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                                                                    EXHIBIT 10.7

               SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT
               ------------------------------------------------

     THIS AGREEMENT, made and entered into as of July 1, 1999 (the "Restatement
Date") further amends and restates the amended and restated employment agreement
entered into as of October 1, 1995, as subsequently amended, which amended and
restated employment agreement amended and restated the agreement entered into as
of April 1, 1994 (the "Effective Date"), by and between Victor H. Blake (the
"Executive") and LaSalle Re Limited (the "Company");

                               WITNESSETH THAT:
                               ---------------

     WHEREAS, the parties desire to enter into this Agreement pertaining to the
continued employment of the Executive by the Company;

     NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth below, it is hereby covenanted and agreed by the Executive and the Company
as follows:

     1.  Performance of Services.  The Executive's employment with the Company
shall be subject to the following:

(a)  Subject to the provisions of this Agreement, the Company hereby agrees to
     employ the Executive as Chairman and Internal Consultant of the Company and
     of LaSalle Re Holdings Limited (the "Holding Company") during the Agreement
     Term (as defined below), and the Executive hereby agrees to remain in the
     employ of the Company during the Agreement Term.

(b)  During the Agreement Term, while the Executive is employed by the Company,
     the Executive shall devote his time, energies and talents to performing his
     duties under this Agreement.

(c)  The Executive agrees that he shall perform his duties faithfully and
     efficiently subject to the directions of the Board.  The Executive's duties
     may include providing services for both the Company, the Holding Company
     and the Subsidiaries (as defined below), as determined by the Board.;
     provided, that the Executive shall not, without his consent, be assigned
     tasks that would be inconsistent with his position at the Company. The
     Executive will have such authority and power as are inherent to the
     undertakings applicable to his positions and necessary to carry out his
     responsibilities and the duties required of him hereunder.

(d)  While the Executive is employed by the Company, he shall be subject to the
     duties that generally apply to the Company's directors, officers, and
     employees (including, without limitation, the duty of loyalty to the
     Company).
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(e)  The Executive shall represent the Company in all places where it does
     business, but shall have no authority to act for the Company outside
     Bermuda, to make decisions on behalf of the Company outside Bermuda, or to
     bind the Company with respect to actions outside Bermuda.

(f)  Notwithstanding the foregoing provisions of this paragraph 1, during the
     Agreement Term, the Executive may devote reasonable time to activities
     other than those required under this Agreement, including chairmanship or
     membership of the London Underwriting Centre Board, membership of
     International Underwriters Association, memberships of the boards of
     directors of or consultancies with CNA and its affiliates, acting as a
     managing director of CNA Underwriting Agencies Limited, the supervision of
     his personal investments, and activities involving professional,
     charitable, educational, religious and similar types of organizations,
     speaking engagements, membership of the boards of directors of or
     consultancies with other organizations, and similar type of activities, to
     the extent that such other activities do not inhibit or prohibit the
     performance of the Executive's duties under this Agreement, or conflict in
     any material way with the business transacted by the Company or any
     Subsidiary; provided, however, that except as otherwise expressly provided
     in this Agreement, the Executive shall not serve on the board of any entity
     engaged in the business of transacting reinsurance, or hold any position
     with any entity engaged in the transaction of such business, without the
     consent of the Board.

(g)  Subject to the provisions of this Agreement, the Executive shall not be
     required to perform services under this Agreement during any period that he
     is Disabled.  The Executive shall be considered "Disabled" during any
     period in which he has a physical or mental disability which renders him
     incapable, after reasonable accommodation, of performing his duties under
     this Agreement.  In the event of a dispute as to whether the Executive is
     Disabled, the Company may refer the same to a licensed practicing physician
     of the Company's choice, and the Executive agrees to submit to such tests
     and examinations as such physician shall deem appropriate.

(h)  the "Agreement Term" shall be the period beginning on the Effective Date
     and ending on September 30, 2003.

(i)  For purposes of this Agreement, the term "Subsidiary" shall mean any
     company (regardless of whether incorporated) during any period in which 50%
     or more of the total combined voting power of all classes of stock (or
     other ownership interest) entitled to vote is owned, directly or
     indirectly, by the Company.

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     2.  Compensation.  Subject to the provisions of this Agreement, during the
Agreement Term, while he is employed by the Company, the Company shall
compensate the Executive for the Executive's services as follows:

(a)  Salary.  The Executive shall receive an annual base salary of $575,000,
     payable in substantially equal monthly or more frequent installments,
     during the period beginning on the Restatement Date and ending on October
     31, 2000.  During the period beginning on November 1, 2000 and ending
     September 30, 2003, the Executive shall receive an annual base salary of
     $300,000, payable in substantially equal monthly or more frequent
     installments.  Amounts payable under this paragraph 2(a) shall be referred
     to in this Agreement as "Salary."

(b)  Bonus.  The Executive shall be entitled to receive bonuses from the Company
     in accordance with the provisions of Exhibit A, which is attached to and
     forms a part of this Agreement.

(c)  Stock Appreciation Rights.  The Executive shall continue to be entitled to
     receive a stock appreciation rights award from the Company under an
     agreement that is substantially in the form of the Stock Appreciation
     Rights Agreement set forth in Exhibit B, which is attached to and forms a
     part of this Agreement.  All other stock options and stock awards
     previously granted to Executive continue to be subject to the terms of the
     separate agreements governing such awards, the terms of which are
     unaffected by the terms of this Agreement.

(d)  Pension.  Other than $30,286 payable to the Executive on March 31, 2000 if
     the Executive's Date of Termination has not occurred on or prior to such
     date, the Executive will accrue no additional retirement benefits under any
     retirement scheme or arrangement sponsored by or contributed to by the
     Company.

(e)  Life Assurance and Other Benefits.  During that part of the Agreement Term
     ending on September 30, 2000, the Executive will be provided with life
     assurance benefits providing a death benefit of (i) $2,000,000.00.  The
     Executive will be provided with medical benefits, workers compensation
     benefits, and long term disability benefits by the Company.  The Executive
     will also be provided with other benefits to the same extent as other
     senior executives of the Company.

(f)  Automobile.  During that part of the Agreement Term ending on September 30,
     2000, the Company will provide the Executive with use of an automobile in
     Bermuda.  The Company will assume responsibility for the cost of insurance,
     maintenance and similar items.  The Executive's personal use of the
     automobile will be permitted at no additional

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     cost to the Executive, and the Executive will be provided with a gross-up
     for any income taxes incurred by the Executive in connection with his
     personal use of the automobile.

(g)  Club.  During that part of the Agreement Term ending on September 30, 2000,
     the Company will reimburse the Executive for periodic dues in one country
     club and one business club in Bermuda.  If any initiation fees previously
     paid on behalf of the Executive are returned to the Executive upon
     termination of his membership or any other reason, such fees shall be
     repaid to the Company to the extent such return is attributable to amounts
     paid by the Company.

(h)  Housing.  It is understood and agreed by the parties that with respect to
     the condominium previously purchased by the Executive (the "Condominium")
     for which the Company previously arranged a loan to the Executive for the
     amount of the Condominium purchase price ($695,000), which loan is
     reflected by the terms of a loan agreement (the "Loan Agreement"):

     (i)     Subject to the provisions of paragraph (v), sale of the Condominium
             shall be required within a reasonable time following the
             Executive's Date of Termination (as defined in this Agreement).
             Payment of the principal amount under the Loan Agreement shall be
             due at the time the Condominium is sold or otherwise transferred by
             the Executive.

     (ii)    Subject to the provisions of paragraph (v), the Company shall
             reimburse the Executive for any interest payments made by Executive
             under the Loan Agreement.

     (iii)   The Company (not the Executive) shall be responsible for any losses
             incurred on the sale of the Condominium, and shall be entitled to
             any gain on the sale, if such sale occurs under paragraph (i).

     (iv)    The Company shall reimburse the Executive for any tax liability
             incurred by him or his estate in any jurisdiction as a result of
             the sale of the Condominium, if such sale occurs under paragraph
             (i).

     (v)     The Executive, by irrevocable written election filed with the
             Company not later than the 45th day after the Date of Termination,
             may elect to retain the Condominium.  As a result of such election,
             the Executive shall be entitled to permanently retain title to the
             Condominium, and no sale of the Condominium shall be required under
             paragraph (i), subject to the following:

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             (A)  Subject to paragraph (B), the Executive shall remain liable
             for repayment of the full amount of principal under the Loan
             Agreement, which repayment shall be fully due on the 50th day after
             the Date of Termination.

             (B)  If, as of the Date of Termination, the fair market value of
             the Condominium has increased over the purchase price, the
             Executive shall also be required pay the amount of the increase to
             the Company.  If the fair market value of the Condominium has
             decreased to below the purchase price, the amount due from the
             Executive shall be reduced by the amount of the decrease, which
             reduction shall be deemed to occur as of the date of repayment.

             (C)  The adjustment made in accordance with paragraph (B) shall be
             in lieu of the adjustment required under paragraph (iii).

             (D)  The fair market value of the Condominium shall be determined
             by an appraiser selected by the Company and reasonably acceptable
             to the Executive.  The Executive shall be entitled to review the
             completed appraisal prior to being required to make the election to
             retain the Condominium as described in the first sentence of this
             paragraph (v).

     (vi)    The Executive and the Company agree that they shall cooperate with
             each other, and shall execute such other documents, to the extent
             reasonable or appropriate to carry out this paragraph 2(h).

     (vii)   Effective on or about December 1, 1999, following shipment by the
             Company at the Company's expense of the Executive's personal
             affects and belongings to the United Kingdom, and through the
             remainder of the Agreement Term, the Executive shall make the
             Condominium fully available to the Company's designee for such use
             as a full-time residence by such designee.

     (viii)  After the date the Executive makes the Condominium available for
             use by the Company's designee in accordance with paragraph (vii),
             above, and prior to the date that either the Condominium is sold in
             accordance with paragraph (i) or that the Executive elects to
             retain the Condominium in accordance with paragraph (v), the
             Company shall reimburse Executive for any costs or liabilities
             relating to the Condominium.

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(i)  Holiday/vacation.  During that part of the Agreement Term ending on
     September 30, 2000, the Executive shall be subject to the holiday and
     vacation policy that applies to other senior executives of the Company.

(j)  Financial planning.  During that part of the Agreement Term ending on
     September 30, 2000, the Executive will be provided with financial and tax
     planning advice at the Company's expense.

(k)  Expenses.  The Company will reimburse the Executive for travel,
     entertainment, and other expenses incurred on a basis appropriate to an
     individual holding the position of chairman of a company of the status of
     the Company, provided that such expenses are incurred in furtherance of the
     Executive's duties for the Company, and subject to such policies and
     procedures in effect from time to time for the Company's senior executives.
     To the extent provided in this Agreement, the Executive will also be
     reimbursed for other expenses (e.g., travel by spouse) even though such
     reimbursement may not be covered pursuant to the Company's generally
     applicable reimbursement policy.

(l)  Indemnification.  The Company shall maintain directors and officers
     liability insurance in commercially reasonable amounts (as reasonably
     determined by the Board), and the Executive shall be covered under such
     insurance to the same extent as other senior management employees of the
     Company.  The Executive shall be eligible for indemnification by the
     Company under the Company bye-laws as currently in effect.  The Company
     agrees that it shall not take any action that would impair the Executive's
     rights to indemnification under the Company bye-laws, as currently in
     effect.

(m)  Dollar Amounts.  As used in this Agreement, "dollars" or numbers preceded
     by the symbol "$" shall mean amounts in United States Dollars.

     3.  Termination.  The Executive's employment during the Agreement Term may
be terminated by the Company or the Executive without any breach of this
Agreement only under the circumstances described in paragraphs 3(a) through
3(f):

(a)  Death.  The Executive's employment will terminate upon his death.

(b)  Permanently Disabled.  The Company may terminate the Executive's employment
     if he is Permanently Disabled.  "Permanently Disabled" means that the
     Executive is eligible for benefits under the Company's long-term disability
     plan.

(c)  Cause.  The Company may terminate the Executive's employment at any time
     for Cause. "Cause" shall mean:

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     (i)     the wilful and continued failure by the Executive to substantially
             perform his duties with the Company (other than any such failure
             resulting from the Executive's being Disabled), within a reasonable
             period of time after a written demand for substantial performance
             is delivered to the Executive by the Board, which demand
             specifically identifies the manner in which the Board believes that
             the Executive has not substantially performed his duties;

     (ii)    the wilful engaging by the Executive in conduct which is
             demonstrably and materially injurious to the Company, monetarily or
             otherwise; or

     (iii)   the engaging by the Executive in egregious misconduct involving
             serious moral turpitude to the extent that, in the reasonable
             judgment of the Company's Board, the Executive's credibility and
             reputation no longer conform to the standard of the Company's
             executives.

     For purposes of this Agreement, no act, or failure to act, on the
     Executive's part shall be deemed "wilful" unless done, or omitted to be
     done, by the Executive not in good faith and without reasonable belief that
     the Executive's action or omission was in the best interest of the Company.

(d)  Constructive Discharge.  If the Executive (i) provides written notice to
     the Company of the occurrence of a material breach of this Agreement by the
     Company, which specifically identifies the manner in which the Executive
     believes that the breach has occurred; (ii) the Company fails to correct
     such breach within a reasonable time after such notice; and (iii) the
     Executive resigns within the 60-day period following the occurrence of such
     breach, then the Executive shall be considered to have been constructively
     discharged.

(e)  Resignation by Executive.  The Executive may resign for any reason by
     giving the Company 180 days prior written notice, except the Executive will
     be treated as having resigned under this paragraph 3(e) only if he has not
     been constructively discharged under paragraph 3(d).

(f)  Termination by Company.  The Company may terminate the Executive's
     employment at any time for any reason by giving the Executive prior written
     notice, except the Executive's employment will not be treated as having
     been terminated under this paragraph 3(f) if the termination is for reasons
     of being Permanently Disabled or for Cause.

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(g)  Date of Termination.  "Date of Termination" means the last day the
     Executive is employed by the Company, provided that the Executive's
     employment is terminated in accordance with the foregoing provisions of
     this paragraph 3.

     4.  Rights Upon Termination.  This paragraph 4 describes the payments and
benefits to be provided to the Executive after his Date of Termination:

(a)  Payment of Previously Earned Amounts.  The Executive shall receive payment
     of accrued but unpaid Salary, vacation pay, and a pro rata portion of his
     bonus (if any) for the period ending with the Date of Termination.

(b)  No Severance Payments.  If the Executive's Date of Termination occurs
     because of his termination for Cause (paragraph 3(c)) or his resignation
     (paragraph 3(e)), then, except as otherwise expressly provided in this
     Agreement, no payments shall be due to the Executive under this Agreement
     for periods after the Date of Termination.

(c)  Salary Continuation.  If the Executive's Date of Termination occurs during
     the Agreement Term because of his death (described in paragraph 3(a)), his
     Permanent Disability (described in paragraph 3(b)), or his constructive
     discharge (described in paragraph 3(d)), or because of discharge by the
     Company for reasons other than Cause (described in paragraph 3(f)), then
     the Executive (or his beneficiary, if applicable, in accordance with
     paragraph 4(f)) shall continue to receive Salary payments (at the rate in
     effect on the Date of Termination) in monthly or more frequent instalments
     through the earliest of: (i) the last day of the Agreement Term or (ii) the
     date, if any, of the breach by the Executive of the non-competition
     requirements of paragraph 8, the confidentiality requirements of paragraph
     9 or the non-disparagement requirements of paragraph 10.

(d)  Other Programs.  No benefits shall be payable to the Executive under any
     other severance pay arrangement or similar arrangement maintained by the
     Company or any Subsidiary.  Except as otherwise expressly provided in this
     Agreement, no other payments or benefits shall be due to the Executive
     following the Date of Termination (except as otherwise specifically
     provided under the terms of an employee benefit plan or arrangement).

(e)  Accelerate Payment.  At the discretion of the Board, with the consent of
     the Executive, the present value of any amount payable to or on behalf of
     the Executive (or his beneficiary) in accordance with this paragraph 4 may
     be paid to or on behalf of the Executive in a lump sum.  The interest rate
     used in determining the present value shall be the interest rate on one-
     year United States Treasury Bills at the auction of such instruments
     nearest in time to the date of the Executive's Date of Termination.
     Notwithstanding the foregoing, if any amount is payable to the beneficiary
     of the Executive because the Executive's Date of Termination has occurred
     as a result of the

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     Executive's death, and at the discretion of the Board, such amount is to be
     paid as a lump sum, then the full amount payable on behalf of the Executive
     shall be paid to such beneficiary, unreduced to reflect the present value
     of the amount payable on behalf of the Executive.

(f)  Payment to Beneficiary.  Any amounts payable to the Executive in accordance
     with this paragraph 4 that are not paid at the time of the Participant's
     death shall be paid at the time and in the form determined in accordance
     with the provisions of this Agreement, to the beneficiary designated by the
     Executive in writing filed with the Company in such form and at such time
     as the Board shall require.  If the Executive failed to designate a
     beneficiary, or if the designated beneficiary of the deceased Executive
     dies before the Executive or before complete payment of the amounts payable
     under this Agreement, the Board shall direct that amounts to be paid under
     this Agreement be paid to the legal representative or representatives of
     the estate of the last to die of the Executive and his beneficiary.

     5.  Duties on Termination.  Subject to the provisions of this Agreement,
during the period beginning on the date of delivery of a notice of termination,
and ending on the Date of Termination, the Executive shall continue to perform
his duties as set forth in this Agreement, and shall also perform such services
for the Company as are necessary and appropriate for a smooth transition to the
Executive's successor, if any.  Notwithstanding the foregoing provisions of this
paragraph 5, the Company may suspend the Executive from performing his duties
under this Agreement following the delivery of a notice of termination providing
for the Executive's resignation, or delivery by the Company of a notice of
termination providing for the Executive's termination of employment for any
reason; provided, however, that during the period of suspension (which shall end
on the Date of Termination), the Executive shall continue to be treated as
employed by the Company for other purposes, and his rights to compensation or
benefits shall not be reduced by reason of the suspension.

     6.  Change in Control.    Upon a Change in Control, the Executive shall be
treated for purposes of this Agreement as having had his employment terminated
by the Company in accordance with paragraph 3(f), and the date of such Change in
Control shall be the Executive's Date of Termination; provided, however, that in
lieu of being paid salary continuation payments in accordance with paragraph
4(c) with respect to all amounts of Salary payable to the Executive, any Salary
attributable to the period ending October 31, 2000 which has not yet been paid
to the Executive shall be paid to the Executive in a lump sum, unreduced to
reflect the present value of such amount, and the Salary otherwise payable to
the Executive which is attributable to the period after October 31, 2000 shall
be paid as salary continuation payments in accordance with paragraph 4(c);
provided further, however, that the Executive may elect to receive the present
value of those Salary amounts attributable to the period after October 31, 2000
in a lump sum. The interest rate used in determining the present value shall be
the interest rate on one-year

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United States Treasury Bills at the auction of such instruments nearest in time
to the date of the Executive's Date of Termination

     (a)     Change in Control. For purposes of this paragraph 6, "Change in
             Control" means a change in the beneficial ownership of the voting
             stock of the Holding Company or a change in the composition of the
             Board of the Holding Company which occurs as follows:

             (i)  Any "person" (as such term is used in Section 13(d) and
                  14(d)(2) of the Securities Exchange Act of 1934) is or becomes
                  a beneficial owner, directly or indirectly, of stock of the
                  Holding Company representing 50 percent or more of the total
                  voting power of the Holding Company's then outstanding stock;
                  or

             (ii) Individuals who were the nominees of the Board of Directors of
                  the Holding Company for election as directors of the Holding
                  Company immediately prior to a meeting of the shareholders of
                  the Holding Company involving a contest for the election of
                  directors shall not constitute a majority of the Board
                  following the election.

     7.  Mitigation and Set-Off.  The Executive shall not be required to
mitigate the amount of any payment provided for in this Agreement by seeking
other employment or otherwise.  The Company shall not be entitled to set off
against the amounts payable to the Executive under this Agreement any amounts
owed to the Company by the Executive, any amounts earned by the Executive in
other employment after termination of his employment with the Company, or any
amounts which might have been earned by the Executive in other employment had he
sought such other employment.

     8.  Non-competition.  While the Executive is employed by the Company, and
during the Non-Competition Period (as defined below), the Executive agrees that
he will not directly or indirectly:

(a)  provide Goods or perform Services (both as defined below) for the benefit
     of any Client (as defined below) except with respect to Goods provided or
     Services performed for the benefit of the Company or any Subsidiary, and
     except for Goods provided and Services otherwise performed at the written
     direction or with the written consent of the Board;

(b)  solicit, attempt to solicit, or endeavor to procure engagement, for himself
     or for any business (other than the Company and the Subsidiaries and, to
     the extent expressly

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     permitted or directed by the Board in writing, any other business), the
     opportunity to provide Goods or perform Services for any Client; or

(c)  divert or attempt to divert any business from the Company or any
     Subsidiary.

For purposes of this paragraph 8:

     (i)     "Goods" shall mean goods of the type provided in the ordinary
             course of business by the Company or any of the Subsidiaries during
             the period in which the Executive is employed by the Company.

     (ii)    "Services" shall mean services of the type provided in the ordinary
             course of business by the Company or any of the Subsidiaries during
             the period in which the Executive is employed by the Company.

     (iii)   "Client" shall mean any person to whom the Company or any
             Subsidiary has provided Goods or Services; provided, however, that
             for periods after the Executive's Date of Termination, the term
             "Client" shall be limited to those persons, (regardless of where
             located, and including, without limitation, businesses) to whom the
             Company or any Subsidiary has provided Goods or Services in the
             twelve-month period prior to the Date of Termination, and any
             person to whom (during the six-month period prior to the Date of
             Termination) the Company or any Subsidiary has devoted material
             efforts to obtaining as a purchaser of its Goods or Services.

     (iv)    "Non-Competition Period" shall be determined as follows:

             (A)  If the Executive's Date of Termination occurs under
                  circumstances other than those described in paragraph 3(d)
                  (relating to constructive discharge) or paragraph 3(f)
                  (relating to certain terminations by the Company), the Non-
                  Competition Period shall be the period beginning on the Date
                  of Termination, and ending on the twenty-four-month
                  anniversary of the Date of Termination.

             (B)  If the Executive's Date of Termination occurs under
                  circumstances described in paragraph 3(d) (relating to
                  constructive discharge) or paragraph 3(f) (relating to certain
                  terminations by the Company), the Non-Competition Period shall
                  be the period beginning on the Date of Termination, and ending
                  on the earlier to occur of the last day of the Agreement Term
                  or the twenty-four-month anniversary of the Date of
                  Termination.  However, under this paragraph (B), the Company,
                  in its

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                  discretion, by notice provided to the Executive not later than
                  15 days after the Date of Termination, may extend the Non-
                  Competition Period beyond the end of the Agreement Term, to a
                  date specified in such notice (but not later than the twenty-
                  four-month anniversary of the Date of Termination), but only
                  if the Company agrees to provide the Salary Continuation
                  Payments during such Non-Competition Period.

Nothing in this paragraph 8, paragraph 9 or paragraph 10 shall be construed as
limiting the Executive's duty of loyalty to the Company while he is employed by
the Company or any other duty he may otherwise have to the Company while he is
employed by the Company.

     9.  Confidential Information.  Except as may be required by the lawful
order of a court or agency of competent jurisdiction, or except to the extent
that the Executive has express authorization from the Company, the Executive
agrees to keep secret and confidential indefinitely all non-public information
(including, without limitation, information regarding litigation and pending
litigation) concerning the Company and the Subsidiaries which was acquired by or
disclosed to the Executive during the course of his employment with the Company,
or during the course of his consultation with the Company following his
termination of employment (regardless of whether consultation is pursuant to
paragraph 11), and not to disclose the same, either directly or indirectly, to
any other person, firm, or business entity, or to use it in any way.  To the
extent that the Executive obtains information on behalf of the Company or any of
the Subsidiaries that may be subject to attorney-client privilege as to the
Company's attorneys, the Executive shall take reasonable steps to maintain the
confidentiality of such information and to preserve such privilege.  Nothing in
the foregoing provisions of this paragraph 9 shall be construed so as to prevent
the Executive from using, in connection with his employment for himself or an
employer other than the Company or any of the Subsidiaries, knowledge which was
acquired by him during the course of his employment with the Company and the
Subsidiaries, and which is generally known to persons of his experience in other
companies in the same industry.

     10. Non-Disparagement.  The Executive agrees that, while he is employed by
the Company, and after his Date of Termination, he shall not make any false,
defamatory or disparaging statements about the Company, the Subsidiaries, or the
officers or directors of the Company or the Subsidiaries that are reasonably
likely to cause material damage to the Company, the Subsidiaries or the officers
or directors of the Company or the Subsidiaries.  While the Executive is
employed by the Company, and after his Date of Termination, the Company agrees,
on behalf of itself and the Subsidiaries, that neither the officers nor the
directors of the Company or the Subsidiaries shall make any false, defamatory or
disparaging statements about the Executive that are reasonably likely to cause
material damage to Executive.

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     11.  Defense of Claims.  The Executive agrees that, for the period
beginning on the Effective Date, and continuing for a reasonable period after
the Executive's termination of employment with the Company, the Executive will
cooperate with the Company in defense of any claims that may be made against the
Company, and will cooperate with the Company in the prosecution of any claims
that may be made by the Company, to the extent that such claims may relate to
services performed by the Executive for the Company.  The Executive agrees to
promptly inform the Company if he becomes aware of any lawsuits involving such
claims that may be filed against the Company.  The Company agrees to reimburse
the Executive for all of the Executive's reasonable out-of-pocket expenses
associated with such cooperation, including travel expenses.  For periods after
the Executive's employment with the Company terminates, the Company agrees to
provide reasonable compensation to the Executive for such cooperation.

     12.  Remedies.  The Executive acknowledges that the Company would be
irreparably injured by a violation of paragraph 8, paragraph 9, or paragraph 10,
and he agrees that the Company, in addition to any other remedies available to
it for such breach or threatened breach, shall be entitled to a preliminary
injunction, temporary restraining order, or other equivalent relief, restraining
the Executive from any actual or threatened breach of either paragraph 8,
paragraph 9 or paragraph 10.  The Company acknowledges that the Executive would
be irreparably injured by a violation of paragraph 10, and the Company agrees
that the Executive, in addition to any other remedies available to him for such
breach or threatened breach, shall be entitled to a preliminary injunction,
temporary restraining order, or other equivalent relief, restraining the Company
from any actual or threatened breach of paragraph 10.  If a bond is required to
be posted in order for the Company or the Executive to secure an injunction or
other equitable remedy, the parties agree that said bond need not be more than a
nominal sum.

     13.  Nonalienation.  The interests of the Executive under this Agreement
are not subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by creditors of the
Executive or the Executive's beneficiary.

     14.  Amendment.  This Agreement may be amended or canceled only by mutual
agreement of the parties in writing without the consent of any other person.  So
long as the Executive lives, no person, other than the parties hereto, shall
have any rights under or interest in this Agreement or the subject matter
hereof.

     15.  Applicable Law.  The provisions of this Agreement shall be construed
in accordance with the laws of Bermuda, without regard to the conflict of law
provisions of any jurisdiction.  All disputes shall be arbitrated or litigated
(whichever is applicable) in Bermuda.

     16.  Severability.  The invalidity or unenforceability of any provision of
this Agreement will not affect the validity or enforceability of any other
provision of this Agreement, and this

                                       13
<PAGE>

Agreement will be construed as if such invalid or unenforceable provision were
omitted (but only to the extent that such provision cannot be appropriately
reformed or modified).

     17.  Waiver of Breach.  No waiver by any party hereto of a breach of any
provision of this Agreement by any other party, or of compliance with any
condition or provision of this Agreement to be performed by such other party,
will operate or be construed as a waiver of any subsequent breach by such other
party or any similar or dissimilar provisions and conditions at the same or any
prior or subsequent time.  The failure of any party hereto to take any action by
reason of such breach will not deprive such party of the right to take action at
any time while such breach continues.

     18.  Successors.  This Agreement shall be binding upon, and inure to the
benefit of, the Company and its successors and assigns and upon any person
acquiring, whether by merger, consolidation, purchase of assets or otherwise,
all or substantially all of the Company's assets and business.

     19.  Notices.  Notices and all other communications provided for in this
Agreement shall be in writing and shall be delivered personally or sent by
registered or certified mail, return receipt requested, postage prepaid, or sent
by facsimile or prepaid overnight courier to the parties at the addresses set
forth below (or such other addresses as shall be specified by the parties by
like notice).  Such notices, demands, claims and other communications shall be
deemed given:

(a)  in the case of delivery by overnight service with guaranteed next day
     delivery, the next day or the day designated for delivery;

(b)  in the case of certified, registered or similar mail delivery, five days
     after deposit in the local mail; or

(c)  in the case of facsimile, the date upon which the transmitting party
     received confirmation of receipt by facsimile, telephone or otherwise;

provided, however, that in no event shall any such communications be deemed to
be given later than the date they are actually received.  Communications that
are to be delivered by the mail or by overnight service are to be delivered to
the addresses set forth below:

to the Company:

     LaSalle Re Limited
     P.O. Box HM 1502
     Hamilton HMFX - Bermuda

                                       14
<PAGE>

or to the Executive:

     Victor H. Blake
     802 St. James Court
     Flatts Village
     Hamilton Parish FL04
     Bermuda

with copy to:

     Victor H. Blake
     Knights Mead
     Broad Highway
     Cobham, Surrey KT11 2RR
     England

All notices to the Company shall be directed to the attention of the chief
financial officer of the Company, with a copy to the Secretary of the Company.
Each party, by written notice furnished to the other party, may modify the
applicable delivery address, except that notice of change of address shall be
effective only upon receipt.

     21.  Arbitration of All Disputes.  In the event of any dispute, controversy
or claim arising out of or in relation to this Agreement, or the breach,
termination or invalidity thereof, the parties hereto agree to proceed to
arbitration.  The number of arbitrators shall be three (3), to be appointed in
the absence of the parties agreement by the Appointment Committee of the
Chartered Institute of Arbitrators Bermuda Branch.  The procedure to be followed
shall be that as laid down in the Arbitration Act of 1986.  The place of
arbitration shall be Bermuda and the language of the arbitration shall be
English.  The decision and award of the arbitral tribunal is final and binding
on the parties.  For the avoidance of doubt, the parties agree that judgment may
be entered and any award made by the Tribunal in any Federal Court in the United
States (or any other jurisdiction where a party to this agreement is located).

     22.  Survival of Agreement.  Except as otherwise expressly provided in this
Agreement, the rights and obligations of the parties to this Agreement shall
survive the termination of the Executive's employment with the Company.

     23.  Entire Agreement.  Except as otherwise noted herein, this Agreement,
including any Exhibit(s) attached hereto, constitutes the entire agreement
between the parties concerning the subject matter hereof and supersedes all
prior and contemporaneous agreements, if any, between the parties relating to
the subject matter hereof.  The enforceability of this Agreement shall not

                                       15
<PAGE>

cease or otherwise be adversely affected by the termination of the Executive's
employment with the Company.

     24.  Acknowledgment by Executive.  The Executive represents to the Company
that he is knowledgeable and sophisticated as to business matters, including the
subject matter of this Agreement, that he has read this Agreement and that he
understands its terms.  The Executive acknowledges that, prior to assenting to
the terms of this Agreement, he has been given a reasonable time to review it,
to consult with counsel of his choice, and to negotiate at arm's-length with the
Company as to the contents.  The Executive and the Company agree that the
language used in this Agreement is the language chosen by the parties to express
their mutual intent, and that no rule of strict construction is to be applied
against any party hereto.

     IN WITNESS THEREOF, the Executive has hereunto set his hand, and the
Company has caused these presents to be executed in its name and on its behalf,
and its corporate seal to be hereunto affixed, all as of the day and year first
above written.

                                         /s/ Victor H. Blake
                                         ---------------------------------------
                                         Victor H. Blake


                                         LASALLE RE LIMITED

                                         By /s/ Clement S. Dwyer, Jr.
                                            ------------------------------------
                                            Chairman, Compensation Committee


ATTEST:

                                       16
<PAGE>

                                   EXHIBIT A
                                   ---------

                               BONUS COMPUTATION
                               -----------------

     A-1.  Purpose.  This Exhibit A is attached to and forms a part of the
employment agreement (the "Agreement") between Victor H. Blake (the "Executive")
and LaSalle Re Holdings Limited (the "Company").  The purpose of this Exhibit A
is to set forth the terms of the bonus program described in paragraph 2(b) of
the Agreement.

     A-2.  Guidelines.  The bonus shall be determined in accordance with the
following guidelines:

 .    A discretionary bonus may be awarded annually in the discretion of the
     Board of the Company, after considering the recommendation of the
     Compensation Committee of the Board.

 .    A non-discretionary bonus shall be earned and paid annually based upon the
     Company's Return on Equity (defined below) achieved for each fiscal year of
     the Company while the Executive is employed by the Company; provided
     however, that no bonus shall be payable for fiscal years ending after
     September 30, 1999.

 .    The non-discretionary annual bonus calculation will be based on the
     Company's Return on Equity earned each year.  If the Company's Return on
     Equity for any year exceeds 10%, the bonus will be paid according to the
     following formula:

     .       For each 1% improvement in Return on Equity above 10%, an amount
             equal to 10.0 % of The Executive's Salary will be paid.

     .       For each 1% improvement in Return on Equity above 22.5%, an amount
             equal to 15.0 % of The Executive's Salary will be paid.

     .       For Return on Equity results between whole percentages (but above
             10%), the percentage of Salary awarded will be increased by
             interpolation.

     .       The " Return on Equity" for any fiscal year shall be equal to the
             net income of the Company for the fiscal year, divided by
             shareholders' equity at the beginning of the period (as determined
             on the basis of U.S. generally accepted accounting principles). For
             purposes of this calculation any

                                       17
<PAGE>

             unrealized appreciation or depreciation of the Company's
             investments shall be disregarded (both as to the numerator and the
             denominator). In addition, payments made to CNA Financial
             Corporation or its affiliates under the Underwriting Support
             Services Agreement will not reduce net income in determining the
             Return on Equity.

                                       18
<PAGE>

                                   EXHIBIT B
                                   ---------

                           STOCK APPRECIATION RIGHTS
                           -------------------------

     B-1.  Purpose.  This Exhibit B is attached to and forms a part of the
employment agreement (the "Agreement") between Victor H. Blake (the "Executive")
and LaSalle Re Holdings Limited (the "Company").  The purpose of this Exhibit B
is to set forth the terms of the stock appreciation rights award described in
paragraph 2(c) of the Agreement.

     B-2.  Agreement.  The Executive shall be entitled to receive a stock
appreciation rights award from the Company under an agreement that is
substantially in the form of the Stock Appreciation Rights Agreement set forth
below.

                                      19
<PAGE>

                      STOCK APPRECIATION RIGHTS AGREEMENT

     This AGREEMENT made as of this 1st day of April, 1994 (this "Agreement") is
among LaSalle Re Limited, a company incorporated and organized under the laws of
Bermuda (the "Company"), and Victor H. Blake (the "Executive").

                              W I T N E S E T H:
                              -----------------

     WHEREAS, pursuant to the Employment Agreement dated April 1, 1994 between
the Company and the Executive, the Company wishes to grant stock appreciation
rights ("SARs") to the Executive upon the terms and conditions set forth herein.

     NOW, THEREFORE, the Executive and the Company agree as follows:

     1.        Definitions. As used in this Agreement, the following terms shall
have the meanings set forth below:

     (A)  "Affiliate" shall mean, with respect to any specified Person, a Person
that directly or indirectly controls, is controlled by or is under common
control with such Person.

     (B)  "Base Value" shall mean U.S. $100, except as may be adjusted pursuant
to Section 5.

     (C)  "Common Shares" shall mean the common shares of the Company, par value
U.S. $1.00 per share.

     (D)  "Extraordinary Transaction" shall mean each of the following
transactions:

     (i)  any amalgamation of the Company with any Person if the Company shall
     not be the continuing or surviving corporation of such amalgamation
     excluding an amalgamation in which the Holders of the outstanding Shares
     immediately before the amalgamation own more than 50% of the outstanding
     shares and voting power of the surviving corporation in substantially the
     same proportions;

     (ii) any amalgamation of the Company with any Person if the Company shall
     be the continuing or surviving corporation but, in connection with such
     amalgamation, the Shares shall be changed into or exchanged for shares or
     other securities of any other Person or cash or any other property
     excluding an amalgamation in which the holders of the outstanding Shares
     immediately before the amalgamation own more than 50% of the
<PAGE>

     outstanding shares and voting power of the surviving corporation in
     substantially the same proportions;

     (iii) any transfer by the Company of all or substantially all of its
     properties or assets to any other Person;

     (iv)  any transaction whereby any Person other than Combined Insurance
     Company of America, Virginia Surety Company, Inc. Union Fidelity Life
     Insurance Company, Aon Risk Consultants (Bermuda) Ltd., Continental
     Casualty Company, CNA Services (Bermuda) Ltd., Corporate Partners L.P.,
     Corporate Offshore Partners L.P., State Board Administration of Florida,
     Blackstone LR Capital Partners II L.P., Blackstone Offshore Partners L.P.,
     Blackstone Family Investment Partnership (Cayman) L.P., Apollo LS Holdings
     LDC, FIMA Finance Management Inc., SDI Inc., Thomas H. Lee Equity Partners,
     L.P., THL-CCI Investors Limited Partnership, Strome Offshore Limited,
     Strome Partners L.P., Perry Partners L.P., Perry Partners International
     Inc. or Engineers Joint Pension Fund becomes the Owner (as defined below)
     of at least 50% of the aggregate number of Shares issued and outstanding on
     the date of such transaction on a Fully Diluted Basis. For the purpose of
     this Section 1(C)(iv), "Owner" shall mean any Person that individually or
     with or through any of its Affiliates beneficially owns Shares, directly or
     indirectly; or has the right to acquire Shares (whether such right is
     exercisable immediately or only after the passage of time); or has the
     right to vote Common Shares except if this Person's right to vote Common
     Shares arises solely from a revocable proxy; or has any agreement,
     arrangement or understanding for the purpose of acquiring, holding, voting
     (except voting pursuant to a revocable proxy) or disposing of Shares with
     any other Person that beneficially owns, or whose Affiliates beneficially
     own, directly or indirectly, Shares;

provided, however, that no transaction shall be considered an Extraordinary
Transaction if it is intended by the Board of Directors to create a holding
company in connection with an initial public offering.

     (E)   "Fair Market Value" of Special Non-Voting Shares, for the purpose of
any computation of SAR Value on a specified date, shall be the value determined
for such a date in good faith by the Board of Directors of the Company, but
shall be based on the market price of the Special Non-Voting Shares or Common
Shares if they are publicly traded.  The determination of the Fair Market Value
of such Special Non-Voting Shares made by the Board of Directors shall be final.
The calculation of the Fair Market Value of the Special Non-Voting Shares made
by the Board of Directors shall not include any discount relating to the absence
of a public trading market for, or any transfer restrictions on, the Special
Non-Voting Shares.

     (F)   "Fully Diluted Basis" shall mean as of any date the aggregate number
of Shares that would be issued and outstanding on such date assuming that all
options, including the Options, warrants and other rights to purchase Shares and
all securities convertible into or exchangeable

                                       2
<PAGE>

for Shares issued and outstanding on such date of exercise shall have been
exercised, converted or exchanged, as the case may be, on such date.

     (G) "Holding Company" shall have the meaning given such term in Section
5(C) hereof.

     (H) "Members" shall have the meaning given such term in the Bye-laws.

     (I) "Options" shall mean the Options to purchase Special Non-Voting Shares
granted to the Optionholders pursuant to the Option Agreement between the
Company and the Optionholders dated November 22, 1993.

     (J) "Person" shall mean an individual, trust, estate, partnership,
association, company or corporation.

     (K) "SAR Value" shall mean, subject to adjustments in Section 5, as of any
date an amount equal to (i) the Fair Market Value of a Special Non-Voting Share
as of that date minus (ii) the Base Value.

     (L) "Shareholders Agreement" shall mean the Shareholders Agreement dated as
of November 22, 1993 among the Company and the Persons named therein, as
amended, supplemented, restated or otherwise modified from time to time.

     (M) "Shares" shall mean any share in the share capital of the Company.

     (N) "Subsidiary" of a Person shall mean (i) a corporation in which more
than 50% of the issued and outstanding shares in the share capital entitled to
vote for the election of directors is at the time owned, directly or indirectly,
by such Person, or (ii) a partnership or other entity in which more than 50% of
the voting power is at the time held, directly or indirectly, by such Person.

     (O) "Target Rate of Return" shall be considered to have been met, with
respect to any date, if the Company's financial performance from November 22,
1993 through the date for which the calculation is being made, based on book
value per share on that date (as determined on the basis of U.S. generally
accepted accounting principles) plus all dividends paid since November 22, 1993,
when compared to the initial amount invested, reflects a cumulative internal
rate of return equal to or in excess of the internal rate of return set forth in
the table under Section 2(B).  For purposes of this calculation all per share
amounts will be adjusted to reflect any stock splits, stock dividends or similar
reclassifications.  If the Company adopts a holding company structure the
Company and the holding company shall be considered on a consolidated basis for
purposes of determining whether the Target Rate of Return has been met.

     2.        Terms of the SARs.

                                       3
<PAGE>

     (A) In consideration of the entering into of the Employment Agreement and
for other value received, receipt of which is hereby acknowledged, the Company,
subject to the terms and conditions of this Agreement, hereby grants to the
Executive 56,812 SARs.

     (B) Subject to Section 2(F), the Executive may exercise that percentage of
Executive's SARs indicated in the table below, in whole or in part, from time to
time during the period commencing on the day following the last day of the
first, if any, of fiscal years 1996 through 1999 in which as of the last day of
such fiscal year the Target Rate of Return indicated on the table below has been
met and ending at March 30, 2004 or, if earlier, two years after the Executive's
termination of employment (the "SAR Period"); however, once a given percentage
of SARs shall become exercisable by reason of the achievement of a particular
rate of return, a subsequent reduction in cumulative rate of return for a period
ending on December 31 of a later year will not serve to reduce the percentage of
SARs that are exercisable.  Upon the expiration of the SAR Period, the Executive
shall cease to have any rights in respect of his SARs, except that the SARs will
be exercisable after the termination of the Executive's employment to the extent
that they are exercisable immediately prior to the date of termination.  To the
extent that the right to exercise the SARs is not earned by reason of
termination of employment, the right to exercise shall be forfeited regardless
of the reason for the termination.

<TABLE>
<CAPTION>
====================================================================================================

                                          SARs                      SARs                      SARs
          If the                         Earned                    Earned                    Earned
       Internal Rate                     After                     After                     After
       of Return is:                    12/31/96                  12/31/97                  12/31/98
----------------------------------------------------------------------------------------------------
 <S>                                    <C>                       <C>                       <C>
 Less than 18%                              0%                        0%                        0%
----------------------------------------------------------------------------------------------------

 Greater than 18% and                      20%                       27%                       33%
 less than 25%
----------------------------------------------------------------------------------------------------

 Greater than 25% and                      40%                       53%                       57%
 less than 27%
----------------------------------------------------------------------------------------------------

 Greater than 27%                          60%                       80%                      100%
====================================================================================================
</TABLE>

     (C) If the Target Rate of Return has not been met as of the last day of
fiscal year 1999 or as of the last day of at least one of the previous three
fiscal years, the Executive shall cease to have any rights under this Agreement.

     (D) The Executive shall not, solely by virtue of this Agreement, be
entitled to any rights of a Member of the Company either at law or in equity.

     (E) At its option, the Executive may return to the Company for cancellation
all or a portion of its SARs.

                                       4
<PAGE>

     (F) Notwithstanding the provisions of Section 2(B), in the event of any
Extraordinary Transaction and provided that on the date of such Extraordinary
Transaction the Target Rate of Return has been met, the Executive shall have the
right to exercise its SARs, in whole or in part, at any time and from time to
time during the period commencing concurrently with and subject to the closing
of such Extraordinary Transaction and ending on November 22, 2003 (also the "SAR
Period").  At any time during the SAR Period and on or after the date of the
Extraordinary Transaction, if the Executive exercises its SARs, the Executive
shall be entitled to receive the kind and amount of shares, other securities,
cash or other property that the Executive would have owned or have been entitled
to receive after the occurrence of such Extraordinary Transaction had the
Executive owned an amount of Special Non-Voting Shares equal to his number of
SARs prior to such Extraordinary Transaction, including the exercise by the
Executive of any rights of election provided to holders of Special Non-Voting
Shares as to the kind or amount of shares, securities, cash or other property
receivable in connection with such Extraordinary Transaction, as the case may
be.

     (G) Any determination by the Board of Directors, acting in good faith, as
to whether the Target Rate of Return has been met shall be final.  Following any
such determination that the Target Rate of Return has been met, the Company
shall provide prompt written notice to the Executive of the commencement of the
SAR Period.

     3.        Notices of Extraordinary Transactions and Exercise Notice.

     The Company shall provide the Executive with written notice of the
occurrence of an Extraordinary Transaction no later than five (5) business days
after such Extraordinary Transaction has occurred or, in the event of an
Extraordinary Transaction described in Section 1(D)(iv), not later than five (5)
business days after the Company first becomes aware of such Extraordinary
Transaction.

     4.        Payment on Exercise of SAR.

     (A) In order to exercise any of the SARs, the Executive shall provide
written notice (the "Exercise Notice") to the Company specifying the number of
SARs being exercised and the date that the SARs will be exercised (the "Exercise
Date").

     (B) Upon receipt of the Exercise Notice by the Company, for each SAR
exercised by the Executive, subject to Section 4(C) the Executive shall be
entitled to a cash payment equal to the SAR Value as of the Exercise Date,
without regard to changes in the Fair Market Value of a share of the Company
occurring after the Exercise Date.  The cash amount payable with respect to the
exercise of a SAR under this Section 4 shall be made, without interest, as soon
as practicable after the later of the date the SAR is exercised or the date on
which the SAR Value has been determined.  The Company shall take all reasonable
steps to pay amounts due with respect to the exercise of a SAR not later than 10
days after the Exercise Date; provided, however, that when funds are not legally
available to pay amounts due under this

                                       5
<PAGE>

Section 4 (or if the amount of the cash payment would not have been legally
available to be paid as a dividend), the Executive shall be entitled to payment
only as described in Section 4(C).

     (C) Notwithstanding the foregoing, upon the exercise of any or all SARs,
instead of making a cash payment equal to the SAR Value the Company in its sole
discretion may elect to:

             (i)  issue to the Executive a number of Special Non-Voting Shares
             equal to the aggregate SAR Value divided by the Fair Market Value
             of a Special Non-Voting Share or

             (ii) require payment by the Executive of the Base Value for each
             SAR exercised and issue to the Executive a number of Special Non-
             Voting Shares equal to the number of SARs exercised.

     5.      Adjustment of the Number of SARs and of the SAR Value.

     (A) In the event that the Company shall at any time after the date hereof
(i) declare or pay a dividend in Shares or make any other distribution in Shares
such that the number of Shares issued and outstanding is increased, (ii)
subdivide or split its issued and outstanding Shares, such that the number of
Shares issued and outstanding is increased, (iii) combine its issued and
outstanding Shares into a smaller number of Shares, (whether by reverse share
split or otherwise) or (iv) issue any Shares in a reclassification of the Shares
(including any such reclassification in connection with a merger, consolidation
or amalgamation in which the Company is the surviving corporation), the number
of SARs shall be proportionately adjusted on a pro rata basis so that the ratio
of aggregate number of outstanding SARs to outstanding Shares shall not change.
Adjustments made pursuant to this Section 5(A) shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event.

     (B) In the event that the Company shall issue rights, options, warrants or
convertible securities to all holders of its issued and outstanding Shares,
entitling them to subscribe for or purchase or convert such convertible
securities into Shares at a price per Share that is lower on the record date
mentioned below than the then Fair Market Value of the Special Non-Voting
Shares, the number of SARs owned by the Executive shall be adjusted by
multiplying his number of SARs by a fraction, (i) of which the numerator shall
be the sum of (A) the number of Shares issued and outstanding on the record date
for determining Members entitled to receive such rights, options, warrants or
convertible securities plus (B) the number of additional Shares offered for
subscription or purchase or upon conversion, and (ii) of which the denominator
shall be the sum of (A) the number of Shares issued and outstanding on the
record date for determining Members entitled to receive such rights, options,
warrants or convertible securities plus (B) the number of shares that the
aggregate offering price of the total number of Shares so offered would purchase
at the Fair Market Value per Share at such record date. Such adjustment shall be
made whenever such rights, options, warrants or convertible securities are

                                       6
<PAGE>

issued, and shall become effective immediately after the record date for the
determination of Members entitled to receive such rights, options, warrants or
convertible securities.

     (C) In the event that the Company shall form or cause to be formed a
holding company or a parent company for the Company (a "Holding Company") and
all or substantially all of the shares in the share capital of the Holding
Company shall be distributed to all holders of Shares in exchange for their
Shares or otherwise, the SAR Value shall be equal to (i) the Fair Market Value
of the number of shares in the share capital of the Holding Company that a
holder of a Special Non-Voting Share was entitled to receive after such
distribution minus (ii) the Base Value.

     (D) Whenever the number of SARs is adjusted as provided in this Section 5,
the Base Value shall be adjusted by multiplying the Base Value immediately prior
to such adjustment by a fraction, (i) of which the numerator shall be the number
of SARs outstanding prior to such adjustment and (ii) of which the denominator
shall be the number of SARs outstanding immediately thereafter.

     (E) Except in the case of a distribution to the holders of Shares payable
(i) in Shares, in accordance with Section 5(A) hereof, (ii) in shares of the
share capital of a Holding Company pursuant to Section 5(C) or (iii) in
dividends declared by the Board to be "regular dividends" and which are paid in
cash in an amount per share which, when added to the value of all cash dividends
previously paid within the same fiscal year, does not exceed 5% of the average
book value per share for the prior four quarters (as determined on the basis of
U.S. generally accepted accounting principles), the Base Value of each
outstanding SAR shall be reduced by the per share amount of all dividends or
distributions paid or declared by the Company prior to the exercise of the SARs;
provided, however, that in no event shall the Base Value be reduced below the
par value of the Common Shares.

     (F) No adjustment in the number of SARs need be made under Section 5(B) if
                                                                ------------
the Company issues or distributes, pursuant to this Agreement, to the Executive
the shares, rights, options, warrants, securities or assets that the Executive
would have been entitled to receive had the Executive owned Special Non-Voting
Shares in an amount equal to its number of SARs prior to the event or the record
date with respect thereto.  No adjustment need be made for a change in the par
value of any of the Shares.

     (G) For the purpose of this Section 5 and the definition of SAR Value in
Section 1(J), the term "Shares" shall mean (i) the Shares at the date of this
Agreement or (ii) any other class of shares in the share capital of the Company
resulting from successive changes or reclassification of such shares consisting
solely of changes in par value.

     (H) In the case of Section 5(B) hereof, upon the expiration of any rights,
options, warrants or convertible securities or if any rights, options, warrants
or convertible securities shall not have been exercised or converted, the number
of SARs held by the Executive shall, upon such expiration, be readjusted and
shall thereafter be such as they would have been had they

                                       7
<PAGE>

been originally adjusted (or had the original adjustment not been required, as
the case may be) as if (A) the only Shares so issued were the Shares, if any,
actually issued or sold upon the exercise of such rights, options or warrants or
the conversion of such convertible securities and (B) such Shares, if any, were
issued or sold for the consideration actually received by the Company upon such
exercise or conversion plus the aggregate consideration, if any, actually
received by the Company for the issuance, sale or grant of all such rights,
options, warrants or convertible securities whether or not exercised;
provided, further, that no such readjustment shall have the effect of decreasing
the number of SARs held by the Executive by an amount in excess of the amount of
the adjustment initially made in respect to the issuance, sale or grant or such
rights, options, warrants or convertible securities.

     (I) In the case of Section 5(B) hereof, on any change in the number of
Shares deliverable upon exercise of any such rights, options, warrants or
convertible securities, other than a change resulting from the antidilution
provisions hereof, the number of SARs held by the Executive shall forthwith be
readjusted to such number as would have been obtained had the adjustment made
upon the issuance of such rights, options, warrants or convertible securities
not converted prior to such change (or rights, options, warrants or convertible
securities related to such securities not converted prior to such change) been
made upon the basis of such change.

     6.  No Fractional Shares

     In the event that the Company decides to pay the SAR Value as provided in
Section 4(C), the Company shall not be required to issue a fractional Share.  If
any fractional interest in a Share would be deliverable upon the exercise of any
of the SARs, in whole or in part, but for the provisions of this Section, the
Company, in lieu of delivering any such fractional Share therefor, shall pay a
cash adjustment therefor in an amount equal to the book value per Share at the
end of the most recent fiscal quarter multiplied by the fraction of the Share
that would otherwise have been issued hereunder.

     7.  Issuance of Certificates

     In the event that the Company decides to pay the SAR Value as provided in
Section 4(C), the issuance of certificates upon the exercise of the SARs, in
whole or in part, shall be without additional charge to the Executive.  The
Company shall pay and indemnify the Executive from and against any issuance,
stamp, documentary or other similar taxes (other than transfer taxes) or charges
imposed by any governmental body, agency or official by reason of the exercise
of the SARs, in whole or in part, or the resulting issuance of Special Non-
Voting Shares.

     Each certificate representing the Special Non-Voting Shares so issued shall
(unless its transfer is not restricted under the Bye-laws of the Company), be
stamped or otherwise imprinted with a legend in substantially the form set forth
in the Shareholders Agreement.

     8.  Issuance of Certificates

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<PAGE>

     In the event that the Company decides to issue Special Non-Voting Shares
upon the exercise of any SAR as provided in Section 4(C), such Special Non-
Voting Shares shall be subject, among others, to the provisions of Bye-law 50
(repurchase of Shares by Company or its Assignee(s)).

     9.  Restriction on Transfer of the SARs and Certain Special Non-Voting
         Shares.

     (A) In the event that the Company decides to issue Special Non-Voting
Shares upon the exercise of any SAR as provided in Section 4(C), such Special
Non-Voting Shares shall be subject, among others, to the provisions relating to
restrictions on stock ownership set forth in the Bye-laws and in the
Shareholders Agreement.  The Executive agrees to execute the Shareholders
Agreement in such event.

     (B) The transfer, in whole or in part, of the Special Non-Voting Shares
issued upon the exercise of any SAR shall be subject to the terms and conditions
applicable to any transfer of Shares provided by the Bye-laws (as amended), the
Shareholders Agreement (as amended) and this Agreement.

     10. Governing Law.

     This Agreement shall be governed by and construed in accordance with the
laws of Bermuda, without regard to principles regarding conflicts of laws.

     11. Notices.

     All notices, requests, demands and other communications hereunder shall be
in writing and shall be deemed, unless otherwise specified herein, to have been
duly given if given in person or otherwise communicated or sent by mail, courier
service, cable, telex, telecopier, facsimile or other mode of representing words
in a legible and non-transitory form if to the  Executive at: 802 St. James
Court, Flatts Village, Hamilton Parish FLO4, Bermuda and if to the Company at
P.O. Box HM 1502,  Hamilton HM CX, Bermuda, Attention:  Secretary, or such other
address as the Company may have furnished to the Members and Executive in
writing; provided, however, that if such notice is sent by next-day courier it
shall be deemed to have been given the day following sending and, if by
registered mail, five days following the sending.

     12. Severability.

     Any provision of this Agreement that is prohibited, unenforceable or not
authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition, unenforceability or lack of authorization
without invalidating the remaining provisions hereof or affecting the validity,
unenforceability or legality of such provision in any other jurisdiction.

     13. Binding Effect; Benefit.

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<PAGE>

     This Agreement shall inure to the benefit of and be binding upon the
parties hereto, and their respective successors, legal representatives and
permitted assigns.  Nothing in this Agreement, expressed or implied, is intended
to confer on any Person other than the parties hereto, and their respective
successors, legal representatives and permitted assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.

     14.  Headings.

     The headings contained in this Agreement are for convenience only and shall
not affect the meaning or interpretation of this Agreement.

                           *     *     *     *     *

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal as of the date first above written.



LASALLE RE LIMITED


By:
   -------------------------------------------
Name:
Title:



----------------------------------------------
Victor H. Blake

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