<PAGE>
 
                                B Y E - L A W S

                                       OF

                          LASALLE RE HOLDINGS LIMITED


                         (as amended February 26, 1998)
<PAGE>
 
                               TABLE OF CONTENTS
                               -----------------
<TABLE> 
<CAPTION> 
                                                                            Page
                                                                            ----
<S>                                                                         <C> 
1.   Interpretation..........................................................  1

     BOARD OF DIRECTORS......................................................  4

2.   Board of Directors......................................................  4
3.   Management of the Company...............................................  4
4.   Power to appoint managing director or chief executive officer...........  5
5.   Power to appoint manager................................................  5
6.   Power to authorize specific actions.....................................  5
7.   Power to appoint attorney...............................................  5
8.   Power to appoint and dismiss employees..................................  5
9.   Power to delegate to a committee........................................  6
10.  Power to borrow and charge property.....................................  7
11.  Election of Directors...................................................  7
11A. Nominations proposed by Members.........................................  8
12.  Defects in appointment of Directors.....................................  8
13.  Removal of Directors....................................................  8
14.  Vacancies on the Board..................................................  9
15.  Notice of meetings of the Board.........................................  9
16.  Meetings of the Board................................................... 10
17.  Unanimous written resolutions........................................... 11
18.  Contracts and disclosure of Directors' interests........................ 11
19.  Remuneration of Directors............................................... 11
20.  Other interests of Directors............................................ 11

     OFFICERS................................................................ 12

21.  Officers of the Company................................................. 12
22.  Remuneration of Officers................................................ 12
23.  Duties of Officers...................................................... 12
24.  Chairman of meetings.................................................... 12
25.  Register of Directors and Officers...................................... 13

     MINUTES................................................................. 13

26.  Obligations of Board to keep minutes.................................... 13

     INDEMNITY............................................................... 13

27.  Indemnification and exculpation of Directors and Officers of the Company 13
</TABLE> 

                                      -i-
<PAGE>
 
                                B Y E - L A W S

                                       OF

                          LASALLE RE HOLDINGS LIMITED

                         (as amended February 26, 1998)

                    . . . . . . . . . . . . . . . . . . . .


1.   Interpretation
     --------------

     (1) In these Bye-laws the following words and expressions shall, where not
inconsistent with the context, have the following meanings respectively:

          (a)  "Act" means the Companies Act 1981 of Bermuda as amended from
               time to time;

          (b)  "Auditor" includes any individual or partnership;

          (c)  "Board" means the Board of Directors appointed or elected
               pursuant to these Bye-laws and acting by resolution in accordance
               with the Act and these Bye-laws or the Directors present at a
               meeting of Directors at which there is a quorum;

          (d)  "Code" means the United States Internal Revenue Code of 1986, as
               amended, or any United States federal statute then in effect that
               has replaced such statute, and a reference to a particular
               section thereof shall be deemed to include a reference to the
               comparable section, if any, of any such replacement United States
               federal statute;

          (e)  "Company" means the company for which these Bye-laws are
               approved and confirmed;

          (f)  "Controlled Shares" in reference to any person means all shares
               of the Company that such person is deemed to own directly,
               indirectly or by attribution (within the meaning of Section 958
               of the Code);

          (g)  "Director" means a director of the Company;
          
<PAGE>
 
          (h)  "Exchange Act" means the United States Securities Exchange Act of
               1934, as amended, or any United States federal statute then in
               effect that has replaced such statute, and a reference to a
               particular section thereof shall be deemed to include a reference
               to the comparable section, if any, of any such replacement United
               States federal statute;

          (i)  "Fair Market Value" means, with respect to a repurchase of any
               shares of the Company in accordance with these Bye-laws, (i) if
               such shares are listed on a securities exchange, the average
               closing sale price of such shares on such exchange, or, if such
               shares are listed on more than one exchange, the average closing
               sale price of the shares on the principal securities exchange on
               which such shares are then traded, or, if such shares are not
               then listed on a securities exchange but are traded in the over-
               the-counter market, the average of the latest bid and asked
               quotations for such shares in such market, in each case for the
               last five trading days immediately preceding the day on which
               notice of the repurchase of such shares is sent pursuant to these
               Bye-laws or (ii) if no such closing sales prices or quotations
               are available because such shares are not publicly traded or
               otherwise, the fair value of such shares as determined by one
               independent nationally recognized investment banking firm chosen
               by the Company and reasonably satisfactory to the Member whose
               shares are to be so repurchased by the Company. The calculation
               of the Fair Market Value of the shares made by such appointed
               investment banking firm (i) shall not include any discount
               relating to the absence of a public trading market for, or any
               transfer restrictions on, such shares, and (ii) such calculation
               shall be final and the fees and expenses stemming from such
               calculation shall be borne by the Company or its assignee, as the
               case may be;

          (j)  "Maximum Percentage" means, with respect to any person, 9.9% or,
               if applicable, such other percentage as the Board shall have
               previously approved for such person in accordance with these 
               Bye-laws;

          (k)  "Member" means the person registered in the Register of Members
               as the holder of shares and, when two or more persons are so
               registered as joint holders of shares, means the person whose
               name stands first in the Register of Members as

                                      -2-
<PAGE>
 
               one of such joint holders or all of such persons as the context
               so requires;

          (l)  "notice" means written notice as further defined in these
               Bye-laws unless otherwise specifically stated;

          (m)  "Officer" means any person appointed by the Board to hold an
               office in the Company;

          (n)  "person" means an individual, a trust, estate, partnership,
               association, company, corporation or other legal entity;

          (o)  "Register of Directors and Officers" means the Register of
               Directors and Officers referred to in Bye-law 25;
               
          (p)  "Register of Members" means the Register of Members referred
               to in Bye-law 52;
               
          (q)  "Secretary" means the person appointed to perform any or all the
               duties of secretary of the Company and includes any deputy or
               assistant secretary;

          (r)  "Securities Act" means the United States Securities Act of 1933,
               as amended, or any United States federal statute then in effect
               that has replaced such statute, and a reference to a particular
               section thereof shall be deemed to include a reference to the
               comparable section, if any, of any such replacement United States
               federal statute;

          (s)  "United States" shall the United States of America and dependent
               territories or any part thereof;

          (t)  "U.S. Person", except as otherwise indicated, means an individual
               who is a citizen or resident of the United States, a corporation
               or partnership created or organized under the laws of the United
               States or any state thereof, or an estate or trust, all of the
               income of which is includable in gross income for United States
               federal income tax purposes, regardless of its source.

     (2)  In these Bye-laws, where not inconsistent with the context:

          (a)  words denoting the plural number include the singular number
               and vice versa;

                                      -3-
<PAGE>
 
          (b)  words denoting the masculine gender include the feminine
               gender;

          (c)  the word:

               (i)  "may" shall be construed as permissive;
     
               (ii) "shall" shall be construed as imperative; and

          (d)  unless otherwise provided herein words or expressions defined in
               the Act shall bear the same meaning in these Bye-laws.

     (3)  Expressions referring to writing or written shall, unless the contrary
intention appears, include facsimile, printing, lithography, photography,
electronic mail and other modes of representing words in a visible form.

     (4)  Headings used in these Bye-laws are for convenience only and are not
to be used or relied upon in the construction hereof.

                               BOARD OF DIRECTORS
                               ------------------

2.   Board of Directors
     ------------------

     The business of the Company shall be managed and conducted by the Board.

3.   Management of the Company
     -------------------------

     (a)  In managing the business of the Company, the Board may exercise all
such powers of the Company as are not, by statute or by these Bye-laws, required
to be exercised by the Company in general meeting subject, nevertheless, to
these Bye-laws, the provisions of any statute and to such regulations as may be
prescribed by the Company in general meeting.

     (b)  No regulation or alteration to these Bye-laws made by the Company in
general meeting shall invalidate any prior act of the Board which would have
been valid if that regulation or alteration had not been made.

     (c)  The Board may procure that the Company pays all expenses incurred
in promoting and incorporating the Company.

     (d)  The Board may exercise all the powers of the Company to discontinue
the Company to a named country or jurisdiction outside Bermuda pursuant to
Section 132G of the Act.

                                      -4-
<PAGE>
 
4.   Power to appoint managing director or chief executive officer
     -------------------------------------------------------------

     The Board may from time to time appoint one or more Directors to the office
of managing director or chief executive officer of the Company who shall,
subject to the control of the Board, supervise and administer all of the general
business and affairs of the Company.

5.   Power to appoint manager
     ------------------------

     The Board may appoint a person to act as manager of the Company's day to
day business and may entrust to and confer upon such manager such powers and
duties as it deems appropriate for the transaction or conduct of such business.

6.   Power to authorize specific actions
     -----------------------------------

     The Board may from time to time and at any time authorize any Director,
Officer or other person to act on behalf of the Company for any specific purpose
and in connection therewith to execute any agreement, document or instrument on
behalf of the Company.

7.   Power to appoint attorney
     -------------------------

     The Board may from time to time and at any time by power of attorney
appoint any company, firm, person or body of persons, whether nominated directly
or indirectly by the Board, to be an attorney of the Company for such purposes
and with such powers, authorities and discretions (not exceeding those vested in
or exercisable by the Board) and for such period and subject to such conditions
as it may think fit and any such power of attorney may contain such provisions
for the protection and convenience of persons dealing with any such attorney as
the Board may think fit and may also authorize any such attorney to sub-delegate
all or any of the powers, authorities and discretions so vested in the attorney.
Such attorney may, if so authorized under the seal of the Company, execute any
deed or instrument under such attorney's personal seal with the same effect as
the affixation of the seal of the Company.

8.   Power to appoint and dismiss employees
     --------------------------------------

     The Board may appoint, suspend or remove any manager, secretary, clerk,
agent or employee of the Company and may fix their remuneration and determine
their duties.

                                      -5-
<PAGE>
 
9.   Power to delegate to a committee
     --------------------------------

     The Board may appoint one or more Board committees and may delegate any of
its powers to any such committee. Without limiting the foregoing, such
committees may include:

          (a)  an Executive Committee which shall have the power of the Board
               between meetings of the Board;

          (b)  an Underwriting and Actuarial Committee, which shall, among other
               things, advise the Board with respect to underwriting policies
               for the Company, review underwriting decisions made by the
               Company, monitor any appointed underwriting services provider,
               advise the Board with respect to actuarial and pricing services,
               review actuarial decisions and monitor any provider of actuarial
               services;

          (c)  an Investment Committee, which shall, among other things, review
               and monitor the Company's financial affairs and the conformity of
               the Company's financial and investment activities with the
               business strategy for the Company established by the Board;

          (d)  an Audit Committee, which shall, among other things, advise the
               Board with respect to the Company's financial reporting
               responsibilities and related matters;

          (e)  a Nominating Committee, which shall, among other things, propose
               to the Members or to continuing Directors, before any election of
               Directors by Members or the filling of any vacancy by the Board,
               a slate of director candidates equal in number to the vacancies
               to be filled. The Nominating Committee shall have neither more
               nor less than three members; and

          (f)  a Compensation Committee, which shall, among other things,
               advise the Board with respect to compensation of Officers.

     All Board committees shall conform to such directions as the Board shall
impose on them, provided that each member shall have one (1) vote, and each
committee shall have the right as it deems appropriate to retain outside
experts. Each committee may adopt rules for the conduct of its affairs,
including rules governing the adoption of resolutions by unanimous written
consent, and the place, time, and notice of meetings, as shall be advisable and
as shall not be inconsistent with these Bye-laws or with any applicable
resolution adopted by the Board. Each committee shall cause

                                      -6-
<PAGE>
 
minutes to be made of all meetings of such committee and of the attendance
thereat and shall cause such minutes and copies of resolutions adopted by
unanimous consent to be promptly inscribed or incorporated by the Secretary in
the minute book.

10.  Power to borrow and charge property
     -----------------------------------

     The Board may exercise all the powers of the Company to borrow money, to
assume, guarantee or otherwise become directly or indirectly liable for
indebtedness for borrowed money, and to mortgage or charge its undertaking,
property and uncalled capital, or any part thereof, and may issue debentures,
debenture stock and other securities whether outright or as security for any
debt, liability or obligation of the Company or any third party.

11.  Election of Directors
     ---------------------

     The number of Directors constituting the Board shall be not less than two
(2) nor more than thirteen (13), the exact number to be determined from time to
time by resolution adopted by the affirmative vote of more than fifty percent
(50%) of the Directors then in office; provided, however, that if no such
resolution shall be in effect the number of Directors shall be thirteen (13).
The Board shall be divided into three classes, with the term of the office of
one class expiring each year. Each class shall consist, as nearly as possible,
of one-third of the total number of Directors constituting the entire Board.
Upon the adoption of this Bye-law, Class I Directors shall be those Directors
elected to hold office for a term expiring at the annual general meeting in the
year 1998; Class II Directors shall be those Directors elected to hold office
for a term expiring at the annual general meeting in the year 1999; and Class
III Directors shall be those Directors elected to hold office for a term
expiring at the annual general meeting in the year 2000. At each annual general
meeting of Members, successors to Directors whose terms expire at that annual
general meeting shall be of the same class as the Directors they succeed and
shall be elected to hold office for a full three (3) year term. If the number of
Directors is altered by resolution of the Board pursuant to this Bye-law, such
resolution shall apportion any increase or decrease among the classes so as to
maintain the number of Directors in each class as equal as possible, but in no
case shall a decrease in the number of Directors shorten the term of any
incumbent Director.

     Notwithstanding any other provision of this Bye-law 11, no person shall be
elected as a Director, other than persons nominated by the Board or a committee
thereof, unless advance notice of the nomination of such person shall have been
given to the Company in the manner provided in Bye-law 11A.

                                      -7-
<PAGE>
 
11A. Nominations proposed by Members
     -------------------------------

     (a)  If a Member desires to nominate one or more persons for election as
Directors at any general meeting duly called for the election of Directors,
written notice of such Member's intent to make such a nomination must be
received by the Secretary at the registered office of the Company not less than
60 days nor more than 120 days before such general meeting. Such notice shall
set forth (i) the name and address, as it appears in the Register of Members, of
the Member who intends to make such nomination; (ii) a representation that the
Member is a holder of record of shares of the Company entitled to vote at such
meeting and intends to appear in person or by proxy at the meeting to make such
nomination; (iii) the class and number of shares of the Company which are held
by the Member; (iv) the name and address of each person to be nominated; (v) a
description of all arrangements or understandings between the Member and any
such nominee and any other person or persons (naming such person or persons)
pursuant to which such nomination is to be made by the Member; (vi) such other
information regarding any such nominee proposed by such Member as would be
required to be included in a proxy statement filed pursuant to Regulation 14A
under the Exchange Act, whether or not the Company is then subject to such
Regulation; and (vii) the consent of any such nominee to serve as a Director, if
so elected.  The Chairman of such general meeting shall, if the facts warrant,
refuse to acknowledge a nomination that is not made in compliance with the
procedure specified in this Bye-law 11A, and any such nomination not properly
brought before the meeting shall not be considered.

     (b)  Notwithstanding anything contained in these Bye-laws to the contrary,
the affirmative vote of the holders of at least sixty-six and two-thirds percent
(66 2/3%) of the outstanding shares entitled to vote, voting together as a
single class, shall be required to amend or repeal, or adopt any provision
inconsistent with, the last sentence of Bye-law 11 or any provision of this
Bye-law 11A.

12.  Defects in appointment of Directors
     -----------------------------------

     All acts done bona fide by any meeting of the Board or by a committee of
the Board or by any person acting as a Director shall, notwithstanding that it
be afterwards discovered that there was some defect in the appointment of any
Director or person acting as aforesaid, or that they or any of them were
disqualified, be as valid as if every such person had been duly appointed and
was qualified to be a Director.

13.  Removal of Directors
     --------------------

     Subject to any provisions to the contrary in these Bye-laws, the Members,
at an annual general meeting or a special general meeting called for that
purpose, may remove any Director or the entire Board, provided that (i) the
notice of any such

                                      -8-
<PAGE>
 
meeting shall contain a statement of the intention so to do and be served on
such Director not less than fourteen (14) days before the meeting and (ii) at
such meeting such Director shall be entitled to be heard on the motion for such
Director's removal.

14.  Vacancies on the Board
     ----------------------

     (a)  The Board shall have the power from time to time and at any time, by
the affirmative vote of more than fifty percent (50%) of the Directors then in
office, to appoint any person as a Director to fill a vacancy on the Board
occurring as the result of the death, disability, disqualification or
resignation of any Director or, to the extent authorized by these Bye-laws, to
fill a vacancy on the Board occurring as a result of the removal of a Director
by the Members pursuant to these Bye-laws. A Director so appointed shall hold
office until the next annual general meeting or until such Director's successor
is elected or appointed or such Director's office is otherwise vacated.

     (b)  The Board may act notwithstanding any vacancy in its number but, if
and for so long as its number is reduced below the number fixed by these
Bye-laws as the quorum necessary for the transaction of business at meetings of
the Board, the continuing Directors or Director may act only for the purpose of
(i) summoning a general meeting of the Company or (ii) preserving the assets of
the Company.

     (c)  The office of Director shall be vacated if the Director:

          (i)   is removed from office pursuant to these Bye-laws or is
                prohibited from being a Director by law;

          (ii)  is or becomes bankrupt or makes any arrangement or composition
                with his creditors generally;

          (iii) is or becomes of unsound mind or dies; or

          (iv)  resigns his or her office by notice in writing to the Company.

15.  Notice of meetings of the Board
     -------------------------------

     (a)  The Chairman or Deputy Chairman, or any two (2) Directors may, and the
Secretary on the requisition of the Chairman, Deputy Chairman, or any two (2)
Directors shall, at any time summon a meeting of the Board by not less than five
(5) days' notice in writing to each Director.

     (b)  Notice of a meeting of the Board shall specify the general nature of
the business to be considered at such meeting and shall be deemed to be duly
given to a Director if it is given to such Director in person or otherwise
communicated or sent

                                      -9-
<PAGE>
 
to such Director by mail, courier service, cable, telex, telecopier, facsimile
or other mode of representing words in a legible and non-transitory form at such
Director's address in the Register of Directors and Officers or to such other
address given by such Director to the Company for this purpose, in each case,
not less than five (5) days' prior to the meeting to which such notice relates.
If such notice is sent by next-day courier, cable, telex, telecopier or
facsimile it shall be deemed to have been given the day following sending and,
if by registered mail, five days following the sending.

     (c)  A Board meeting shall, notwithstanding that it is called by shorter
notice than that specified in this Bye-law, be deemed to have been properly
called if it is so agreed in writing by all the Directors, whether present or
not at the meeting.

     (d)  Meetings of the Directors may be held within or outside of Bermuda.

16.  Meetings of the Board
     ---------------------

     (a)  The Board shall hold regular quarterly meetings although it may
specially meet for the transaction of business, adjourn and otherwise regulate
its meetings as it sees fit. The quorum necessary for the transaction of
business may be fixed by the affirmative vote of more than fifty percent (50%)
of the Directors then in office and unless so fixed shall be the lesser of six
(6) or fifty percent (50%) of the Directors then in office.

     (b)  Directors may participate in any meeting of the Board by means of such
telephone, electronic or other communication facilities as permit all persons
participating in the meeting to communicate with each other simultaneously and
instantaneously, and participation in such a meeting shall constitute presence
in person at such meeting.

     (c)  The Directors shall elect one of their number to be Chairman of the
Board and another to be Deputy Chairman of the Board.

     (d)  A resolution put to the vote at a meeting of the Board shall be
carried by the affirmative vote of more than fifty percent (50%) of the votes of
the Directors present at a duly constituted meeting at which a quorum is present
and acting throughout unless otherwise provided by these Bye-laws or by Bermuda
law; provided, however, that not less than 75% of the votes of the Directors
then in office shall be required to cause more than 20% of LaSalle Re Limited's
written premiums received in any fiscal year (calculated on a consolidated
basis) to be other than from property catastrophe reinsurance.

                                      -10-
<PAGE>
 
17.  Unanimous written resolutions
     -----------------------------

     A resolution in writing signed by all the Directors, which may be in
counterparts, shall be as valid as if it had been passed at a meeting of the
Board duly called and constituted. Such resolution shall be deemed to be adopted
at the place where, and at the time when, the last signature of a Director is
affixed thereto.

18.  Contracts and disclosure of Directors' interests
     ------------------------------------------------

     (a)  Any Director, or any Director's firm, partner or any company with whom
any Director is associated, may act in a professional capacity for the Company
and such Director or such Director's firm, partner or such company shall be
entitled to remuneration for professional services as if such Director were not
a Director, provided that nothing herein contained shall authorize a Director or
Director's firm, partner or such company to act as Auditor of the Company.

     (b)  A Director who is directly or indirectly interested in a contract or
proposed contract or arrangement with the Company shall declare the nature of
such interest as required by the Act.

     (c)  Following a declaration being made pursuant to this Bye-law, and
unless disqualified by the chairman of the relevant Board meeting, a Director
may vote in respect of any contract or arrangement or proposed contract or
arrangement in which such Director is interested and may be counted in the
quorum at such meeting.

19.  Remuneration of Directors
     -------------------------

     (a)  The remuneration (if any) of the Directors shall be determined by the
Board and shall be deemed to accrue from day to day.  The Directors shall be
reimbursed for all travel, hotel and other expenses which are reasonable and
properly incurred by them in attending and returning from meetings of the Board,
any committee appointed by the Board, general meetings of the Company, or in
connection with the business of the Company or their duties as Directors
generally.

     (b)  A Director may hold any other office or place of profit under the
Company (other than the office of Auditor) in conjunction with his office of
Director for such period on such terms as to remuneration and otherwise as the
Directors may determine.

20.  Other interests of Directors
     ----------------------------

     A Director of the Company may be or become a director or other officer of
or otherwise interested in any company promoted by the Company or in which the
Company may be interested as member or otherwise, and no such Director shall be

                                      -11-
<PAGE>
 
accountable to the Company for any remuneration or other benefits received by
him as a director or officer of, or from his interest in, such other company.
The Directors may also cause the voting power conferred by the shares in any
other company held or owned by the Company to be exercised in such manner in all
respects as the Board thinks fit, including the exercise thereof in favour of
any resolution appointing the Directors or any of them to be directors or
officers of such other company, or voting or providing for the payment of
remuneration to the directors or officers of such other company.


                                    OFFICERS
                                    --------

21.  Officers of the Company
     -----------------------

     The Officers, who shall be appointed by the Board, shall consist of a
Chairman, President, one or more Deputy Chairmen, one or more Vice Presidents, a
Treasurer, a Secretary and such other Officers as the Board may from time to
time determine to be necessary or advisable in the conduct of the affairs of the
Company. The same person may hold two (2) or more offices in the Company, except
no person may hold the offices of President and Secretary, Chairman and Deputy
Chairman or President and Vice-President at the same time.  The Deputy Chairman
shall not by virtue of such office have any executive authority on behalf of the
Company.

22.  Remuneration of Officers
     ------------------------

     The Officers shall receive such remuneration as the Board may from time to
time determine.

23.  Duties of Officers
     ------------------

     The Officers shall have such powers and perform such duties in the
management, business and affairs of the Company as may be delegated to them by
the Board from time to time.

24.  Chairman of meetings
     --------------------

     Unless otherwise agreed by a majority of those attending and entitled to
attend and vote thereat, the Chairman shall act as chairman at all meetings of
the Members and of the Board at which such person is present. In his absence a
Deputy Chairman, if present, shall act as chairman and in the absence of all of
them a chairman shall be appointed or elected by those present at the meeting
and entitled to vote.

                                      -12-
<PAGE>
 
25.  Register of Directors and Officers
     ----------------------------------

     (a)  The Board shall cause to be kept in one or more books at the
registered office of the Company a Register of Directors and Officers and shall
enter therein the particulars required by the Act.

     (b)  The Register of Directors and Officers shall be open to inspection by
Members and other entitled persons at the office of the Company on every
business day, subject to such reasonable restrictions as the Board may impose,
so that not less than two (2) hours in each business day is allowed for
inspection.


                                     MINUTES
                                     -------

26.  Obligations of Board to keep minutes
     ------------------------------------

     The Board shall cause minutes to be duly entered in books provided for the
purpose:

          (a)  of all elections and appointments of Officers;

          (b)  of the names of the Directors present at each meeting of the
               Board and of any committee appointed by the Board; and

          (c)  of all resolutions and proceedings of general meetings of the
               Members, meetings of the Board, meetings of managers and meetings
               of committees appointed by the Board.


                                    INDEMNITY
                                    ---------

27.  Indemnification and exculpation of Directors and Officers of the Company
     ------------------------------------------------------------------------

     (a)  (i) The Company shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
including all appeals (other than an action, suit or proceeding by or in the
right of the Company) by reason of the fact that he is or was a Director,
Officer or advisory committee member, or is or was serving at the request of the
Company as a director or officer of another company, corporation, partnership,
joint venture, trust or other enterprise, against expenses (including, without
limitation, reasonable professional fees, expert witness fees and attorneys'
fees), judgments, decrees, fines, penalties and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably

                                      -13-
<PAGE>
 
believed to be in or not opposed to the best interests of the Company, and, with
respect to any criminal action, suit or proceeding, had no reasonable cause to
believe his conduct was unlawful except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
finally adjudged to be liable for fraud or dishonesty in the performance of his
duty to the Company. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the Company, and, with respect to any
criminal action, suit or proceeding, had reasonable cause to believe that his
conduct was unlawful.

     (ii)  The Company shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, including all appeals, by or in the right of the Company to
procure a judgment in its favour by reason of the fact that he is or was a
Director, Officer or advisory committee member, or is or was serving at the
request of the Company as a director or officer of another company, corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including, without limitation, reasonable professional fees, expert witness
fees and attorneys' fees) actually and reasonably incurred by him in connection
with the defense or settlement of such action, suit or proceeding if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Company and except that no indemnification shall be made
in respect of any claim, issue or matter as to which such person shall have been
finally adjudged to be liable for fraud or dishonesty in the performance of his
duty to the Company unless and only to the extent that the court in which such
action, suit or proceeding was brought, or any other court of competent
jurisdiction, shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the court
shall deem proper.

     (iii)  The Company shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, including all appeals, by or in the right of the Company to
procure a judgment in its favour by reason of the fact that he is or was a
Director, Officer or advisory committee member, or is or was serving at the
request of the Company as a director or officer of another company, corporation,
partnership, joint venture, trust or other enterprise, against judgments,
decrees, fines, penalties and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Company, but only to the extent that a court
determines upon application that, in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity.

                                      -14-
<PAGE>
 
     (iv)  The purpose of this Bye-law as a whole is to provide the
broadest indemnity allowable at law, and to the extent any indemnification
hereunder is prohibited, unenforceable or not authorized under applicable law,
it is the intent of this Bye-law that such indemnification be interpreted as
broadly as possible without invalidating the remaining provisions hereof.
Specifically, to the extent prohibited by Bermuda law, these Bye-laws shall not
result in indemnification of any person to the extent he engaged in fraud or
dishonesty.

     (b)  If any person has been successful on the merits or otherwise in
defense of any action, suit or proceeding for which he is entitled to
indemnification pursuant to Bye-law 27(a), or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection therewith.

     (c)  Any indemnification under Bye-law 27(a), unless ordered by a court,
shall be made by the Company only as authorized in the specific case upon a
determination that indemnification of such person is proper in the circumstances
because he has met the applicable standard of conduct set forth in Bye-law
27(a). Such determination shall be made (1) by the Board by a majority vote of
Directors who were not parties to such action, suit or proceeding, or (2) if a
majority of the disinterested Directors so directs, by independent legal counsel
in a written opinion, or (3) by the Members.  If any person is entitled to
indemnification under Bye-law 27(a) for a portion of the expenses (including
attorneys' fees), judgments, decrees, fines, penalties and amounts paid in
settlement actually and reasonably incurred by him in connection with an action,
suit or proceeding, the Company shall indemnify such person only as to the
portion to which he is entitled.

     (d)  Expenses (including attorneys' fees) actually and reasonably incurred
by any person in defending any civil, criminal, administrative or investigative
action, suit or proceeding or threat thereof referred to in Bye-law 27(a) shall
be paid by the Company in advance of the final disposition of such action, suit
or proceeding upon receipt of an undertaking by or on behalf of such person to
repay such amount if it shall be ultimately determined that he is not entitled
to be indemnified by the Company as authorized in these Bye-Laws or otherwise
pursuant to applicable law; provided, however, that if it is determined by
either (1) a majority vote of Directors who were not parties to such action,
suit or proceeding, or (2) if a majority of the disinterested directors so
directs, by independent legal counsel in a written opinion, that there is no
reasonable basis to believe that such person is entitled to be indemnified by
the Company as authorized in these Bye-Laws or otherwise pursuant to applicable
law, then no expense shall be advanced in accordance with this Bye-law 27(d).

     (e)  The indemnification and advancement of expenses provided in these
Bye-Laws shall not be deemed exclusive of any other rights to which those
seeking

                                      -15-
<PAGE>
 
indemnification and advancement of expenses may now or hereafter be entitled
under any statute, agreement, vote of Members or otherwise, both as to action in
an official capacity and as to action in another capacity while holding such
office.

     (f)  The Company shall have power to purchase and maintain insurance on
behalf of any person who is or was a Director, Officer or advisory committee
member, employee or agent of the Company, or is or was serving at the request of
the Company as a director, officer, employee or agent of another company,
corporation, partnership, joint venture, trust or other enterprise, against any
liability asserted against him and incurred by him in any capacity, or arising
out of his status as such, whether or not the Company would have the power to
indemnify him against such liability under the provisions of these Bye-Laws or
under law.

     (g)  The indemnification and advancement of expenses provided by, or
granted pursuant to, this Bye-law shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to hold the
position for which he is entitled to be indemnified or advanced expenses and
shall inure to the benefit of the heirs, executors and administrators of such a
person.

     (h)  In order to induce persons to serve as Directors, Officers or advisory
committee members, or at the request of the Company as directors or officers of
another company, corporation, partnership, joint venture, trust or other
enterprise, each Member waives any claim or right of action it might have,
whether individually or by or in the right of the Company, against any such
person on account of any action taken by such person, or the failure of such
person to take any action, in the performance of his duties with or for the
Company or such other company, corporation, partnership, joint venture, trust or
other enterprise; provided, however, that such waiver shall not apply to any
claims or rights of action arising out of the fraud or dishonesty of such person
or to recover any gain, personal profit or advantage to which such person is not
legally entitled.


                                    MEETINGS
                                    --------

28.  Notice of annual general meeting
     --------------------------------

     The annual general meeting of the Company shall be held at such time and
place as the Chairman or any two (2) Directors or any Director and the Secretary
or the Board shall appoint. No annual general meeting shall take place in the
United States.  Written notice of such meeting stating the date, place and time
at which the meeting is to be held, that the election of Directors will take
place thereat, and as far as practicable, the other business to be conducted at
the meeting shall be given to each Member not less than five (5) days before the
date of such meeting.

                                      -16-
<PAGE>
 
29.  Notice of special general meeting
     ---------------------------------

     The Chairman or any two (2) Directors or any Director and the Secretary or
the Board may convene a special general meeting of the Company whenever in their
judgment such a meeting is necessary.  No special general meeting shall take
place in the United States. Written notice of such meeting stating the date,
place and the time at which the meeting is to be held and the general nature of
the business to be considered at the meeting shall be given to each Member not
less than five (5) days before the date of such meeting.

30.  Accidental omission of notice of general meeting
     ------------------------------------------------

     The accidental omission to give notice of a general meeting to, or the
non-receipt of notice of a general meeting by, any person entitled to receive
notice shall not invalidate the proceedings at that meeting.

31.  Meeting called on requisition of Members
     ----------------------------------------

     Notwithstanding anything herein, the Board shall, on the requisition of
Members holding at the date of the deposit of the requisition not less than
one-tenth of such of the paid-up share capital of the Company as at the date of
the deposit carries the right to vote at general meetings of the Company,
forthwith proceed to convene a special general meeting of the Company and the
provisions of section 74 of the Act shall apply.

32.  Short notice
     ------------

     A general meeting of the Company shall, notwithstanding that it is called
by shorter notice than that specified in these Bye-laws, be deemed to have been
properly called if it is so agreed by (i) all the Members entitled to attend and
vote thereat in the case of an annual general meeting; and (ii) a majority in
number of the Members having the right to attend and vote at the meeting, being
a majority together holding not less than ninety-five percent (95%) of the total
issued and outstanding Common Shares.

33.  Postponement of meetings
     ------------------------

     The Board may postpone any general meeting called in accordance with the
provisions of these Bye-laws (other than a meeting requisitioned under these
Bye-laws) provided that notice of postponement is given to each Member before
the time for such meeting.  Fresh notice of the date, time and place for the
postponed meeting shall be given to each Member in accordance with the
provisions of these Bye-laws.

                                      -17-
<PAGE>
 
34.  Quorum for general meeting
     --------------------------

     At any general meeting of the Company, two (2) or more persons present in
person and representing in person or by proxy in excess of fifty percent (50%)
of the total issued and outstanding Common Shares throughout the meeting shall
form a quorum for the transaction of business, provided that if the Company
shall at any time have only one (1) Member, one Member present in person or by
proxy shall form a quorum for the transaction of business at any general meeting
of the Company held during such time.  If within half an hour from the time
appointed for the meeting a quorum is not present, the meeting shall stand
adjourned to the same day one (1) week later, at the same time and place or to
such other day, time or place as the Board may determine.

35.  Adjournment of meetings
     -----------------------

     The chairman of a general meeting may, with the consent of the Members at
any general meeting at which a quorum is present (and shall if so directed),
adjourn the meeting.  Unless the meeting is adjourned to a specific date and
time, fresh notice of the date, time and place for the resumption of the
adjourned meeting shall be given to each Member in accordance with the
provisions of these Bye-laws.

36.  Attendance at meetings
     ----------------------

     Members may participate in any general meeting by means of such telephone,
electronic or other communication facilities as permit all persons participating
in the meeting to communicate with each other simultaneously and
instantaneously, and participation in such a meeting shall constitute presence
in person at such meeting.

37.  Written resolutions
     -------------------

     (a)  A resolution in writing signed by all Members, which may be in
counterparts, shall be as valid as if it had been passed by a General Meeting
duly called and constituted, such resolution to be effective on the date on
which the last Member signs the resolution.

     (b)  A resolution in writing made in accordance with this Bye-law shall
constitute minutes for the purposes of sections 81 and 82 of the Act.

     (c)  This Bye-law shall not apply to (i) a resolution passed pursuant to
section 89(5) of the Act or (ii) a resolution passed for the purpose of removing
a Director before the expiration of his term of office under these Bye-laws or
Section 93 of the Act.

                                      -18-
<PAGE>
 
38.  Attendance of Directors
     -----------------------

     The Directors of the Company shall be entitled to receive notice of and to
attend and be heard at any general meeting.

39.  Voting at meetings
     ------------------

     Subject to the provisions of the Act and these Bye-laws, any question
proposed for the consideration of the Members at any general meeting shall be
decided by the affirmative vote of more than fifty percent (50%) of the votes
cast in accordance with the provisions of these Bye-laws.

40.  Decision of chairman
     --------------------

     At any general meeting a declaration by the chairman of the meeting that a
question proposed for consideration has been carried, or carried unanimously, or
by a particular majority, or lost, and an entry to that effect in a book
containing the minutes of the proceedings of the Company shall, subject to the
provisions of these Bye-laws, be conclusive evidence of that fact.

41.  Demand for a poll
     -----------------

     (a)  Notwithstanding the provisions of the immediately preceding Bye- law,
at any general meeting of the Company, in respect of any question proposed for
the consideration of the Members, a poll may be demanded by any of the following
persons:

          (i)    the chairman of such meeting;

          (ii)   at least three (3) Members present in person or represented by
                 proxy;

          (iii)  any Member or Members present in person or represented by proxy
                 and holding between them not less than one-tenth of the total
                 voting power of all the Members having the right to vote at
                 such meeting; or

          (iv)   any Member or Members present in person or represented by proxy
                 holding Common Shares for which an aggregate sum has been paid
                 up equal to not less than one-tenth of the total sum paid up on
                 all Common Shares.

     (b)  Where, in accordance with the provisions of subparagraph (a) of this
Bye-law, a poll is demanded, subject to any rights or restrictions for the time
being

                                      -19-
<PAGE>
 
lawfully attached to any class of shares and subject to the provisions of these
Bye-laws, every Member present in person or by proxy at such meeting shall have
one (1) vote for each Common Share of which such person is the holder or for
which such person holds a proxy and such votes shall be counted in the manner
set out in subparagraph (d) of this Bye-law or in the case of a general meeting
at which one (1) or more Members are present by telephone in such manner as the
chairman of the meeting may direct and the result of such poll shall be deemed
to be the resolution of the meeting at which the poll was demanded and shall
replace any previous resolution upon the same matter.

     (c)  A poll demanded in accordance with the provisions of subparagraph (a)
of this Bye-law, for the purpose of electing a chairman or on a question of
adjournment, shall be taken forthwith, and a poll demanded on any other question
shall be taken in such manner and at such time at such meeting as the chairman
may direct, and any business other than that upon which a poll has been demanded
may be proceeded with pending the taking of the poll.

     (d)  Where a vote is taken by poll, each Member present in person or by
proxy and entitled to vote shall be furnished with a ballot on which such person
shall record his or her vote in such manner as shall be determined at the
meeting having regard to the nature of the question on which the vote is taken,
and each ballot paper shall be signed or initialled or otherwise marked so as to
identify the voter and the registered holder in the case of a proxy.  At the
conclusion of the poll, the ballot papers shall be examined and counted by a
committee of not less than two (2) Members or proxy holders appointed by the
chairman for the purpose and the result of the poll shall be declared by the
chairman.

42.  Seniority of joint holders voting
     ---------------------------------

     In the case of joint holders the vote of the senior who tenders a vote,
whether in person or by proxy, shall be accepted to the exclusion of the votes
of the other joint holders, and for this purpose seniority shall be determined
by the order in which the names stand in the Register of Members.

43.  Instrument of proxy
     -------------------

     The instrument appointing a proxy shall be in writing in the form, or as
near thereto as circumstances admit, of Form "A" in the Schedule hereto, under
the hand of the appointor or of the appointor's attorney duly authorized in
writing, or if the appointor is a corporation, either under its seal or under
the hand of a duly authorized officer or attorney.  The decision of the chairman
of any general meeting as to the validity of any instrument of proxy shall be
final.

                                      -20-
<PAGE>
 
44.  Representation of corporations at meetings
     ------------------------------------------

     A corporation which is a Member may, by written instrument, authorize such
person as it thinks fit to act as its representative at any meeting of the
Members and the person so authorized shall be entitled to exercise the same
powers on behalf of the corporation which such person represents as that
corporation could exercise if it were an individual Member. Notwithstanding the
foregoing, the chairman of the meeting may accept such assurances as he or she
thinks fit as to the right of any person to attend and vote at general meetings
on behalf of a corporation which is a Member.

                            SHARE CAPITAL AND SHARES
                            ------------------------

45.  Rights of shares
     ----------------

     (a)  The share capital of the Company shall be divided into two (2) classes
of shares consisting of one hundred million (i) common shares of par value U.S.
$ 1 (the "Common Shares") and (ii) preferred shares of par value U.S. $ 1 (the
"Preferred Shares").

     (b)  Subject to the provisions of these Bye-laws, the holders of Common
Shares shall:

          (1)  be entitled to one (1) vote per Common Share;

          (2)  be entitled to such dividends as the Board may from time to time
               declare;

          (3)  in the event of a winding-up or dissolution of the Company,
               whether voluntary or involuntary or for the purpose of a
               reorganisation or otherwise or upon any distribution of capital,
               be entitled to the surplus assets of the Company; and

          (4)  generally be entitled to enjoy all of the rights attaching to
               shares.

     (c)  The Board is authorized, subject to limitations prescribed by law, to
issue the Preferred Shares in series, to establish from time to time the number
of Preferred Shares to be included in each such series, and to fix the
designation, powers, preferences and rights of the Preferred Shares of each such
series and the qualifications, limitations or restrictions thereof.  The terms
of any series of Preferred Shares shall be set forth in a Certificate of
Designation in the minutes of the Company.

                                      -21-
<PAGE>
 
     The authority of the Board with respect to each series shall include, but
not be limited to, determination of the following:

          (1)  The number of Preferred Shares constituting that series and the
               distinctive designation of that series;

          (2)  The rate of dividend, and whether (and if so, on what terms and
               conditions) dividends shall be cumulative (and if so, whether
               unpaid dividends shall compound or accrue interest) or shall be
               payable in preference or in any other relation to the dividends
               payable on any other class or classes of shares or any other
               series of the Preferred Shares;

          (3)  Whether that series shall have voting rights in addition to the
               voting rights provided by law and, if so, the terms and extent of
               such voting rights;

          (4)  Whether the Preferred Shares may be redeemed and, if so, the
               terms and conditions on which they may be redeemed (including,
               without limitation, the dates upon or after which they may be
               redeemed and the price or prices at which they may be redeemed,
               which price or prices may be different in different circumstances
               or at different redemption dates);

          (5)  Whether the Preferred Shares shall be issued with the privilege
               of conversion or exchange and, if so, the terms and conditions of
               such conversion or exchange (including without limitation the
               price or prices or the rate or rates of conversion or exchange or
               any terms for adjustment thereof);

          (6)  The amounts, if any, payable upon the Preferred Shares in the
               event of voluntary liquidation, dissolution or winding up of the
               Company in preference of shares of any other class or series and
               whether the Preferred Shares shall be entitled to participate
               generally in distributions on the Common Shares under such
               circumstances;

          (7)  The amounts, if any, payable upon the Preferred Shares in the
               event of involuntary liquidation, dissolution or winding up of
               the Company in preference of shares of any other class or series
               and whether the Preferred Shares shall be entitled to participate
               generally in distributions on the Common Shares under such
               circumstances;

                                      -22-
<PAGE>
 
          (8)  Sinking fund provisions, if any, for the redemption or purchase
               of the Preferred Shares (the term "sinking fund" being understood
               to include any similar fund, however designated); and

          (9)  Any other relative rights, preferences, limitations and powers of
               that series.

46.  Power to issue shares
     ---------------------

     (a)  Subject to the provisions of these Bye-laws, the unissued shares of
the Company (whether forming part of the original share capital or any increased
share capital) shall be at the disposal of the Board, which may issue, offer,
allot, exchange or otherwise dispose of shares, or options, warrants or other
rights to purchase shares or securities convertible into or exchangeable for
shares (including any employee benefit plan providing for the issuance of shares
or options or rights in respect thereof), at such times, for such consideration
and on such terms and conditions as it may determine (including, without
limitation, such preferred or other special rights or restrictions with respect
to dividend, voting, liquidation or other rights of the shares as may be
determined by the Board).

     (b)  The Board shall, in connection with the issue of any share, have the
power to pay such commissions and brokerage fees and charges as may be permitted
by law.

     (c)  The Company shall not give, whether directly or indirectly, whether by
means of loan, guarantee, provision of security or otherwise, any financial
assistance for the purpose of a purchase or subscription made or to be made by
any person of or for any shares, but nothing in this Bye- law shall prohibit
transactions mentioned in Sections 39A, 39B and 39C of the Act.

47.  Repurchase of shares by Company or its assignee(s)
     --------------------------------------------------

     (a)  Exercise of power to repurchase shares of the Company
          -----------------------------------------------------

     The Board may exercise all the powers of the Company to purchase all or any
part of its own shares pursuant to Sections 42 and 42A of the Act.

     (b)  Unilateral repurchase right 
          ---------------------------

     Subject to Section 42A of the Act, if the Board in its absolute and
unfettered discretion, on behalf of the Company, determines that share ownership
by any Member may result in adverse tax, regulatory or legal consequences to the
Company, any of its subsidiaries or any of the Members, the Company will have
the

                                      -23-
<PAGE>
 
option, but not the obligation, to repurchase all or part of the shares held by
such Member to the extent the Board, in the reasonable exercise of its
discretion, determines it is necessary to avoid or cure such adverse
consequences for immediately available funds in an amount equal to the Fair
Market Value of such shares on the date the Company sends the Repurchase Notice
(the "Repurchase Price"); provided that the Board will use its best efforts to
exercise this option equally among similarly situated Members (to the extent
possible under the circumstances). In that event, the Company will also be
entitled to assign its repurchase right to a third party or parties including
the other Members, with the consent of such assignee. Each Member shall be bound
by the determination by the Company to repurchase or assign its right to
repurchase such Member's shares and, if so required by the Company, shall sell
the number of shares that the Company requires it to sell.

     In the event that the Company or its assignee(s) determines to repurchase
any such shares, the Company shall provide each Member concerned with written
notice of such determination ("Repurchase Notice") at least seven (7) calendar
days prior to such repurchase or such shorter period as each such Member may
authorize, specifying the date on which any such shares are to be repurchased
and the Repurchase Price.  The Company may revoke the Repurchase Notice at any
time before it (or its assignee) pays for the shares.  Neither the Company nor
its assignee(s) shall be obliged to give general notice to the Members of any
intention to purchase or the conclusion of any purchase of shares.  Payment of
the Repurchase Price by the Company or its assignee(s) shall be by wire transfer
and made at a closing to be held no less than seven (7) calendar days after
receipt of the Repurchase Notice by the Member.

     (c)  Unilateral repurchase right in the event of involuntary transfer
          ----------------------------------------------------------------

     If a Member shall be involuntarily dissolved or liquidated or shall have
entered in respect of it an order for relief under the United States Bankruptcy
Code (or any similar law of any applicable jurisdiction) or shall otherwise be
required to transfer involuntarily any or all of its shares pursuant to a court
order, foreclosure, tax lien, government seizure, death or otherwise, and, in
any such case as a result thereof, any or all of such Member's shares (the
"Involuntary Transfer Shares") shall be actually or purportedly transferred or
otherwise disposed of (the "Involuntary Transfer"), such Member, or its legal
representative or successor, shall promptly give notice to the Company of such
transfer and the Company will have the option, but not the obligation, to
repurchase all or part of the Involuntary Transfer Shares held by such Member
for immediately available funds in an amount equal to the Fair Market Value of
such shares.  In that event, the Company will also be entitled to assign its
repurchase right to a third party or parties including the other Members, with
the consent of such assignee.  Each Member shall be bound by the determination
by the Company to repurchase or assign its right to repurchase the Involuntary
Transfer

                                      -24-
<PAGE>
 
Shares and, if so required by the Company, shall sell the number of Involuntary
Transfer Shares that the Board requires it to sell.

     In the event that the Company or its assignee(s) determines to repurchase
any Involuntary Transfer Shares, the Company or its assignee(s) shall provide
each Member concerned with written notice at least thirty (30) calendar days
prior to such repurchase or such shorter period as each such Member may
authorize, specifying the date on which any such Involuntary Transfer Shares is
to be repurchased and the Repurchase Price. Neither the Company nor its
assignee(s) shall be obliged to give general notice to the Members of any
intention to purchase or the conclusion of any purchase of the Involuntary
Transfer Shares.  Payment of the Fair Market Value of the Involuntary Transfer
Shares by the Company or its assignee(s) shall be by wire transfer and made at a
closing to be held no later than the later to occur of (i) thirty (30) calendar
days after the date the Repurchase Notice is sent to the Member or (ii) fifteen
(15) calendar days after the date that the final governmental approval or
consent to the consummation of the purchase, if required, is obtained.

48.  Variation of rights and alteration of share capital
     ---------------------------------------------------

     (a)  While the share capital is divided into different classes of shares,
the rights attached to any class (unless otherwise provided by the terms of
issue of the shares of that class) may, whether or not the Company is being
wound-up, be varied with the consent in writing of the holders of not less than
seventy-five percent (75%) of the issued and outstanding shares of that class,
or with the sanction of a resolution passed by the holders of not less than
seventy-five percent (75%) of the issued and outstanding shares of that class at
a separate general meeting of the holders of the shares of the class held in
accordance with Section 47(7) of the Act.  The rights conferred upon the holders
of the shares of any class issued with preferred or other rights shall not,
unless otherwise expressly provided by the terms of issue of the shares of that
class, be deemed to be varied by the creation or issue of further shares ranking
pari passu therewith.

     (b)  The Company may from time to time by resolution of the Members change
the currency denomination of, increase, alter or reduce its share capital in
accordance with the provisions of Sections 45 and 46 of the Act, provided,
however, that any resolution of the Members to alter or reduce its share capital
be by the affirmative vote of Members representing not less than seventy five
percent (75%) of the votes conferred by the issued and outstanding Common Shares
entitled to vote. Where, on any alteration of share capital, fractions of shares
or some other difficulty would arise, the Board may deal with or resolve the
same in such manner as it thinks fit including, without limitation, the issue to
Members, as appropriate, of fractions of shares and/or arranging for the sale or
transfer of the fractions of shares of Members.

                                      -25-
<PAGE>
 
49.  Registered holder of shares
     ---------------------------

     (1)  Except as ordered by a court of competent jurisdiction or as required
by law, no person shall be recognized by the Company as holding any share unless
such person is the registered holder, and the Company shall not be bound by or
required in any way to recognize (even when having notice thereof) any
equitable, contingent, future or partial interest in any share or any interest
in any fractional part of a share or any other right in respect of any share
except an absolute right to the entirety thereof in the registered holder.

     (2)  Any dividend, interest or other monies payable in cash in respect of
shares may be paid by cheque or draft sent through the post directed to the
Member at such Member's address in the Register of Members or, in the case of
joint holders, to such address of the holder first named in the Register of
Members, or to such person and to such address as the holder or joint holders
may in writing direct.  If two (2) or more persons are registered as joint
holders of any shares, any one (1) can give an effectual receipt for any
dividend paid in respect of such shares.

50.  Death of a joint holder
     -----------------------

     Where two (2) or more persons are registered as joint holders of a share or
shares, then in the event of the death of any joint holder or holders, the
remaining joint holder or holders shall be absolutely entitled to the said share
or shares and the Company shall recognize no claim in respect of the estate of
any joint holder except in the case of the last survivor of such joint holders.

51.  Share certificates
     ------------------

     (a)  Every Member shall be entitled to a certificate under the seal of the
Company (or a facsimile thereof) specifying the number and, where appropriate,
the class of shares held by such Member and whether the same are fully paid up
and, if not, how much has been paid thereon.  The Board may by resolution
determine, either generally or in a particular case, that any or all signatures
on certificates may be printed thereon or affixed by mechanical means.

     (b)  The Company shall be under no obligation to complete and deliver a
share certificate unless specifically called upon to do so by the person to whom
such shares have been allotted.

     (c)  If any such certificate shall be proved to the satisfaction of the
Board to have been worn out, lost, mislaid or destroyed the Board may cause a
new certificate to be issued and request an indemnity for the lost certificate
if it sees fit.

                                      -26-
<PAGE>
 
                              REGISTER OF MEMBERS
                              -------------------

52.  Contents of Register of Members
     -------------------------------

     The Board shall cause to be kept in one (1) or more books a Register of
Members and shall enter therein the following particulars:

          (a)  the name and address of each Member, the number and the class of
               shares held by such Member and the amount paid or agreed to be
               considered as paid on such shares;

          (b)  the date on which each person was entered in the Register of
               Members;

          (c)  the date on which any person ceased to be a Member for one (1)
               year after such person so ceased; and

          (d)  the country where such Member is resident.

53.  Inspection of Register of Members
     ---------------------------------

     The Register of Members shall be open to inspection by Members or other
entitled persons at the registered office of the Company on every business day,
subject to such reasonable restrictions as the Board may impose, so that not
less than two (2) hours in each business day is allowed for inspection.  The
Register of Members may, after notice has been given by advertisement in an
appointed newspaper to that effect, be closed for any time or times not
exceeding in the whole thirty (30) days in each year.

              CLOSING REGISTER OF MEMBERS OR SETTING RECORD DATE
              --------------------------------------------------

54.  Closing Register of Members
     ---------------------------

     For the purpose of determining Members who are holders of shares entitled
to notice of or to vote at any general meeting of Members or any adjournment
thereof, or entitled to receive payment of any dividend, or in order to make a
determination of Members for any other proper purpose, the Directors may provide
that the Register of Members shall be closed for transfers for a stated period
but not to exceed in any case thirty (30) days.  If the Register of Members
shall be so closed for the purpose of determining Members entitled to notice of
or to vote at a general meeting of Members, such Register shall be so closed for
at least ten (10) days immediately preceding such meeting and the record date
for such determination shall be the date of the closure of the Register of
Members.

                                      -27-
<PAGE>
 
55.  Setting of record date
     ----------------------

     In lieu of or apart from closing the Register of Members, the Directors may
fix any date as the record date for:

          (a)  determining the Members entitled to receive any dividend; and

          (b)  determining the Members entitled to receive notice of and to vote
               at any general meeting of the Company.

                              TRANSFER OF SHARES
                              ------------------

56.  Instrument of transfer
     ----------------------

     (1)  Subject to the Act and to such of the restrictions contained in these
Bye-laws or elsewhere as may be applicable, any Member may transfer all or any
of his shares by an instrument of transfer as specified herein.

     (2)  An instrument of transfer shall be in the form or as near thereto as
circumstances admit of Form "B" in the Schedule hereto or in such other common
form as the Board may accept.  Such instrument of transfer shall be signed by or
on behalf of the transferor and transferee provided that, in the case of a fully
paid share, the Board may accept the instrument signed by or on behalf of the
transferor alone. The transferor shall be deemed to remain the holder of such
share until the same has been transferred to the transferee in the Register of
Members.

     (3) The Board may refuse to recognize any instrument of transfer unless it
is accompanied by the certificate in respect to the shares to which it relates
and by such other evidence as the Board may reasonably require to show the right
of the transferor to make the transfer.

57.  Restrictions on transfer
     ------------------------

     (a)  Any transfer of shares (or any interest therein) that results in a
Member holding Controlled Shares in excess of the Maximum Percentage of the
outstanding capital stock of the Company without the approval of more than 50%
of the Directors then in office shall not be registered in the share register of
the Company and shall be void and of no effect.

     (b)  Any transfer of shares (or any interest therein) that results in a
Member (other than a Member which is a registered "Investment Company" under the
United States Investment Company Act of 1940, as amended) directly, indirectly
or beneficially owning (within the meaning of Section 13(d) of the Exchange Act)
more than 5% of the outstanding capital stock of the Company without the
approval of

                                      -28-
<PAGE>
 
more than 50% of the Directors then in office shall not be registered in the
share register of the Company and shall be void and of no effect.

     (c)  Without limiting the foregoing, the Board shall decline to approve or
register a transfer of shares unless all applicable consents, authorisations,
permissions or approvals of any governmental body or agency in Bermuda, the
United States or any other applicable jurisdiction required to be obtained prior
to such transfer shall have been obtained.

     (d)  If the Board declines to approve or register a transfer, it shall,
within ten (10) days after the date on which the Company received notice of the
transfer, send to the transferor and transferee notice of such refusal.

     (e)  The restrictions on transfer authorized by this Bye-law shall not be
imposed in any circumstances in a way that would interfere with the settlement
of trades or transactions entered into through the facilities of the New York
Stock Exchange, Inc.; provided, however, that the Company may decline to
register transfers in accordance with these Bye-laws and resolutions of the
Board after a settlement has taken place.


                            TRANSMISSION OF SHARES
                            ----------------------

58.  Representative of deceased Member
     ---------------------------------

     In the case of the death of a Member, the survivor or survivors where the
deceased Member was a joint holder, and the legal personal representatives of
the deceased Member where the deceased Member was a sole holder, shall be the
only persons recognised by the Company as having any title to the deceased
Member's interest in the shares.  Subject to the provisions of Section 52 of the
Act, for the purpose of this Bye-law, "legal personal representative" means the
executor or administrator of a deceased Member or such other person as the Board
may in its absolute discretion decide as being properly authorised to deal with
the shares of a deceased Member.

59.  Registration on death or bankruptcy
     -----------------------------------

     (a)  Any person becoming entitled to a share in consequence of the death or
bankruptcy of any Member may be registered as a Member upon such evidence as the
Board may deem sufficient or may elect to nominate some person to be registered
as a transferee of such share, and in such case the person becoming entitled
shall execute in favour of such nominee an instrument of transfer in the form,
or as near thereto as circumstances admit, of Form "C" in the Schedule hereto. 
On the presentation thereof to the Board, accompanied by such evidence as the
Board may require to

                                      -29-
<PAGE>
 
prove the title of the transferor and such other information as the Board shall
deem necessary or appropriate, and the transferee shall be registered as a
Member but the Board shall, in either case, have the same right to decline or
suspend registration as it would have had in the case of a transfer of the share
by that Member before such Member's death or bankruptcy, as the case may be.

     (b)  If the person so becoming entitled shall elect to be registered as a
holder, such person shall deliver or send to the Company a notice in writing
signed by such person stating that it so elects.

60.  Successors of Members
     ---------------------

     A person becoming entitled to a share by reason of the death or bankruptcy
of the holder (or in any other case than by transfer) shall be entitled to the
same dividends and other advantages to which he would be entitled if he were the
registered holder of the share, except that he shall not, before being
registered as a holder in respect of the share, be entitled in respect of it to
exercise any right conferred by virtue of being a holder in relation to meetings
of the Company, provided, however, that the Directors may at any time give
notice requiring any such person to elect either to be registered himself or to
transfer the share and if the notice is not complied with within ninety (90)
days the Directors may thereafter withhold payment of all dividends, bonuses or
other monies payable in respect of the share until the requirements of the
notice have been complied with.


                       DIVIDENDS AND OTHER DISTRIBUTIONS
                       ---------------------------------

61.  Declaration of dividends by the Board
     -------------------------------------

     Subject to any rights or restrictions at the time lawfully attached to any
class of shares and subject to the provisions of these Bye-laws, the Board may,
in accordance with Section 54 of the Act, by the affirmative vote of more than
fifty percent (50%) of the votes of the Directors then in office, declare a
dividend to be paid to the Members, in proportion to the number of shares held
by them, and such dividend may be paid in cash or wholly or partly in specie in
which case the Board may fix the value for distribution in specie of any assets.

62.  Other distributions
     -------------------

     The Board may, by the affirmative vote of more than fifty percent (50%) of
the votes of the Directors then in office, declare and make such other
distributions (in cash or in specie) to the Members as may be lawfully made out
of the assets of the Company.

                                      -30-
<PAGE>
 
63.  Reserve fund
     ------------

     The Board may from time to time before declaring a dividend set aside, out
of the surplus or profits of the Company, such sum as it thinks proper as a
reserve fund to be used to meet contingencies or for equalising dividends or for
any other special purpose.

64.  Deduction of amounts due to the Company
     ---------------------------------------

     The Board may deduct from the dividends or distributions payable to any
Member all monies due from such Member to the Company.

65.  Unclaimed dividends
     -------------------

     Any dividend unclaimed for a period of six (6) years from the date of
declaration of such dividend shall be forfeited and shall revert to the Company
and the payment by the Board of any unclaimed dividend, interest or other sum
payable on or in respect of the share into a separate account shall not
constitute the Company a trustee in respect thereof.

66.  Interest on dividend
     --------------------

     No dividend or distribution shall bear interest against the Company.


                                CAPITALIZATION
                                --------------

67.  Capitalization
     --------------

     (a)  The Board may resolve to capitalise any part of the amount for the
time being standing to the credit of any of the Company's share premium or other
reserve accounts or to the credit of the profit and loss account or otherwise
available for distribution by applying such sum in paying up unissued shares to
be allotted as fully paid shares pro rata to the Members.

     (b)  The Company may capitalise any sum standing to the credit of a reserve
account or sums otherwise available for dividend or distribution by applying
such amounts in paying up in full partly paid shares of those Members who would
have been entitled to such sums if they were distributed by way of dividend or
distribution.

                                      -31-
<PAGE>
 
                       ACCOUNTS AND FINANCIAL STATEMENTS
                       ---------------------------------

68.  Record of account
     -----------------

     The Board shall cause to be kept proper records of account with respect to
all transactions of the Company and in particular with respect to:

          (a)  all sums of money received and expended by the Company and the
               matters in respect of which the receipt and expenditure relates;

          (b)  all sales and purchases of goods by the Company; and

          (c)  the assets and liabilities of the Company.

Such records of account shall be kept at the registered office of the Company
or, subject to Section 83(2) of the Act, at such other place as the Board thinks
fit and shall be available for inspection by the Directors during normal
business hours.

69.  Financial year end
     ------------------

     The financial year end of the Company may be determined by resolution of
the Board and failing such resolution shall be December 31 in each year.

70.  Financial statements
     --------------------

     Subject to any rights to waive laying of accounts pursuant to Section 88 of
the Act, financial statements as required by the Act shall be laid before the
Members in general meeting.


                                     AUDIT
                                     -----

71.  Appointment of Auditor
     ----------------------

     Subject to Section 88 of the Act, at the annual general meeting or at a
subsequent special general meeting in each year, an independent representative
of the Members shall be appointed by them as Auditor of the accounts of the
Company. Such Auditor may be a Member but no Director, Officer or employee of
the Company shall, during his or her continuance in office, be eligible to act
as an Auditor of the Company.

                                      -32-
<PAGE>
 
72.  Remuneration of Auditor
     -----------------------

     The remuneration of the Auditor shall be fixed by the Company in general
meeting or in such manner as the Members may determine.

73.  Vacation of office of Auditor
     -----------------------------

     If the office of Auditor becomes vacant by the resignation or death of the
Auditor, or by the Auditor becoming incapable of acting by reason of illness or
other disability at a time when the Auditor's services are required, the Board
shall, as soon as practicable, convene a special general meeting to fill the
vacancy thereby created.

74.  Access to books of the Company
     ------------------------------

     The Auditor shall at all reasonable times have access to all books kept by
the Company and to all accounts and vouchers relating thereto, and the Auditor
may call on the Directors or Officers of the Company for any information in
their possession relating to the books or affairs of the Company.

75.  Report of the Auditor
     ---------------------

     (a)  Subject to any rights to waive laying of accounts or appointment of an
Auditor pursuant to Section 88 of the Act, the accounts of the Company shall be
audited at least once in every year.

     (b)  The financial statements provided for by these Bye-laws shall be
audited by the Auditor in accordance with generally accepted auditing standards.
The Auditor shall make a written report thereon in accordance with generally
accepted auditing standards and the report of the Auditor shall be submitted to
the Members in general meeting.

     (c)  The generally accepted auditing standards referred to in subparagraph
(b) of this Bye-law may be those of a country or jurisdiction other than Bermuda
or which have been appointed pursuant to section 90 of the Act.  If so, the
financial statements and the report of the Auditor must disclose this fact and
identify the generally accepted auditing standards used.


                                    NOTICES
                                    -------

76.  Notices to Members of the Company
     ---------------------------------

     A notice may be given by the Company to any Member either by delivering it
to such Member in person or by sending it to such Member's address in the
Register

                                      -33-
<PAGE>
 
of Members or to such other address given for the purpose. For the purposes of
this Bye-law, a notice may be sent by mail, courier service, cable, telex,
telecopier, facsimile or other mode of representing words in a legible and non-
transitory form. 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.

77.  Notices to joint Members
     ------------------------

     Any notice required to be given to a Member shall, with respect to any
shares held jointly by two (2) or more persons, be given to whichever of such
persons is named first in the Register of Members and notice so given shall be
sufficient notice to all the holders of such shares.

78.  Service and delivery of notice
     ------------------------------

     Any notice shall be deemed to have been served at the time when the same
would be delivered in the ordinary course of transmission and, in proving such
service, it shall be sufficient to prove that the notice was properly addressed
and prepaid, if posted, and the time when it was posted, delivered to the
courier or to the cable company or transmitted by telex, facsimile or other
method as the case may be.


                               REGISTERED OFFICE
                               -----------------

79.  The registered office of the Company shall be at such address as the Board
may fix from time to time by resolution.


                              SEAL OF THE COMPANY
                              -------------------

80.  The seal
     --------

     The seal of the Company shall be in such form as the Board may from time to
time determine.  The Board may adopt one or more duplicate seals for use outside
Bermuda.

81.  Manner in which seal is to be affixed
     -------------------------------------

     The seal of the Company shall not be affixed to any instrument except
attested by the signature of a Director and the Secretary or any two Directors,
or any person appointed by the Board for the purpose, provided that any
Director, or Officer, may affix the seal of the Company attested by such
Director or Officer's signature only to any authenticated copies of these
Bye-laws, the incorporating documents of the Company, the minutes of any
meetings or any other documents required to be

                                      -34-
<PAGE>
 
authenticated by such Director or Officer. Any such signature may be printed or
affixed by mechanical means on any share certificate, debenture stock
certificate or other security certificate.


                                  WINDING-UP
                                  ----------

82.  Determination to liquidate
     --------------------------

     The Company shall be wound up voluntarily by resolution of the Members.

83.  Winding-up/distribution by liquidator
     -------------------------------------

     If the Company shall be wound up the liquidator may, with the sanction of a
resolution of the Members, divide among the Members in specie or in kind the
whole or any part of the assets of the Company (whether they shall consist of
property of the same kind or not) and may, for such purpose, set such value as
he or she deems fair upon any property to be divided as aforesaid and may
determine how such division shall be carried out as between the Members or
different classes of Members. The liquidator may, with the like sanction, vest
the whole or any part of such assets in trustees upon such trusts for the
benefit of the Members as the liquidator shall think fit, but so that no Member
shall be compelled to accept any shares or other securities or assets whereon
there is any liability.


                    ALTERATION OF MEMORANDUM OF ASSOCIATION
                    ---------------------------------------
                                 AND BYE-LAWS
                                 ------------

84.  Except as required by the Act, neither the Memorandum of Association of the
Company nor any Bye-law shall be rescinded, altered or amended and no new 
Bye-law shall be made until the same has been approved by a resolution of the
Directors and confirmed by a resolution of the Members.

                                      -35-
<PAGE>
 
                               SCHEDULE - FORM A
                               -----------------


                          LASALLE RE HOLDINGS LIMITED
                          ---------------------------



                                   P R O X Y
                                   ---------



of                                       the holder of           share(s) in the

above-named Company hereby appoint .................................. or failing

him/her .......................................... or failing him/her

 .......................................  as my proxy to vote on my behalf at the

General Meeting of the Company to be held on the    day of           , 19  ,

and at any adjournment thereof.



Dated this      day of            , 19




Signed by the above-named



 .....................................

 .....................................
Witness

                                      -36-
<PAGE>
 
                               SCHEDULE - FORM B
                               -----------------

                         TRANSFER OF A SHARE OR SHARES
                         -----------------------------

FOR VALUE RECEIVED .................................... [amount]

 ........................................  [transferor] hereby sell(s), assign(s)
 
and transfer(s) unto ...........................................................

[transferee] of ......................................  [address] with residence

in [country], [number of shares] shares of LASALLE RE HOLDINGS LIMITED



Dated ...........................

                                        ........................................
                                                   (Transferor)


In the presence of:


 ...................................
       (Witness)



                                 ...............................................
                                                   (Transferee)



In the presence of:


 ...................................
       (Witness)

                                      -37-
<PAGE>
 
                               SCHEDULE - FORM C
                               -----------------

                              TRANSFER BY A PERSON
                     BECOMING ENTITLED ON DEATH OF A MEMBER
                     --------------------------------------

I/We having become entitled in consequence of the death of [name of the deceased
Member] to [number] share(s) numbered [number in figures] standing in the
register of members of LASALLE RE HOLDINGS LIMITED in the name of the said [name
of deceased Member] instead of being registered myself/ourselves request to have
[name of transferee] (the "Transferee") registered as a transferee of such
share(s), and I/we do hereby accordingly transfer the said share(s), to the
Transferee to hold the same unto the Transferee, his or her executors,
administrators and assigns, subject to the conditions on which the same were
held at the time of the execution thereof; and the Transferee does hereby agree
to take the said share(s) subject to the same conditions.

WITNESS our hands this ...... day of ................., 19...

Signed by the above-named           )
[person or persons entitled]        )
in the presence of:                 )

Signed by the above-named           )
[transferee]                        )
in the presence of:                 )

                                      -38-