<PAGE>

================================================================================


               UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC 20549


                                   Form 10-Q
                                        

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

                For the quarterly period ended  March 31, 1999
                                               ----------------

                                      OR

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

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


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



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

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



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



Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.    [X] Yes    [_] No


The number of the Registrant's Common Shares (par value $1.00 per share)
outstanding as of May 6, 1999, was 15,791,454.



================================================================================
<PAGE>

-------------------------------------------------------------------------------
 
                          LaSalle Re Holdings Limited
                              INDEX TO FORM 10-Q

                         PART I - FINANCIAL INFORMATION

<TABLE>
<CAPTION>
                                                                                             Page
                                                                                             -----
ITEM 1.    Unaudited Consolidated Financial Statements.
<S>        <C>                                                                           <C>
           Consolidated Balance Sheets
           March 31, 1999 and September 30,1998.....................................      3

           Consolidated Statements of Operations and Comprehensive Income
           Three Months and Six Months ended March 31, 1999 and 1998................      4

           Consolidated Statements of Changes in Shareholders' Equity
           Three Months and Six Months ended March 31, 1999 and 1998................      5

           Consolidated Statements of Cash Flows
           Six Months ended March 31, 1999 and 1998.................................      6

           Notes to Unaudited Consolidated Financial Statements.....................      7

ITEM 2.    Management's Discussion and Analysis of
           Results of Operations and Financial Condition............................     10

ITEM 2A.   Quantitative and Qualitative Disclosure about Market Risk................     20


                                  PART II - OTHER INFORMATION
ITEM 1.    Legal Proceedings........................................................     21

ITEM 2.    Changes in Securities and Use of Proceeds................................     21

ITEM 3.    Defaults upon Senior Securities..........................................     21

ITEM 4.    Submission of Matters to a Vote of Security Holders......................     21

ITEM 5.    Other information........................................................     21

ITEM 6.    Exhibits and Reports on Form 8-K.........................................     21

Signatures .........................................................................     23

</TABLE>

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

<PAGE>
 
                          LaSalle Re Holdings Limited
 
                          Consolidated Balance Sheets
               (Expressed in thousands of United States Dollars,
                       except share and per share data)

                                   Unaudited
--------------------------------------------------------------------------------

<TABLE> 
<CAPTION>  
                                            March 31, 1999    September 30, 1998
<S>                                         <C>               <C>  
Assets
Cash and cash equivalents                      $159,148            $ 85,281
Investments held as available for sale
 at fair value                                  416,583             521,476
(amortized cost $412,679 : $503,531)
Accrued investment income                         8,837              11,056
Reinsurance balances receivable                 116,477              86,779
Deferred acquisition costs                       16,373              13,444
Prepaid reinsurance premiums                     19,819               7,584
Other assets                                     37,582              31,670
                                               --------            --------

Total assets                                   $774,819            $757,290
                                               ========            ========

Liabilities
Reserve for losses and loss expenses           $119,724            $ 97,942
Unearned premium reserve                        105,163              83,119
Other liabilities                                48,487              29,241
Dividend payable                                  5,914              11,366
                                               --------            --------

Total liabilities                               279,288             221,668
                                               --------            --------

Minority interest                                93,521             105,569
                                               --------            --------

Shareholders' equity
Share capital authorised in the aggregate
 100,000,000 shares, par value $1
Preferred shares
 (issued & outstanding, 3,000,000
 Series A preferred shares par value $1,
 liquidation preference $25 per share)            3,000               3,000
Common shares
 (issued & outstanding, 15,783,275:
 15,178,791 par value $1)                        15,783              15,179
Additional paid in capital                      297,249             295,578
Accumulated other comprehensive income
  Unrealized gain on investments                  3,039              13,838
Retained earnings                                82,939             102,458
                                               --------            --------
Total shareholders' equity                      402,010             430,053
                                               --------            --------

Total liabilities, minority interest
 and shareholders' equity                      $774,819            $757,290
                                               ========            ========
</TABLE>

See accompanying notes to unaudited consolidated financial statements
<PAGE>
 
<TABLE> 
<CAPTION> 

                                                    LaSalle Re Holdings Limited
 
                                  Consolidated Statements of Operations and Comprehensive Income
                        (Expressed in thousands of United States Dollars, except share and per share data)
                                                             Unaudited
====================================================================================================================================
                                                               Three Months Ended                   Six Months Ended
                                                        March 31, 1999    March 31, 1998    March 31, 1999    March 31, 1998
<S>                                                     <C>               <C>               <C>               <C>
Revenues

Gross premiums written                                     $ 88,631          $ 94,631          $100,442          $104,255
Premiums ceded                                              (16,465)          (12,426)          (17,448)          (10,966)
                                                           --------          --------          --------          --------

Net premiums written                                         72,166            82,205            82,994            93,289
Change in unearned premiums                                 (34,111)          (40,299)           (9,809)          (13,464)
                                                           --------          --------          --------          --------

Net premiums earned                                          38,055            41,906            73,185            79,825

Net investment income                                         8,824             8,583            16,778            17,035
Net realized (losses) gains on investments                     (602)            1,613             1,590             2,017
Other income                                                      0                 0                 0                63
                                                           --------          --------          --------          --------

Total revenues                                               46,277            52,102            91,553            98,940
                                                           --------          --------          --------          --------

Expenses                                                                                                       

Losses and loss expenses incurred                            50,204            19,938            80,790            28,636
Underwriting expenses                                         6,305             6,200            11,969            12,374
Operational expenses                                          2,407             3,514             4,843             5,604
Corporate expenses                                              236                 0               307                 0
Interest expense                                                439               439               904             1,002
Exchange loss (gain)                                            413               (12)             (392)             (378)
                                                           --------          --------          --------          --------

Total expenses                                               60,004            30,079            98,421            47,238
                                                           --------          --------          --------          --------

(Loss) income before minority interest                      (13,727)           22,023            (6,868)           51,702
Minority interest                                            (3,401)            4,290            (2,246)           10,191
                                                           --------          --------          --------          --------

Net (loss) income                                           (10,326)           17,733            (4,622)           41,511

Other comprehensive income                                                                                     

Unrealized gains (losses) on securities                      (3,483)               48            (6,368)            1,008
Less: reclassification adjustments                                                                             
      for gains (losses) included in net income              (1,314)             (763)           (4,431)             (507)
                                                           --------          --------          --------          --------

Total other comprehensive (loss) income                      (4,797)             (715)          (10,799)              501
                                                           --------          --------          --------          --------

Comprehensive (loss) income                                ($15,123)         $ 17,018          ($15,421)         $ 42,012
                                                           ========          ========          ========          ========

(Losses) earnings per common share                           ($0.76)            $1.06            ($0.51)            $2.53
                                                           ========          ========          ========          ========

(Losses) earnings per common share - assuming dilution       ($0.76)            $0.97            ($0.51)            $2.31
                                                           ========          ========          ========          ========

See accompanying notes to unaudited consolidated financial statements

====================================================================================================================================
</TABLE>
<PAGE>
 
                          LaSalle Re Holdings Limited
 
          Consolidated Statements of Changes in Shareholders' Equity
               (Expressed in thousands of United States Dollars,
                       except share and per share data)
                                   Unaudited

===============================================================================
 
<TABLE> 
<CAPTION> 
 
                                                Three Months Ended                   Six Months Ended
                                         March 31, 1999    March 31, 1998    March 31, 1999    March 31, 1998
<S>                                      <C>               <C>               <C>               <C> 
Preferred shares par value $1
Balance at beginning and end of period      $  3,000          $  3,000          $  3,000          $  3,000
                                            ========          ========          ========          ========
Common shares par value $1
Balance at beginning of period              $ 15,780          $ 15,134          $ 15,179          $ 15,074
Exercise of share options                          0                31                 6                81
Issue of shares                                    3                 0               663                10
Share repurchase                                   0                 0               (65)                0
                                            --------          --------          --------          --------
Balance at end of period                    $ 15,783          $ 15,165          $ 15,783          $ 15,165
                                            ========          ========          ========          ========
Additional paid in capital
Balance at beginning of period              $297,135          $300,322          $295,578          $299,964
Issue of shares                                   59                23               232               381
Compensation awards                               55                 0               309                 0
Share repurchase                                   0                 0            (1,015)                0
Change in minority interest                        0                 0             2,145                 0
                                            --------          --------          --------          --------
Balance at end of period                    $297,249          $300,345          $297,249          $300,345
                                            ========          ========          ========          ========
Accumulated Other Comprehensive Income
Balance at beginning of period              $  7,836          $  3,251          $ 13,838          $  2,035
Unrealized (loss) gain in period              (4,797)             (715)          (10,932)              501
Change in minority interest                        0                 0               133                 0
                                            --------          --------          --------          --------
Balance at end of period                    $  3,039          $  2,536          $  3,039          $  2,536
                                            ========          ========          ========          ========
Retained earnings
Balance at beginning of period              $100,816          $115,899          $102,458          $105,153
Net (loss) income                            (10,326)           17,733            (4,622)           41,511
Common share dividends                        (5,910)          (11,359)          (11,825)          (22,700)
Preferred share dividends                     (1,641)           (1,641)           (3,283)           (3,282)
Exercise of share options                          0               (31)             (509)              (81)
Share repurchase                                   0                 0              (272)                0
Change in minority interest                        0                 0               992                 0
                                            --------          --------          --------          --------
Balance at end of period                    $ 82,939          $120,601          $ 82,939          $120,601
                                            ========          ========          ========          ========
Total shareholders' equity                  $402,010          $441,647          $402,010          $441,647
                                            ========          ========          ========          ========
</TABLE>
See accompanying notes to unaudited consolidated financial statements
===============================================================================
<PAGE>
 

                          LaSalle Re Holdings Limited

 
                     Consolidated Statements of Cash Flows
               (Expressed in thousands of United States Dollars)
                                   Unaudited
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
                                                                                  Six Months Ended
                                                                   March 31, 1999                  March 31, 1998
<S>                                                               <C>                             <C>
Cash flows from operating activities

Net (loss) income                                                         ($4,622)                      $  41,511

Adjustments to reconcile net income to
 cash provided by operating activities:
   Minority interest in net income                                         (2,246)                         10,191
   Amortization of investment premium                                         330                             484
   Net gain on sale of investments                                         (1,590)                         (2,017)
   Unrealized (gain) loss on foreign exchange                                 387                            (521)
Changes in:
   Reinsurance balances receivable                                        (30,352)                        (21,920)
   Deferred acquisition costs                                              (2,929)                         (4,526)
   Prepaid reinsurance premiums                                           (12,236)                         (8,569)
   Accrued investment income                                                2,214                           1,168
   Other assets                                                            (5,965)                         (5,770)
   Reserve for losses and loss expenses                                    22,108                           6,528
   Unearned premium reserve                                                22,045                          22,034
   Other liabilities                                                       20,941                          22,556
                                                                    -------------                   -------------
Cash provided by operating activities                                       8,085                          61,149
                                                                    -------------                   -------------
Cash flows from investing activities

Purchase of investments                                                  (107,545)                       (234,223)
Proceeds on the sale of investments                                       199,655                         206,535
Proceeds on the maturity of investments                                         0                          20,000
                                                                    -------------                   -------------
Cash provided by (applied to) investing activities                         92,110                          (7,688)
                                                                    -------------                   -------------
Cash flows from financing activities

Issue of shares                                                             1,297                             392
Dividends paid                                                            (25,619)                        (31,201)
Share repurchases                                                          (1,346)                              0
Option exercises                                                             (660)                              0
                                                                    -------------                   -------------
Cash applied to financing activities                                      (26,328)                        (30,809)
                                                                    -------------                   -------------

Net increase in cash and cash equivalents                                  73,867                          22,652

Cash and cash equivalents at beginning of period                           85,281                          54,761
                                                                    -------------                   -------------
Cash and cash equivalents at end of period                              $ 159,148                       $  77,413
                                                                    =============                   =============
</TABLE>

See accompanying notes to unaudited consolidated financial statements.    
--------------------------------------------------------------------------------
<PAGE>
 
                          LaSalle Re Holdings Limited

             Notes to Unaudited Consolidated Financial Statements
              (Expressed in thousands of United States Dollars, 
                       except share and per share data)
--------------------------------------------------------------------------------

1. General

The accompanying unaudited interim consolidated financial statements have been
prepared pursuant to the rules and regulations for reporting on Form 10-Q.
Accordingly, certain information and footnotes required by generally accepted
accounting principles for complete financial statements are not included herein.
The interim financial statements should be read in conjunction with the LaSalle
Re Holdings Limited Annual Report on Form 10-K for the fiscal year ended
September 30, 1998.

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

Unless the context otherwise requires, references herein to the "Company"
include LaSalle Re Holdings Limited and its subsidiary, LaSalle Re Limited
("LaSalle Re") and its subsidiaries LaSalle Re Corporate Capital Ltd. ("LaSalle
Re Capital") and LaSalle Re (Services) Limited. The consolidated financial
statements include the results of the Company and the Company's share of LaSalle
Re and its subsidiaries for all periods presented.
<PAGE>
 
                          LaSalle Re Holdings Limited
             Notes to Unaudited Consolidated Financial Statements
              (Expressed in thousands of United States Dollars, 
                       except share and per share data)
--------------------------------------------------------------------------------

2.   Earnings per Share

Earnings per share have been calculated in accordance with SFAS 128:

<TABLE>
<CAPTION>
                                                    Three Months Ended               Six Months Ended
                                                         March 31,                       March 31,
                                                   1999            1998            1999            1998

<S>                                             <C>             <C>             <C>             <C>
Net (loss) income                               $    (10,326)   $     17,733    $     (4,622)   $     41,511
Add back: minority interest                           (3,401)          4,290          (2,246)         10,191
Less: Series A preferred share
   dividends                                          (1,641)         (1,641)         (3,282)         (3,281)
                                                ------------    ------------    ------------    ------------

(Loss) income available to common
   shareholders                                 $    (15,368)   $     20,382    $    (10,150)   $     48,421
                                                ------------    ------------    ------------    ------------

Weighted average number of shares
   outstanding:
Common shares                                     15,782,845      15,157,646      15,563,311      15,123,573
Exchangeable Non-Voting Shares                     4,472,646       4,018,146       4,472,646       4,018,146
                                                ------------    ------------    ------------    ------------
Weighted average number of shares
   outstanding:                                   20,255,491      19,175,792      20,035,957      19,141,719
                                                ============    ============    ============    ============

(Loss) earnings per share                       $      (0.76)   $       1.06    $      (0.51)   $       2.53
                                                ============    ============    ============    ============

(Loss) income available to common
   shareholders                                 $    (15,368)   $     20,382    $    (10,150)   $     48,421
                                                ------------    ------------    ------------    ------------
Weighted average number of common
   shares outstanding:                            20,255,491      19,175,792      20,035,957      19,141,719
Plus: incremental shares from assumed
   exercise of options                                Note 1       1,722,423          Note 1       1,745,881
   exercise of stock appreciation rights              Note 1          80,973          Note 1          83,602
Plus: contingently issuable shares                    Note 1           4,609          Note 1           2,266
Adjusted weighted average number of             ------------    ------------    ------------    ------------
   common shares outstanding:                     20,255,491      20,983,797      20,035,957      20,973,468
                                                ------------    ------------    ------------    ------------

Earnings per share assuming dilution            $      (0.76)   $       0.97    $      (0.51)   $       2.31
                                                ============    ============    ============    ============
</TABLE>

Note 1
------

The incremental shares from assumed exercises of options, stock appreciation
rights and contingently issuable shares are not included in the above
computation for the three months and six months ended March 31, 1999 as they
have an antidilutive effect on losses per share.

As of March 31, 1999, the Company had 1,086,114 options outstanding and had
granted 340,872 stock appreciation rights. As of March 31, 1998, the Company had
2,416,457 options outstanding and had granted 340,872 stock appreciation rights.

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

             Notes to Unaudited Consolidated Financial Statements
              (Expressed in thousands of United States Dollars, 
                       except share and per share data)
--------------------------------------------------------------------------------

3.    Reinsurance

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

                  Three Months Ended    Three Months Ended      Six Months Ended      Six Months Ended
                    March 31, 1999        March 31, 1998         March 31, 1999        March 31, 1998

                  Written     Earned    Written     Earned      Written   Earned      Written   Earned
<S>               <C>         <C>       <C>         <C>         <C>       <C>         <C>       <C>
Assumed            88,631     40,602     94,631     43,059      100,442   78,398      104,255   82,012

Ceded             (16,465)    (2,547)   (12,426)    (1,153)     (17,448)  (5,213)     (10,966)  (2,187)
                  -------     ------    -------     ------      -------   ------      -------   ------

Net Premiums       72,166     38,055     82,205     41,906       82,994   73,185       93,289   79,825
                  =======     ======    =======     ======      =======   ======      =======   ======
</TABLE>
                                        
4.    Subsequent event

Effective April 1, 1999 LaSalle Re negotiated a quota share reinsurance
arrangement with CNA, a large Chicago-based insurer, a related party.  Under
this agreement, CNA will assume a portion of LaSalle's current catastrophe
exposure in certain peak zones.  It is expected that this program will result in
$4,400 of additional ceded reinsurance premium for the 1999 fiscal year.

--------------------------------------------------------------------------------
<PAGE>
 
                          LaSalle Re Holdings Limited
  
            Management's Discussion and Analysis of Operations 
                            and Financial Condition
--------------------------------------------------------------------------------

The following is a discussion and analysis of the Company's results of
operations for the three months and six months ended March 31, 1999 and 1998 and
financial condition as of March 31, 1999 and September 30, 1998. This discussion
and analysis should be read in conjunction with the attached unaudited
consolidated financial statements and notes thereto of the Company and the
audited consolidated financial statements and notes thereto contained in the
Company's Annual Report on Form 10-K for the fiscal year ended September 30,
1998.

General

The Company primarily writes property catastrophe reinsurance on a worldwide
basis through its subsidiary, LaSalle Re. Property catastrophe reinsurance
contracts cover unpredictable events such as hurricanes, windstorms, hailstorms,
earthquakes, fires, industrial explosions, freezes, riots, floods and other man-
made or natural disasters. Therefore, there can be significant volatility in the
Company's results from fiscal quarter to quarter and fiscal year to year.
Through LaSalle Re Capital, the Company also provides capital support to
selected Lloyd's syndicates which individually write the following lines of
business: direct and facultative property insurance; marine reinsurance; and
professional indemnity, directors and officers insurance and bankers blanket
bond business. In addition, as a result of the Company's limited operating and
claims history, the financial data included herein are not necessarily
indicative of the results of operations or financial condition of the Company in
the future.

Results of Operations - for the three months ended March 31, 1999 and 1998

Gross premiums written for the quarter ended March 31, 1999 were $88.6 million
compared to $94.6 million for the quarter ended March 31, 1998, a decrease of
6.3%. The Company's property catastrophe book experienced a reduction in gross
premiums written of $3.4 million for the quarter ended March 31, 1999 compared
to the quarter ended March 31, 1998. Of this reduction, $1.3 million related to
United States property catastrophe business and $2.1 million related to
international property catastrophe business. This reduction was due to
continuing competitive rates, which have led to lower priced premiums in
comparison to those written in the quarter ended March 31, 1998, and the non-
renewal of contracts in certain cases where the Company considered business to
be under-priced. Based on the Company's experience, rates for business written
in the quarter ended March 31, 1999 were approximately 5-10% below rates written
in the quarter ended March 31, 1998 for both international business and United
States business. In addition, the Company experienced a change in the mix of
international property catastrophe business assumed, with the Company reducing
its line sizes on catastrophe pro-rata contracts and increasing gross premiums
written from direct business. The Company has continued to place an emphasis on
accessing clients directly as pro-rata contracts have a less efficient cost
structure.

For the quarter ended March 31, 1999, gross premiums written in lines of
business other than property catastrophe totaled $17.6 million or 19.9% of gross
premiums written compared to $22.0 million or 23.3% of gross premiums written
for the quarter ended March 31, 1998. The decrease is reflective of reduced
exposures on satellite, crop hail and pro-rata property business. The Company
reduced its exposure in these lines of business because industry wide rates had
declined and created under-priced business.

In addition, the Company experienced premium adjustments of $3.6 million for the
quarter ended March 31, 1999 compared to $2.3 million for the quarter ended
March 31, 1998. The increase was due primarily to the revision of a premium
estimate on a significant catastrophe pro-rata property contract following the
receipt of updated information from the cedent.
<PAGE>
 
                          LaSalle Re Holdings Limited

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

Premiums ceded for the quarter ended March 31, 1999 were $16.5 million compared
to $12.4 million in the quarter ended March 31, 1998. The increase of $4.1
million was principally due to additional reinsurance protections purchased by
LaSalle Re Capital.

As a result of the above, net premiums written for the quarter ended March 31,
1999 were $72.2 million compared to $82.2 million for the quarter ended March
31, 1998.

Net premiums earned for the quarter ended March 31, 1999 were $38.1 million
compared to $41.9 million for the same quarter in 1998. The decrease of 9.1% was
principally caused by two factors: a reduction in gross premiums written from
calendar year 1998 to calendar year 1999 and an increase in the level of
reinsurance protections purchased. For the quarter ended March 31, 1999, ceded
premiums amortized were $2.5 million compared to $1.2 million for the quarter
ended March 31, 1998.

Net investment income increased 2.3% to $8.8 million for the quarter ended March
31, 1999 from $8.6 million for the quarter ended March 31, 1998. The increase of
$0.2 million was due to the receipt of $0.4 million of interest on an equity
account maintained in accordance with the terms of the Company's multi-year
excess of loss reinsurance program. This interest offset a reduction in the
investment income earned on the Company's investment portfolio. Annualized
investment income as a percentage of the average market value of invested assets
was 6.3% for the quarter ended March 31, 1999 compared to 6.2% for the quarter
ended March 31, 1998.

Net realized losses on investments were $0.6 million during the quarter ended
March 31, 1999 compared to net realized gains of $1.6 million during the quarter
ended March 31, 1998. During the quarter, the Company sold longer maturity bonds
and reinvested the proceeds in shorter maturity bonds and money market
instruments. This measure was designed to protect the total returns on the
portfolio in an increasing yield environment. In this environment, the
unrealized gain on the investment portfolio declined from $13.8 million at
September 30, 1998 to $3.0 million at March 31, 1999. In accordance with
generally accepted accounting principles, unrealized gains and losses on the
Company's investment portfolio are not recognized in the Company's consolidated
results of operations but are reflected as accumulated comprehensive income and
shown as a separate component of shareholders' equity. It is anticipated that
the measure taken to shorten interest rate sensitive assets will reduce the
potential for significant capital gains while generating future income returns
at money market rates or better. The gains in the quarter ended March 31, 1998
resulted primarily from a credit spread enhancement exercise undertaken during
the period. In addition, the Company realized small gains on the sale of bonds
with Far East and Asian exposure.

The following table sets forth the Company's combined ratios for the quarters
March 31, 1999 and 1998:
 
<TABLE>
<CAPTION>
                                         March 31, 1999              March 31, 1998
                                 -----------------------------------------------------
<S>                                      <C>                         <C>
Loss and loss expense ratio               131.9%                      47.6%
Expense ratio                              22.9%                      23.2%
Combined ratio                            154.8%                      70.8%
</TABLE>

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

The Company incurred losses and loss expenses of $50.2 million during the
quarter ended March 31, 1999 compared with $19.9 million during the quarter
ended March 31, 1998. During the quarter ended March 31, 1999, the Company
incurred losses on the tornadoes which hit the mid-western states of the United
States in January 1999. In addition to these claims and the 
<PAGE>
 
                          LaSalle Re Holdings Limited

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

establishment of reserves for other events that occurred during the quarter but
have not yet been reported, the Company strengthened prior year reserves. The
Company recorded approximately $14 million of additional case reserves for large
losses reported during the quarter. These losses arose from causes that could
not have been reasonably anticipated when the Company established its incurred-
but-not-reported loss reserves. Included in the additional case reserves was a
loss of $6.5 million on a property stop loss contract. This contract had an
incidental auto warranty coverage component which produced a full limit loss to
the contract. Also included were losses of $4.5 million on auto property damage
stop loss contracts. Given the Company's recent loss experience, the Company
reviewed the assumptions used in setting incurred-but-not-reported loss
reserves. These assumptions have been revised to reflect both new information
and a more conservative reserving philosophy. As a result, the Company recorded
an additional $20 million of incurred-but-not-reported loss reserves during the
quarter ended March 31, 1999. These reserves relate to all lines of business
written by the Company. Of the losses incurred for the quarter ended March 31,
1998, $7.0 million related to a claim on an aggregate stop loss protection of
which the Company was notified during the quarter. In addition, the Company
incurred losses in respect of: satellite failures; various risk and aggregate
stop loss protection losses; losses relating to the Company's participation in
Lloyd's; the Canadian winter freeze which occurred in January 1998; and Typhoon
Paka which hit Guam.

Effective October 1, 1998, the Underwriting Services Agreement, under which CNA
Bermuda had provided the Company with underwriting services, was terminated. On
that date, all of the personnel assigned to the Company by CNA Bermuda became
employees of the Company and the underwriting function formerly performed by CNA
Bermuda was assumed by the Company directly. In connection with the termination
of the Underwriting Services Agreement, the Company entered into an Underwriting
Support Services Agreement with CNA Re Services Company and CNA Bermuda. With
effect from October 1, 1998, LaSalle Re has agreed to pay an annual retainer of
$0.3 million and an underwriting profit commission equal to 1.67% of the
aggregate net underwriting profits of LaSalle Re, where certain conditions are
met. For the 1997 fiscal year, LaSalle Re paid fees under the Underwriting
Services Agreement at a rate of 1.5% of the gross written and collected premium
per fiscal year; and an underwriting profit commission equal to 4.0% of the
aggregate net underwriting profits of LaSalle Re, where certain conditions were
met.

Underwriting expenses as a percentage of net earned premiums were 16.6% for the
quarter ended March 31, 1999 compared to 14.8% for the quarter ended March 31,
1998. As a percentage of net earned premiums, fees accrued pursuant to the
Underwriting Support Services Agreement decreased from 2.0% for the quarter
ended March 31, 1998 to 1.4% for the quarter ended March 31, 1999. This
decrease, however, has been offset by two factors. Following the transfer of the
underwriters, the Company has included their compensation cost in underwriting
expenses, which has increased the percentage of underwriting expenses to net
premiums earned by 1.7%. Separately, the Company's level of brokerage fees and
ceding commissions increased to 13.5% of net premiums earned for the quarter
ended March 31, 1999 compared to 12.8% of net premiums earned for the quarter
ended March 31, 1998. The increase was partly due to an increase in the level of
amortized reinsurance, which reduces net premiums earned and the effect of
increased earned premiums on the business underwritten by LaSalle Re Capital,
whose expense ratio was approximately 20%.

Operational expenses were $2.4 million for the quarter ended March 31, 1999
compared to $3.5 million for the quarter ended March 31, 1998. As a percentage
of net premiums earned, operational expenses were 6.3% during the quarter ended
March 31, 1999 compared to 8.4% for the quarter ended March 31, 1998. The
decrease in operational expenses of $1.1 million was principally due to a
decrease in the level of executive compensation booked. During the quarter ended
March 31, 1999, the Company had a credit of $0.6 million in respect of stock
appreciation rights compared to an expense of $0.9 million during the quarter
ended March 31, 1998. This reduction was offset by increased salary costs
relating to the change in the Underwriting Services
<PAGE>
 
                          LaSalle Re Holdings Limited

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

Agreement, with the Company assuming responsibility for the salaries of the
underwriting support staff and the chief operating officer for the quarter ended
March 31, 1999.

Corporate expenses were $0.2 million for the quarter ended March 31, 1999 and
related to the preparation and filing of a registration statement for an
offering of preferred shares. The registration statement was subsequently
withdrawn prior to becoming effective. The Company did not incur any corporate
expenses during the quarter ended March 31, 1998. All corporate expenses are
charged to income in the period they are incurred.

Interest expense was $0.4 million during the quarter ended March 31, 1999
compared with $0.4 million in the quarter ended March 31, 1998. Interest expense
included financing charges associated with the deposit portion of LaSalle Re's
ceded reinsurance contract and other interest expenses related to the ongoing
commitment fees payable on the Company's credit facility. As at March 31, 1999,
there were no borrowings under this facility.

Foreign exchange losses in the quarter ended March 31, 1999 were $0.4 million
compared to gains of $0.01 million in the quarter ended March 31, 1998. The
Company experienced realized gains on transactions during the quarter and
unrealized losses on balances existing at the quarter end. The realized gains
related to the settlement of sterling liabilities and the unrealized losses were
principally due to the strengthening of the United States dollar against the
German mark and the Japanese yen. The negligible gains in the quarter ended
March 31, 1998 were principally due to gains on the Company's sterling and
Australian dollar positions, which were offset by losses on its German mark and
New Zealand dollar positions.

The Company's losses per share were $0.76 for the quarter ended March 31, 1999
compared to earnings of $1.06 for the quarter ended March 31, 1998. Losses per
share assuming dilution were $0.76 for the quarter ended March 31, 1999 compared
to earnings of $0.97 for the quarter ended March 31, 1998.

Results of Operations - for the six months ended March 31, 1999 and 1998

Gross premiums written for the six months ended March 31, 1999 were $100.4
million compared to $104.3 million for the six months ended March 31, 1998, a
decrease of 3.7%. The Company's property catastrophe book experienced a
reduction in gross premiums written of $5.2 million for the six months ended
March 31, 1999 compared to the six months ended March 31, 1998. Of this
reduction, $2.3 million related to United States property catastrophe business
and $2.9 million related to international property catastrophe business. This
reduction was due to continuing competitive rates, which have led to lower
priced premiums in comparison to those written in the six months ended March 31,
1998, and the non-renewal of contracts in certain cases where the Company
considered business to be under-priced. Based on the Company's experience for
January 1 1999 business, rates for business written in the six months ended
March 31, 1999 were approximately 5-10% below rates written in the corresponding
period of 1998 for both international business and for United States business.
In addition, the Company experienced a change in the mix of international
property catastrophe business assumed, with the Company reducing its line sizes
on pro-rata contracts and increasing gross premiums written from direct
business. The Company has continued to place an emphasis on accessing clients
directly as pro-rata contracts have a less efficient cost structure.

For the six months ended March 31, 1999, gross premiums written in lines of
business, other than property catastrophe, totaled $26.4 million or 26.3% of
gross premiums written compared to $30.7 million or 29.4% of gross premiums
written for the six months ended March 31, 1998. The decrease was primarily due
to reduced gross premiums written by LaSalle Re Capital of $5.3 million, which
was caused by a change in underlying writing patterns.
<PAGE>
 
                          LaSalle Re Holdings Limited

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

During the six months ended March 31, 1999, the Company experienced premium
adjustments of $5.3 million compared to $1.1 million for the six months ended
March 31, 1998. These increases are primarily due to the revision of premium
estimates on pro-rata property catastrophe contracts following the receipt of
updated information from cedents. In addition, the Company recorded an increase
in the level of reinstatement premiums of $1.2 million due to increased loss
activity.

Premiums ceded for the six months ended March 31, 1999 were $17.4 million
compared to $11.0 million in the six months ended March 31, 1998. This increase
related to an increase in the number of reinsurance protections purchased by
LaSalle Re and LaSalle Re Capital.

As a result of the above, net premiums written for the six months ended March
31, 1999 were $83.0 million compared to $93.3 million for the six months ended
March 31, 1998.

Net premiums earned for the six months ended March 31, 1999 were $73.2 million
compared to $79.8 million for the same period in 1998. The 8.3% decrease was the
result of reduced premiums earned on the Company's core property catastrophe
business, which was partially offset by additional earnings on premium
adjustments. Ceded premiums amortized were $5.2 million for the six months ended
March 31, 1999 compared to $2.2 million for the six months ended March 31, 1998.
The increase was due to increased reinsurance protections purchased by LaSalle
Re Capital.

Net investment income decreased 1.2% to $16.8 million for the six months ended
March 31, 1999 from $17.0 million for the six months ended March 31, 1998.
Annualized investment income as a percentage of the average market value of
invested assets was 5.8% for the six months ended March 31, 1999 compared to
6.1% for the six months ended March 31, 1998. The decrease in net investment
income is attributable to a fall in the rates achieved on the investment 
portfolio.

Net realized gains on investments were $1.6 million during the six months ended
March 31, 1999, compared to net realized gains of $2.0 million for the six
months ended March 31, 1998. During the six months, the Company sold longer
maturity bonds and reinvested the proceeds in shorter maturity bonds and money
market instruments. This measure was designed to protect the total returns on
the portfolio in an increasing yield environment. In this environment, the
unrealized gain on the investment portfolio declined from $13.8 million at
September 30, 1998 to $3.0 million at March 31, 1999. In accordance with
generally accepted accounting principles, unrealized gains and losses on the
Company's investment portfolio are not recognized in the Company's consolidated
results of operations but are reflected as accumulated comprehensive income and
shown as a separate component of shareholders' equity. It is anticipated that
the measure taken to shorten interest rate sensitive assets will reduce the
potential for significant capital gains while generating future income returns
at money market rates or better. The gains in the six months ended March 31,
1998 resulted primarily from a credit spread enhancement exercise undertaken
during the period. In addition, the Company realized small gains on the sale of
bonds with Far East and Asian exposure.

The following table sets forth the Company's combined ratios for the six months
ended March 31, 1999 and 1998:
 
<TABLE>
<CAPTION>
                                    March 31, 1999              March 31, 1998
                                 -----------------------------------------------
<S>                                  <C>                         <C>
Loss and loss expense ratio             110.4%                       35.9%
Expense ratio                            23.0%                       22.5%
Combined ratio                          133.4%                       58.4%
</TABLE>

Losses and loss expenses incurred represent losses paid and reserves established
in respect of specific losses and loss expenses reported by cedents and expected
loss development and additions to incurred-but-not-reported loss reserves.
<PAGE>
 
                          LaSalle Re Holdings Limited

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

The Company incurred losses and loss expenses of $80.8 million during the six
months ended March 31, 1999 compared with $28.6 million during the six months
ended March 31, 1998. Of the losses incurred for the six months ended March 31,
1999, a significant portion related to the strengthening of prior year reserves.
Approximately $15 million was incurred in respect of Hurricane Georges, which
occurred in September 1998. In addition, the Company recorded approximately $14
million of additional case reserves for large reported losses. These losses
arose from causes that could not have been reasonably anticipated when the
Company established its incurred-but-not-reported loss reserves. Included in the
additional case reserves was a loss of $6.5 million on a property stop loss
contract. This contract had an incidental auto warranty coverage component which
produced a full limit loss to the contract. Also included were losses of $4.5
million on auto property damage stop loss contracts. Given the Company's recent
loss experience, the Company reviewed the assumptions used in setting incurred-
but-not-reported loss reserves. These assumptions have been revised to reflect
both new information and a more conservative reserving philosophy. As a result,
the Company recorded an additional $20 million of incurred-but-not-reported loss
reserves during the six months ended March 31, 1999. These reserves relate to
all lines of business written by the Company. The Company incurred losses on the
tornadoes which hit the mid-western states of the United States in January 1999
and has reserved for other events which occurred during the six months but have
not yet been reported. These losses and loss reserves amounted to approximately
$30.8 million. The main components of losses and loss expenses incurred during
the six months ended March 31, 1998 related to; satellite failures; various risk
and aggregate stop loss protection losses; the Canadian winter freeze which
occurred in January 1998; and Typhoon Paka which hit Guam.

Effective on October 1, 1998, the Underwriting Services Agreement, under which
CNA Bermuda had provided the Company with underwriting services, was terminated.
On that date, all of the personnel assigned to the Company by CNA Bermuda became
employees of the Company and the underwriting function formerly performed by CNA
Bermuda was assumed by the Company directly. In connection with the termination
of the Underwriting Services Agreement, the Company entered into an Underwriting
Support Services Agreement with CNA Re Services Company and CNA Bermuda. With
effect from October 1, 1998, LaSalle Re has agreed to pay an annual retainer of
$0.3 million and an underwriting profit commission equal to 1.67% of the
aggregate net underwriting profits of LaSalle Re, where certain conditions are
met. For the 1997 fiscal year, LaSalle Re paid fees under the Underwriting
Services Agreement at a rate of 1.5% of the gross written and collected premium
per fiscal year and an underwriting profit commission equal to 4.0% of the
aggregate net underwriting profits of LaSalle Re, where certain conditions were
met.

Underwriting expenses include brokerage, commissions, excise taxes and other
costs related to underwriting reinsurance contracts. Underwriting expenses as a
percentage of net earned premiums were 16.4% for the six months ended March 31,
1999 compared to 15.5% for the six months ended March 31, 1998. As a percentage
of net earned premiums, fees accrued pursuant to the Underwriting Support
Services Agreement decreased from 3.1% for the six months ended March 31, 1998
to 1.5% for the six months ended March 31, 1999. This decrease, however, has
been offset by two factors. Following the transfer of the underwriters, the
Company has included their compensation cost in underwriting expenses, which has
increased the percentage of underwriting expenses to net premiums earned by
1.3%. Separately, the Company's level of brokerage fees and ceding commissions
increased from 12.4% for the six months ended March 31, 1998 to 13.6% for the
six months ended March 31, 1999. The increase was partly due to an increase in
the level of amortized reinsurance, which reduces net premiums earned, the
effect of increased earned premiums on the business underwritten by LaSalle Re
Capital, whose expense ratio was approximately 20%, and an increase in the
average cost of property catastrophe proportional business.

Operational expenses were $4.8 million for the six months ended March 31, 1999,
compared to $5.6 million for the six months ended March 31, 1998. As a
percentage of net premiums earned,
<PAGE>
 
                          LaSalle Re Holdings Limited

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

operational expenses were 6.6% during the six months ended March 31, 1999 and
7.0% for the six months ended March 31, 1998. The decrease in operational
expenses of $0.8 million was principally due to a decrease in the level of
executive compensation booked. During the six months ended March 31, 1999, the
Company recorded a credit of $1.5 million in respect of stock appreciation
rights compared to a charge of $0.9 million during the six months ended March
31, 1998. This reduction was offset by increased salary costs of approximately
$1.0 million relating to the change in the Underwriting Services Agreement, with
the Company assuming responsibility for the salaries of the underwriting support
staff and the chief operating officer for the six months ended March 31, 1999.
In addition, during the six months ended March 31, 1999, the Company incurred
additional charges of $0.5 million relating to LaSalle Re Capital and costs
associated with the hiring of new employees.

Corporate expenses were $0.3 million for the six months ended March 31, 1999 and
related to the preparation and filing of a registration statement for an
offering of preferred shares. The registration statement was subsequently
withdrawn prior to becoming effective. The Company did not incur any corporate
expenses during the six months ended March 31, 1998. All corporate expenses are
charged to income in the period they are incurred.

Interest expense was $0.9 million during the six months ended March 31, 1999
compared with $1.0 million during the six months ended March 31, 1998. Interest
expense included financing charges associated with the deposit portion of
LaSalle Re's ceded reinsurance contract and other interest expenses related to
the ongoing commitment fees payable on the Company's credit facility. As at
March 31, 1999, there were no borrowings under this facility.

Foreign exchange gains in the six months ended March 31, 1999 and March 31, 1998
were $0.4 million. The exchange gains for the six months ended March 31, 1999
were due to realized foreign exchange gains made on transactions processed
during the period. The realized gains related primarily to the settlement of
sterling liabilities and the receipt of Japanese yen receivable balances in a
period which saw a strengthening of the United States dollar against these
currencies. In 1998, the gains were principally due to an increase in the value
of the United States dollar against sterling.

The Company's losses per share were $0.51 for the six months ended March 31,
1999 compared to earnings of $2.53 for the six months ended March 31, 1998.
Losses per share assuming dilution were $0.51 for the six months ended March 31,
1999 compared to earnings of $2.31 for the six months ended March 31, 1998.

Liquidity and Capital Resources

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

LaSalle Re's sources of funds consist of net premiums written, investment income
and proceeds from sales and redemptions of investments. Cash is used primarily
to pay losses and loss expenses, brokerage, commissions, excise taxes,
administrative expenses and dividends. Under the Insurance Act, 1978, amendments
thereto and related regulations of Bermuda (the "Insurance Act"), LaSalle Re is
prohibited from paying dividends of more than 25% of its opening statutory
capital and surplus unless it files an affidavit stating that it will continue
to meet the required solvency margin and minimum liquidity ratio requirements
and from declaring or paying any dividends without the approval of the Bermuda
Minister of Finance if it failed to meet its required margins in the previous
fiscal year. The Insurance Act also requires LaSalle Re to maintain a minimum
solvency margin and minimum liquidity ratio and prohibits dividends which would
result in a breach of these requirements. In addition, LaSalle Re is prohibited
under the Insurance Act
<PAGE>
 
                          LaSalle Re Holdings Limited

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

from reducing its total opening statutory capital by more than 15% without the
approval of the Minister of Finance. LaSalle Re currently meets these
requirements. In addition, the payment of dividends by LaSalle Re is subject to
the rights of holders of the Exchangeable Non-Voting Shares to receive a pro
rata share of any dividend and to LaSalle Re's need to maintain shareholders'
equity adequate to support the level of its reinsurance operations.

Operating activities provided net cash of $8.1 million for the six months ended
March 31, 1999 and $61.1 million for the six months ended March 31, 1998. Cash
flows from operations in future years may differ substantially from net income.
Cash flows are affected by loss payments, which, due to the nature of the
reinsurance coverage provided by LaSalle Re, are generally expected to comprise
large loss payments on a limited number of claims and can therefore fluctuate
significantly from year to year. The irregular timing of these large loss
payments can create significant variations in operating cash flows between
periods. LaSalle Re funds such payments from cash flows from operations and
sales of investments.

As a result of the potential for large loss payments, LaSalle Re maintains a
substantial portion of its assets in cash and investments. As of March 31, 1999,
74% of its total assets were held in cash and investments, which totaled $575.7
million. Cash and cash equivalents were $159.1 million as at March 31, 1999
compared to $85.3 million at September 30, 1998. The increase is a result of the
Company's current investment strategy of selling longer maturity bonds and
reinvesting the proceeds in shorter maturity bonds and money market instruments,
a move designed to protect the total returns on the portfolio in an increasing
yield environment. This has reduced the modified average duration of the
portfolio from 3.1 years at September 30, 1998 to 2.89 years at March 31, 1999.

The Company has adopted the Statement of Financial Accounting Standard No. 115
("SFAS 115") to account for its marketable securities with all of the Company's
investments classified as "available for sale". Under this classification,
investments are recorded at fair market value and any unrealized gains or losses
are reported as a separate component of shareholders' equity. In accordance with
SFAS No. 130 "Reporting of Comprehensive Income", the unrealized gains or losses
on these investments are disclosed as part of other comprehensive income in the
income statement. The unrealized gain on the investment portfolio net of amounts
attributable to minority interest was $3.0 million at March 31, 1999 compared to
$13.8 million at September 30, 1998.

As of March 31, 1999, 81.2% of the securities held in the Company's investment
portfolio were fixed-income securities rated "AA" or better and 97.0% were 
fixed-income securities rated "A" or better by Standard & Poor's Rating Service
or Moody's Investors Service, Inc. No single investment comprised more than 5%
of the overall portfolio. As at March 31, 1999, issuers from the Far East and
Asia represented 4.8% of the investment portfolio. These bonds had an aggregate
unrealized loss of $0.3 million and were all rated AAA.

Accrued investment income was $8.8 million at March 31, 1999 compared to $11.1
million at September 30, 1998. The decrease of $2.3 million was due to a
reduction in the portfolio percentage of coupon bearing assets which were
decreased as part of the investment strategy to sell longer-dated bonds and re-
invest the proceeds into shorter-dated, non-coupon bearing money market
instruments.

Reinsurance balances receivable were $116.5 million at March 31, 1999 compared
to $86.8 million at September 30, 1998. This increase was reflective of the
seasonality of premiums written, with the Company traditionally writing its
highest level of premiums in the quarter ended March 31 compared to other
calendar quarters. In addition, included within reinsurance balances receivable
at March 31, 1999 was $35.7 million that related to the business written by
LaSalle Re Capital, compared to $28.1 million as at September 30, 1998. Given
the three-year accounting methodology utilized by Lloyd's, the majority of these
balances will not be received until the year
<PAGE>
 
                          LaSalle Re Holdings Limited

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


2000. The seasonality of premiums written also explained the increases in
unearned premiums and deferred acquisition costs from $83.1 million and $13.4
million, respectively, at September 30, 1998 to $105.2 million and $16.4
million, respectively, at March 31, 1999.

Prepaid reinsurance premiums increased from $7.6 million as at September 30,
1998 to $19.8 million as at March 31, 1999. The increase was due to the
reinsurance coverage placed by the Company and LaSalle Re Capital during the
quarter.

Other assets increased from $31.7 million as at September 30, 1998 to $37.6
million as at March 31, 1999. This was primarily due to the deposit portion of
the ceded reinsurance contract, together with the movement on the associated
profit commission.

At March 31, 1999, reserves for unpaid losses and loss expenses were $119.7
million compared to $97.9 million at September 30, 1998. During the quarter
ended March 31, 1999, the Company increased its reserves for unpaid losses and
loss expenses, following a revision of the assumptions used in setting incurred-
but-not-reported loss reserves. In addition, included in the reserve for unpaid
losses and loss expenses at March 31, 1999 is an amount of $14.1 million
compared to $6.7 million at September 30, 1998 in respect of the business
underwritten by LaSalle Re Capital. Given the three-year accounting methodology,
these losses will not be settled until after the year 2000. The Company has no
material commitments for capital expenditures.

Other liabilities increased from $29.2 million as at September 30, 1998 to $48.5
million as at March 31, 1999. The increase of $19.3 million was primarily due to
liabilities established for the multi-year excess of loss reinsurance program
and the reinsurance protections purchased by LaSalle Re Capital.

In accordance with the terms of certain reinsurance contracts, the Company
posted letters of credit in the aggregate amount of $21.3 million as of March
31, 1999 compared to $8.9 million as of September 30, 1998 to support
outstanding loss reserves. In connection with LaSalle Re Capital's support of
three Lloyd's syndicates, with effect from January 1, 1997 the Company posted
letters of credit in the aggregate amount of $15.8 million (equivalent to
(Pounds)9.8 million). In addition, in connection with a swap agreement, the
Company has posted a letter of credit of $3.0 million. All letters of credit are
secured by a lien on the Company's investment portfolio equal to 115% of the
amount of the outstanding letters of credit.

On March 1, 1999, the Company paid a dividend of $0.5469 per share to holders of
record of Series A preferred shares on January 28, 1999. As of March 31, 1999,
dividends due but not yet declared on the Series A preferred shares amounted to
$0.5 million. On March 19, 1999, the Company declared a common share dividend of
$0.375 per share to shareholders of record on April 3, 1999, payable on April
17, 1999. The actual amount and timing of any future common share dividends is
at the discretion of the Board. The declaration and payment of any dividends is
dependent upon the profits and financial requirements of the Company and other
factors, including certain legal, regulatory and other restrictions. On April
21, 1999, the Company announced its intention to drop its formula driven
dividend policy which paid out 50 - 60% of prior years net income. The Company
will instead move to a regular quarterly dividend declared by the Board. There
can be no assurance that the Company will declare or pay any dividends in future
periods.

The Company has in place a $100 million committed line of credit from a
syndicate of banks. The proceeds from the credit facility may only be used to
buy preferred shares of LaSalle Re that, in turn, may use the proceeds of such
purchase to meet current cash requirements. The facility matures December 1,
2000, and is secured by a pledge ("legal mortgage") of all the capital stock of
LaSalle Re held by the Company, including any preferred shares that may be
issued by LaSalle Re to the Company. The line of credit contains various
covenants, including limitations
<PAGE>
 
                          LaSalle Re Holdings Limited

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

on incurring additional indebtedness; restrictions on the sale or lease of
assets not in the ordinary course of business; maintenance of a ratio of
consolidated total debt to consolidated tangible net worth of no more than 0.40
to 1.00; maintenance of tangible net worth at the end of each fiscal year of the
greater of $300 million or 70% of net premiums written; maintenance of statutory
capital of LaSalle Re of at least $400 million at the end of calendar year 1999
and thereafter; and maintenance of a ratio of net premiums written to statutory
capital at the end of any fiscal quarter for the four fiscal quarters then ended
of no more than 1.00 to 1.00 in each case. The Company may pay dividends and
make other restricted payments so long as, after giving effect to such
restricted payments, no event of default has occurred. Dividends and restricted
payments are limited to 50% of consolidated net income for its immediately
preceding fiscal year less amounts paid on the Series A preferred shares. In
order for the Company to pay dividends in excess of 50% of consolidated net
income, the Company would have to renegotiate certain terms of its credit
facility. As of March 31, 1999, the credit facility had not been utilized.

The Company's financial condition and results of operations are influenced by
both internal and external forces. Loss payments, investment returns and
premiums may be impacted by changing rates of inflation and other economic
conditions. Cash flows from operations and the liquidity of its investment
portfolio are, in the Company's opinion, adequate to meet the Company's expected
cash requirements over the next 3 months.

In June 1997, the Financial Accounting Standards Board issued SFAS No. 131
"Disclosures about Segments of an Enterprise and Related Information." This
statement is effective for financial statements issued for periods beginning
after December 15, 1997 and requires the Company to report financial and
descriptive information about its reportable operating segments. This standard
will require additional disclosure and will be adopted by the Company for the
year ended September 30, 1999. This statement is not applicable to interim
periods in the first year of adoption.

In February 1998, the Financial Accounting Standards Board issued SFAS No. 132
"Employers' Disclosures about Pensions and other Postretirement Benefits". This
statement is effective for fiscal years beginning after December 15, 1997. As
the provisions of the statement need not be applied to immaterial items, the
Company considers it unlikely the statement will change its disclosures
significantly.

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133
"Accounting for Derivative Instruments and Hedging Activities". This statement
is effective for all fiscal quarters of fiscal years beginning after June 15,
1999. Given the limited number of transactions currently entered into by the
Company that are covered by the Statement, the Company does not anticipate any
significant changes to its current financial reporting.

The AICPA issued Statement of Position, 98-7 "Deposit Accounting" which is
effective for financial statements with fiscal years ending after June 15, 1999.
Currently, the Company is investigating the potential impact this standard will
have on the accounting treatment for the Company's multi year excess of loss
reinsurance program. The first loss is substantially funded and therefore has
been accounted for as a financing arrangement and recorded as a deposit in the
balance sheet.

Year 2000 Issue

The Company has given priority to making its computer systems ready to process
dates in and after the year 2000 ("Year 2000 ready"). The Company does not
believe that it faces any material Year 2000 issues with respect to its non-
information technology systems.
<PAGE>
 
                          LaSalle Re Holdings Limited

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

During the quarter ended March 31, 1999, the Company completed its testing of
the Year 2000 version of the Senator underwriting management system and found it
to be Year 2000 ready. In addition, the Company upgraded the RSG reinsurance
system to the Year 2000 version, completed its testing to ensure Year 2000
readiness and made corrections of a remedial nature to other software and
hardware components and infrastructure. The Company is still currently reviewing
enterprise-wide spreadsheet and database files for potential Year 2000 problems
and making corrections where applicable. It is anticipated that this process
will be completed by May 15, 1999. The Company has budgeted $0.3 million for the
overall Year 2000 effort and has expensed $0.1 million to date. Given the
current level of estimated and actual costs, it is not anticipated that the
costs of achieving Year 2000 readiness will have a material impact on the
Company's future results.

The Company is working to obtain assurances that its external brokers and
suppliers will be Year 2000 ready. The Company has distributed a Year 2000
questionnaire to its suppliers and brokers. As of March 31, 1999, over 90% of
suppliers and brokers, including the Company's major suppliers and brokers, had
provided adequate response to this questionnaire. The Company is following up
with suppliers and brokers who have not given adequate responses and intends in
September 1999 to make a decision as to whether or not to continue the business
relationship with those brokers and suppliers who have not responded to the Year
2000 readiness questionnaire.

The Company also assesses the effect of the Year 2000 issue on the business it
underwrites, considering the exposure to Year 2000 related losses on a contract
by contract basis at the time of underwriting.

The Company's most reasonably likely worst case scenario would be the failure of
the Company's computerized reinsurance systems to process transactions. As a
contingency plan, the Company intends, prior to January 1, 2000, to extract a
hard copy from its computerized reinsurance systems of all information required
to initiate a manual system for processing transactions in the event of a system
failure. The Company believes that it would have the necessary resources to
function on a manual basis, if so required.

Quantitative and Qualitative Disclosure about Market Risk


The Company made disclosure relating to its market risks in the Form 10-K for
the year ended September 30, 1998. Given the Company's current investment
strategy, the maturity pattern of the portfolio has changed since September 30,
1998. The Company has increased its cash and cash equivalents from $85.3
million, (par value $55.5 million) to $159.1 million, (par value $119.3 million)
with a weighted average interest rate of 4.9% rather than 5.8%. In addition, the
Company has decreased its holdings of fixed maturity instruments that mature in
2007 and 2008 from a par value of $14.5 and $63.0 million, respectively at
September 30, to $0.0 and $18.0 million at March 31, 1999, respectively.
<PAGE>
 
                          LaSalle Re Holdings Limited
                          PART II - OTHER INFORMATION
                                        

ITEM 1.    LEGAL PROCEEDINGS.
 
           None.
 
ITEM 2.    CHANGES IN SECURITIES AND USE OF PROCEEDS.
 
           None.
 
ITEM 3.    DEFAULTS UPON SENIOR SECURITIES.
 
           None.
 
ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
 
           The Annual General Meeting of Shareholders was held on February 24,
           1999.

           The following directors were elected:
 
                               Term Expiring   Votes in favor   Votes Withheld
                                                                
           William J. Adamson       2002         13,798,471         41,433
           Paul J. Zepf             2002         13,799,441         40,463
           Ivan P. Berk             2002         13,792,999         46,905
 
           The terms of office of the following directors continued after the
           date of the Annual General Meeting: Until 2000 - Tim I. Madden, Peter
           Rackley, Victor H. Blake, and Lester Pollack. Until 2001 - Clement S.
           Dwyer and Donald P. Koziol.
 
           The appointment of KPMG Peat Marwick as independent public
           accountants for the Company for the fiscal year ending September 30,
           1999 was approved. The holders of 13,823,694 shares voted in favor,
           8,395 shares voted against and 7,815 shares abstained.
 
ITEM 5.    OTHER INFORMATION.
 
           None.
 
ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K.
 
    (a)    Exhibits - The following exhibits are filed as part of this report on
           Form 10-Q:
 
            3.1  Memorandum of Association (Incorporated by reference to Exhibit
                 3.1 to Registration Statement on Form S-1 (File No. 33-97304)).
            3.2  Bye-Laws (Incorporated by reference to Exhibit 3.2 to Form 10-Q
                 for the quarterly period ended March 31, 1998 (File No. 
                 1-12823)).
           10.1  Waiver, dated as of April 1, 1999, among the Company, several
                 banks and Chase Manhattan Bank as administrative agent, to
                 Credit Agreement dated as of December 1, 1995 among the
                 Company, several banks and Chemical Bank, as administrative
                 agent.
           10.2  CNA Quota Share Arrangement between LaSalle Re Limited and
                 Continental Casualty Company, dated April 1, 1999.

<PAGE>

           10.3  Third Amendment to LaSalle Re Holdings Limited
                 Employee Stock Purchase Plan, dated February 26,
                 1999.
           27    Financial Data Schedule.
 
       (b) Reports on Form 8-K
           In a Current Report filed on Form 8-K dated March 31, 1999, the
           Company reported under Item 5 (Other Events) the issuance of a press
           release disclosing that it anticipated a reserve strengthening charge
           of $35.0 million for the quarter ending March 31, 1999.
<PAGE>
 
                          LaSalle Re Holdings Limited
                                   SIGNATURES
                                        


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



Date: May 6, 1999    LASALLE RE HOLDINGS LIMITED
                     /s/ Victor H. Blake
                     -------------------
                     Name:  Victor H. Blake
                     Title: Chairman, President & Chief Executive Officer



Date: May 6, 1999    /s/ Guy D. Hengesbaugh
                     ----------------------
                     Name:  Guy D. Hengesbaugh
                     Title: Chief Operating Officer & Executive Vice President
                            (Principal Financial Officer)