<PAGE>
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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 June 30, 1998
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OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 1-12823
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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
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] Not applicable [_]
The number of the Registrant's Common Shares (par value $1.00 per share)
outstanding as of August 6, 1998 was 15,176,685.
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<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
June 30, 1998 and September 30,1997.................................. 3
Consolidated Statements of Operations and Comprehensive Income
Three Months and Nine Months ended June 30, 1998 and 1997............ 4
Consolidated Statements of Changes in Shareholders' Equity
Three Months and Nine Months ended June 30, 1998 and 1997............ 5
Consolidated Statements of Cash Flows
Nine Months ended June 30, 1998 and 1997............................. 6
Notes to Unaudited Consolidated Financial Statements................. 7
ITEM 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition........................ 10
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings.................................................... 20
ITEM 2. Changes in Securities and Use of Proceeds............................ 20
ITEM 3. Defaults upon Senior Securities...................................... 20
ITEM 4. Submission of Matters to a Vote of Security Holders.................. 20
ITEM 5. Other information.................................................... 20
ITEM 6. Exhibits and Reports on Form 8-K..................................... 20
Signatures...................................................................... 21
</TABLE>
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<PAGE>
LaSalle Re Holdings Limited
Consolidated Balance Sheets
(Expressed in thousands of United States Dollars, except
share and per share data)
(Unaudited)
<TABLE>
<CAPTION>
=========================================================================================================
June 30, 1998 September 30, 1997
<S> <C> <C>
Assets
Cash and cash equivalents $85,146 $54,761
Investments held as available for sale at fair value 493,373 498,282
(amortized cost $488,981: $495,705)
Accrued investment income 12,657 12,684
Reinsurance balances receivable 103,110 80,041
Deferred acquisition costs 14,742 11,932
Prepaid reinsurance premiums 10,963 5,837
Other assets 32,935 22,551
------------ -----------
Total assets $752,926 $686,088
============ ===========
Liabilities
Reserve for losses and loss expenses $65,550 $45,491
Unearned premium reserve 93,788 88,490
Other liabilities 39,245 22,823
Dividend payable 11,366 10,703
------------ -----------
Total liabilities 209,949 167,507
------------ -----------
Minority interest 98,325 93,355
------------ -----------
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, 15,175,882: 15,073,914 par value $1) 15,176 15,074
Additional paid in capital 300,725 299,964
Accumulated other comprehensive income
Unrealized gain on investments 3,468 2,035
Retained earnings 122,283 105,153
------------ -----------
Total shareholders' equity 444,652 425,226
------------ -----------
Total liabilities, minority interest and
shareholders' equity $752,926 $688,088
============ ===========
See accompanying notes to unaudited consolidated financial statements
=========================================================================================================
</TABLE>
3
<PAGE>
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)
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<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, 1998 June 30, 1997 June 30, 1998 June 30, 1997
<S> <C> <C> <C> <C>
Revenues
Gross premiums written $26,769 $29,454 $131,024 $144,087
Premiums ceded 1,991 1,665 (8,975) (8,486)
------- ------- -------- --------
Net premiums written 28,760 31,119 122,049 135,601
Change in unearned premiums 13,293 14,784 (171) (5,175)
------- ------- -------- --------
Net premiums earned 42,053 45,903 121,878 130,426
Net investment income 8,732 8,468 25,767 24,759
Net realized gains (losses) in investments 515 (564) 2,532 (141)
Other income 0 125 63 125
------- ------- -------- --------
Total revenues 51,300 53,932 150,240 155,169
------- ------- -------- --------
Expenses
Losses and loss expenses incurred 23,607 4,475 52,243 22,198
Underwriting expenses 6,815 8,018 19,189 20,917
Operational expenses 2,120 3,049 7,724 8,974
Corporate expenses 139 256 139 1,624
Interest expense 392 537 1,394 1,140
Exchange (gain) loss 54 (88) (324) 1,886
------- ------- -------- --------
Total expenses 33,127 16,247 80,365 56,739
------- ------- -------- --------
Income before minority interest 18,173 37,685 69,875 98,430
Minority interest 3,480 7,729 13,671 19,999
------- ------- -------- --------
Net income 14,693 29,956 56,204 78,431
Other comprehensive income
Unrealized gains (losses) on securities 1,274 2,724 2,160 472
Less: reclassification adjustments
for gains (losses) included in net income (342) 561 (727) 284
------- ------- -------- --------
Total other comprehensive income 932 3,285 1,433 756
------- ------- -------- --------
Comprehensive income $15,625 $33,241 $ 57,637 $ 79,187
======= ======= ======== ========
Earnings per common share $ 0.86 $ 1.76 $ 3.39 $ 4.40
======= ======= ======== ========
Earnings per common share - assuming dilution $ 0.78 $ 1.63 $ 3.09 $ 4.10
======= ======= ======== ========
</TABLE>
See accompanying notes to unaudited consolidated financial statements
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4
<PAGE>
<TABLE>
<CAPTION>
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)
===================================================================================================================================
Three Months Ended Nine Months Ended
June 30, 1998 June 30, 1997 June 30, 1998 June 30, 1997
<S> <C> <C> <C> <C>
Preferred shares par value $1
Balance at beginning of period $ 3,000 $ 3,000 $ 3,000 $ 0
Issue of shares 0 0 0 3,000
-------- -------- -------- --------
Balance at end of period $ 3,000 $ 3,000 $ 3,000 $ 3,000
======== ======== ======== ========
Common shares par value $1
Balance at beginning of period $ 15,165 $ 16,517 $ 15,074 $ 14,398
Exercise of share options 0 0 81 0
Issue of shares - employee stock purchase plan 1 0 11 0
Issue of shares 10 0 10 0
Conversion of exchangeable non-voting shares 0 2,260 0 4,379
Share repurchase 0 (3,704) 0 (3,704)
-------- -------- -------- --------
Balance at end of period $ 15,176 $ 15,073 $ 15,176 $ 15,073
======== ======== ======== ========
Additional paid in capital
Balance at beginning of period $300,345 $324,938 $299,964 $221,968
Issue of shares - employee stock purchase plan 30 13 411 30
Issue of shares 350 0 350 0
Issue of preferred shares, net of underwriting discount 0 0 0 70,283
Conversion of exchangeable non-voting shares 0 21,436 0 54,106
Share repurchase 0 (44,571) 0 (44,571)
-------- -------- -------- --------
Balance at end of period $300,725 $301,816 $300,725 $301,816
======== ======== ======== ========
Unrealized gain (loss) on investments
Balance at beginning of period $ 2,536 $ (4,390) $ 2,035 $ (1,861)
Unrealized gain in period 932 3,657 1,433 1,403
Conversion of exchangeable non-voting shares 0 (372) 0 (647)
-------- -------- -------- --------
Balance at end of period $ 3,468 $ (1,105) $ 3,468 $ (1,105)
======== ======== ======== ========
Retained earnings
Balance at beginning of period $120,601 $105,540 $105,153 $ 72,943
Net income 14,693 29,956 56,204 78,431
Common share dividends (11,370) (10,702) (34,070) (34,156)
Preferred share dividends (1,641) (1,166) (4,923) (1,166)
Exercise of share options 0 0 (81) 0
Conversion of exchangeable non-voting shares 0 8,945 0 20,091
Share repurchase 0 (30,684) 0 (34,254)
-------- -------- -------- --------
Balance at end of period $122,283 $101,889 $122,283 $101,889
======== ======== ======== ========
Total shareholders' equity $444,652 $420,673 $444,652 $420,673
======== ======== ======== ========
See accompanying notes to unaudited consolidated financial statements
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</TABLE>
5
<PAGE>
LaSalle Re Holdings Limited
Consolidated Statements of Cash Flows
(Expressed in thousands of United States Dollars)
(Unaudited)
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<TABLE>
Nine Months Ended
June 30, 1998 June 30, 1997
<S> <C> <C>
Cash flows from operating activities
Net income $ 56,204 $ 78,431
Adjustments to reconcile net income to
cash provided by operating activities:
Minority interest in net income 13,671 19,999
Amortization of investment premium 701 940
Net (gain) loss on sale of investments (2,532) 141
Unrealized (gain) loss on foreign exchange (648) 465
Changes in:
Reinsurance balances receivable (22,434) (33,690)
Deferred acquisition costs (2,810) (2,186)
Prepaid reinsurance premiums (5,126) (7,654)
Accrued investment income 27 1,500
Other assets (10,226) (19,625)
Reserve for losses and loss expenses 19,198 (7,200)
Unearned premium reserve 5,297 12,829
Other liabilities 16,955 27,053
--------- ---------
Cash (applied to) provided by operating activities 68,277 71,003
--------- ---------
Cash flows from investing activities
Purchase of investments (319,564) (250,706)
Net purchases of short term investments 0 (6,813)
Proceeds on the sale of investments 293,119 201,415
Proceeds on the maturity of investments 35,000 71,000
--------- ---------
Cash (applied to) provided by investing activities 8,555 14,896
--------- ---------
Cash flows from financing activities
Issue of shares 783 72,668
Dividends paid (47,230) (39,122)
Share repurchase 0 (99,068)
--------- ---------
Cash (applied to) provided by investing activities (46,447) (65,522)
--------- ---------
Net increase in cash and cash equivalents 30,385 20,377
Cash and cash equivalents at beginning of period 54,761 46,990
--------- ---------
Cash and cash equivalents at end of period $ 85,146 $ 67,367
========= =========
</TABLE>
See accompanying notes to unaudited consolidated financial statements
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6
<PAGE>
LaSalle Re Holdings Limited
Notes to Unaudited Consolidated Financial Statements
(Expressed in thousands of United States Dollars, except share and per share
data)
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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, 1997.
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.
2. Comprehensive Income
During the quarter ended March 31, 1998, the Company adopted the reporting and
disclosure requirements of SFAS No.130 "Reporting Comprehensive Income".
3. Accounting Policies
Earnings per share have been calculated in accordance with Statement of
Financial Accounting Standards No.128 ("SFAS 128"). Earnings per share are
calculated by dividing net income available to common shareholders by the
weighted average number of common shares outstanding. For the purposes of this
calculation, the exchangeable non-voting shares of LaSalle Re ("Exchangeable
Non-Voting Shares") are considered outstanding common shares of the Company due
to the exchangeable nature of the shares. Earnings per share assuming dilution
are computed by dividing net income available to common shareholders by the sum
of the weighted average number of common shares outstanding and the dilutive
potential common shares outstanding during the period of calculation. Prior
period calculations have been restated to give effect to SFAS 128.
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7
<PAGE>
LaSalle Re Holdings Limited
Notes to Unaudited Consolidated Financial Statements
(Expressed in thousands of United States Dollars,
except share and per share data)
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4. Earnings per Share
Earnings per share have been calculated in accordance with SFAS No. 128:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net income $ 14,693 $ 29,956 $ 56,204 $ 78,431
Add back: minority interest 3,480 7,729 13,671 19,999
Less: Series A preferred share
dividends (1,641) (1,641) (4,922) (1,741)
----------- ----------- ----------- -----------
Income available to common
shareholders $ 16,532 $ 36,044 $ 64,953 $ 96,689
----------- ----------- ----------- -----------
Weighted average number of shares
outstanding:
Common shares 15,167,816 15,635,182 15,138,550 15,734,587
Exchangeable Non-Voting Shares 4,018,146 4,888,018 4,018,146 6,263,523
----------- ----------- ----------- -----------
Weighted average number of shares
outstanding: 19,185,962 20,523,200 19,156,696 21,998,110
=========== =========== =========== ===========
Earnings per share $ 0.86 $ 1.76 $ 3.39 $ 4.40
=========== =========== =========== ===========
Income available to common
shareholders $ 16,532 $ 36,044 $ 64,953 $ 96,689
----------- ----------- ----------- -----------
Weighted average number of common
shares outstanding: 19,185,962 20,523,200 19,156,696 21,998,110
Plus: incremental shares from assumed
exercise of options 1,772,511 1,579,785 1,739,551 1,511,357
exercise of stock appreciation rights 88,064 66,544 83,623 60,262
Plus: contingently issuable shares 38,455 0 13,983 0
Adjusted weighted average number of ----------- ----------- ----------- -----------
common shares outstanding 21,084,992 22,169,529 20,993,853 23,569,729
----------- ----------- ----------- -----------
Earnings per share assuming dilution $ 0.78 $ 1.63 $ 3.09 $ 4.10
=========== =========== =========== ===========
</TABLE>
As of June 30, 1998, the Company had 2,416,457 options outstanding and had
granted 340,872 stock appreciation rights. As of June 30, 1997, the Company had
2,686,887 options outstanding and had granted 340,872 stock appreciation rights.
================================================================================
8
<PAGE>
LaSalle Re Holdings Limited
Notes to Unaudited Consolidated Financial Statements
(Expressed in thousands of United States Dollars,
except share and per share data)
================================================================================
5. Reinsurance
The effect of reinsurance on premiums written and earned is as follows:
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended
June 30, 1998 June 30, 1997 June 30, 1998 June 30, 1997
Written Earned Written Earned Written Earned Written Earned
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assumed $26,769 $43,505 $29,454 $46,382 $131,024 $124,364 $144,087 $131,259
Ceded 1,991 (1,452) 1,665 (479) (8,975) (2,486) (8,486) (833)
------- ------- ------- ------- -------- -------- -------- --------
Net Premiums $28,760 $42,053 $31,119 $45,903 $122,049 $121,878 $135,601 $130,426
======= ======= ======= ======= ======== ======== ======== ========
</TABLE>
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9
<PAGE>
LaSalle Re Holdings Limited
Management's Discussion and Anaylsis of Results of Operations
and Financial Condition
================================================================================
The following is a discussion and analysis of the Company's results of
operations for the three months and nine months ended June 30, 1998 and 1997 and
financial condition as of June 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, 1997.
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. Due to the nature of the business written by the Company, the
financial data included herein is 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 June 30, 1998 and 1997
Gross premiums written for the quarter ended June 30, 1998 were $26.8 million
compared to $29.5 million for the quarter ended June 30, 1997, a decrease of
9.2%. The Company's property catastrophe book experienced a reduction in gross
premiums written of $4.1 million for the quarter ended June 30, 1998 compared to
the quarter ended June 30, 1997. The reduction in the property catastrophe book
was related to both US and International business. In respect of US property
catastrophe business, the Company was unable to renew certain contracts
underwritten in 1997 due to the consolidation of certain ceding companies. The
reduction in international property catastrophe business was primarily due to
the non-renewal of contracts in cases where the Company considered the business
to be under-priced.
The decline in the core property catastrophe book during the quarter ended June
30, 1998 was offset by an increase in gross premiums written in other lines of
business. For the quarter ended June 30, 1998 gross premiums written in other
lines of business totaled $11.0 million or 41.0% of gross premiums written
compared to $8.5 million or 28.8% of gross premiums written for the quarter
ended June 30, 1997. This increase was primarily due to increased gross premiums
written by LaSalle Re Capital and the inclusion of a new property pro-rata
contract.
Premiums ceded for the quarter ended June 30, 1998 were $(2.0) million compared
to $(1.7) million in the quarter ended June 30, 1997.
As a result of the above, net premiums written for the quarter ended June 30,
1998 were $28.8 million compared to $31.1 million for the quarter ended June 30,
1997.
Net premiums earned for the quarter ended June 30, 1998 were $42.1 million
compared to $45.9 million for the same quarter in 1997. The decline in premiums
earned on the property catastrophe book was partly offset by the increased
premiums earned on business written by LaSalle Re Capital. Premiums written by
LaSalle Re Capital are earned over a period of 18-24 months from the inception
date of the underlying contracts. As LaSalle Re Capital began writing premiums
with effect from January 1, 1997, there were limited earnings in the quarter
ended June 30, 1997. Premiums on property catastrophe excess of loss contracts
are earned over the period coverage is provided, which is generally 12 months
and under proportional property catastrophe contracts,
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10
<PAGE>
LaSalle Re Holdings Limited
Management's Discussion and Anaylsis of Results of Operations
and Financial Condition
================================================================================
with the risks underlying the contracts incepting throughout the contract
period, premiums are generally earned over 18 months. Premiums on other lines of
business are earned over the period for which coverage is provided, which range
from 12 months to 60 months.
Ceded premiums amortized were $1.5 million for the quarter ended June 30, 1998
compared to $0.5 million for the quarter ended June 30, 1997. The increase of
$1.0 million was due to certain reinsurance protections purchased by LaSalle Re
Capital.
Net investment income increased 2.4% to $8.7 million for the quarter ended June
30, 1998 from $8.5 million for the quarter ended June 30, 1997. The increase in
net investment income was attributable to a larger average investment base.
Annualized investment income as a percentage of the average market value of
invested assets was 6.2% for the quarter ended June 30, 1998 compared to 6.3%
for the quarter ended June 30, 1997.
Net realized gains on investments were $0.5 million during the quarter ended
June 30, 1998 compared to losses of $0.6 million during the quarter ended June
30, 1997. 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 part of comprehensive income and shown as a separate component of
shareholders' equity.
The following table sets forth the Company's combined ratios for the quarters
ended June 30, 1998 and 1997:
<TABLE>
<CAPTION>
June 30, 1998 June 30, 1997
---------------------------------
<S> <C> <C>
Loss and loss expense ratio 56.1% 9.7%
Expense ratio 21.2% 24.1%
Combined ratio 77.3% 33.8%
</TABLE>
Losses and loss expenses incurred represents 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 $23.6 million during the
quarter ended June 30, 1998 compared with $4.5 million during the quarter ended
June 30, 1997. Losses incurred during the quarter ended June 30, 1998 related
primarily to claims from adverse weather conditions that affected the United
States, United Kingdom and parts of Europe. In addition, the Company increased
incurred but not reported loss reserves with respect to the other lines of
business being written by the Company. The Company was not affected by any
significant catastrophic losses in the quarter ended June 30, 1997.
The expense ratio includes underwriting expenses and operational expenses.
Underwriting expenses include brokerage, commissions, excise taxes and other
costs related to underwriting reinsurance contracts. Underwriting expenses as a
percentage of net premiums earned were 16.2% for the quarter ended June 30, 1998
compared to 17.5% for the quarter ended June 30, 1997. Due to lower underwriting
profits and reduced premium writings, fees accrued pursuant to the Underwriting
Services Agreement between LaSalle Re and CNA (Bermuda) Services Limited
decreased in the quarter ended June 30, 1998 to 2.7% as a percentage of net
premiums earned from 4.6% for the quarter ended June 30, 1997. The Company's
brokerage, ceding and profit commissions increased to 13.5% for the quarter
ended June 30, 1998 from 12.9% for the quarter ended June 30, 1997. The increase
was partly due to an increase in earned premiums written by LaSalle Re Capital,
whose expense ratio is approximately 20%, and partly due to an increase in the
average cost of writing property catastrophe proportional business.
================================================================================
11
<PAGE>
LaSalle Re Holdings Limited
Management's Discussion and Anaylsis of Results of Operations
and Financial Condition
================================================================================
Operational expenses were $2.1 million for the quarter ended June 30, 1998
compared to $3.0 million for the quarter ended June 30, 1997. As a percentage of
net premiums earned, operational expenses were 5.0% during the quarter ended
June 30, 1998 compared to 6.6% for the quarter ended June 30, 1997. Effective
October 1, 1997, the Administrative Services Agreement with Aon Risk Consultants
(Bermuda) Ltd. ("ARC"), was terminated and all of the personnel assigned to the
Company by ARC became employees of the Company with the Company assuming the
functions previously performed by ARC. This generated a reduction in operational
expenses, which was partially offset by increased costs in respect of LaSalle Re
Capital.
Corporate expenses for the quarter ended June 30, 1998 were $0.1 million
compared to $0.3 million for the quarter ended June 30, 1997. During the quarter
ended June 30, 1998, the Company incurred costs associated with its
investigation of potential transactions. Expenses incurred in the quarter ended
June 30, 1997 included costs associated with the offering of preferred shares,
except the underwriting discount, which was charged to additional paid in
capital, and the initial costs associated with the tender offer. All corporate
expenses are charged to income in the period they are incurred.
Interest expense was $0.4 million during the quarter ended June 30, 1998
compared with $0.5 million in the quarter ended June 30, 1997. 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 June 30, 1998,
there were no borrowings under this facility.
Foreign exchange losses in the quarter ended June 30, 1998 were negligible at
$0.05 million compared to negligible gains of $0.09 million in the quarter ended
June 30, 1997.
The Company's earnings per share were $0.86 for the quarter ended June 30, 1998
compared to $1.76 for the quarter ended June 30, 1997. Earnings per share
assuming dilution were $0.78 for the quarter ended June 30, 1998 compared to
$1.63 for the quarter ended June 30, 1997.
Results of Operations -- for the nine months ended June 30, 1998 and 1997
Gross premiums written for the nine months ended June 30, 1998 were $131.0
million compared to $144.1 million for the nine months ended June 30, 1997, a
decrease of 9.1%. The Company's property catastrophe book experienced a
reduction in gross premiums written of $31.3 million for the nine months ended
June 30, 1998 compared to the nine months ended June 30, 1997. Of this
reduction, approximately $7.7 million resulted from the Company's reduction of
its line sizes on two international quota share contracts, pursuant to its
policy of reducing aggregate exposures in a declining rate environment. The
remaining portion of the reduction was due to continuing competitive rates,
which have led to lower priced premiums in comparison to those written in the
nine months ended June 30, 1997, and the non-renewal of contracts in certain
cases where the Company considered business to be under-priced. The reduction in
the property catastrophe book was primarily related to international property
catastrophe business with 35.0% of the reduction related to United States
property catastrophe business.
The decline in the core property catastrophe book during the nine months ended
June 30, 1998 was offset by an increase in gross premiums written in other lines
of business. For the nine months ended June 30, 1998, gross premiums written in
other lines of business totaled $41.8 million or 31.9% of gross premiums written
compared to $29.1 million or 20.2% of gross premiums written for the nine months
ended June 30, 1997. The increase was primarily due to increased gross premiums
of $10.1 million written by LaSalle Re Capital.
================================================================================
12
<PAGE>
LaSalle Re Holdings Limited
Management's Discussion and Anaylsis of Results of Operations
and Financial Condition
================================================================================
Premiums ceded for the nine months ended June 30, 1998 were $9.0 million
compared to $8.5 million in the nine months ended June 30, 1997. This increase
related to certain reinsurance protections purchased by LaSalle Re and LaSalle
Re Capital.
As a result of the above, net premiums written for the nine months ended June
30, 1998 were $122.0 million compared to $135.6 million for the nine months
ended June 30, 1997.
Net premiums earned for the nine months ended June 30, 1998 were $121.9 million
compared to $130.4 million for the same period in 1997. The 6.5% decrease was
the result of reduced premiums earned on the Company's core property catastrophe
business, which was partially offset by increased earned premiums on those
premiums written by LaSalle Re Capital and positive premium adjustments.
Premiums written by LaSalle Re Capital are earned over a period of 18-24 months
from the inception date of the underlying contracts. Premiums on property
catastrophe excess of loss contracts are earned over the period coverage is
provided, which is generally 12 months. Under proportional property catastrophe
contracts, with the risks underlying the contracts incepting throughout the
contract period, premiums are generally earned over 18 months. Premiums on other
lines of business are earned over the period for which coverage is provided,
which range from 12 months to 60 months.
Ceded premiums amortized were $2.5 million for the nine months ended June 30,
1998 compared to $0.8 million for the nine months ended June 30, 1997. The
charge for the nine months ended June 30, 1997 effectively included only two
quarters, as the reinsurance protections were not in place until January 1,
1997.
Net investment income increased 4.0% to $25.8 million for the nine months ended
June 30, 1998 from $24.8 million for the nine months ended June 30, 1997.
Annualized investment income as a percentage of the average market value of
invested assets was 6.2% for both the nine months ended June 30, 1998 and 1997.
The increase in net investment income was attributable to a larger average
investment base.
Net realized gains on investments were $2.5 million for the nine months ended
June 30, 1998 compared to a loss of $0.1 million for the nine months ended June
30, 1997. The gains in the nine months ended June 30, 1998 resulted primarily
from a credit spread enhancement exercise undertaken during the quarter ended
March 31, 1998. 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 part of comprehensive income and shown as a separate component of
shareholders' equity.
The following table sets forth the Company's combined ratios for the nine months
ended June 30, 1998 and 1997:
<TABLE>
<CAPTION>
June 30, 1998 June 30, 1997
---------------------------------
<S> <C> <C>
Loss and loss expense ratio 42.9% 17.0%
Expense ratio 22.0% 22.9%
Combined ratio 64.9% 39.9%
</TABLE>
Losses and loss expenses incurred represents 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 $52.2 million during the nine
months ended June 30, 1998 compared with $22.2 million during the nine months
ended June 30, 1997. Of the losses incurred for the nine months ended June 30,
1998, approximately $13.8 million related to reported claims derived from
adverse weather conditions in the second quarter of 1998 and $7.0
================================================================================
13
<PAGE>
LaSalle Re Holdings Limited
Management's Discussion and Anaylsis of Results of Operations
and Financial Condition
================================================================================
million related to a claim on an aggregate stop loss protection. Also, the
Company incurred losses in respect of satellite failures, various risk and
aggregate stop loss protection losses and the Canadian winter freeze. In
addition, the Company increased incurred but not reported loss reserves with
respect to the increased premium writings on other lines of business. The main
components of losses and loss expenses incurred during the nine months ended
June 30, 1997 related to development on Hurricane Fran, winter storm activity in
the United States, the United Kingdom and Europe and the triggering of aggregate
loss covers.
The expense ratio includes underwriting expenses and operational expenses.
Underwriting expenses include brokerage, commissions, excise taxes and other
costs related to underwriting reinsurance contracts. Underwriting expenses as a
percentage of net premiums earned were 15.7% for the nine months ended June 30,
1998 compared to 16.0% for the nine months ended June 30, 1997. Due to lower
underwriting profits and premium writings in the nine months ended June 30, 1998
fees accrued pursuant to the Underwriting Services Agreement as a percentage of
net premiums earned, decreased to 3.2% from 4.2% for the nine months ended June
30, 1997. The Company's brokerage, ceding and profit commissions increased to
12.5% for the nine months ended June 30, 1998 from 11.8% for the nine months
ended June 30, 1997. The increase was partly due to an increase in earned
premiums written by LaSalle Re Capital, whose expense ratio is approximately
20%. In addition, the Company experienced an increase in the average cost of
writing property catastrophe proportional business.
Operational expenses were $7.7 million for the nine months ended June 30, 1998,
compared to $9.0 million for the nine months ended June 30, 1997. As a
percentage of net premiums earned, operational expenses were 6.3% during the
nine months ended June 30, 1998 compared to 6.9% for the nine months ended June
30, 1997. Effective October 1, 1997, the Administrative Services Agreement with
ARC was terminated and all of the personnel assigned to the Company by ARC
became employees of the Company with the Company assuming the functions
previously performed by ARC. This generated a reduction in operational expenses
as the fees paid to ARC were in excess of the additional costs assumed by the
Company. This decrease was, however, offset by an increase in costs relating to
LaSalle Re Capital of $0.8 million and increased executive compensation and
directors fees of $0.8 million.
The Company incurred corporate expenses of $0.1 million during the nine months
ended June 30, 1998 compared to $1.6 million for the nine months ended June 30,
1997. The costs incurred in the nine months ended June 30, 1998 related to costs
associated with its investigation of potential transactions. Corporate expenses
incurred for the nine months ended June 30, 1997 included costs associated with
the secondary offering, the preferred offering, the tender offer, the formation
costs of LaSalle Re Capital and the Company's move to the New York Stock
Exchange. Corporate expenses do not include the underwriting discounts
associated with these offerings. In respect of the secondary public offering,
this cost was borne by the selling shareholders. In respect of the offering of
preferred shares, the underwriting discount was charged to additional paid in
capital.
Interest expense was $1.4 million during the nine months ended June 30, 1998
compared with $1.1 million in the nine months ended June 30, 1997. The increase
in interest expense was due to financing charges associated with the deposit
portion of LaSalle Re's ceded reinsurance contract, which incepted January 1,
1998. Other interest expenses related to the ongoing commitment fees payable on
the Company's credit facility. As at June 30, 1998, there were no borrowings
under this facility.
Foreign exchange gains in the nine months ended June 30, 1998 were $0.3 million
compared to losses of $1.9 million in the nine months ended June 30, 1997. The
gains in the nine months ended June 30, 1998 were principally due to an increase
in the value of the United States Dollar against Sterling. In 1997, the losses
resulted from an unfavorable closing of a Sterling forward
================================================================================
14
<PAGE>
LaSalle Re Holdings Limited
Management's Discussion and Anaylsis of Results of Operations
and Financial Condition
================================================================================
contract, and a strengthening of the United States Dollar since January 1, 1997
against the major foreign currencies in which the Company wrote premiums.
The Company's earnings per share were $3.39 for the nine months ended June 30,
1998 compared to $4.40 for the nine months ended June 30, 1997. Earnings per
share assuming dilution were $3.09 for the nine months ended June 30, 1998
compared to $4.10 for the nine months ended June 30, 1997.
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 that would
result in a breach of these requirements. In addition, LaSalle Re is prohibited
under the Insurance Act from reducing its total opening statutory capital by
more than 15% without the approval of the Minister of Finance. LaSalle Re
currently meets these requirements. In addition, the payment of dividends by
LaSalle Re is subject to the rights of holders of the Exchangeable Non-Voting
Shares to receive a pro rata share of any dividend and to its need to maintain
shareholders' equity adequate to support the level of LaSalle Re's reinsurance
operations.
Operating activities provided net cash of $68.3 million for the nine months
ended June 30, 1998 and $71.0 million for the nine months ended June 30, 1997.
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 June 30, 1998,
76.8% of its total assets were held in cash and investments. To further mitigate
the uncertainty surrounding the amount and timing of potential liabilities and
to minimize interest rate risk, LaSalle Re maintains a short average duration
for its investment portfolio. The modified average duration of the portfolio was
3.6 years at June 30, 1998. At June 30, 1998, the fair value of the Company's
total investment portfolio, including cash, was $578.5 million.
During the quarter ended June 30, 1998, the Company modified its investment
guidelines to allow the purchase of mortgage backed securities. As at June 30,
1998, these securities had a market value of $9.9 million that equated to
approximately 2.01% of the Company's investment portfolio.
In addition, during the quarter ended June 30, 1998 the Company entered into a
Japanese earthquake swap to provide cashflow to the counter-party in the event
of a defined seismic
================================================================================
15
<PAGE>
LaSalle Re Holdings Limited
Management's Discussion and Anaylsis of Results of Operations
and Financial Condition
================================================================================
activity. The contract exposes LaSalle Re to a maximum cash outflow of the
notional amount of $3.0 million should the defined seismic event occur. The
Company is also exposed to credit loss in the event of nonperformance by the
counter-party to the remittance of interest payments as required by the swap.
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 $3.5 million at June 30, 1998 compared to
a gain of $2.0 million at September 30, 1997.
As of June 30, 1998, 87.6% of the securities held in the Company's investment
portfolio were fixed-income securities rated "AA" or better and 98.9% 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 June 30, 1998, issuers from the Far East and
Asia represented 6.1% of the investment portfolio. These bonds had an aggregate
unrealized loss of $0.1 million. Of these bonds, all except one were rated AAA,
with the other bond rated AA and maturing in July 1998.
Reinsurance balances receivable were $103.1 million at June 30, 1998 compared to
$80.0 million at September 30, 1997. The increase was primarily due to the
inclusion of reinsurance balances receivable related to the business written by
LaSalle Re Capital. At June 30, 1998, these receivable balances were $27.6
million compared to $11.3 million as at September 30, 1997. Given the three-year
accounting methodology utilized by Lloyd's, these balances will not be received
until after the year 2000. The increases in unearned premium and deferred
acquisition costs from $88.5 million and $11.9 million, respectively, at
September 30, 1997 to $93.8 million and $14.7 million, respectively, at June 30,
1998 are due to an increase in gross premiums written by LaSalle Re Capital.
Prepaid reinsurance premiums increased from $5.8 million as at September 30,
1997 to $11.0 million as at June 30, 1998. The increase was due to the
reinsurance coverage placed by the Company at January 1, 1998.
Other assets increased from $22.6 million as at September 30, 1997 to $32.9
million as at June 30, 1998. Of the increase, $5.3 million related to the
deposit portion of the ceded reinsurance contract, which is accounted for in
accordance with SFAS No 113, together with the associated profit commission. In
addition, $2.1 million of the increase related to the purchase of fixed assets
in connection with the termination of the Administrative Services Agreement and
a further $2.3 million was prepaid in respect of the option fee for the second
year of coverage provided by the Catastrophe Equity Put option program.
Other liabilities increased from $22.8 million as at September 30, 1997 to $39.2
million as at June 30, 1998. The increase of $16.4 million was primarily due to
liabilities established for the purchased reinsurance protections and operating
expenses of LaSalle Re Capital.
On June 1, 1998, the Company paid a dividend of $0.5469 per share to holders of
record of Series A preferred shares on May 1, 1998. As of June 30, 1998,
dividends due but not yet declared on the Series A preferred shares amounted to
$0.5 million. On June 19, 1998, the Company declared a common share dividend of
$0.75 per share to shareholders of record on July 3, 1998, payable on July 17,
1998. The actual amount and timing of any future common
================================================================================
16
<PAGE>
LaSalle Re Holdings Limited
Management's Discussion and Anaylsis of Results of Operations
and Financial Condition
================================================================================
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. There can be no assurance that the Company's dividend policy will
not change or that the Company will declare or pay any dividends in future
periods.
In accordance with the terms of certain reinsurance contracts, the Company has
posted letters of credit in the amount of $8.4 million as of June 30, 1998 as
compared to $8.7 million as of September 30, 1997 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 amount of $16.3 million (equivalent to (Pounds)9.8 million). In
addition, in connection with the Japanese earthquake swap, 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.
At June 30, 1998, reserves for unpaid losses and loss expenses were $65.5
million. The increase of $20.0 million from September 30, 1997 was primarily due
to the claims incurred in the second quarter of 1998, relating primarily to
weather related losses which have not yet been paid and the provision of
additional incurred but not reported loss reserves for other lines of business.
The Company has no material commitments for capital expenditures.
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 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
$300 million, increasing to $350 million at the end of calendar year 1998 and
$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 June 30, 1998, the
credit facility had not been utilized.
Management has formed a year 2000 task force to assess the extent to which the
Company's computer systems (and third parties' computer systems that are
material to the Company's operations such as the computer systems of service
providers, suppliers and brokers) are capable of correctly processing
information relating to dates in and after the year 2000 ("the Year 2000
Issue").
The Company is currently preparing an inventory of its computer hardware and
software. This will be used as a basis to determine which items require
modifications in order to be Year 2000 compliant. In addition, the Company is
evaluating for Year 2000 compliance a new reinsurance software package that is
scheduled for adoption by the Company later in the current calendar year. At
present, the Company believes that with appropriate modifications to its
hardware and software systems the effects of the Year 2000 Issue can be
mitigated. The Year 2000 Issue could
================================================================================
17
<PAGE>
LaSalle Re Holdings Limited
Management's Discussion and Anaylsis of Results of Operations
and Financial Condition
================================================================================
have a material impact on the Company, however, if the Company is unable to
complete such modifications in a timely manner.
The Company has approached a list of key contacts to determine the extent to
which the Company is vulnerable to the possible failure by those third parties'
to correct their own Year 2000 Issue. This list includes service providers,
suppliers and brokers. The Company is currently in the process of reviewing the
responses received to date and does not anticipate any such failures. However,
there can be no guarantee that the systems of other companies will be modified
in a timely manner or that a failure by another company to become Year 2000
compliant would not have a material adverse effect on the Company.
Although the task force has not completed its assessment, currently the Company
believes that the costs of addressing this issue will not have a material
adverse impact on the Company's financial position. However, if the Company and
third parties upon which it relies fail to address this issue in a timely
manner, such failure could result in a material financial risk to the Company.
In June 1997, the Financial Accounting Standards Board issued SFAS No. 131
"Disclosures about Segments of an Enterprise and Related Information." The
statement is effective for fiscal year financial statements issued for periods
beginning after December 15, 1997. SFAS 131 requires the Company to report
financial and descriptive information about its reportable operating segments.
The Company is currently reviewing the impact of this standard on its financial
reporting.
In February 1998, the Financial 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 that as a result of the statement disclosures will change
significantly.
In June 1998, the Financial 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. The Company
is currently reviewing the impact of this standard on its financial reporting.
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 opinion of the Company, adequate to meet the expected cash
requirements of the Company over the next 12 months.
Cautionary Statement Regarding Forward-Looking Statements
This report contains certain forward-looking statements within the meaning of
Section 27A of the United States Securities Act of 1933, as amended, and Section
21E of the United States Securities Exchange Act of 1934, as amended. Forward-
looking statements are statements other than historical information or
statements of current condition. Some forward-looking statements may be
identified by use of terms such as "believes", "anticipates", "intends", or
"expects". These statements relate to the plans of the Company for future
operations, including the Company's dividend policy. In light of the risks and
uncertainties inherent in all future projections, these statements should not be
regarded as a representation that the objectives would be achieved. Many factors
could cause actual results to differ materially from those in the forward-
looking statements, including, but not limited, to the following: catastrophic
events of unanticipated frequency or severity; changes in the demand for or
supply of property catastrophe reinsurance; actions of competitors; changes in
the Company's financial ratings; changes in insurance or tax
================================================================================
18
<PAGE>
LaSalle Re Holdings Limited
Management's Discussion and Anaylsis of Results of Operations
and Financial Condition
================================================================================
laws or regulations or governmental interpretations thereof; changes in foreign
economic conditions including currency rate fluctuations; a major decrease in
the cession of business from CNA Financial Corporation ("CNA"); or the
termination of the Underwriting Services Agreement with an affiliate of CNA. The
Company undertakes no obligation to release publicly the results of any future
revisions it may make to forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
================================================================================
19
<PAGE>
================================================================================
LaSalle Re Holdings Limited
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
On June 3, 1998, the Company sold 6,500 of its common shares to
Clement S. Dwyer, Jr., a director of the Company, and 3,500 of its
common shares to Mr. Dwyer's wife, Martha H. Dwyer. The aggregate
price for these 10,000 shares was $360,000 in cash. These securities
were issued in a private placement pursuant to an exemption from
registration provided by Section 4(2) of the Securities Act of 1933,
as amended, which exempts transactions by an issuer not involving any
public offering. The issuance did not involve any general
solicitation and Mr. and Mrs. Dwyer acquired these securities for
their own accounts and not with a view to any distribution thereof to
the public.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
ITEM 5. OTHER INFORMATION.
Shareholder proposals must be received in writing by the Secretary of
the Company no later than September 8, 1998 and must comply with the
requirements of the Securities and Exchange Commission in order to be
considered for inclusion in the Company's proxy statement and form of
proxy relating to the Annual General Meeting to be held in 1999. In
connection with such meeting, the Company may solicit proxies which
confer discretionary authority to vote on any shareholder proposals
of which the Secretary of the Company does not receive notice by
November 22, 1998. Shareholders who intend to nominate persons for
election as directors at general meetings must comply with the
advance notice procedures set forth in the Bye-Laws of the Company in
order for such nominations to be properly brought before that general
meeting. These advance notice procedures require that written notice
of such shareholder's intent to make such a nomination be received by
the Secretary of the Company not less than 60 days nor more than 120
days prior to the general meeting.
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)).
27 Financial Data Schedule
(b) Reports on Form 8-K - No reports were filed during the quarter ended
June 30, 1998.
================================================================================
20
<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:______________ LASALLE RE HOLDINGS LIMITED
/s/ Andrew Cook
---------------
Name: Andrew Cook
Title: Senior Vice President & Chief Financial
Officer
Date:______________ /s/ Victor H. Blake
-------------------
Name: Victor H. Blake
Title: Chairman, President & Chief Executive
Officer
================================================================================
21
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 7
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> SEP-30-1998 SEP-30-1998
<PERIOD-START> APR-01-1998 OCT-01-1998
<PERIOD-END> JUN-30-1998 JUN-30-1998
<DEBT-HELD-FOR-SALE> 0 0
<DEBT-CARRYING-VALUE> 0 0
<DEBT-MARKET-VALUE> 0 0
<EQUITIES> 0 0
<MORTGAGE> 0 0
<REAL-ESTATE> 0 0
<TOTAL-INVEST> 493,373 493,373
<CASH> 85,146 85,146
<RECOVER-REINSURE> 0 0
<DEFERRED-ACQUISITION> 14,742 14,742
<TOTAL-ASSETS> 752,926 752,926
<POLICY-LOSSES> 65,550 65,550
<UNEARNED-PREMIUMS> 93,788 93,788
<POLICY-OTHER> 0 0
<POLICY-HOLDER-FUNDS> 0 0
<NOTES-PAYABLE> 0 0
<COMMON> 15,176 15,176
0 0
3,000 3,000
<OTHER-SE> 426,476 426,476
<TOTAL-LIABILITY-AND-EQUITY> 752,926<F1> 752,926<F1>
42,053 121,878
<INVESTMENT-INCOME> 8,732 25,767
<INVESTMENT-GAINS> 515 2,532
<OTHER-INCOME> 0 63
<BENEFITS> 23,607 52,243
<UNDERWRITING-AMORTIZATION> 6,815 19,189
<UNDERWRITING-OTHER> 2,705 8,933
<INCOME-PRETAX> 18,173 69,875
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 18,173 69,875
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 18,173 69,875
<EPS-PRIMARY> 0.86<F2> 3.39<F2>
<EPS-DILUTED> 0.78<F3> 3.09<F3>
<RESERVE-OPEN> 0<F4> 0<F4>
<PROVISION-CURRENT> 0<F4> 0<F4>
<PROVISION-PRIOR> 0<F4> 0<F4>
<PAYMENTS-CURRENT> 0<F4> 0<F4>
<PAYMENTS-PRIOR> 0<F4> 0<F4>
<RESERVE-CLOSE> 0<F4> 0<F4>
<CUMULATIVE-DEFICIENCY> 0<F4> 0<F4>
<FN>
<F1> Includes minority interest.
<F2> Basic EPS, following adoption of SFAS 128.
<F3> Diluted EPS, following adoption of SFAS 128.
<F4> Amounts for Securities Act Industry Guide 6 and Exchange Act Industry Guide
4 disclosures are not provided because the Company's loss reserves do not
exceed one-half of the consolidated common shareholders' equity.
</FN>
</TABLE>
