<PAGE>
 
                                 EXHIBIT 10.1

                               SECOND AMENDMENT
                               ----------------

     SECOND AMENDMENT AND WAIVER, dated as of March 13, 1997 (this "Amendment"),
to the Credit Agreement, dated as of December 1, 1995, among LASALLE RE HOLDINGS
LIMITED, a Bermuda company (the "Borrower"), the several banks and other 
financial institutions from time to time parties to this Agreement 
(collectively, the "Lenders"; individually, a "Lender") and THE CHASE MANHATTAN 
BANK (formerly known as CHEMICAL BANK), a New York banking corporation, as  
administrative agent for the Lenders hereunder.


                                  WITNESSETH:
                                  -----------   

     WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to make,
and have made, certain loans and other extensions of credit to the Borrower; 
and

     WHEREAS, the Borrower has requested, and, upon this Amendment becoming 
effective, the Required Lenders have agreed, that certain provisions of the 
Credit Agreement be amended in the manner provided for in this Amendment.

     NOW, THEREFORE, the parties hereto hereby agree as follows:

     I.   Defined Terms.  Terms defined in the Credit Agreement and used herein 
shall have the meanings given to them in the Credit Agreement.

     II.  Amendments to Credit Agreement.

     1.   Amendment to Subsection 1.1.  (a) The definition of "Statutory 
Capital" set forth in Subsection 1.1 of Credit Agreement is hereby amended by 
deleting that definition in its entirety and substituting therefor the 
following:

               "Statutory Capital": at any date of determination, (i)(1) the
          amount set forth on line 3 of the Statutory Statement of Capital and
          Surplus in the Annual Return of LaSalle Re (or, if such statement
          shall be modified, the equivalent item on any applicable successor
          form) or (2) the amount identified as "Statutory Capital" on the
          Quarterly Certificate of LaSalle Re, whichever was most recently
          delivered to the Administrative Agent and the Lenders pursuant to
          subsection 5.1, (ii) plus, to the extent it is excluded or deducted in
          the determination of the amount in clause (i) hereof, the amount of
          any preferred stock of LaSalle Re (including the Preferred Stock and
          the LaSalle Re Series A Preferred Shares) and (iii) less an amount
          equal to the outstanding Loans.
  
<PAGE>
 

                                                                               2


          (b) The definition of "Tangible Net Worth" set forth in subsection 1.1
of Credit Agreement is hereby amended by adding the following phrase immediately
before the period at the end of such definition:

     ; provided that with respect to the Borrower, Tangible Net Worth shall
     include all items which in accordance with GAAP would be included under
     minority interest on a balance sheet of the Borrower at the date of 
     determination

          and (c) inserting the following new definitions in their appropriate 
alphabetical order:

               "Holdings Series A Preferred Shares": the perpetual preferred
          shares issued prior to June 1, 1997 by the Borrower in an aggregate
          amount not exceeding $75,000,000 on substantially the terms and
          conditions set forth in Annex I-C hereto.

               "LaSalle Re Series A Preferred Shares": the perpetual preferred
          shares issued prior to June 1, 1997 by LaSalle Re in an aggregate
          amount not exceeding $75,000,000 on substantially the terms and
          conditions set forth in Annex I-D hereto.

     2.   Amendment to Subsection 6.1. Subsection 6.1 of the Credit Agreement is
hereby amended by (a) deleting the amount "$250,000,000" in clause (b) thereof
and substituting therefor the amount "$300,000,000" and (b) deleting the amount
"$250,000,000" in clause (c) thereof and substituting therefor the amount
"$300,000,000".

     3.   Amendment to Subsection 6.2. Subsection 6.2 of the Credit Agreement is
hereby amended by (a) deleting the "and" at the end of clause (iii) and (b)
inserting immediately before the period at the end of such subsection the
following new clause:

          , (v) the issue of the Holdings Series A Preferred Shares in an
          aggregate amount not exceeding $75,000,000, and (vi) the issue of the
          LaSalle Re Series A Preferred Shares in an aggregate amount not
          exceeding $75,000,000

     4.   Amendment to Subsection 6.7. Subsection 6.7 of the Credit Agreement is
hereby amended by (a) deleting in its entirety clause (ii) thereof and
substituting in lieu thereof the following:

          (ii) (A) LaSalle Re may pay a cash dividend on its common shares
          immediately prior to December 31, 1995 in an aggregate amount not to
          exceed $25,000,000, (B) the Borrower may make a share repurchase of
          the common shares of the Borrower immediately prior to December 31,
          1996 in an aggregate amount not to exceed $50,000,000, and (C) the
          Borrower may make a share repurchase of common shares of the Borrower
          prior to January 1, 1998 in an aggregate amount equal to the sum of
          (1) the proceeds of the Holdings Series A Preferred Shares and (2) to
          the extent not utilized, the Restricted
<PAGE>
 

                                                                               3


          Payments previously permitted pursuant to subclause (ii)(B) of this
          subsection 6.7; provided that in no case shall Restricted Payments
          made pursuant to this subclause (ii)(C) exceed an aggregate amount of
          $125,000,000, and

     and (b) deleting in its entirety clause (iii) thereof and substituting in 
lieu thereof the following:

          (iii) each of the Borrower and LaSalle Re may make a Restricted
          Payment on its common shares and the Borrower may make Restricted
          Payments in the form of cash dividends on the Holdings Series A
          Preferred Shares when (A) the Consolidated Tangible Net Worth
          resulting after such Restricted Payment would be at least (1) during
          calendar year 1996, $350,000,000, (2) during calendar years 1997 and
          1998, $375,000,000, and (3) thereafter, $400,000,000 and (B) the
          aggregate Restricted Payments, resulting after such Restricted
          Payment, pursuant to this clause (iii) during any fiscal quarter of
          the Borrower would not exceed 12.5% of the Consolidated Net Income of
          the Borrower for the immediately preceding fiscal year; provided that
          the aggregate amount of Restricted Payments made pursuant to this
          clause (iii) in the third quarter of the Borrower's 1997 fiscal year
          shall not exceed 13.75% of the Consolidated Net Income of the Borrower
          for the immediately preceding fiscal year

     5.   Amendment to Subsection 6.9. Subsection 6.9 of the Credit Agreement is
hereby amended by (a) deleting the "and" at the end of clause (v) thereof and 
(b) inserting the following new clause immediately preceding the period at the 
end of such subsection:

          and (vii) Investments by the Borrower in the LaSalle Re Series A
          Preferred Shares made prior to June 1, 1997

     6.   Amendment to Subsection 6.13. Subsection 6.13 of the Credit Agreement 
is hereby amended by deleting that subsection in its entirety and substituting 
in lieu thereof the following:

               6.13  Limitation of Issuances of Capital Stock. Issue or sell any
          shares of LaSalle Re's Capital Stock (other than the Eligible Stock)
          unless such Capital Stock is subordinate to the Eligible Stock in
          terms of dividends and liquidation preference and is otherwise on
          terms and conditions satisfactory in all respects to the Required
          Lenders; except that LaSalle Re may issue and sell to the Borrower the
          LaSalle Re Series A Preferred Shares.

     7.   Amendment to Annexes: Annexes I-C and I-D are hereby added to the 
Credit Agreement in the forms thereof set forth on Exhibits A and B, 
respectively, hereto.

     III. Conditions to Effectiveness. This Amendment shall become effective on 
the date (the "Amendment Effective Date") on which the following condition 
precedent has been satisfied or waived:
<PAGE>


                                                                               4


     1.   The Borrower, the Agent and the Required Lenders shall have executed
and delivered this Amendment to the Agent.

     IV.  General.

     1.   Representations and Warranties.  To induce the Agent and the Lenders 
parties hereto to enter into this Amendment, the Borrower hereby represents and 
warrants to the Agent and all of the Lenders as of the Amendment Effective Date 
that:

     a.   Financial Condition. (1) The audited consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as at September 30, 1996 and the
related audited consolidated statements of income and of cash flows for the
fiscal year ended on such date, copies of which have heretofore been
furnished to each Lender, are complete and correct and present fairly the
consolidated financial condition of the Borrower and its consolidated
Subsidiaries as at such date, and the consolidated results of their operations
and their consolidated cash flows for the fiscal year then ended.

     (2)  The unaudited consolidated balance sheets of the Borrower and its 
consolidated Subsidiaries as at December 31, 1996 and the related unaudited 
consolidated statement of income and of cash flows for the three-month period 
ended on each such date, certified by a Responsible Officer, copies of which 
have heretofore been furnished to each Lender, are complete and correct and 
present fairly the consolidated financial condition of the Borrower and its 
consolidated Subsidiaries as at such date, and the consolidated results of their
operations and their consolidated cash flows for the three-period then ended 
(subject to normal year-end audit adjustments).

     (3)  All such financial statements, including the related schedules and
notes thereto, have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by such accountants or
Responsible Officer, as the case may be, and as disclosed therein).

     (b)  Corporate Power; Authorization; Enforceable Obligations.

     (1)  The Borrower has the corporate power and authority, and the legal 
right, to make, deliver this Amendment and to perform the Loan Documents to 
which it is a party, as amended by this Amendment, and has taken all necessary 
corporate action to authorize the execution, delivery and performance of this 
Amendment and the performance of such Loan Documents, as so amended.

     (2)  No consent or authorization of, approval by, notice to, filing with or
other act by or in respect of, any Governmental Authority or any other Person is
required in connection with the execution and delivery of this Amendment or with
the performance, validity or enforceability of the Loan Documents to which it is
a party, as amended by this Amendment.

     (3)  This Amendment has been duly executed and delivered on behalf of the
Borrower.
<PAGE>
 
     (4)  This Amendment and each Loan Document to which it is a party, as 
amended by this Amendment, constitutes a legal, valid and binding obligation of 
the Borrower enforceable against the Borrower in accordance with its terms, 
except as affected by bankruptcy, insolvency, fraudulent conveyance, 
reorganization, moratorium and other similar laws relating to or affecting the 
enforcement of creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law) and an implied covenant
of good faith and fair dealing.

     (c)  No Legal Bar.  The execution, delivery and performance of this 
Amendment and the performance of the Loan Documents, as amended by this 
Amendment, will not violate any Requirement of Law or Contractual Obligation of 
the Borrower or of any of its Subsidiaries and will not result in, or require, 
the creation or imposition of any Lien on any of its or their respective 
properties or revenues pursuant to any such Requirement of Law or Contractual 
Obligation.

     (d)  Representations and Warranties.  The representations and warranties 
made by the Borrower in the Loan Documents are true and correct in all material 
respects on and as of the Amendment Effective Date, before and after giving
effect to the effectiveness of this Amendment, as if made on and as of the
Amendment Effective Date, except to the extent such representations and
warranties expressly relate to an earlier date in which case such
representations and warranties shall be true and correct in all material
respects as of such earlier date.

     2.   Payment of Expenses.  The Borrower agrees to pay or reimburse the 
Agent for all of its out-of-pocket costs and reasonable expenses incurred in 
connection with this Amendment, any other documents prepared in connection 
herewith and the transactions contemplated hereby, including, without 
limitation, the reasonable fees and disbursements of counsel to the Agent.

     3.   No Other Amendments; Confirmation.  Except as expressly amended, 
modified and supplemented hereby, the provisions of the Credit Agreement are and
shall remain in full force and effect.

     4.   Governing Law; Counterparts. (a)  This Amendment and the rights and 
obligations of the parties hereto shall be governed by, and construed and 
interpreted in accordance with, the laws of the State of New York.

     (b)  This Amendment may be executed by one or more of the parties to this 
Agreement on any number of separate counterparts, and all of said counterparts 
taken together shall be deemed to constitute one and the same instrument.  A set
of the copies of this Amendment signed by all the parties shall be lodged with 
the Borrower and the Agent.  This Amendment may be delivered by facsimile 
transmission of the relevant signature pages hereof.
<PAGE>
 
                                                                               6

          IN WITNESS WHEREOF, the parties hereto have caused this Amendment to 
be duly executed and delivered by their respective proper and duly authorized 
officers as of the day and year first above written.


                                  LASALLE RE HOLDINGS LIMITED

                                  By:  /s/ Andrew Cook
                                     ----------------------------------
                                  Title:  Chief Financial Officer

                                  THE CHASE MANHATTAN BANK, as
                                  Administrative Agent and as a Lender

                                  By:  /s/ Deborah Van Zijl
                                     ----------------------------------
                                  Title:  Vice President

                                  THE FIRST NATIONAL BANK OF CHICAGO

                                  By:  /s/ Samuel W. Bridges
                                     ----------------------------------
                                  Title:  First Vice President

                                  MELLON BANK, N.A.

                                  By:  /s/ Susan M. Whitewood
                                     ----------------------------------
                                  Title:  Assistant Vice President

                                  FLEET NATIONAL BANK

                                  By:  /s/ Carla Balesano
                                     ----------------------------------
                                  Title:  Vice President

                                  CITIBANK, N.A.

                                  By:  /s/ Andrew G. Fowler
                                     ----------------------------------
                                  Title:  Vice President
<PAGE>
 
                                   EXHIBIT A

              CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
                                      OF
                           SERIES A PREFERRED SHARES
                                      OF
                          LASALLE RE HOLDINGS LIMITED


     The Series A Preferred Shares shall have the designation, preferences and
rights, and shall be subject to the restrictions, as hereinafter appearing:

     Section 1.  Designation and Amount. There shall be a series of Preferred
Shares of the Company which shall be designated as "Series A Preferred Shares,"
par value $1.00 per share (hereinafter called "Series A Preferred Shares"), and
the number of shares constituting such series shall be 3,000,000. Such number of
shares may be increased or decreased at any time and from time to time by
resolution of the Company's Board of Directors; provided, however, that no
decrease shall reduce the number of shares of Series A Preferred Shares to a
number less than that of the shares then outstanding plus the number of shares
of Series A Preferred Shares issuable upon exercise of outstanding rights,
options or warrants or upon conversion of outstanding securities issued by the
Company.

     Section 2.  Definitions.  For purposes of the Series A Preferred Shares,
the following terms shall have the meanings indicated:

          "Board" shall mean the Board of Directors of the Company or any
     committee authorized by such Board of Directors to perform any of its
     responsibilities with respect to the Series A Preferred Shares.

          "Business Day" shall mean any day other than a Saturday, Sunday or a
     day on which banking institutions in Hamilton, Bermuda, or New York, New
     York are not required to be open.

          "Call Date" shall mean any date which the Company establishes for the
     redemption of Series A Preferred Shares, which date must be specified in
     the notice mailed to holders of the Series A Preferred Shares pursuant to
     Section 5(d) hereof.

          "Common Shares" shall mean the common shares of the Company, par value
     $1.00 per share.

          "Company" shall mean LaSalle Re Holdings Limited.

          "Dividend Payment Date" shall mean the first day of March, June,
     September and December in each year, commencing on June 1, 1997; provided,
     however, that if
 
<PAGE>
 
any Dividend Payment Date falls on any day other than a Business Day, the
dividend payment due on such Dividend Payment Date shall be paid on the Business
Day immediately before such Dividend Payment Date.

     "Dividend Periods" shall mean quarterly dividend periods commencing on
March 1, June 1, September 1 and December 1 of each year and ending on and
including the day preceding the first day of the next succeeding Dividend Period
(other than the initial Dividend Period, which shall commence on the Issue Date
and end on and include May 31, 1997, and other than the Dividend Period during
which any Series A Preferred Shares shall be redeemed pursuant to Section 5
hereof, which shall end on and include the Call Date with respect to the Series
A Preferred Shares being redeemed).

     "Dollars" or "$" shall mean U.S. Dollars.

     "Excess Preferred Shares" shall have the meaning set forth in Section 9(a)
hereof.

     "Fully Junior Shares" shall mean the Common Shares and any other class or
series of shares of the Company's stock now or hereafter issued and outstanding
over which the Series A Preferred Shares have preference or priority in both (i)
the payment of dividends and (ii) the distribution of assets on any liquidation,
dissolution or winding up of the Company.

     "Issue Date" shall mean the first date on which the Series A Preferred
Shares are issued and sold.

     "Junior Shares" shall mean the Common Shares and any other class or series
of shares of the Company's stock now or hereafter issued and outstanding over
which the Series A Preferred Shares have preference or priority in either (i)
the payment of dividends or (ii) the distribution of assets on any liquidation,
dissolution or winding up of the Company.

     "LaSalle Re" shall mean LaSalle Re Limited, a subsidiary of the Company.

     "Parity Shares" shall have the meaning set forth in Section 7(b) hereof.

     "Person" shall mean any individual, firm, partnership, corporation, limited
liability company or other entity, and shall include any successor (by merger or
otherwise) of such entity.

     "Register of Members" shall mean the Register of Members of the Company.

     "Repurchase Date" shall have the meaning set forth in Section 9(a) hereof.

                                      -2-
 
<PAGE>
 
     "Repurchase Notice" shall shall have the meaning set forth in Section 9(a)
hereof.

     "Series A Preferred Shares" shall have the meaning set forth in Section 1
hereof.

     "set apart for payment" shall be deemed to include, without any action
other than the following, the recording by the Company in its accounting ledgers
of any accounting or bookkeeping entry which indicates, pursuant to a
declaration of dividends or other distribution by the Board, the allocation of
funds to be so paid on any class or series of shares of the Company's stock;
provided, however, that if any funds for any class or series of Junior Shares or
any class or series of shares of the Company's stock ranking on a parity with
the Series A Preferred Shares as to the payment of dividends or other
distributions are placed in a separate account of the Company or delivered to a
disbursing, paying or other similar agent, then "set apart for payment" with
respect to the Series A Preferred Shares shall mean placing such funds in a
separate account or delivering such funds to a disbursing, paying or other
similar agent.

     "Special Representation Right" shall have the meaning set forth in Section
8(b) hereof.

     "Special Representatives" shall have the meaning set forth in Section 8(b)
hereof.

     "Subsidiary Voting Right" shall have the meaning set forth in Section 8(b)
hereof.

     "Transfer Agent" shall mean First Chicago Trust Company of New York, or
such other agent or agents of the Company as may be designated by the Board or
its designee as the transfer agent, registrar and dividend disbursing agent for
the Series A Preferred Shares.

     "Voting Preferred Shares" shall have the meaning set forth in Section 8(b)
hereof.

Section 3.     Dividends.

     (a) The holders of Series A Preferred Shares shall be entitled to receive,
when, as and if declared by the Board out of funds legally available for the
payment of dividends, cumulative preferential dividends payable in cash in an
amount per share equal to 8.75% of the liquidation preference per annum
(equivalent to $2.1875 per share), except as provided in Section 3(b) hereof.
Such dividends shall begin to accrue and shall be fully cumulative from the
Issue Date, whether or not in any Dividend Period or Periods there shall be
funds of the Company legally available for

                                      -3-
 
<PAGE>
 
the payment of such dividends and whether or not such dividends shall be
declared. Such dividends shall be payable quarterly, when, as and if declared by
the Board, in arrears on Dividend Payment Dates, commencing on the first
Dividend Payment Date after the Issue Date. Each such dividend shall be payable
in arrears to the holders of record of Series A Preferred Shares, as they appear
in the Register of Members at the close of business on such record dates, not
less than 30 nor more than 60 days preceding such Dividend Payment Dates
thereof, as shall be fixed by the Board. Accrued and unpaid dividends for any
past Dividend Periods may be declared and paid at any time and for such interim
periods, without reference to any regular Dividend Payment Date, to holders of
record on such date, not less than 30 nor more than 60 days preceding the
payment date thereof, as may be fixed by the Board. Any dividend payment made on
Series A Preferred Shares shall first be credited against the earliest accrued
but unpaid dividend due with respect to Series A Preferred Shares which remains
payable.

     (b) The holders of Series A Preferred Shares shall be entitled to receive,
when, as and if declared by the Board, a partial dividend for the initial
Dividend Period from the Issue Date until May 31, 1997. The amount of dividends
payable for such period, or any other period shorter than a full Dividend
Period, on the Series A Preferred Shares shall be computed on the basis of a 
360-day year of twelve 30-day months. Holders of Series A Preferred Shares shall
not be entitled to any dividends, whether payable in cash, property or stock, in
excess of cumulative dividends, as herein provided, on the Series A Preferred
Shares. No interest, or sum of money in lieu of interest, shall be payable in
respect of any dividend payment or payments on the Series A Preferred Shares
that may be in arrears.

     (c) So long as any Series A Preferred Shares are outstanding, no dividends
or other distributions, except as described in the immediately following
sentence, shall be declared or paid or set apart for payment on any class or
series of Parity Shares for any period unless full cumulative dividends have
been or contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof set apart for such payment on the Series A Preferred
Shares for all Dividend Periods terminating on or prior to the dividend payment
date in respect of the dividend or other distribution on such class or series of
Parity Shares. When dividends on the Series A Preferred Shares are not paid in
full or a sum sufficient for such payment is not set apart, as aforesaid, all
dividends declared upon Series A Preferred Shares and all dividends declared
upon any class or series of Parity Shares shall be declared ratably in
proportion to the respective amounts of dividends accumulated and unpaid on the
Series A Preferred Shares and accumulated and unpaid on such Parity Shares.

     (d) So long as any Series A Preferred Shares are outstanding, no dividends
or other distributions (other than dividends or distributions paid solely in
shares of, or options, warrants or rights to subscribe for or purchase shares
of, Fully Junior Shares) shall be declared or paid or set apart for payment and
no other distribution shall be declared or paid or set apart for payment upon
Junior Shares, nor shall any

                                      -4-
 
<PAGE>
 
     Junior Shares be redeemed, purchased or otherwise acquired (other than a
     redemption, purchase or other acquisition of Common Shares made for
     purposes of an employee incentive or benefit plan of the Company or any
     subsidiary of the Company) for any consideration (or any moneys be paid to
     or made available for a sinking fund for the redemption of any Junior
     Shares) by the Company, directly or indirectly (except by conversion into
     or exchange for Fully Junior Shares), unless in each case (i) the full
     cumulative dividends on all outstanding Series A Preferred Shares and any
     Parity Shares shall have been or contemporaneously are declared and paid or
     declared and set apart for payment for all past Dividend Periods with
     respect to the Series A Preferred Shares and all past dividend periods with
     respect to such Parity Shares and (ii) sufficient funds shall have been or
     contemporaneously are declared and set apart for the payment of the
     dividend for the current Dividend Period with respect to the Series A
     Preferred Shares and the current dividend period with respect to such
     Parity Shares.

          (e) No dividends on Series A Preferred Shares shall be declared by the
     Board or paid or set apart for payment by the Company at such time as the
     terms and provisions of any agreement of the Company, including any
     agreement relating to its indebtedness, prohibit such declaration, payment
     or setting apart for payment or provide that such declaration, payment or
     setting apart for payment would constitute a breach thereof or a default
     thereunder, or if such declaration, payment or setting apart shall be
     restricted or prohibited by law.

          (f) If there shall be any change in the law, regulation or official
     directive (whether or not having the force of law) or in the interpretation
     by any Bermuda Government authority or court of competent jurisdiction
     which imposes on the Company any condition with respect to the Series A
     Preferred Shares as a result of which any dividend payment is reduced, the
     Company shall give notice to the holders of Series A Preferred Shares of
     such event and all such reductions shall be borne in full by the holders of
     Series A Preferred Shares (but only to the extent permitted by law).

     Section 4.     Liquidation Rights.

          (a)  In the event of any liquidation, dissolution or winding up of the
     Company, whether voluntary or involuntary, before any dividend payment or
     distribution of the assets of the Company (whether capital or surplus)
     shall be made or set apart for payment to the holders of Junior Shares, the
     holders of the Series A Preferred Shares shall be entitled to receive
     $25.00 per Series A Preferred Share plus an amount equal to all dividends
     (whether or not earned or declared) accrued and unpaid thereon to the date
     of final distribution to such holders; but such holders shall not be
     entitled to any further payment.  If, upon any liquidation, dissolution or
     winding up of the Company, the assets of the Company, or proceeds thereof,
     distributable among the holders of the Series A Preferred Shares shall be
     insufficient to pay in full the preferential amount aforesaid and
     liquidating payments on any shares of any class or series of Parity

                                      -5-
<PAGE>
 
     Shares, then such assets, or the proceeds thereof, shall be distributed
     among the holders of Series A Preferred Shares and any such Parity Shares
     ratably in accordance with the respective amounts that would be payable on
     such Series A Preferred Shares and any such Parity Shares if all amounts
     payable thereon were paid in full.  For the purposes of this Section 4, (i)
     a consolidation, amalgamation or merger of the Company with one or more
     corporations or other entities, (ii) a sale, lease or conveyance of all or
     substantially all of the shares of capital stock or the property or
     business of the Company or (iii) a statutory share exchange shall not be
     deemed to be a liquidation, dissolution or winding up, voluntary or
     involuntary, of the Company.

          (b) Subject to the rights of the holders of shares of any series or
     class or classes of shares of the Company's stock ranking on a parity with
     or prior to the Series A Preferred Shares upon liquidation, dissolution or
     winding up, upon any liquidation, dissolution or winding up of the Company,
     after payment shall have been made in full to the holders of the Series A
     Preferred Shares, as provided in this Section 4, any other series or class
     or classes of Junior Shares shall, subject to the respective terms and
     provisions (if any) applying thereto, be entitled to receive any and all
     assets remaining to be paid or distributed, according to their respective
     numbers of shares, and the holders of the Series A Preferred Shares shall
     not be entitled to share therein.

     Section 5.     Redemption at the Option of the Company.

          (a) Subject to Section 5(d) and Section 9 hereof, the Series A
     Preferred Shares shall not be redeemable by the Company prior to the tenth
     anniversary of the Issue Date.  On and after the tenth anniversary of the
     Issue Date, the Company, at its option, may redeem the Series A Preferred
     Shares, in whole at any time or from time to time in part at the option of
     the Company, for cash at a redemption price of $25.00 per Series A
     Preferred Share, plus any amounts payable pursuant to Section 5(b) hereof.

          (b) Upon any redemption of Series A Preferred Shares pursuant to this
     Section 5, the Company shall pay all accrued and unpaid dividends, if any,
     thereon to the Call Date, without interest.  If the Call Date falls after a
     dividend payment record date and prior to the corresponding Dividend
     Payment Date, then each holder of Series A Preferred Shares at the close of
     business on such dividend payment record date shall be entitled to the
     dividend payable on such shares on the corresponding Dividend Payment Date
     notwithstanding the redemption of such shares before such Dividend Payment
     Date or the Company's default in the payment of the dividend due. Except as
     provided above, the Company shall make no payment or allowance for unpaid
     dividends, whether or not in arrears, on Series A Preferred Shares called
     for redemption.

          (c) Unless full cumulative dividends on the Series A Preferred Shares
     and any class or series of Parity Shares shall have been declared and paid
     or declared and

                                      -6-
 
<PAGE>
 
     set apart for payment for all past Dividend Periods and the then current
     Dividend Period (including such dividend periods on any Parity Shares), the
     Series A Preferred Shares and any Parity Shares may not be redeemed under
     this Section 5 in part and the Company may not otherwise purchase or
     acquire Series A Preferred Shares or any Parity Shares, otherwise than
     pursuant to a purchase or exchange offer made on the same terms to all
     holders of Series A Preferred Shares and Parity Shares or pursuant to
     Section 9 hereof.

          (d)    At any time prior to the tenth anniversary of the Issue Date,
     if the Company shall have submitted to the holders of its Common Shares a
     proposal for amalgamation, consolidation, merger, statutory share exchange
     or any proposal for any other matter that requires for its validation or
     effectuation an affirmative vote of the holders of the Series A Preferred
     Shares at the time outstanding, acting as a single class, the Company, at
     its option, may redeem all of the outstanding Series A Preferred Shares for
     cash at a redemption price of $26.00 per Series A Preferred Share, plus any
     amounts payable pursuant to Section 5(b) hereof.

          (e)    Notice of the redemption of any Series A Preferred Shares under
     this Section 5 shall be mailed by first-class mail to each holder of record
     of Series A Preferred Shares to be redeemed at the address of each such
     holder as shown in the Register of Members, not less than 30 nor more than
     90 days prior to the Call Date. Neither the failure to mail any notice
     required by this paragraph (e), nor any defect therein or in the mailing
     thereof, to any particular holder, shall affect the sufficiency of the
     notice or the validity of the proceedings for redemption with respect to
     the other holders. Any notice which was mailed in the manner herein
     provided shall be conclusively presumed to have been duly given on the date
     when the same would be delivered in the ordinary course of transmission,
     whether or not the holder receives the notice. Each such mailed notice
     shall state, as appropriate: (1) the Call Date; (2) the number of Series A
     Preferred Shares to be redeemed and, if fewer than all the Series A
     Preferred Shares held by such holder are to be redeemed, the number of such
     shares to be redeemed from such holder; (3) the redemption price; (4) the
     place or places at which certificates for such shares are to be
     surrendered; and (5) that dividends on the Series A Preferred Shares to be
     redeemed shall cease to accrue on such Call Date except as otherwise
     provided herein. Notice having been mailed as aforesaid, from and after the
     Call Date (unless the Company shall fail to make available, as hereinafter
     provided, an amount of cash necessary to effect such redemption), (i)
     except as otherwise provided herein, dividends on the Series A Preferred
     Shares so called for redemption shall cease to accrue; (ii) such shares
     shall no longer be deemed to be outstanding; (iii) all rights of the
     holders thereof as holders of Series A Preferred Shares of the Company
     shall cease (except the right to receive cash payable upon such redemption,
     without interest thereon, upon surrender and endorsement of their
     certificates if so required and to receive any dividends payable thereon);
     and (iv) any officer of the Company shall be entitled, on behalf of such
     holder and as its attorney-in-fact, to execute and deliver any and all
     documents as may be necessary to effect such redemption. The Company's
     obligation to provide

                                      -7-
 
<PAGE>
 
     cash in accordance with the preceding sentence shall be deemed fulfilled
     if, on or before the Call Date, the Company shall deposit with a bank or
     trust company (which may be an affiliate of the Company) that has an office
     in the Borough of Manhattan, City of New York, and that has, or is an
     affiliate of a bank or trust company that has, capital and surplus of at
     least $50,000,000, funds necessary for such redemption, in trust, with
     irrevocable instructions that such cash be applied to the redemption of the
     Series A Preferred Shares so called for redemption. No interest shall
     accrue for the benefit of the holders of Series A Preferred Shares to be
     redeemed on any cash so set aside by the Company. Subject to applicable
     escheat laws, any such cash unclaimed at the end of two years from the Call
     Date shall revert to the general funds of the Company, after which
     reversion the holders of such shares so called for redemption shall look
     only to the general funds of the Company for the payment of such cash.

          As promptly as practicable after the surrender, in accordance with the
     notice given as aforesaid, of the certificates for any Series A Preferred
     Shares so redeemed (properly endorsed or assigned for transfer, if the
     Company shall so require and if the notice shall so state), such shares
     shall be exchanged for any cash (without interest thereon) for which such
     shares have been redeemed. If fewer than all the outstanding Series A
     Preferred Shares are to be redeemed, shares to be redeemed shall be
     selected by the Company from outstanding Series A Preferred Shares not
     previously called for redemption pro rata (as nearly as may be
     practicable), by lot or by any other method determined by the Company in
     its sole discretion to be equitable. If fewer than all the Series A
     Preferred Shares represented by any certificate are redeemed, then new
     certificates representing the unredeemed shares shall be issued without
     cost to the holder thereof.

     Section 6.  Shares To Be Retired. All Series A Preferred Shares which shall
have been issued and reacquired in any manner by the Company shall be restored
to the status of authorized but unissued shares of the Company's stock, without
designation as to class or series.

     Section 7.  Ranking. Any class or series of shares of the Company's stock
shall be deemed to rank:

          (a)    prior to the Series A Preferred Shares, as to the payment of
     dividends and as to distribution of assets upon liquidation, dissolution or
     winding up, if the holders of such class or series shall be entitled to the
     receipt of dividends or of amounts distributable upon liquidation,
     dissolution or winding up, as the case may be, in preference or priority to
     the holders of Series A Preferred Shares;

          (b)    on a parity with the Series A Preferred Shares, as to the
     payment of dividends and as to distribution of assets upon liquidation,
     dissolution or winding up, whether or not the dividend rates, dividend
     payment dates or redemption or liquidation prices per share thereof shall
     be different from those of the Series A Preferred Shares, if the holders of
     such class or series and the Series A Preferred

                                      -8-
<PAGE>
 
     Shares shall be entitled to the receipt of dividends and of amounts
     distributable upon liquidation, dissolution or winding up in proportion to
     their respective amounts of accrued and unpaid dividends per share or
     liquidation preferences, without preference or priority one over the other
     ("Parity Shares");

          (c)    junior to the Series A Preferred Shares, as to the payment of
     dividends or as to the distribution of assets upon liquidation, dissolution
     or winding up, if such class or series shall be Junior Shares; and

          (d)    junior to the Series A Preferred Shares, as to the payment of
     dividends and as to the distribution of assets upon liquidation,
     dissolution or winding up, if such class or series shall be Fully Junior
     Shares.

     Section 8.  Special Representation and Voting Rights.

          (a)    Except as otherwise provided in this Section 8 and as otherwise
     required by law, holders of the Series A Preferred Shares shall have no
     voting rights; provided, however, that each holder of Series A Preferred
     Shares shall be entitled to notice of all shareholders' meetings at the
     same time and in the same manner as notice is given to the shareholders
     entitled to vote at such meetings and shall have the right to attend such
     meetings.

          (b)    Whenever, at any time or times, dividends payable on Series A
     Preferred Shares or any class or series of Parity Shares shall be in
     arrears (whether or not such dividends have been earned or declared) in an
     amount equivalent to dividends for six full Dividend Periods (whether or
     not consecutive), then, immediately upon the happening of such event, the
     holders of Series A Preferred Shares, together with the holders of shares
     of every other class or series of Parity Shares (all such other classes or
     series, the "Voting Preferred Shares"), voting as a single class regardless
     of class or series, shall have the right (the "Special Representation
     Right") to elect two special representatives (the "Special
     Representatives"). The Special Representatives shall not be directors or
     officers of the Company but shall be entitled to receive notice of all
     Board meetings and to take part in such Board meetings, with the privilege
     of voice but not vote. At any time after the Special Representation Right
     shall have been vested, the Secretary of the Company may, and upon the
     written request of any holder of Series A Preferred Shares (addressed to
     the Secretary at the principal office of the Company) shall, call a special
     meeting of the holders of the Series A Preferred Shares and of the Voting
     Preferred Shares for the election of the two Special Representatives, such
     call to be made by notice similar to that provided in the Bye-Laws of the
     Company for a special general meeting of the shareholders or as required by
     law. If any such special meeting required to be called as above provided
     shall not be called by the Secretary within 20 days after receipt of any
     such request, then any holder of Series A Preferred Shares may call such
     meeting, upon the notice above provided, and for that purpose shall have
     access to the Register of Members. Alternatively, the two Special

                                      -9-
<PAGE>
 
     Representatives may be elected by a resolution in writing, which may be in
     counterparts, signed by all of the holders of the Series A Preferred Shares
     and of the Voting Preferred Shares. Any Special Representative elected by
     the holders of the Series A Preferred Shares and the Voting Preferred
     Shares may be removed, with or without cause, and any vacancy that may
     occur in the position of Special Representative may be filled (i) by a
     majority vote at any special meeting of the holders of the Series A
     Preferred Shares and the Voting Preferred Shares, voting as a single class,
     or (ii) by a resolution in writing, which may be in counterparts, signed by
     all of the holders of the Series A Preferred Shares and the Voting
     Preferred Shares. If any interim vacancy shall occur in the position of
     Special Representative prior to a special meeting or written resolution of
     the holders of the Series A Preferred Shares and the Voting Preferred
     Shares, a successor shall be chosen by the then remaining Special
     Representative or the successor of such remaining Special Representative,
     to serve until a successor is elected at a special meeting or by written
     resolution, or until the position of Special Representative terminates as
     hereinafter provided. At any time or times when the Special Representation
     Right shall have been vested and shall not have ceased pursuant to this
     paragraph, the Company shall cause, to the extent permitted under Bermuda
     law, the election of two additional directors of LaSalle Re who shall be
     designated by the Special Representatives (the "Subsidiary Voting Right").
     In the event that the Special Representatives do not agree with respect to
     the designation of the aforesaid two directors, each Special Representative
     shall be entitled to designate one of such directors. Whenever all
     arrearages in dividends on the Series A Preferred Shares and the Voting
     Preferred Shares then outstanding shall have been paid and dividends
     thereon for the current quarterly dividend period shall have been declared
     and paid or declared and set apart for payment, then the Special
     Representation Right and the Subsidiary Voting Right shall cease (but
     subject always to the same provision for the vesting of such rights in the
     case of any future arrearages in an amount equivalent to dividends for six
     full Dividend Periods), and the positions of all persons elected as Special
     Representatives shall forthwith terminate.

          (c)    So long as any Series A Preferred Shares are outstanding, in
     addition to any other vote or consent of shareholders required by law or by
     the Company's Bye-Laws, as amended, the affirmative vote of the holders of
     at least 75% of the Series A Preferred Shares at the time outstanding,
     acting as a single class, given either in writing without a meeting or by
     vote in person or by proxy at any meeting called for the purpose, shall be
     necessary for effecting or validating:

               (i)    Any amendment, alteration or repeal of any of the
          provisions of the Company's Memorandum of Association, Bye-Laws or
          this Certificate of Designation that would vary the rights,
          preferences or voting powers of the holders of the Series A Preferred
          Shares;

               (ii)   An amalgamation, consolidation, merger or statutory share
          exchange that affects the Series A Preferred Shares, unless in each
          such case

                                      -10-
<PAGE>
 
          each Series A Preferred Share (i) shall remain outstanding with no
          variation in its rights, preferences or voting powers or (ii) shall be
          converted into or exchanged for preferred shares of the surviving
          entity having rights, preferences and voting powers identical to that
          of a Series A Preferred Share;

               (iii)  The authorization, creation or any increase in the
          authorized amount of, any shares of any class or series or any
          security convertible into shares of any class or series ranking prior
          to the Series A Preferred Shares in the payment of dividends or the
          distribution of assets on any liquidation, dissolution or winding up
          of the Company; or

               (iv)   Any other transaction or action which would amount to a
          variation of the rights, preferences or voting powers of the holders
          of the Series A Preferred Shares;

     provided, however, that any action to authorize or create or to increase
     the authorized amount of, any Fully Junior Shares or Parity Shares shall
     not be deemed to vary the rights, preferences or voting powers of the
     holders of Series A Preferred Shares; and provided, further, that no such
     vote of the holders of Series A Preferred Shares shall be required if,
     prior to the time when any of the foregoing actions is to take effect, all
     outstanding Series A Preferred Shares shall have been redeemed.

          (d)    The holders of the Series A Preferred Shares shall not be
     entitled to vote on any sale of all or substantially all of the assets of
     the Company.

          (e)    For purposes of any vote by the holders of the Series A
     Preferred Shares pursuant to the foregoing provisions of this Section 8,
     each Series A Preferred Share shall have one (1) vote per share, except
     that when any class or series of Voting Preferred Shares shall have the
     right to vote with the Series A Preferred Shares as a single class on any
     matter, then the Series A Preferred Shares and such class or series of
     Voting Preferred Shares shall have with respect to such matters one (1)
     vote per $25.00 of stated liquidation preference. Except as otherwise
     required by applicable law or as set forth herein, the Series A Preferred
     Shares shall not have any other voting rights or powers, and the consent of
     the holders thereof shall not be required for the taking of any action by
     the Company.

     Section 9.  Limitation on Ownership.

          (a)    Limitation.  Notwithstanding any other provision of the terms
     of the Series A Preferred Shares, except as provided in the next sentence
     and in Section 9(b), no Person shall at any time directly or indirectly
     acquire ownership of more than 9.9% of the outstanding Series A Preferred
     Shares. Any Series A Preferred Shares owned by a Person in excess of such
     9.9% shall be deemed "Excess Preferred Shares." Within 10 days of becoming
     aware of the existence of Excess Preferred Shares (whether by notice on
     Schedule 13D or otherwise), the Company shall initiate

                                      -11-
<PAGE>
 
     the repurchase of any and all Excess Preferred Shares by giving notice of
     repurchase (the "Repurchase Notice") to the holder or holders thereof,
     unless, prior to the giving of such Repurchase Notice the holder shall have
     disposed of its ownership in the Excess Preferred Shares. The Repurchase
     Notice shall set forth the number of Series A Preferred Shares constituting
     Excess Preferred Shares, the repurchase price and the place and date of the
     closing at which the certificates representing such Excess Preferred Shares
     are to be surrendered and the repurchase price paid. The closing date shall
     be no more than 10 days after the date on which the Company mails the
     Repurchase Notice by first-class mail (such date of mailing hereinafter
     referred to as the "Repurchase Date"). The Company will be entitled to
     assign its repurchase right to a third party or parties, who may be other
     shareholders of the Company, with the consent of any such assignee(s). The
     Company may revoke the Repurchase Notice at any time before it (or its
     assignee) pays for the Series A Preferred Shares. Neither the Company nor
     its assignee(s) shall be obliged to give general notice to the Company's
     shareholders of any intention to repurchase or the conclusion of any
     repurchase of Series A Preferred Shares. The repurchase price of each
     Excess Preferred Share called for such repurchase shall be the average
     daily per Series A Preferred Share closing sales price, if the Series A
     Preferred Shares are listed on a national securities exchange or are
     reported on the Nasdaq National Market System, and if the Series A
     Preferred Shares are not so listed or reported, shall be the mean between
     the average per Series A Preferred Share closing bid prices and the average
     per Series A Preferred Share closing asked prices, in each case during the
     30-day period ending on the Business Day prior to the Repurchase Date, or
     if there have been no sales on a national securities exchange or the Nasdaq
     National Market System and no published bid quotations and no published
     asked quotations with respect to Series A Preferred Shares during such 30-
     day period, the repurchase price shall be the price determined by the Board
     in good faith. From and after the Repurchase Date (i) except as otherwise
     provided herein, dividends on the Series A Preferred Shares so called for
     repurchase shall cease to accrue; (ii) such shares shall no longer be
     deemed to be outstanding; (iii) all rights of the holders thereof as
     holders of Series A Preferred Shares of the Company shall cease (except the
     right to receive cash payable upon such repurchase, without interest
     thereon, upon surrender and endorsement of their certificates if so
     required and to receive any dividends payable thereon); and (iv) any
     officer of the Company shall be entitled, on behalf of such holder and as
     its attorney-in-fact, to execute and deliver any and all documents as may
     be necessary to effect such repurchase. Nothing in this Section 9(a) shall
     preclude the settlement of any transaction entered into through the
     facilities of the New York Stock Exchange.

          (b)    Exemptions. The limitation on ownership set forth in Section
     9(a) shall not apply to the acquisition of Series A Preferred Shares by an
     underwriter in a public offering of Series A Preferred Shares and shall not
     apply to the ownership of Series A Preferred Shares by a managing
     underwriter in the initial public offering of Series A Preferred Shares.
     The Board, in its sole and absolute discretion, may exempt from the
     ownership limitation set forth in Section 9(a) certain designated Series A
     Preferred Shares owned by a Person who has provided the Board with evidence
     and assurances

                                      -12-
<PAGE>
 
     acceptable to the Board that ownership of such shares will cause no adverse
     tax, legal or regulatory consequences to the Company, any of the Company's
     subsidiaries or any of the Company's shareholders.

     Section 10.  Record Holders. The Company and the Transfer Agent may deem
and treat the record holder of any Series A Preferred Shares, as the same
appears in the Register of Members, as the true and lawful owner thereof for all
purposes, and neither the Company nor the Transfer Agent shall be affected by
any notice to the contrary. Payments in respect of Series A Preferred Shares
shall be sent to the holders thereof at their address most recently noted on the
Register of Members and, in the case of joint holders of Series A Preferred
Shares, may be made to all such joint holders but sent to that one of the joint
holders of Series A Preferred Shares who is first named in the Register of
Members at his address most recently noted in the Register of Members or shall
be made payable to such person or persons and sent to such address as all the
joint holders of such Series A Preferred Shares may in writing direct. Cheques
in payment of any obligation of the Company to holders of Series A Preferred
Shares shall be sent by first-class mail at the risk of the holder of the Series
A Preferred Shares, and due payment of a cheque shall be full satisfaction of
the obligation represented thereby notwithstanding any notice which the Company
may have whether express or otherwise of any right, title or interest or claim
of any other person to or in such Series A Preferred Shares.

     Section 11.  Sinking Fund. The Series A Preferred Shares shall not be
entitled to the benefits of any retirement or sinking fund.

     Section 12.  Conversion. The Series A Preferred Shares shall not be
convertible into or exchangeable for any other securities of the Company.

                                      -13-
<PAGE>
 
                                   EXHIBIT B

              CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
                                      OF
                           SERIES A PREFERRED SHARES
                                      OF
                              LASALLE RE LIMITED


     The Series A Preferred Shares shall have the designation, preferences and
rights, and shall be subject to the restrictions, as hereinafter appearing:

     Section 1.  Designation and Amount.  There shall be a series of Preferred
Shares of the Company which shall be designated as "Series A Preferred Shares,"
par value $1.00 per share (hereinafter called "Series A Preferred Shares"), and
the number of shares constituting such series shall be 3,000,000.  Such number
of shares may be increased or decreased at any time and from time to time by
resolution of the Company's Board of Directors; provided, however, that no
decrease shall reduce the number of shares of Series A Preferred Shares to a
number less than that of the shares then outstanding plus the number of shares
of Series A Preferred Shares issuable upon exercise of outstanding rights,
options or warrants or upon conversion of outstanding securities issued by the
Company.

     Section 2.  Definitions.  For purposes of the Series A Preferred Shares,
the following terms shall have the meanings indicated:

          "Additional Directors" shall have the meaning set forth in Section
     8(b) hereof.

          "Board" shall mean the Board of Directors of the Company or any
     committee authorized by such Board of Directors to perform any of its
     responsibilities with respect to the Series A Preferred Shares.

          "Business Day" shall mean any day other than a Saturday, Sunday or a
     day on which banking institutions in Hamilton, Bermuda, or New York, New
     York are not required to be open.

          "Call Date" shall mean any date which the Company establishes for the
     redemption of Series A Preferred Shares, which date must be specified in
     the notice mailed to holders of the Series A Preferred Shares pursuant to
     Section 5(d) hereof.

          "Common Shares" shall mean the common shares of the Company, par value
     $1.00 per share.

          "Company" shall mean LaSalle Re Limited.
<PAGE>
 
          "Dividend Payment Date" shall mean the first day of March, June,
     September and December in each year, commencing on June 1, 1997; provided,
     however, that if any Dividend Payment Date falls on any day other than a
     Business Day, the dividend payment due on such Dividend Payment Date shall
     be paid on the Business Day immediately before such Dividend Payment Date.

          "Dividend Periods" shall mean quarterly dividend periods commencing on
     March 1, June 1, September 1 and December 1 of each year and ending on and
     including the day preceding the first day of the next succeeding Dividend
     Period (other than the initial Dividend Period, which shall commence on the
     Issue Date and end on and include May 31, 1997, and other than the Dividend
     Period during which any Series A Preferred Shares shall be redeemed
     pursuant to Section 5 hereof, which shall end on and include the Call Date
     with respect to the Series A Preferred Shares being redeemed).

          "Dollars" or "$" shall mean U.S. Dollars.

          "Fully Junior Shares" shall mean the Common Shares and any other class
     or series of shares of the Company's stock now or hereafter issued and
     outstanding over which the Series A Preferred Shares have preference or
     priority in both (i) the payment of dividends and (ii) the distribution of
     assets on any liquidation, dissolution or winding up of the Company.

          "LaSalle Re Holdings" shall mean LaSalle Re Holdings Limited, of which
     the Company is a subsidiary.

          "Issue Date" shall mean the first date on which the Series A Preferred
     Shares are issued and sold.

          "Junior Shares" shall mean the Common Shares and any other class or
     series of shares of the Company's stock now or hereafter issued and
     outstanding over which the Series A Preferred Shares have preference or
     priority in either (i) the payment of dividends or (ii) the distribution of
     assets on any liquidation, dissolution or winding up of the Company.

          "Parity Shares" shall have the meaning set forth in Section 7(b)
     hereof.

          "Person" shall mean any individual, firm, partnership, corporation,
     limited liability company or other entity, and shall include any successor
     (by merger or otherwise) of such entity.

          "Register of Members" shall mean the Register of Members of the
     Company.

          "Series A Preferred Shares" shall have the meaning set forth in
     Section 1 hereof.

                                      -2-
<PAGE>
 
          "set apart for payment" shall be deemed to include, without any action
     other than the following, the recording by the Company in its accounting
     ledgers of any accounting or bookkeeping entry which indicates, pursuant to
     a declaration of dividends or other distribution by the Board, the
     allocation of funds to be so paid on any class or series of shares of the
     Company's stock; provided, however, that if any funds for any class or
     series of Junior Shares or any class or series of shares of the Company's
     stock ranking on a parity with the Series A Preferred Shares as to the
     payment of dividends or other distributions are placed in a separate
     account of the Company or delivered to a disbursing, paying or other
     similar agent, then "set apart for payment" with respect to the Series A
     Preferred Shares shall mean placing such funds in a separate account or
     delivering such funds to a disbursing, paying or other similar agent.

          "Transfer Agent" shall mean First Chicago Trust Company of New York,
     or such other agent or agents of the Company as may be designated by the
     Board or its designee as the transfer agent, registrar and dividend
     disbursing agent for the Series A Preferred Shares.

          "Voting Preferred Shares" shall have the meaning set forth in Section
     8(b) hereof.

     Section 3.  Dividends.

          (a)    The holders of Series A Preferred Shares shall be entitled to
     receive, when, as and if declared by the Board out of funds legally
     available for the payment of dividends, cumulative preferential dividends
     payable in cash in an amount per share equal to 8.75% of the liquidation
     preference per annum (equivalent to $2.1875 per share), except as provided
     in Section 3(b) hereof.  Such dividends shall begin to accrue and shall be
     fully cumulative from the Issue Date, whether or not in any Dividend Period
     or Periods there shall be funds of the Company legally available for the
     payment of such dividends and whether or not such dividends shall be
     declared. Such dividends shall be payable quarterly, when, as and if
     declared by the Board, in arrears on Dividend Payment Dates, commencing on
     the first Dividend Payment Date after the Issue Date.  Each such dividend
     shall be payable in arrears to the holders of record of Series A Preferred
     Shares, as they appear in the Register of Members at the close of business
     on such record dates, not less than 30 nor more than 60 days preceding such
     Dividend Payment Dates thereof, as shall be fixed by the Board. Accrued and
     unpaid dividends for any past Dividend Periods may be declared and paid at
     any time and for such interim periods, without reference to any regular
     Dividend Payment Date, to holders of record on such date, not less than 30
     nor more than 60 days preceding the payment date thereof, as may be fixed
     by the Board.  Any dividend payment made on Series A Preferred Shares shall
     first be credited against the earliest accrued but unpaid dividend due with
     respect to Series A Preferred Shares which remains payable.

                                      -3-
<PAGE>
 
          (b)    The holders of Series A Preferred Shares shall be entitled to
     receive, when, as and if declared by the Board, a partial dividend for the
     initial Dividend Period from the Issue Date until May 31, 1997.  The amount
     of dividends payable for such period, or any other period shorter than a
     full Dividend Period, on the Series A Preferred Shares shall be computed on
     the basis of a 360-day year of twelve 30-day months.  Holders of Series A
     Preferred Shares shall not be entitled to any dividends, whether payable in
     cash, property or stock, in excess of cumulative dividends, as herein
     provided, on the Series A Preferred Shares. No interest, or sum of money in
     lieu of interest, shall be payable in respect of any dividend payment or
     payments on the Series A Preferred Shares that may be in arrears.

          (c)    So long as any Series A Preferred Shares are outstanding, no
     dividends or other distributions, except as described in the immediately
     following sentence, shall be declared or paid or set apart for payment on
     any class or series of Parity Shares for any period unless full cumulative
     dividends have been or contemporaneously are declared and paid or declared
     and a sum sufficient for the payment thereof set apart for such payment on
     the Series A Preferred Shares for all Dividend Periods terminating on or
     prior to the dividend payment date in respect of the dividend or other
     distribution on such class or series of Parity Shares.  When dividends on
     the Series A Preferred Shares are not paid in full or a sum sufficient for
     such payment is not set apart, as aforesaid, all dividends declared upon
     Series A Preferred Shares and all dividends declared upon any class or
     series of Parity Shares shall be declared ratably in proportion to the
     respective amounts of dividends accumulated and unpaid on the Series A
     Preferred Shares and accumulated and unpaid on such Parity Shares.

          (d)    So long as any Series A Preferred Shares are outstanding, no
     dividends or other distributions (other than dividends or distributions
     paid solely in shares of, or options, warrants or rights to subscribe for
     or purchase shares of, Fully Junior Shares) shall be declared or paid or
     set apart for payment and no other distribution shall be declared or paid
     or set apart for payment upon Junior Shares, nor shall any Junior Shares be
     redeemed, purchased or otherwise acquired (other than a redemption,
     purchase or other acquisition of Common Shares made for purposes of an
     employee incentive or benefit plan of the Company or any subsidiary of the
     Company) for any consideration (or any moneys be paid to or made available
     for a sinking fund for the redemption of any Junior Shares) by the Company,
     directly or indirectly (except by conversion into or exchange for Fully
     Junior Shares), unless in each case (i) the full cumulative dividends on
     all outstanding Series A Preferred Shares and any Parity Shares shall have
     been or contemporaneously are declared and paid or declared and set apart
     for payment for all past Dividend Periods with respect to the Series A
     Preferred Shares and all past dividend periods with respect to such Parity
     Shares and (ii) sufficient funds shall have been or contemporaneously are
     declared and set apart for the payment of the dividend for the current
     Dividend Period with respect to the Series A Preferred Shares and the
     current dividend period with respect to such Parity Shares.

                                      -4-
<PAGE>
 
          (e)    No dividends on Series A Preferred Shares shall be declared by
     the Board or paid or set apart for payment by the Company at such time as
     the terms and provisions of any agreement of the Company, including any
     agreement relating to its indebtedness, prohibit such declaration, payment
     or setting apart for payment or provide that such declaration, payment or
     setting apart for payment would constitute a breach thereof or a default
     thereunder, or if such declaration, payment or setting apart shall be
     restricted or prohibited by law.

          (f)    If there shall be any change in the law, regulation or official
     directive (whether or not having the force of law) or in the interpretation
     by any Bermuda Government authority or court of competent jurisdiction
     which imposes on the Company any condition with respect to the Series A
     Preferred Shares as a result of which any dividend payment is reduced, the
     Company shall give notice to the holders of Series A Preferred Shares of
     such event and all such reductions shall be borne in full by the holders of
     Series A Preferred Shares (but only to the extent permitted by law).

     Section 4.  Liquidation Rights.

          (a)    In the event of any liquidation, dissolution or winding up of
     the Company, whether voluntary or involuntary, before any dividend payment
     or distribution of the assets of the Company (whether capital or surplus)
     shall be made or set apart for payment to the holders of Junior Shares, the
     holders of the Series A Preferred Shares shall be entitled to receive
     $25.00 per Series A Preferred Share plus an amount equal to all dividends
     (whether or not earned or declared) accrued and unpaid thereon to the date
     of final distribution to such holders; but such holders shall not be
     entitled to any further payment. If, upon any liquidation, dissolution or
     winding up of the Company, the assets of the Company, or proceeds thereof,
     distributable among the holders of the Series A Preferred Shares shall be
     insufficient to pay in full the preferential amount aforesaid and
     liquidating payments on any shares of any class or series of Parity Shares,
     then such assets, or the proceeds thereof, shall be distributed among the
     holders of Series A Preferred Shares and any such Parity Shares ratably in
     accordance with the respective amounts that would be payable on such Series
     A Preferred Shares and any such Parity Shares if all amounts payable
     thereon were paid in full. For the purposes of this Section 4, (i) a
     consolidation, amalgamation or merger of the Company with one or more
     corporations or other entities, (ii) a sale, lease or conveyance of all or
     substantially all of the shares of capital stock or the property or
     business of the Company or (iii) a statutory share exchange shall not be
     deemed to be a liquidation, dissolution or winding up, voluntary or
     involuntary, of the Company.

          (b)    Subject to the rights of the holders of shares of any series or
     class or classes of shares of the Company's stock ranking on a parity with
     or prior to the Series A Preferred Shares upon liquidation, dissolution or
     winding up, upon any liquidation, dissolution or winding up of the Company,
     after payment shall have been made in full to the holders of the Series A
     Preferred Shares, as provided in this

                                      -5-
<PAGE>
 
     Section 4, any other series or class or classes of Junior Shares shall,
     subject to the respective terms and provisions (if any) applying thereto,
     be entitled to receive any and all assets remaining to be paid or
     distributed, according to their respective numbers of shares, and the
     holders of the Series A Preferred Shares shall not be entitled to share
     therein.


     Section 5.  Redemption at the Option of the Company.

          (a)    The Company, at its option, may redeem the Series A Preferred
     Shares, in whole at any time or from time to time in part at the option of
     the Company, for cash at a redemption price of $25.00 per Series A
     Preferred Share, plus any amounts payable pursuant to Section 5(b) hereof;
     provided, however, that the Company may only redeem the Series A Preferred
     Shares, in whole or in part, if LaSalle Re Holdings shall have made
     alternative arrangements to provide a means for it to continue to have
     adequate resources to meet its dividend obligations to the holders of its
     series A preferred shares.

          (b)    Upon any redemption of Series A Preferred Shares pursuant to
     this Section 5, the Company shall pay all accrued and unpaid dividends, if
     any, thereon to the Call Date, without interest. If the Call Date falls
     after a dividend payment record date and prior to the corresponding
     Dividend Payment Date, then each holder of Series A Preferred Shares at the
     close of business on such dividend payment record date shall be entitled to
     the dividend payable on such shares on the corresponding Dividend Payment
     Date notwithstanding the redemption of such shares before such Dividend
     Payment Date or the Company's default in the payment of the dividend due.
     Except as provided above, the Company shall make no payment or allowance
     for unpaid dividends, whether or not in arrears, on Series A Preferred
     Shares called for redemption.

          (c)    Unless full cumulative dividends on the Series A Preferred
     Shares and any class or series of Parity Shares shall have been declared
     and paid or declared and set apart for payment for all past Dividend
     Periods and the then current Dividend Period (including such dividend
     periods on any Parity Shares), the Series A Preferred Shares and any Parity
     Shares may not be redeemed under this Section 5 in part and the Company may
     not otherwise purchase or acquire Series A Preferred Shares or any Parity
     Shares, otherwise than pursuant to a purchase or exchange offer made on the
     same terms to all holders of Series A Preferred Shares and Parity Shares.

          (d)    Notice of the redemption of any Series A Preferred Shares under
     this Section 5 shall be mailed by first-class mail to each holder of record
     of Series A Preferred Shares to be redeemed at the address of each such
     holder as shown in the Register of Members, not less than 30 nor more than
     90 days prior to the Call Date. Neither the failure to mail any notice
     required by this paragraph (d), nor any defect therein or in the mailing
     thereof, to any particular holder, shall affect the sufficiency

                                      -6-
<PAGE>
 
     of the notice or the validity of the proceedings for redemption with
     respect to the other holders.  Any notice which was mailed in the manner
     herein provided shall be conclusively presumed to have been duly given on
     the date when the same would be delivered in the ordinary course of
     transmission, whether or not the holder receives the notice.  Each such
     mailed notice shall state, as appropriate:  (1) the Call Date; (2) the
     number of Series A Preferred Shares to be redeemed and, if fewer than all
     the Series A Preferred Shares held by such holder are to be redeemed, the
     number of such shares to be redeemed from such holder; (3) the redemption
     price; (4) the place or places at which certificates for such shares are to
     be surrendered; and (5) that dividends on the Series A Preferred Shares to
     be redeemed shall cease to accrue on such Call Date except as otherwise
     provided herein.  Notice having been mailed as aforesaid, from and after
     the Call Date (unless the Company shall fail to make available, as
     hereinafter provided, an amount of cash necessary to effect such
     redemption), (i) except as otherwise provided herein, dividends on the
     Series A Preferred Shares so called for redemption shall cease to accrue;
     (ii) such shares shall no longer be deemed to be outstanding; (iii) all
     rights of the holders thereof as holders of Series A Preferred Shares of
     the Company shall cease (except the right to receive cash payable upon such
     redemption, without interest thereon, upon surrender and endorsement of
     their certificates if so required and to receive any dividends payable
     thereon); and (iv) any officer of the Company shall be entitled, on behalf
     of such holder and as its attorney-in-fact, to execute and deliver any and
     all documents as may be necessary to effect such redemption.  The Company's
     obligation to provide cash in accordance with the preceding sentence shall
     be deemed fulfilled if, on or before the Call Date, the Company shall
     deposit with a bank or trust company (which may be an affiliate of the
     Company) that has an office in the Borough of Manhattan, City of New York,
     and that has, or is an affiliate of a bank or trust company that has,
     capital and surplus of at least $50,000,000, funds necessary for such
     redemption, in trust, with irrevocable instructions that such cash be
     applied to the redemption of the Series A Preferred Shares so called for
     redemption.  No interest shall accrue for the benefit of the holders of
     Series A Preferred Shares to be redeemed on any cash so set aside by the
     Company.  Subject to applicable escheat laws, any such cash unclaimed at
     the end of two years from the Call Date shall revert to the general funds
     of the Company, after which reversion the holders of such shares so called
     for redemption shall look only to the general funds of the Company for the
     payment of such cash.

          As promptly as practicable after the surrender, in accordance with the
     notice given as aforesaid, of the certificates for any Series A Preferred
     Shares so redeemed (properly endorsed or assigned for transfer, if the
     Company shall so require and if the notice shall so state), such shares
     shall be exchanged for any cash (without interest thereon) for which such
     shares have been redeemed.  If fewer than all the outstanding Series A
     Preferred Shares are to be redeemed, shares to be redeemed shall be
     selected by the Company from outstanding Series A Preferred Shares not
     previously called for redemption pro rata (as nearly as may be
     practicable), by lot or by any other method determined by the Company in
     its sole discretion to be equitable.  If fewer than all the Series A
     Preferred Shares represented by any certificate are redeemed, then new

                                      -7-
 
<PAGE>
 
     certificates representing the unredeemed shares shall be issued without
     cost to the holder thereof.

     Section 6.  Shares To Be Retired. All Series A Preferred Shares which shall
have been issued and reacquired in any manner by the Company shall be restored
to the status of authorized but unissued shares of the Company's stock, without
designation as to class or series.

     Section 7.  Ranking. As to the payment of dividends and the distribution of
assets upon liquidation, dissolution or winding up of the Company, the Series A
Preferred Shares shall rank junior to the preferred stock authorized by the
Board on November 28, 1995 in connection with the Credit Agreement dated as of
December 1, 1995 among LaSalle Re Holdings, certain banks and Chemical Bank as
administrative agent. Any other class or series of shares of the Company's stock
shall be deemed to rank:

          (a)    prior to the Series A Preferred Shares, as to the payment of
     dividends and as to distribution of assets upon liquidation, dissolution or
     winding up, if the holders of such class or series shall be entitled to the
     receipt of dividends or of amounts distributable upon liquidation,
     dissolution or winding up, as the case may be, in preference or priority to
     the holders of Series A Preferred Shares;

          (b)    on a parity with the Series A Preferred Shares, as to the
     payment of dividends and as to distribution of assets upon liquidation,
     dissolution or winding up, whether or not the dividend rates, dividend
     payment dates or redemption or liquidation prices per share thereof shall
     be different from those of the Series A Preferred Shares, if the holders of
     such class or series and the Series A Preferred Shares shall be entitled to
     the receipt of dividends and of amounts distributable upon liquidation,
     dissolution or winding up in proportion to their respective amounts of
     accrued and unpaid dividends per share or liquidation preferences, without
     preference or priority one over the other ("Parity Shares");

          (c)    junior to the Series A Preferred Shares, as to the payment of
     dividends or as to the distribution of assets upon liquidation, dissolution
     or winding up, if such class or series shall be Junior Shares; and

          (d)    junior to the Series A Preferred Shares, as to the payment of
     dividends and as to the distribution of assets upon liquidation,
     dissolution or winding up, if such class or series shall be Fully Junior
     Shares.

     Section 8.  Voting Rights.

          (a)    Except as otherwise provided in this Section 8 and as otherwise
     required by law, holders of the Series A Preferred Shares shall have no
     voting rights; provided, however, that each holder of Series A Preferred
     Shares shall be entitled to notice of all shareholders' meetings at the
     same time and in the same manner as

                                      -8-
<PAGE>
 
     notice is given to the shareholders entitled to vote at such meetings and
     shall have the right to attend such meetings.

          (b)    Whenever, at any time or times, dividends payable on Series A
     Preferred Shares or any class or series of Parity Shares shall be in
     arrears (whether or not such dividends have been earned or declared) in an
     amount equivalent to dividends for six full Dividend Periods (whether or
     not consecutive), then, immediately upon the happening of such event, the
     holders of Series A Preferred Shares, together with the holders of shares
     of every other class or series of Parity Shares (all such other classes or
     series, the "Voting Preferred Shares"), voting as a single class regardless
     of class or series, shall have the right to increase the size of the Board
     by two directors and to elect two additional directors to serve on the
     Board (the "Additional Directors") at any general meeting of shareholders
     or at a special meeting of the holders of the Series A Preferred Shares and
     the Voting Preferred Shares called as hereinafter provided.  At any time
     after such voting power shall have been so vested in the holders of Series
     A Preferred Shares and the Voting Preferred Shares, the Secretary of the
     Company may, and upon the written request of any holder of Series A
     Preferred Shares (addressed to the Secretary at the principal office of the
     Company) shall, call a special meeting of the holders of the Series A
     Preferred Shares and of the Voting Preferred Shares for the election of the
     Additional Directors, such call to be made by notice similar to that
     provided in the Bye-Laws of the Company for a special general meeting of
     the shareholders or as required by law. If any such special meeting
     required to be called as above provided shall not be called by the
     Secretary within 20 days after receipt of any such request, then any holder
     of Series A Preferred Shares may call such meeting, upon the notice above
     provided, and for that purpose shall have access to the Register of
     Members.  Alternatively, the Additional Directors may be elected by a
     resolution in writing, which may be in counterparts, signed by all of the
     holders of the Series A Preferred Shares and the Voting Preferred Shares.
     The Additional Directors shall hold office until the next annual general
     meeting of the shareholders or until the office of Additional Director
     terminates as hereinafter provided.  Any Additional Director may be
     removed, with or without cause, by a majority vote at any special meeting
     of the holders of the Series A Preferred Shares and of the Voting Preferred
     Shares, voting as a single class, provided that the notice of any such
     meeting convened for the purpose of removing an Additional Director shall
     contain a statement of the intention so to do and be served on such
     Additional Director not less than 14 days before the meeting and at such
     meeting such Additional Director shall be entitled to be heard on the
     motion for such Additional Director's removal.  In the event of any vacancy
     in the office of Additional Director, a successor shall be elected by the
     holders of the Series A Preferred Shares and the Voting Preferred Shares,
     voting as a single class, at any general meeting of shareholders or at a
     special meeting of the holders of the Series A Preferred Shares and the
     Voting Preferred Shares called in accordance with the procedures described
     above for the election of Additional Directors, or by a written resolution
     as provided above, such successor to hold office until the next annual
     general meeting of the shareholders or until the office of Additional
     Director

                                      -9-
<PAGE>
 
     terminates as hereinafter provided.  If an interim vacancy shall occur in
     the office of Additional Director prior to a general meeting of the
     shareholders or a special meeting or written resolution of the holders of
     the Series A Preferred Shares and the Voting Preferred Shares, a successor
     shall be elected by the Board upon nomination by the then remaining
     Additional Director or the successor of such remaining Additional Director,
     to serve until a successor is elected in accordance with the preceding
     sentence or until the office of Additional Director terminates as
     hereinafter provided; provided, however, that if no remaining Additional
     Director or successor of such Additional Director is then in office,
     Additional Directors shall be elected in accordance with the procedures
     described in the immediately preceding sentence. Whenever all arrearages in
     dividends on the Series A Preferred Shares and the Voting Preferred Shares
     then outstanding shall have been paid and dividends thereon for the current
     quarterly dividend period shall have been declared and paid or declared and
     set apart for payment, then the right of the holders of the Series A
     Preferred Shares and the Voting Preferred Shares to elect the Additional
     Directors shall cease (but subject always to the same provision for the
     vesting of such right in the case of any future arrearages in an amount
     equivalent to dividends for six full Dividend Periods), and the terms of
     office of all persons elected as Additional Directors pursuant thereto
     shall forthwith terminate and the number of directors constituting the
     Board shall be reduced accordingly.

          (c)    So long as any Series A Preferred Shares are outstanding, in
     addition to any other vote or consent of shareholders required by law or by
     the Company's Bye-Laws, as amended, the affirmative vote of the holders of
     at least 75% of the Series A Preferred Shares at the time outstanding,
     acting as a single class, given either in writing without a meeting or by
     vote in person or by proxy at any meeting called for the purpose, shall be
     necessary for effecting or validating:

               (i)     Any amendment, alteration or repeal of any of the
          provisions of the Company's Memorandum of Association, Bye-Laws or
          this Certificate of Designation that would vary the rights,
          preferences or voting powers of the holders of the Series A Preferred
          Shares;

               (ii)    An amalgamation, consolidation, merger or statutory share
          exchange that affects the Series A Preferred Shares, unless in each
          such case each Series A Preferred Share (i) shall remain outstanding
          with no variation in its rights, preferences or voting powers or (ii)
          shall be converted into or exchanged for preferred shares of the
          surviving entity having rights, preferences and voting powers
          identical to that of a Series A Preferred Share;

               (iii)   The authorization, creation or any increase in the
          authorized amount of, any shares of any class or series or any
          security convertible into shares of any class or series ranking prior
          to the Series A Preferred Shares in the payment of dividends or the
          distribution of assets on any liquidation, dissolution or winding up
          of the Company; or

                                      -10-
<PAGE>
 
               (iv)    Any other transaction or action which would amount to a
          variation of the rights, preferences or voting powers of the holders
          of the Series A Preferred Shares;

     provided, however, that any action to authorize or create or to increase
     the authorized amount of, any Fully Junior Shares or Parity Shares shall
     not be deemed to vary the rights, preferences or voting powers of the
     holders of Series A Preferred Shares; and provided, further, that no such
     vote of the holders of Series A Preferred Shares shall be required if,
     prior to the time when any of the foregoing actions is to take effect, all
     outstanding Series A Preferred Shares shall have been redeemed.

          (d)    For purposes of any vote by the holders of the Series A
     Preferred Shares pursuant to the foregoing provisions of this Section 8,
     each Series A Preferred Share shall have one (1) vote per share, except
     that when any class or series of Voting Preferred Shares shall have the
     right to vote with the Series A Preferred Shares as a single class on any
     matter, then the Series A Preferred Shares and such class or series of
     Voting Preferred Shares shall have with respect to such matters one (1)
     vote per $25.00 of stated liquidation preference. Except as otherwise
     required by applicable law or as set forth herein, the Series A Preferred
     Shares shall not have any other voting rights or powers, and the consent of
     the holders thereof shall not be required for the taking of any action by
     the Company.

     Section 9.  Record Holders. The Company and the Transfer Agent may deem and
treat the record holder of any Series A Preferred Shares, as the same appears in
the Register of Members, as the true and lawful owner thereof for all purposes,
and neither the Company nor the Transfer Agent shall be affected by any notice
to the contrary. Payments in respect of Series A Preferred Shares shall be sent
to the holders thereof at their address most recently noted on the Register of
Members and, in the case of joint holders of Series A Preferred Shares, may be
made to all such joint holders but sent to that one of the joint holders of
Series A Preferred Shares who is first named in the Register of Members at his
address most recently noted in the Register of Members or shall be made payable
to such person or persons and sent to such address as all the joint holders of
such Series A Preferred Shares may in writing direct. Cheques in payment of any
obligation of the Company to holders of Series A Preferred Shares shall be sent
by first-class mail at the risk of the holder of the Series A Preferred Shares,
and due payment of a cheque shall be full satisfaction of the obligation
represented thereby notwithstanding any notice which the Company may have
whether express or otherwise of any right, title or interest or claim of any
other person to or in such Series A Preferred Shares.

     Section 10. Sinking Fund. The Series A Preferred Shares shall not be
entitled to the benefits of any retirement or sinking fund.

     Section 11. Conversion. The Series A Preferred Shares shall not be
convertible into or exchangeable for any other securities of the Company.

                                      -11-