amount at which
     the instrument could be exchanged in a current transaction between willing
     parties. We estimate fair values based upon quoted market prices or broker
     dealer quotes and these estimates may vary in the near term.

     Fair value disclosures with respect to debt securities are detailed in Note
     5 to the financial statements. The fair value of other financial
     instruments, principally cash and cash equivalents, reinsurance balances
     receivable, accrued investment income, promissory note receivable and other
     liabilities, approximates their recorded value due to the short term nature
     of the balances.



                                      F-21
<PAGE>


Note 13
Commitments,
Contingencies,
Concentrations
and
Related-Party
Transactions

     Commitments

     The Company leases office space under a non-cancelable operating lease,
     which expires in 2004. The Company's future minimum lease commitments at
     year end 2001 total $660 and are payable as follows: 2002, $317; 2003,
     $317; 2004, $26.

     Total office rent expense for the 2001 year, 2000 year, the 1999 period and
     the 1999 year was $393, $441, $227 and $328 respectively.

     Contingencies

     Concurrent with the Trenwick/LaSalle business combination, Trenwick entered
     into an amended and restated $490,000 credit agreement with various lending
     institutions. The agreement consists of both a $260,000 revolving credit
     facility and a $230,000 letter of credit facility. The revolving credit
     facility has subsequently been converted into a four-year term loan. The
     primary obligors are two of Trenwick's subsidiary companies. Guarantees are
     provided by the Company with respect to these obligations. The letter of
     credit facility is scheduled to expire in November 2002. The term loan
     facility is subject to scheduled principal amortization over the four-year
     period in accordance with the following schedule: 2002, 22.5%; 2003, 27.5%;
     2004, 32.5%; 2005, 17.5%. The applicable interest rate on borrowings under
     the credit facility is generally 2.5% above the London Interbank Offered
     Rate and was 4.7% at year end 2001.

     A portion or all of the term loan must be repaid in the event of equity
     issuances, asset sales or debt issuances by Trenwick or its subsidiaries.
     At year end 2001, $195,000 of term loans were outstanding, and $230,000 of
     letters of credit were outstanding under the credit facility.

     Should the two Trenwick subsidiary companies or Trenwick be unable to meet
     the loan repayments as they fall due, and such repayments are not
     refinanced, the Company would become liable for such repayments under the
     terms of the guarantees. No liability for any such amounts has been
     reflected in these financial statements. As a result of recent losses
     incurred by Trenwick Group Ltd.'s operating subsidiaries, their cash
     distribution capacities have been significantly reduced.

     Concentrations

     During the 2001 year, the Company received 53% of its gross written
     premiums through two brokers of which Aon accounted for 27% and Guy
     Carpenter accounted for 26%. During the 2000 year, 1999 period and the 1999
     year, Aon provided 23%, 4% and 18% and Guy Carpenter provided 19%, 40% and
     20% of the Company's gross written premiums.

     Loss of all or a substantial portion of the business provided by these
     brokers could have an immediate material adverse effect on the business and
     operations of the Company. The Company does not believe, however, that the
     loss of such business would have a long-term adverse effect because of the
     Company's competitive position within the reinsurance market and the
     availability of business from other brokers.

     No one ceding company accounted for more than 3% of the Company's gross
     written premiums in the 2001 or 2000 years, or the 1999 period or year.

     At year end 2001, 93% of the Company's net reinsurance recoverables on
     unpaid claims and claims expenses is recoverable from five principal
     retrocessionaires. The reinsurance recoverable balances, were from GE
     Frankona, ($18,000), London Life ($17,500), Western General ($7,500), Irish
     European Re ($5,000), and IPC Re ($5,000). Each of these companies is rated
     "A" or better by A.M. Best Company.


                                      F-22
<PAGE>


     Included in reinsurance deposits in the balance sheet at year end 2000 is
     $27,422 which was deposited with Allianz.

     Related Party Transactions with Trenwick

     During the 2001 and 2000 year, the Company purchased $10,650 and $13,000
     par value, respectively of Trenwick Capital Trust I Preferred stock for
     $8,461 and 9,902, respectively, which are included in debt securities. This
     stock matures in 2037 and provides preferential cumulative semi-annual cash
     distributions at an annual rate of 8.82% which are guaranteed by Trenwick
     America Corporation, within certain limits, as to distribution payments and
     liquidation or redemption payments. Income recognized on this investment
     was $1,806 and $166 for the 2001 and 2000 years, respectively. The market
     value of the investment at year end 2001 and 2000 was $13,021 and 9,848,
     respectively. The amortized cost was $18,380 and $9,905, respectively.
     Unrealized losses of $5,359 and $57, respectively, are included in
     accumulated other comprehensive income at year end 2001 and 2000.

     At year end 2001, $75,000 was receivable from Trenwick with respect to a
     loan advanced during the 2000 year. Interest is charged on this loan at a
     rate equal to that generated by the Company's investment portfolio.
     Interest recognized for the 2001 year was $4,688.

     Also at year end 2001, $11,651 was receivable from Trenwick with respect to
     an intercompany account balance. This is repayable on demand and is
     interest free.

     Other Related Party Transactions

     Two of the Company's founding shareholders were CNA Financial and Aon.
     Their ownership of the Company during the period prior to the
     Trenwick/LaSalle business combination was between 15.6% and 18.3% for CNA
     and 15.3% and 18.0% for Aon. The Company had numerous business
     relationships with both companies, the principal ones of which are
     summarized below:

                                                                     1999 Period
                                                       2000 Year      and Year
                                                      ---------       --------

     Premiums assumed through Aon                      $30,340         $25,448
     Brokerage costs on premiums assumed through Aon     3,034           2,544
     Investment management services from Aon               821           1,000
     Premiums assumed from CNA                             668           8,386
     Premiums ceded to CNA                               6,556           7,909
     Override and profit commissions on premiums
        ceded to CNA                                     1,244             644
     Underwriting support services from CNA                685           1,634


     While the 2001 underwriting support services agreement between the Company
     and CNA did not terminate until September 30, 2001, the Company did not
     utilize CNA's underwriting support services following the Trenwick/LaSalle
     business combination. Consequently, all fees payable between September 30,
     2000 and September 30, 2001 were accrued and expensed at the date of the
     Trenwick/LaSalle business combination.

     The investment management services agreement between LaSalle Re Holdings
     Limited and Aon terminated at year end 2000.


                                      F-23
<PAGE>


     The Company loaned Mr. Hengesbaugh $142,321 in 2001 to finance a portion of
     the purchase price of a home in Bermuda. The loan is evidenced by a demand
     promissory note and interest is payable at the rate of 8% per annum.

Note 14
Additional
Operating
Cash Flow
Information


     Operating activities are presented in the consolidated statement of cash
     flows on a direct basis. The indirect basis reconciles net income (loss) to
     cash from (for) operating activities. This reconciliation follows:

<TABLE>
<CAPTION>
                                               2001         2000        1999        1999
                                               Year         Year       Period       Year
                                             ---------    --------    --------    --------
<S>                                           <C>          <C>        <C>          <C>
Net income (loss)                             $(11,245)    $23,265    $(14,841)    $(2,834)
Investment premium amortization, net               418      (1,212)       (692)        154
Net realized investment losses (gains)          (7,567)      1,688          --        (615)
Unrealized loss (gain) on foreign exchange        (803)       (405)        193         193
Negative goodwill accretion                       (488)       (122)         --          --
Minority interest in undistributed
 net income (loss) of subsidiaries                  --         839      (4,990)     (2,845)
Restricted stock compensation expense               --         693          91         751
Changes in assets and liabilities, net
 of effect from purchases of subsidiary:
  Accrued investment income                      2,578      (2,555)     (2,139)        981
  Premiums receivable                           (8,101)        652      14,770      (6,354)
  Reinsurance recoverable balances             (50,748)     11,346      (8,676)     (9,100)

  Prepaid reinsurance premiums                   2,529         402       6,172      (9,726)
  Deferred policy acquisition costs              2,683         853       3,441       1,533
  Other assets                                  26,748       8,558      (1,000)     (5,916)

  Trenwick Group Ltd. advances                  (7,649)     (5,598)         --          --
  Unpaid claims and claims expenses            105,705     (14,472)     43,593      48,403

  Unearned premium income                       (4,992)     (9,966)    (27,154)     (6,070)
  Reinsurance balances payable                   3,331        (376)     (2,243)      9,778
  Other liabilities                               (254)     (2,223)      2,044       1,609
                                             ---------    --------    --------    --------
Cash from (for) operating activities           $52,145     $11,367      $8,569     $19,942
                                             =========    ========    ========    ========
</TABLE>


                                      F-24
<PAGE>




Note 15
Unaudited
Quarterly
Financial
Data

     Summarized unaudited quarterly financial data for the years presented is as
     follows:

<TABLE>
<CAPTION>
                                      Quarter                      2001                2000
                                    ---------------               -------            -------
<S>                                 <C>                           <C>                <C>
     Net premiums earned            Fourth quarter                $18,324            $25,357
                                    Third quarter                  29,777             26,751
                                    Second quarter                 27,813             28,776
                                    First quarter                  21,628             27,212


     Net investment income          Fourth quarter                  9,795              9,666
                                    Third quarter                   9,900              9,591
                                    Second quarter                  9,776              9,251
                                    First quarter                   9,457              8,936

     Net realized investment        Fourth quarter                  (150)                228
        Gains (losses)              Third quarter                   1,348                270
                                    Second quarter                    784                 38
                                    First quarter                   5,585            (2,224)



     Net income (loss)              Fourth quarter                 28,567             15,610
                                    Third quarter                (68,696)              8,552
                                    Second quarter                  9,691             12,912
                                    First quarter                  19,193           (13,809)

     Net income (loss)              Fourth quarter                 26,926             13,969
       available to common          Third quarter                (70,337)              6,911
       shareholders                 Second quarter                  8,050             11,271
                                    First quarter                  17,552           (15,450)
</TABLE>

                                      F-25