<PAGE>
 

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


               UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC 20549

                                   FORM 10-Q

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

                 For the quarterly period ended March 31, 1997
                                                --------------

                                       OR


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

                        Commission File Number 1-12823
                                               -------



                          LsSalle Re Holdings Limited
            (Exact name of registrant as specified in its charter)




                    Bermuda                         Not applicable
        -------------------------------         ----------------------
        (State or other jurisdiction of             (IRS Employer
        incorporation or organization)          Identification Number)




        Continental Building, 25 Church Street, Hamilton HM12, Bermuda
        --------------------------------------------------------------
                   (Address of principal executive offices)


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


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.   Yes [X]  Not applicable [_]


The number of the Registrant's Common Shares (par value $1.00 per share)
outstanding as of May 9, 1997 was 15,073,454.


--------------------------------------------------------------------------------
<PAGE>
 
--------------------------------------------------------------------------------

                          LASALLE RE HOLDINGS LIMITED
                              INDEX TO FORM 10-Q

                        PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
 
                                                                        PAGE
                                                                        ----
<S>         <C>                                                         <C>
ITEM 1.     Unaudited Consolidated Financial Statements
            Consolidated Balance Sheets
            March 31, 1997 and September 30, 1996  ...................    3
 
            Consolidated Statements of Operations
            Three Months and Six Months ended March 31, 1997 and 1996.    4
 
            Consolidated Statements of Changes in Shareholders' Equity
            Three Months and Six Months ended March 31, 1997 and 1996.    5
 
            Consolidated Statements of Cash Flows
            Six Months ended March 31, 1997 and 1996    ..............    6
 
            Notes to Unaudited Consolidated Financial Statements .....  7-8
  
ITEM 2.     Management's Discussion and Analysis of
            Financial Condition and Results of Operations ............ 9-16
 
 
 
                          PART II - OTHER INFORMATION

ITEM 1.     Legal Proceedings ........................................   22
 
ITEM 2.     Changes in Securities.....................................   22
 
ITEM 3.     Defaults upon Senior Securities ..........................   22
 
ITEM 4.     Submission of Matters to a Vote of Security Holders ......   22
 
ITEM 5.     Other information.........................................   23
 
ITEM 6.     Exhibits and Reports on Form 8-K..........................   23
 
Signatures      ......................................................   24
 
Exhibit 11.1    ......................................................   25
 
</TABLE>


--------------------------------------------------------------------------------
<PAGE>
 
                          LaSalle Re Holdings Limited

                          Consolidated Balance Sheets
              (Expressed in thousands of United States Dollars, 
                       except share and per share data)
                                   Unaudited

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                March 31, 1997    September 30, 1996

<S>                                                             <C>               <C>
Assets

Cash and cash equivalents                                          $148,377             $46,990
Investments held as available for sale at fair value                480,580             490,514
(amortized cost $486,628: $493,450)
Accrued investment income                                            13,274              14,211
Reinsurance balances receivable                                     108,123              70,625
Deferred acquisition costs                                           13,471              10,464
Prepaid reinsurance premiums                                          9,797                   0
Other assets                                                         20,212               1,570
                                                                   --------            --------

Total assets                                                       $793,834            $634,374
                                                                   ========            ========
Liabilities
Reserve for losses and loss expenses                                $43,314             $49,875
Unearned premium reserve                                            112,650              82,894
Other liabilities                                                    41,201              11,087
Dividend payable                                                     11,727               3,600
                                                                   --------            --------

Total liabilities                                                   208,892             147,456
                                                                   --------            --------

Minority interest                                                   139,337             179,470
                                                                   --------            --------
Shareholders' equity
Share capital authorized in the aggregate
100,000,000 shares, par value $1.
Preferred shares
 (Issued & outstanding, 3,000,000, Series A 
 Preferred Shares par value $1,
 liquidation preference $25 per share)                                3,000                   0
Common shares
 (Issued & outstanding, 16,517,485, par value $1)                    16,517              14,398
Additional paid in capital                                          324,938             221,968
Unrealized loss on investments                                       (4,390)             (1,861)
Retained earnings                                                   105,540              72,943

                                                                   --------            --------
Total shareholders' equity                                          445,605             307,448
                                                                   --------            --------
Total liabilities, minority interest and
shareholders' equity                                               $793,834            $634,374
                                                                   ========            ========
</TABLE>
--------------------------------------------------------------------------------

                                       3
<PAGE>

<TABLE>
<CAPTION>

                                             LaSalle Re Holdings Limited

                                        Consolidated Statements of Operations
                                  (Expressed in thousands of United States Dollars,
                                          except share and per share data)
                                                      Unaudited
---------------------------------------------------------------------------------------------------------------------
                                                          Three Months Ended                Six Months Ended
                                                    March 31, 1997   March 31, 1996   March 31, 1997   March 31, 1996
<S>                                                    <C>              <C>              <C>              <C>
Revenues

Gross premiums written                                 $109,396        $132,572        $114,633         $145,191
Premiums ceded                                          (10,151)              0         (10,151)               0
                                                     ----------      ----------      ----------       ----------

Net premiums written                                     99,245         132,572         104,482          145,191
Change in unearned premiums                             (57,845)        (78,925)        (19,959)         (42,099)
                                                     ----------      ----------      ----------       ----------
Premiums earned                                          41,400          53,647          84,523          103,092
Net investment income                                     8,143           6,416          16,291           12,588
Net realized gains (losses) on investments                  392             (17)            423               14
                                                     ----------      ----------      ----------       ----------
Total revenues                                           49,935          60,046         101,237          115,694
                                                     ----------      ----------      ----------       ----------
Expenses

Losses and loss expenses incurred                         6,886          18,354          17,723           34,235
Underwriting expenses                                     5,784           7,208          12,899           13,707
Operational expenses                                      2,621           2,727           5,925            5,168
Corporate expenses                                          529              58           1,368              911
Interest expense                                            536              56             603              108
Exchange loss                                               881             311           1,974              833
                                                     ----------      ----------      ----------       ----------

Total expenses                                           17,237          28,714          40,492           54,962
                                                     ----------      ----------      ----------       ----------
Income before minority interest                          32,698          31,332          60,745           60,732
Minority interest                                         8,933          11,552          15,840           22,661
                                                     ----------      ----------      ----------       ----------
Net income                                               23,765          19,780          44,905           38,071
                                                     ==========      ==========      ==========       ==========
Net income per common share                               $1.34           $1.31           $2.50            $2.55
                                                     ==========      ==========      ==========       ==========
Weighted average number of common shares
and common share equivalents outstanding             24,343,480      23,971,080      24,230,110       23,855,930
                                                     ==========      ==========      ==========       ==========

--------------------------------------------------------------------------------------------------------------------
</TABLE>
                                       4
<PAGE>


                          LaSalle Re Holdings Limited

          Consolidated Statements of Changes in Shareholders' Equity
 (Expressed in thousands of United States Dollars, except share and per share
                                     data)
                                   Unaudited

--------------------------------------------------------------------------------
<TABLE>
<CAPTION> 
                                                                 Three Months Ended                      Six Months Ended
                                                          March 31, 1997    March 31, 1996       March 31, 1997    March 31, 1996

<S>                                                       <C>               <C>                  <C>               <C>
Preferred shares par value $1
Balance at beginning of period                                  $      0          $      0             $      0          $      0
Issue of shares                                                    3,000                 0                3,000                 0
                                                                --------          --------             --------          --------
Balance at end of period                                        $  3,000          $      0             $  3,000          $      0
                                                                ========          ========             ========          ========
Common shares par value $1
Balance at beginning of period                                  $ 16,517          $ 14,398             $ 14,398          $ 14,398
Conversion of exchangeable non-voting shares                           0                 0                2,119                 0
                                                                --------          --------             --------          --------
Balance at end of period                                        $ 16,517          $ 14,398             $ 16,517          $ 14,398
                                                                ========          ========             ========          ========
Additional paid in capital
Balance at beginning of period                                  $254,645          $221,968             $221,968          $221,968
Issue of preferred shares, net of underwriting discount           70,283                 0               70,283                 0
Issue of shares - employee stock purchase plan                        10                 0                   17                 0
Conversion of exchangeable non-voting shares                           0                 0               32,670                 0
                                                                --------          --------             --------          --------
Balance at end of period                                        $324,938          $221,968             $324,938          $221,968
                                                                ========          ========             ========          ========
Unrealized loss on investments
Balance at beginning of period                                  $    935          $  3,564             $ (1,861)         $ (1,039)
Unrealized gain/(loss) in period                                  (5,325)           (4,366)              (2,254)              237
Conversion of exchangeable non-voting shares                           0                 0                 (275)                0
                                                                --------          --------             --------          --------
Balance at end of period                                        $ (4,390)         $   (802)            $ (4,390)         $   (802)
                                                                ========          ========             ========          ========
Retained earnings
Balance at beginning of period                                  $ 93,502          $ 20,548             $ 72,943          $ 18,095
Net Income                                                        23,765            19,780               44,905            38,071
Common Stock dividends                                           (11,727)           (3,600)             (23,454)          (19,438)
Conversion of exchangeable non-voting shares                           0                 0               11,146                 0
                                                                --------          --------             --------          --------
Balance at end of period                                        $105,540          $ 36,728             $105,540          $ 36,728
                                                                ========          ========             ========          ========

Total shareholders' equity                                      $445,605          $272,292             $445,605          $272,292
                                                                ========          ========             ========          ========
</TABLE>
--------------------------------------------------------------------------------
                                       5
<PAGE>
 
                          LaSalle Re Holdings Limited

                     Consolidated Statements of Cash Flows
               (Expressed in thousands of United States Dollars)
                                   Unaudited
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------

                                                                            Six Months Ended
Cash flows from operating activities                            March 31,1997              March 31, 1996

<S>                                                             <C>                        <C> 
Net income                                                          $  44,905                   $  38,071

Adjustments to reconcile net income to
cash provided by operating activities:
  Minority interest in net income                                      15,840                      22,661
  Amortization of investment premium                                    1,241                       2,150
  Net gain on sale of investments                                        (423)                         (9)
  Unrealized loss on foreign exchange                                     862                         377
Changes in:
  Reinsurance balances receivable                                     (37,992)                    (41,889)
  Deferred acquisition costs                                           (3,007)                     (4,912)
  Prepaid reinsurance premiums                                         (9,797)                          0
  Accrued investment income                                               937                       2,561
  Other assets                                                        (18,642)                       (580)
  Reserve for losses and loss expenses                                 (6,599)                     (6,149)
  Unearned premium                                                     29,756                      42,099
  Other liabilities                                                    27,458                       1,863
                                                                    ---------                   ---------
Cash provided by operating activities                                  44,539                      56,243
                                                                    ---------                   ---------
Cash flows from investing activities

Purchase of investments                                              (149,580)                    (70,518)
Net purchases of short term investments                                (1,947)                          0
Proceeds on the sale of marketable securities                         111,538                      63,063
Proceeds on the maturity of marketable securities                      46,000                      12,500
                                                                    ---------                   ---------
Cash provided by investing activities                                   6,011                       5,045
                                                                    ---------                   ---------
Cash flows from financing activities

Issue of shares                                                        72,655                           0
Dividends paid                                                        (21,818)                   (100,000)
                                                                    ---------                   ---------
Cash provided by (applied to) financing activities                     50,837                    (100,000)
                                                                    ---------                   ---------

Net increase (decrease) in cash and cash equivalents                  101,387                     (38,712)
Cash and cash equivalents at beginning of period                       46,990                      82,360
                                                                    ---------                   ---------
Cash and cash equivalents at end of period                          $ 148,377                   $  43,648
                                                                    =========                   =========

------------------------------------------------------------------------------------------------------------
</TABLE>
                                       6
<PAGE>
 
                          LaSalle Re Holdings Limited

             Notes to Unaudited Consolidated Financial Statements

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

1.  General

The accompanying unaudited interim consolidated financial statements have been
prepared pursuant to the rules and regulations for reporting on Form 10-Q.
Accordingly, certain information and footnotes required by generally accepted
accounting principles for complete financial statements are not included herein.
The interim financial statements should be read in conjunction with LaSalle Re
Holdings Limited Annual Report dated September 30, 1996.

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

Interim statements are subject to possible adjustments in connection with the
annual audit of the Company's accounts for the full year; in the Company's
opinion, all adjustments necessary for a fair presentation of these interim
statements have been included and are of a normal and recurring nature.

During the quarter ended December 31, 1996, the Company completed a secondary
offering (the "Secondary Offering") of its common shares, par value $1 per share
(the "Common Shares"). In connection with the Secondary Offering certain
founding shareholders of LaSalle Re (the "Founding Shareholders") exchanged some
of their exchangeable non-voting shares ("Exchangeable Non-Voting Shares") for
Common Shares of the Company. As a result of this exchange, the Company
increased its ownership of the outstanding capital stock of LaSalle Re from 63%
to 73%. The Company has continually owned 100% of the outstanding voting stock
of LaSalle Re. This exchange has been accounted for at historic cost as the
transaction is akin to the conversion of equity securities with the share
exchange initiated by the shareholders of the Exchangeable Non-Voting Shares
pursuant to an existing contractual agreement between the shareholders of
LaSalle Re and the Company.

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

2.  Significant Accounting Policies

Reinsurance

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

In accordance with SFAS No 113 "Accounting and Reporting for Reinsurance of
Short-Duration and Long-Duration Contracts", contracts providing indemnification
against loss or liability relating to insurance risk have been accounted for as
reinsurance. Reinsurance premiums are reported as  prepaid reinsurance premiums
and amortized over the contract period in proportion to the amount of
reinsurance protection provided. Contracts which do not provide a reasonable
possibility that the reinsurer may realize a significant loss from the insurance
risk assumed have been accounted for as deposits which are included as part of
other assets.

The ceding of the reinsurance does not legally discharge the Company from its
liability, since the Company is required to pay losses and bear collection risk
if the reinsurers fail to meet their obligations under the reinsurance
agreements.

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

                                       7
<PAGE>
 
                          Lasalle Re Holdings Limited

             Notes to Unaudited Consolidated Financial Statements

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

3.    Reinsurance

The effect of reinsurance on premiums written and earned is as follows:
<TABLE>
<CAPTION>

                    Three months ended March 31,       Six months ended March 31,
                                1997                              1997

                      Written           Earned        Written            Earned
<S>                   <C>               <C>           <C>                <C>
Assumed               109,396           41,754        114,633            84,877

Ceded                  10,151              354         10,151               354
                      -------           ------        -------            ------
Net Premiums           99,245           41,400        104,482            84,523
                      -------           ------        -------            ------
</TABLE>
There were no ceded premiums for the three months ended March 31, 1996 or the
six months ended March 31, 1996.

4.  Series A Preferred Shares


In March 1997, the Company issued 3,000,000 Series A Preferred Shares par value
$1.00 per share. These shares are entitled to a liquidation preference of $25.00
per share. Dividends are cumulative at 8.75% of the liquidation preference per
annum (equivalent to an annual rate of $2.1875 per share). On or after March 27,
2007 these shares will be redeemable, in whole or in part, at the option of the
Company at a redemption price of $25.00 per share. Generally, the holders of
these shares have no voting rights except where dividends on these shares are in
arrears in an amount equivalent to dividends for six full dividend periods
(whether or not consecutive).

--------------------------------------------------------------------------------
                                       8
<PAGE>

                         LaSalle Re Holdings Limited

              Management's Discussion and Analysis of Operations
                            and Financial Condition
--------------------------------------------------------------------------------

The following is a discussion and analysis of the Company's financial condition
as of March 31, 1997 and the results of operations for the three months and six
months ended March 31, 1997 and 1996. This discussion and analysis should be
read in conjunction with the attached unaudited consolidated financial
statements and notes thereto of the Company and the audited consolidated
financial statements and notes thereto contained in the Company's Annual Report
dated September 30, 1996.

GENERAL

LaSalle Re was incorporated in Bermuda in October 1993 and initially capitalized
by several institutional and other investors with $373.1 million. It commenced
operations on November 22, 1993.  LaSalle Re Holdings Limited was incorporated
in Bermuda in September 1995. During the quarter ended December 31, 1995, the
Company and LaSalle Re consummated an offer (the "Exchange Offer") pursuant to
which, among other things, the Founding Shareholders exchanged their capital
stock of LaSalle Re for Common Shares of the Company and, in certain
circumstances, Exchangeable Non-Voting Shares of LaSalle Re. The Exchangeable
Non-Voting Shares are held by certain Founding Shareholders who would otherwise
hold, or cause another shareholder to hold, directly, indirectly or
constructively, in excess of 9.9% of the voting power of the Company or LaSalle
Re. The Exchangeable Non-Voting Shares are exchangeable, at the option of the
holder, for Common Shares on a one-for-one basis, unless the board of directors
of the Company determines such exchange may cause actual or potential adverse
tax consequences to the Company or any shareholder. The Exchangeable Non-Voting
Shares will at all times rank as to assets, dividends and in all other respects
on a parity with the common shares of LaSalle Re, except that they do not have
the right to vote on any matters except as required by Bermuda law and in
connection with certain actions by the Company. Immediately following the
completion of the Offerings, LaSalle Re consummated the Redemption, pursuant to
which it redeemed from certain selling shareholders capital stock of LaSalle Re
at a price per share that was equivalent to the initial public offering price
per Common Share (less the underwriting discount and commissions).

In December 1996, the Company completed a Secondary Offering. In connection with
the Secondary Offering, certain Founding Shareholders of LaSalle Re exchanged
some of their Exchangeable Non-Voting Shares for Common Shares of the Company.
As a result of this exchange, the Company increased its ownership of the
outstanding capital stock of LaSalle Re from 63% to 73%. The Company has
continually owned 100% of the outstanding voting stock of LaSalle Re.

In March 1997, the Company completed an offering of 3,000,000 Series A Preferred
Shares (the "Preferred Offering"). The Series A Preferred Shares, par value
$1.00 per share, carry a liquidation preference of $25.00 per share, plus
accrued and unpaid dividends, if any, to the date of liquidation. Dividends on
the Series A Preferred Shares are cumulative from the date of original issuance
and will be payable quarterly on the first day of March, June, September and
December each year, commencing June 1, 1997, in an amount per share equal to
8.75% of the liquidation preference per annum (equivalent to $2.1875 per share).
Net proceeds from the offering after underwriting discounts and commissions were
$72.6 million.

LaSalle Re Capital was incorporated in Bermuda to provide capital support to
selected Lloyd's of London syndicates. During the quarter ended December 31,
1996 LaSalle Re Capital was accepted as a corporate member of Lloyd's of London.
Effective January 1, 1997 it is participating in three syndicates which
individually write the following: marine insurance and reinsurance; professional
indemnity, directors and officers' insurance, bankers blanket bond business; and

--------------------------------------------------------------------------------
                                       9
<PAGE>
 
                          LaSalle Re Holdings Limited

              Management's Discussion and Analysis of Operations
                            and Financial Condition
--------------------------------------------------------------------------------

direct and facultative business. LaSalle Re Capital provides support to the
syndicates through letters of credit.

In order to reduce its earnings volatility, protect its capital base and support
its dividend policy, the Company purchased a multi-year excess of loss
reinsurance program effective January 1, 1997. The program is event based,
providing up to $100 million of coverage in excess of the first $100 million of
losses for the first loss and $100 million of coverage in excess of the first
$150 million of losses for the second loss occurrence, with a $200 million
aggregate coverage limit over a three-year period. The attachment point is
triggered by losses incurred directly by the Company. If and when the first loss
is triggered, the Company is required to accrue a reinstatement premium and
additional premiums will be payable in years 2 and 3 of the contract. The
Company has accounted for the first loss portion of the coverage as a deposit in
accordance with SFAS 113.  If and when a second loss occurs, the Company will be
required to pay a one time additional premium.  If no losses occur, the contract
can be canceled after the first year with significant return premiums accruing
to the Company. The reinsurance is provided by a company which currently holds a
rating of "A+" (Superior) from A.M. Best Company, Inc. and a claims-paying
rating of "AA" (Excellent) from Standard & Poor's Rating Services.

The Company primarily writes property catastrophe reinsurance on a worldwide
basis through its subsidiary, LaSalle Re. Property catastrophe reinsurance
contracts cover unpredictable events such as hurricanes, windstorms, hailstorms,
earthquakes, fires, industrial explosions, freezes, riots, floods and other man-
made or natural disasters. Therefore, there can be significant volatility in the
Company's results from fiscal quarter to quarter and fiscal year to year. In
addition, as a result of the Company's limited operating and claims history, the
financial data included herein are not necessarily indicative of the financial
condition or results of operations of the Company in the future.

RESULTS OF OPERATIONS - FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996

Gross premiums written for the quarter ended March 31, 1997 were $109.4 million
compared to $132.5 million for the quarter ended March 31, 1996, a decrease of
17.4%. This decrease is primarily due to a $23.6 million reduction in gross
premiums written by the Company in the quarter ended March 31, 1997 compared to
the quarter ended March 31, 1996. For the three months ended March 31, 1997,
property catastrophe premiums written by the Company in the United States
decreased 3.5% to $41.4 million from $42.9 million for the three months ended
March 31, 1996. Premiums written in respect of the Company's participation in
the California Earthquake Authority program partially offset rate reductions
experienced by the Company throughout its United States book of business.

International property catastrophe premiums written by the Company decreased
28.4% to $55.6 million from $77.6 million, primarily due to a competitive rate
environment. This competitive rating environment led to a reduction in the
number of international contracts written.

Consistent with the Company's policy of pursuing other lines of business, these
lines increased 46.3% to $17.7 million for the quarter ended March 31, 1997 from
$12.1 million for the quarter ended March 31, 1996. This increase is primarily
due to $5.8 million of gross premiums written by LaSalle Re Capital in the
quarter ended March 31, 1997. Since LaSalle Re Capital was only accepted into
Lloyd's with effect from January 1, 1997 there is no comparative figure for the
quarter ended March 31, 1996. This increase was offset by adjustment premiums on
excess of loss and proportional contracts of $(3.7) million in the quarter ended
March 31, 1997 compared to $(1.2) million in the quarter ended March 31, 1996.

--------------------------------------------------------------------------------
                                       10
<PAGE>
 
                          LaSalle Re Holdings Limited

              Management's Discussion and Analysis of Operations
                            and Financial Condition
--------------------------------------------------------------------------------

Premiums ceded for the quarter ended March 31, 1997 were $10.2 million compared
to nil in the quarter ended March 31, 1996. This is attributable to reinsurance
protection purchased by LaSalle Re and to reinsurance purchased by LaSalle Re
Capital.

As a result of the above, net premiums written for the quarter ended March 31,
1997 were $99.2 million compared to $132.6 million for the quarter ended March
31, 1996, a decrease of $33.4 million or 25.2%.

Net premiums earned for the quarter ended March 31, 1997 were $41.4 million
compared to $53.6 million for the same quarter in 1996. The 22.8% decrease is
the result of a reduction in premiums written from calendar year 1996 to
calendar year 1997. Premiums on property catastrophe excess of loss contracts
are earned on a pro rata basis over the period coverage is provided, which is
generally 12 months. Under proportional property catastrophe contracts, the
risks underlying the contracts incept throughout the policy period and premiums
generally are earned over 18 months. Under contracts written by LaSalle Re
Capital, the risks underlying the contracts incept throughout the policy period
and premiums generally are earned over 18 to 24 months.

Net investment income increased 26.6% to $8.1 million for the quarter ended
March 31, 1997 from $6.4 million for the quarter ended March 31, 1996.
Annualized investment income as a percentage of the average market value of
invested assets was 6.0% for the quarter ended March 31, 1997 compared to 5.6%
for the quarter ended March 31, 1996. The increase in net investment income was
attributable to a larger average investment base together with an increase in
investment yields in the quarter ended March 31, 1997 compared to the quarter
ended March 31, 1996.

Net realized gains on investments were $0.4 million during the quarter ended
March 31, 1997 compared to net realized losses of $(0.02) million during the
quarter ended March 31, 1996. In accordance with generally accepted accounting
principles, unrealized gains and losses on the Company's investment portfolio
are not recognized in the Company's consolidated results of operations but are
reflected as a separate component of shareholders' equity.

The following table sets forth the Company's combined ratios for the quarters
ended March 31, 1997 and 1996:
<TABLE>
<CAPTION>

                               MARCH 31, 1997   MARCH 31, 1996
                             ---------------------------------
<S>                            <C>              <C>
Loss and loss expense ratio        16.6%            34.2%

Expense ratio                      20.3%            18.5%

Combined ratio                     36.9%            52.7%
</TABLE>

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

The Company incurred losses and loss expenses of $6.9 million during the quarter
ended March 31, 1997 compared with $18.4 million during the quarter ended March
31, 1996. The main components of losses and loss expenses incurred during the
quarter ended March 31, 1997

--------------------------------------------------------------------------------
                                       11
<PAGE>
 
                          LaSalle Re Holdings Limited

              Management's Discussion and Analysis of Operations
                            and Financial Condition
--------------------------------------------------------------------------------

relate to tornado damage in the southern United States and the triggering of
aggregate loss covers. Losses and loss expenses incurred during the quarter
ended March 31, 1996 relate to a strengthening in reserves for Hurricanes Luis
and Marilyn of $10.3 million, Norwegian floods and international and United
States winter storms.

The expense ratio includes underwriting expenses and operational expenses.
Underwriting expenses include brokerage, commissions, excise taxes and other
costs related to underwriting reinsurance contracts. Underwriting expenses as a
percentage of net earned premiums were 14.0% for the quarter ended March 31,
1997 compared to 13.4% for the quarter ended March 31, 1996. The increase is
partially attributable to reinsurance premiums ceded which reduced net earned
premiums in the quarter ended March 31, 1997 compared to the quarter ended March
31, 1996. In addition, lower losses incurred in the quarter increased the
underwriting profit commission payable pursuant to the Underwriting Services
Agreement with CNA (Bermuda) Services Ltd.

Operational expenses were $2.6 million during the quarter ended March 31, 1997
compared to $2.7 million for the quarter ended March 31, 1996. The decrease is
due to reduced fees under the Administrative Services Agreement between the
Company and Aon Risk Consultants (Bermuda) Ltd. following a re-negotiation of
the fee. In addition for the quarter ended March 31, 1997, operational expenses
includes costs associated with the operation of LaSalle Re Capital. As a
percentage of earned premiums operational expenses were 6.3% during the quarter
ended March 31, 1997 compared with 5.1% for the quarter ended March 31, 1996.
This increase is due to lower earned premiums in the quarter ended March 31,
1997 compared to those earned in the quarter ended March 31, 1996.

The Company incurred corporate expenses of $0.5 million during the quarter ended
March 31, 1997 compared to $0.05 million in the quarter ended March 31, 1996.
Corporate expenses for the quarter ended March 31, 1997 include costs associated
with the Preferred Offering, except the underwriting discount, which was charged
to additional paid in capital, and the initial costs associated with the tender
offer. In the quarter ended March 31, 1996 corporate expenses related to the
initial public offering. All corporate expenses are charged to income in the
period they are incurred.

Interest expense was $0.5 million during the quarter ended March 31, 1997
compared with $0.06 million in the quarter ended March 31, 1996. The increase in
interest expense is due to financing charges associated with LaSalle Re's ceded
reinsurance contract. Other interest expenses relate to the annual
administration fee and the ongoing commitment fees payable on the Company's
credit facility. As at March 31, 1997, there were no borrowings under this
facility.

Foreign exchange losses in the quarter ended March 31, 1997 were $0.9 million
compared to $0.3 million in the quarter ended March 31, 1996.  The losses in the
quarter ended March 31, 1997 resulted from a strengthening of the United States
Dollar against the major foreign currencies in which the Company writes
premiums. The majority of these losses emanated from a 1.7% decline in the value
of Sterling from January 1, 1997.  The losses in the quarter ended March 31,
1996 were primarily due to the weak performance of Sterling against the United
States Dollar. Foreign exchange losses in the quarter ended March 31, 1996 were
partially mitigated through the use of foreign currency contracts.

The Company's net income per share was $1.34 for the quarter ended March 31,
1997 and $1.31 for the quarter ended March 31, 1996.

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

                                      12
<PAGE>
 
                          LaSalle Re Holdings Limited

              Management's Discussion and Analysis of Operations
                            and Financial Condition
--------------------------------------------------------------------------------

RESULTS OF OPERATIONS - FOR THE SIX MONTHS ENDED MARCH 31, 1997 AND 1996

Gross premiums written for the six months ended March 31, 1997 were $114.6
million compared to $145.2 million for the six months ended March 31, 1996, a
decrease of 21.1%. The decrease in gross premiums written was due to reduced new
and renewal premiums as a result of a worldwide competitive rating environment
in the last three months of the period combined with negative adjustment
premiums recorded throughout the six month period ended March 31, 1997. Further,
for the six months ended March 31, 1997, compared to the six months ended March
31, 1996, the Company experienced a reduction in reinstatement premiums of $3.0
million due to more favorable loss experience.

The decline in gross premiums written by the Company was partially offset by
$5.8 million of gross premiums written by LaSalle Re Capital in the six months
ended March 31, 1997. Since LaSalle Re Capital was only accepted into Lloyd's
with effect from January 1, 1997 there is no comparative figure for the six
months ended March 31, 1996.

Premiums ceded for the six months ended March 31, 1997 were $10.2 million
compared to nil in the quarter ended March 31, 1996. This is attributable to
reinsurance protection purchased by LaSalle Re with effect from January 1, 1997
and to reinsurance purchased by LaSalle Re Capital.

Net premiums earned for the six months ended March 31, 1997 were $84.5 million
compared to $103.1 million for the same period in 1996. The 18.0% decrease was
due to the overall decrease in premiums written in the previous twelve months
and the six months ended March 31, 1997.

Net investment income increased 29.4% to $16.3 million for the six months ended
March 31, 1997 from $12.6 million for the six months ended March 31, 1996. The
increase is attributable to a larger average investment base coupled with an
increase in yields in the six months ended March 31, 1997 compared to the six
months ended March 31,1996. Annualized investment income as a percentage of the
average market value of invested assets was 6.0% for the six months ended March
31, 1997 compared to 5.4% for the six months ended March 31, 1996.

Net realized gains on investments were $0.4 million during the six months ended
March 31, 1997 compared to $0.01 net realized gains during the six months ended
March 31, 1996.

The following table sets forth the Company's combined ratios for the six month
periods ended March 31, 1997 and 1996:

<TABLE>
<CAPTION>

                               MARCH 31, 1997   MARCH 31, 1996
                             -----------------------------------
<S>                            <C>              <C>
Loss and loss expense ratio         21.0%            33.2%

Expense ratio                       22.3%            18.3%

Combined ratio                      43.3%            51.5%

</TABLE>

The Company incurred losses and loss expenses of $17.7 million during the six
months ended March 31, 1997 compared with $34.2 million during the six months
ended March 31, 1996. Losses and loss expenses incurred during the six months
ended March 31, 1997 included development on Hurricane Fran, winter storm
activity in the United States, the United Kingdom and Europe and the triggering
of aggregate loss covers. Losses and loss expenses incurred

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

                                       13
<PAGE>
 
                          LaSalle Re Holdings Limited

              Management's Discussion and Analysis of Operations
                            and Financial Condition
--------------------------------------------------------------------------------

during the six months ended March 31, 1996 included a strengthening in reserves
of $13.7 million for Hurricanes Marilyn and Luis, $6.6 million for German
hailstorms, together with Norwegian floods, international and United States
winter storms, various risk losses and a satellite loss.

Underwriting expenses as a percentage of net premiums earned were 15.3% for the
six months ended March 31, 1997 compared to 13.3% for the six months ended March
31, 1996. The increase is primarily attributable to an increase in the level of
fees and profit commissions accrued pursuant to the Underwriting Services
Agreement which as a percentage of net premiums earned were 4.0% for the six
months ended March 31, 1997 compared to 3.1% for the six months ended March 31,
1996. In addition the Company incurred significant profit commissions on one
program due to better than expected loss ratios, which increased underwriting
expenses as a percentage of net premiums earned. Further, the increase is
partially attributable to reinsurance premiums ceded which reduced net premiums
earned in the six months ended March 31, 1997 compared to the six months ended
March 31, 1996.

Operational expenses were $5.9 million during the six months ended March 31,
1997 compared to $5.2 million for the six months ended March 31, 1996. As a
percentage of earned premiums operational expenses were 7.0% during the six
months ended March 31, 1997 compared with 5.0% for the six months ended March
31, 1996. The increase is due increased fees pursuant to the Administrative
Services Agreement, additional executive compensation and expenses relating to
the operation of LaSalle Re Capital as well as a reduction in net premiums
earned in the six months ended March 31, 1997 compared to the same period in
1996.

Corporate expenses were $1.4 million during the six months ended March 31, 1997
compared with $0.9 million in the six months ended March 31, 1996. Corporate
expenses for the six months ended March 31, 1997 included costs associated with
the secondary public offering, the formation costs of LaSalle Re Capital, the
Preferred Offering and initial costs associated with the tender offer. In 1996,
corporate expenses included costs associated with the initial public offering
and all costs associated with the establishment of the Company's credit
facility. Corporate expenses do not include the underwriting discounts
associated with these offerings. In respect of the initial and the secondary
public offerings, these costs were borne by the selling shareholders. In respect
of the Preferred Offering the underwriting discount has been charged to
additional paid in capital.

Interest expense was $0.6 million during the six months ended March 31, 1997
compared to $0.1 million in the six months ended March 31, 1996. The increase in
interest expense is due to financing charges associated with LaSalle Re's ceded
reinsurance contract. Other interest expenses relate to the annual
administration fee and the ongoing commitment fees payable on the Company's
credit facility. As at March 31, 1997, there were no borrowings under this
facility.

Foreign exchange losses in the six months ended March 31, 1997 were $2.0 million
compared to losses of $0.8 million in the six months ended March 31, 1996. The
losses in the six months ended March 31, 1997 resulted from the unfavorable
closing of a Sterling forward contract, and a further strengthening of the
United States Dollar since January 1, 1997 against the major foreign currencies
in which the Company writes premiums. The losses in the six month period ended
March 31, 1996 were primarily due to the weak performance of Sterling against
the United States dollar. Foreign exchange losses in the six months ended March
31, 1996 were partially mitigated through the use of foreign currency contracts.

The Company's net income per share was $2.50 for the six months ended March 31,
1997 and $2.55 for the six months ended March 31, 1996.

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

                                       14
<PAGE>
 
                          LaSalle Re Holdings Limited

              Management's Discussion and Analysis of Operations
                            and Financial Condition
--------------------------------------------------------------------------------

LIQUIDITY AND CAPITAL RESOURCES

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

LaSalle Re's sources of funds consist of net premiums written, investment income
and proceeds from sales and redemptions of investments.  Cash is used primarily
to pay losses and loss expenses, brokerage, commissions, excise taxes,
administrative expenses and dividends.  Under the Insurance Act, 1978,
amendments thereto and related regulations of Bermuda, LaSalle Re is prohibited
from paying dividends of more than 25% of its opening statutory capital and
surplus unless it files an affidavit stating that it will continue to meet the
required solvency margin and minimum liquidity ratio requirements and from
declaring or paying any dividends without the approval of the Minister of
Finance if it failed to meet its required margins in the previous fiscal year.
The Insurance Act also requires LaSalle Re to maintain a minimum solvency margin
and minimum liquidity ratio and prohibits dividends which would result in a
breach of these requirements.  In addition, LaSalle Re is prohibited under the
Insurance Act from reducing its total opening statutory capital by more than 15%
without the approval of the Minister of Finance. LaSalle Re currently meets
these requirements.  In addition, the payment of dividends by LaSalle Re is
subject to the rights of holders of the Exchangeable Non-Voting Shares to
receive a pro rata share of any dividend and to its need to maintain
shareholders' equity adequate to support the level of LaSalle Re's reinsurance
operations.

Operating activities provided net cash of $44.5 million for the six months ended
March 31, 1997 and $56.2 million for the six months ended March 31, 1996.  Cash
flows from operations in future years may differ substantially from net income.
Cash flows are affected by loss payments, which, due to the nature of the
reinsurance coverage provided by LaSalle Re, are generally expected to comprise
large loss payments on a limited number of claims and can therefore fluctuate
significantly from year to year.  The irregular timing of these large loss
payments can create significant variations in operating cash flows between
periods.  LaSalle Re funds such payments from cash flows from operations and
sales of investments.

As a result of the potential for large loss payments, LaSalle Re maintains a
substantial portion of its assets in cash and marketable securities.  As of
March 31, 1997, 79.2% of its total assets were held in cash and marketable
securities. To further mitigate the uncertainty surrounding the amount and
timing of potential liabilities and to minimize interest rate risk, LaSalle Re
maintains a short average duration for its investment portfolio. The modified
average duration of the portfolio was 2.54 years at March 31, 1997. At March 31,
1997, the fair value of the Company's total investment portfolio, including
cash, was $629.0 million.

The increase in cash and cash equivalents from $47.0 million as at September 30,
1997 to $148.4 million as at March 31, 1997 is due primarily to the receipt of
funds from the Preferred Offering and the conversion of investments into cash in
readiness for the payment of the common share dividend.

The Company has adopted the Statement of Financial Accounting Standard 115
("SFAS 115") to account for its marketable securities. In accordance with SFAS
115, all of the Company's investments are classified as "available for sale".
Under this classification, investments are recorded at fair market value and any
unrealized gains or losses are reported as a separate component of shareholders'
equity.  The unrealized loss on the investment portfolio net of

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

                                       15
<PAGE>
 
                          LaSalle Re Holdings Limited

              Management's Discussion and Analysis of Operations
                            and Financial Condition
--------------------------------------------------------------------------------

amounts attributable to minority interest was $4.4 million at March 31, 1997
compared to $1.9 million at September 30, 1996.

As of March 31, 1997, all of the securities held in the Company's investment
portfolio were fixed-income securities rated "A" or better by S&P or Moody's
Investors Services Inc. ("Moody's").  No single investment comprised more than
5% of the overall portfolio.

Reinsurance balances receivable were $108.1 million at March 31, 1997 compared
to $70.6 million at September 30, 1996.  The increase is reflective of the
seasonality of premiums written with the Company traditionally writing its
highest level of premiums in the quarter ended March 31 compared to other
calendar quarters. This also explains the increase in the level of unearned
premiums and deferred acquisition costs from $82.9 million and $10.5 million
respectively, as at September 30, 1996 to $112.7 million and $13.5 million
respectively, as at March 31, 1997.

In accordance with the terms of certain reinsurance contracts, the Company has
posted letters of credit in the amount of $13.7 million as of March 31, 1997 as
compared to $15.5 million as of September 30, 1996 to support outstanding loss
reserves. In connection with LaSalle Re Capital's support of three Lloyd's of
London syndicates, the Company has posted letters of credit in the amount of
$16.2 million (equivalent to (Pounds)9.8 million) . All letters of credit are
secured by a lien on the Company's investment portfolio equal to 115% of the
amount of the outstanding letters of credit.

Prepaid reinsurance premiums relate to the reinsurance coverage placed by the
Company in the quarter ended March 31, 1997. There was no corresponding coverage
at September 30, 1996.

The increase in other assets from $1.6 million as at September 30, 1996 to $20.2
million as at March 31, 1997 is primarily due to the deposit portion of the
ceded reinsurance contract, accounted for in accordance with SFAS No 113.

At March 31, 1997, reserves for unpaid losses and loss expenses were $43.3
million.  The Company has no material commitments for capital expenditures.

The increase in other liabilities from $11.1 million as at September 30, 1997 to
$41.2 million as at March 31, 1997 reflects the inclusion of $23.3 million
relating to reinsurance premiums payable and $5.1 million relating to the
settlement of an outstanding investment trade.

In February 1997, in connection with the Preferred Offering, the Board confirmed
the dividend policy pursuant to which the Company intends to distribute as
dividends to holders of Common Shares and Exchangeable Non-Voting Shares in each
fiscal year 50% to 60% of the amount by which its net income (before minority
interest) from the prior fiscal year exceeds the amount of dividends payable on
Series A Preferred Shares in the current fiscal year.

Dividends on the Series A Preferred Shares are cumulative from the date of
original issuance and will be payable quarterly on the first day of March, June,
September and December of each year, commencing June 1, 1997, in an amount per
share equal to 8.75% of the liquidation preference per annum (equivalent to
$2.1875 per share). As of March 31, 1997 dividends due but not yet declared on
the Series A Preferred Shares amounted to $0.07 million.

On March 25, 1997 the Company declared a common share dividend of $0.71 per
share to shareholders of record on April 4, 1997 payable on April 18, 1997.  The
actual amount and timing of any future dividends is at the discretion of the
Board and is dependent upon the profits and

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

                                       16
<PAGE>
 
                          LaSalle Re Holdings Limited

              Management's Discussion and Analysis of Operations
                            and Financial Condition
--------------------------------------------------------------------------------

financial requirements of the Company and other factors, including certain
legal, regulatory and other restrictions. There can be no assurance that the
Company's dividend policy will not change or that the Company will declare or
pay any dividends.

As part of its capital management strategy, on March 28, 1997 the Company
commenced a $100 million tender offer whereby it offered to purchase for
cancellation up to 3,703,703 of its Common Shares at a price no greater than
$30.00 nor less than $27.00 per share. The tender offer expired on April 25,
1997 with 5,508,314 Common Shares and Common Share equivalents tendered at a
tender price of $27.00. The tender offer was funded in part by the net proceeds
of the Preferred Offering with the remaining funding from excess capital. On May
6, 1997 the Company purchased 3,703,703 Common Shares for cancellation, at the
tender price of $27.00.

In addition to the tender offer, the Company currently intends to repurchase up
to $25 million of Common Shares in open market or privately negotiated
transactions from time to time depending on market conditions and the Company's
capital and liquidity requirements.

The Company has in place a $100 million committed line of credit from a
syndicate of banks.  The proceeds from the credit facility may only be used to
buy preferred shares of LaSalle Re, which in turn may use the proceeds of such
purchase to meet current cash requirements.  The facility matures December 1,
2000, and is secured by a pledge ("legal mortgage") of all the capital stock of
LaSalle Re held by the Company, including any preferred shares that may be
issued by LaSalle Re to the Company.  The line of credit contains various
covenants, including: limitations on incurring additional indebtedness;
prohibitions of dividends and other restricted payments that would cause the
Company's tangible net worth (total shareholders' equity and minority interest)
to fall below $375 million for calendar years 1997 and 1998, and $400 million
thereafter; restriction of dividends per fiscal quarter to 12.5% of consolidated
net income of the Company for the immediately preceding fiscal year;
restrictions on the sale or lease of assets not in the ordinary course of
business; maintenance of a ratio of consolidated total debt to consolidated
tangible net worth of no more than 0.40 to 1.00; maintenance of tangible net
worth at the end of each fiscal year of the greater of $300 million or 70% of
net premiums written; maintenance of statutory capital of LaSalle Re at the end
of each fiscal year of at least $300 million; and maintenance of a ratio of net
premiums written to statutory capital at the end of any fiscal quarter for the
four fiscal quarters then ended of no more than 1.00 to 1.00 in each case.  In
order for the Company to pay dividends in excess of 50% of net income, the
Company would have to renegotiate certain terms of its credit facility. As of
March 31, 1997, the credit facility had not been utilized.

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

In February 1997, the Financial Accounting Standards Board issued SFAS No. 128
"Earnings per Share." This statement is effective for financial statements
issued for periods ending after December 15, 1997, including interim periods.
Implementation of this new standard requires entities with simple capital
structures to disclose basic earnings per share on the face of the income
statement. All other entities are required to disclose basic and diluted
earnings per share. As such the Company will be required to disclose basic and
diluted earnings per share on the face of the income statement. The Company
believes that the calculation of basic earnings per share will result in
marginally increased earnings per share over the present calculation of primary

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

                                       17
<PAGE>
 
                          LaSalle Re Holdings Limited

              Management's Discussion and Analysis of Operations
                            and Financial Condition
--------------------------------------------------------------------------------

earnings per share and the calculation of the diluted earnings per share will
not materially differ from the present calculation of primary earnings per
share. The accounting standard will be adopted by the Company for the quarter
ending December 31, 1997.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report contains certain forward-looking statements within the meaning of
Section 27A of the United States Securities Act of 1933 as amended and Section
21E of the United States Securities Exchange Act of 1934 as amended.  Forward-
looking statements are statements other than historical information or
statements of current condition.  Some forward-looking statements may be
identified by use of terms such as "believes", "anticipates", "intends", or
"expects".  These statements relate to the plans of the Company for future
operations, including the dividend policy pursuant to which the Company intends
to distribute as dividends to holders of Common Shares and Exchangeable Non-
Voting Shares in each fiscal year 50% to 60% of the amount by which its net
income (before minority interest) from the prior fiscal year exceeds the amount
of dividends payable on Series A Preferred Shares in the current fiscal year. In
light of the risks and uncertainties inherent in all future projections, these
statements should not be regarded as a representation that the objectives will
be achieved.  Many factors could cause actual results to differ materially from
those in the forward-looking statements, including, but not limited, to the
following:

LIMITED OPERATING HISTORY

The Company commenced operations in November 1993 and accordingly has a limited
operating and loss history. The Company's limited operating and loss history may
make it more difficult for the Company to assess the risks it underwrites based
on its own historical loss experience and to project future results based on
past results.

VOLATILITY OF FINANCIAL RESULTS

Because the property catastrophe reinsurance business involves large aggregate
exposures to man-made and natural disasters, the Company expects that its claim
experience will be characterized by relatively low frequency and high severity.
The occurrence of losses from catastrophic events is likely to result in
substantial volatility in the Company's financial results for any fiscal quarter
or year and could have a material adverse effect on the Company's financial
condition and results of operations and its ability to write new business.

The Company's property catastrophe reinsurance contracts cover unpredictable
events such as hurricanes, windstorms, hailstorms, earthquakes, fires,
industrial explosions, freezes, riots, floods and other man-made or natural
disasters. The Company endeavors to manage its exposure to catastrophic events
by, among other things, limiting the amount of its exposure in each geographic
zone worldwide and implementing exposure limits and attachment points on each
property catastrophe reinsurance contract. Nonetheless, a single catastrophic
event could affect multiple geographic zones or the frequency or severity of
catastrophic events could exceed the Company's estimates, either of which could
have a material adverse effect on the Company's financial condition and results
of operations.

While the property catastrophe reinsurance contracts represent the most volatile
aspect of the Company's portfolio,  other lines of insurance and reinsurance may
be assumed by the Company. These lines have their own characteristics, which may
include, but not be limited to, a longer reporting period between the event and
the discovery of the event giving rise to a loss. For these

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

                                       18
<PAGE>
 
                          LaSalle Re Holdings Limited

              Management's Discussion and Analysis of Operations
                            and Financial Condition
--------------------------------------------------------------------------------

lines of insurance and reinsurance, the Company will post incurred but not
reported loss reserves using actuarial techniques. Actual losses and loss
expenses, if any, may deviate, perhaps substantially, from the incurred but not
reported loss reserve. There can be no assurance that the final loss
settlements, if any, will not exceed the Company's incurred but not reported
loss reserve and have a material adverse effect on the Company's financial
condition and results of operations in a particular period.

PREMIUM NEGOTIATIONS

The Company engages in negotiations with its clients and their brokers during
the underwriting process with respect to rates, attachment points, limits and
line size. Since all of these and other factors are subject to negotiation, any
estimated premiums provided by the Company could change materially as
negotiations are finalized and contracts are signed.

Premiums for proportional contracts are based on estimates provided to the
Company by the ceding Company. Premiums in respect of contracts underwritten by
LaSalle Re Capital are based on estimates provided to the Company by the
syndicates. These contracts are adjusted during the course of the contract life
as actual figures become available. There can be material differences between
estimated and actual results and these differences can have a material impact on
the Company's results of operations.

BUSINESS CONSIDERATIONS

Based on the Company's marketing efforts, reinsurance contract submissions and
publicly available information, the Company believes that property catastrophe
rates decreased somewhat in 1995 and further in 1996 from 1994 levels.  In
particular, rates have declined significantly in areas, such as Japan and
Europe, where there has been favorable loss experience, while in the U.S.
market, where the level of property catastrophe losses has generally been higher
than in international markets in recent years, rates have decreased to a lesser
degree.  Notwithstanding these rate decreases, the Company believes that current
rates generally exceed 1992 levels.  If and while favorable loss experience
continues and reinsurance capacity does not diminish, the Company expects
further downward pressure on rates during 1997.  Based on the 1997 contract
renewals that have occurred to date, the Company estimates that it has
experienced overall rate decreases of approximately 15% compared to 1996.  As
rates decline, the Company expects net premiums written from property
catastrophe reinsurance to decline in 1997.  However, based on its current
perception of market opportunities, the Company expects that growth in its other
lines of business will partially offset the decline in its property catastrophe
premiums.  There can be no assurance that the present level of demand will
continue, that the present level of supply of reinsurance will not increase as a
result of capital provided by recent or future market entrants or by existing
property catastrophe reinsurers or that rates will not decline further.

INVESTMENT INCOME

Investment income is a function of the composition of the investment portfolio
and the external interest rate environment. The composition of the investment
portfolio may change in response to the Company's operations, in particular loss
payments. The external interest rate environment, which is beyond the control of
the Company, can change at any time. Either of these factors alone or in
combination could materially impact the amount of investment income earned by
the Company.

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

                                       19
<PAGE>
 
                          LaSalle Re Holdings Limited

              Management's Discussion and Analysis of Operations
                            and Financial Condition
--------------------------------------------------------------------------------

RELIANCE ON Aon AND CNA; TRANSACTIONS WITH AFFILIATES; CONFLICTS OF INTEREST

The majority of the Company's day-to-day operations are performed by affiliates
of Aon Corporation ("Aon") and CNA Financial Corporation ("CNA") pursuant to
service agreements. The service agreements generally provide for underwriting,
actuarial, information technology, financial reporting and investment
management.  The service agreements terminate on December 31, 1998 with a two
year extension at the option of the Company. The Company and Aon have agreed in
principle, subject to execution of a definitive agreement and to Board approval,
to terminate the Administrative Services Agreement as of mid-1997, after which
the Company anticipates that all of the personnel currently assigned to the
Company by Aon Bermuda would become employees of the Company. There can be no
assurance that the Company will be able to retain all such employees. While a
number of other organizations offer the services provided to the Company by
affiliates of CNA, there can be no assurance that if the service agreement was
to terminate, the Company would be able to successfully perform such services
for itself or obtain such services from persons which are not affiliated to CNA
on substantially similar terms. In particular, the termination of the Company's
underwriting services agreement could have a material adverse effect on the
Company.

Since inception, CNA has ceded to the Company a portion of its existing book of
property catastrophe reinsurance business. Such cessions assisted the Company in
establishing a geographic diversification of exposures. If CNA were to suddenly
cease ceding business to the Company, the geographical diversity of the
Company's portfolio of property catastrophe risks and the Company's results of
operations could be materially adversely affected.

LOSS RESERVES

It is the Company's policy to establish loss reserves for the settlement costs
of all loss and loss expenses incurred with respect to business written by it.
Loss reserves represent loss estimates derived from actuarial and statistical
projections of the Company's expectations of ultimate loss and loss expenses for
incurred losses at a given time. Under GAAP, the Company is not permitted to
establish loss reserves with respect to its property catastrophe reinsurance
until an event occurs that may give rise to a loss. As a result, only loss
reserves applicable to losses incurred up to the reporting date may be set
aside, with no allowance for the provision of a contingency reserve to account
for expected future losses. Reserve estimates by the Company may be inherently
less reliable than the reserve estimates of reinsurers with stable volumes of
business and an established loss history. Actual losses and loss expenses paid
may deviate, perhaps substantially, from the reserve estimates. There can be no
assurance that actual losses and loss expenses will not deviate substantially
from the reserves reflected in the Company's financial statements or that the
final loss settlements will not exceed the Company's loss reserve and have a
material adverse effect in the Company's financial condition and results of
operations in a particular period.

FOREIGN CURRENCY FLUCTUATIONS

The Company's financial statements are reported in US dollars. The Company
writes a significant amount of business in currencies other than US dollars and
is exposed to risks relating to fluctuations in foreign currency exchange rates.
These risks include exposure to changes in net cash inflows on non-US dollar
denominated insurance premiums and exposure to reinsurance losses denominated in
non-US currencies. The Company may from time to time experience significant
exchange gains or losses in currencies other than US dollars, which will affect
the Company's results of operations.

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

                                       20
<PAGE>
 
                          LaSalle Re Holdings Limited

              Management's Discussion and Analysis of Operations
                            and Financial Condition
--------------------------------------------------------------------------------

RATINGS

LaSalle Re is currently rated by A. M. Best Company, Inc. ("A. M. Best") and
Standard & Poor's Corporation ("S&P").  In April 1996, LaSalle Re received an
initial rating from A. M. Best of "A-" (Excellent).  Prior to that time, LaSalle
Re was not rated by any rating agency.  The rating received by LaSalle Re
represents the fourth highest in the rating scale used by A. M. Best.  In
October 1996, LaSalle Re received an initial rating of its claims paying ability
from S&P of "A" (Good).  The rating received by LaSalle Re represents the sixth
highest in the rating scale used by S&P.  Such ratings are based on factors of
concern to cedants and brokers and are not directed toward the protection of
investors.  Such ratings are neither a rating of securities nor a recommendation
to buy, hold or sell such securities.  While the Company believes that its new
ratings will not be a major competitive advantage or disadvantage, some of the
Company's principal competitors have higher ratings than the Company.  Insurance
ratings are one factor used by brokers and cedants as a means of assessing the
financial strength and quality of reinsurers.  In addition, a cedant's own
rating may be adversely affected by the lack of a rating of its reinsurer.
Therefore, a cedant may elect to reinsure with a competitor of the Company that
has a higher insurance rating.  Similarly, the lowering or loss of a rating in
the future could adversely affect the Company's ability to compete.

The Company undertakes no obligation to release publicly the results of any
future revisions it may make to forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.

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                                       21
<PAGE>
 
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                          LASALLE RE HOLDINGS LIMITED
                          PART II - OTHER INFORMATION

 
ITEM 1.   LEGAL PROCEEDINGS.
 
          None.
 
ITEM 2.   CHANGES IN SECURITIES.
 
          In March 1997, the Company issued 3,000,000 Series A Preferred Shares
          (the "Preferred Shares"), par value $1.00 per share. Certain terms of
          the Preferred Shares may have the effect of materially limiting or
          qualifying the rights of holders of the Company's Common Shares.
          
          a)  Upon liquidation, holders of the Preferred Shares will be entitled
              to receive out of any surplus assets a liquidation preference of
              $25.00 per share, plus accrued and unpaid dividends, before any
              dividend payment or distribution of assets is made to the holders
              of Common Shares.

          b)  Dividends on the Preferred Shares are cumulative at 8.75% of the
              liquidation preference per annum (equivalent to an annual rate of
              $2.1875 per share). With certain limited exceptions, so long as
              any Preferred Shares are outstanding, no dividends or other
              distributions may be paid on Common Shares nor may the Company
              repurchase any Common Shares unless full cumulative dividends have
              been paid on the Preferred Shares.

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES.
 
          None.
 
ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
                             
          The Annual General Meeting was held on February 28, 1997.

          The following directors were elected
<TABLE>
<CAPTION>
                                      Term Expiring    Votes in favor     Votes Withheld
          <S>                         <C>              <C>                <C> 
          Victor H. Blake O.B.E.          2000           10,062,596           54,356
          Joseph Haviv                    2000           10,057,896           59,056
          Lester Pollack                  2000           10,030,596           86,356
          Harvey G. Simons                2000           10,028,696           88,256

</TABLE>
 
          The terms of office of the following directors continued after the
          date of the Annual General Meeting: Until 1998 - Andrew Africk;
          Jonathan H. Kagan; Donald P. Koziol and Peter Rackley. Until 1999 -
          William J Adamson; Ivan Berk; Scott A. Schoen; David A. Stockman and
          Paul J. Zepf.
          
          The appointment of KPMG Peat Marwick as independent public accountants
          for the Company for the fiscal year ending September 30, 1997 was
          ratified and

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<PAGE>
 
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          approved. The holders of 10,110,040 shares voted in favor, 2,250
          shares voted against and 4,802 shares abstained.

ITEM 5.   OTHER INFORMATION.
 
          With effect from April 11, 1997 the Company transferred its common
          stock to the New York Stock Exchange from the Nasdaq National Market.

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K.
 
     (A)  Exhibits - The following exhibits are filed as part of this report on
          Form 10-Q:

          3.1  Memorandum of Association (Incorporated by reference to Exhibit
               3.1 to Registration Statement on Form S-1(File No. 33-97304)).
          3.2  Bye-Laws (Incorporated by reference to Exhibit 3.1 to Form 10-Q
               for the quarterly period ended December 31, 1995 (File No. 0-
               27216)).
          4.1  Memorandum of Association refer to exhibit 3.1 above.
          4.2  Bye-Laws refer to exhibit 3.2 above.
          4.3  Form of Certificate of Designation, Preferences and Rights of
               Series A Preferred Shares of LaSalle Re Holdings Limited
               (Incorporated by reference to Exhibit 4.3 to Registration
               Statement on Form S-3 (File No 333-23273)).
          11.1 Statement Regarding Computation of Net Income Per Common Share.
          27   Financial Data Schedule.
 
     (B)  Reports on Form 8-K: The Registrant did not file any reports on Form 
          8-K during the three months ended March 31, 1997.

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<PAGE>
 
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                          LASALLE RE HOLDINGS LIMITED
                                   SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



Date:  May 12, 1997         LASALLE RE HOLDINGS LIMITED
       ------------         ---------------------------
                            /s/ Andrew Cook
                            ---------------
                            Name: Andrew Cook
                            Title: Chief Financial Officer & Treasurer



Date:  May 12, 1997         /s/ Victor H. Blake
       ------------         -------------------
                            Name: Victor H. Blake
                            Title: Chairman, President & Chief Executive Officer



Date:  May 12, 1997         /s/ Andrew Cook
       ------------         ---------------
                            Name: Andrew Cook
                            Title: Chief Financial Officer & Treasurer

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