in the operating loss of Bermuda-based LaSalle Re Holdings by nearly 25 percent to $16.3 million for the second quarter.

The reinsurance company which is based in Hamilton, Bermuda, yesterday reported financial results for the period ended March 31, 2000, the second quarter of its 2000 fiscal year.

Operating loss before minority interest for the quarter was $16.3 million or 88 cents per share, compared to a loss of $13.1 million or 73 cents per share in the same period of 1999.

President and Chief Executive Officer of LaSalle, Guy Hengesbaugh said: "LaSalle's financial results for the quarter were primarily driven by two factors. One was a significant increase in the market loss estimate for the French storms of late December, 1999.

"The other factor was a loss from one of the Lloyd's syndicates supported by our corporate capital vehicle.'' According to the company, the second quarter of 2000 included $18.6 million in development due to the European storms.

Mr. Hengesbaugh said: "Market loss estimates at the close of last quarter for the European storms were near $6 billion. We have since witnessed significant growth in these losses, especially in Martin, which was the second major storm to occur in the last week of December. We now believe that the ultimate insured loss cost for the two storms are more likely be in the $9 billion range.

"Given this development, and in keeping with our conservative reserving approach, the company has increased its reserves for these storms. We have assumed full limit losses for both storms, Lothar and Martin, on all specific French contracts and a prudent reserving for non-specific worldwide contracts.'' The company said the increase in loss estimates for the storms will not affect the share-for-share exchange ratio to be used in LaSalle's proposed business combination with Trenwick Group Inc.

The second factor was losses of $7.4 million from a Lloyd's syndicate supported by LaSalle Re Corporate Capital. This related to business on which LaSalle has an aggregate loss cap and has reserved to the full limits of the cap, so no further loss can develop from these policies.

Excluding the impact of these items, net losses and loss expenses were as anticipated.

Commenting on market conditions, Mr. Hengesbaugh said: "We are seeing real rate increases in territories such as the US and Japan, where contracts are coming up for renewal. However, rate increases have not been as strong as we would like, and therefore we will continue to reduce our aggregate exposures until we see significant rate improvements.'' He said LaSalle had responded by reducing its European exposures by 30 percent over the last few months.

Gross premiums written were $65.2 million for the quarter, compared to $88.6 million written in the second quarter of 1999. Written premiums were down due mainly to the associated aggregate reductions during the period. In addition, approximately $6.0 million of premium was written at January 1, 1999 for policy periods of more than 12 months, as clients sought to renew for periods extending past January 1, 2000.

This premium will be up for renewal primarily in the third fiscal quarter of 2000.

Net premiums earned were $27.2 million, compared to $38.1 million in the corresponding quarter of 1999. Net investment income was $8.9 million in the quarter ended March 31, 2000, compared to $8.8 million in second-quarter 1999.

Net losses and loss expenses were $43.5 million compared to $50.2 million during the quarter ended March 31, 1999. The second quarter of 1999 included $35 million in reserve strengthening and additional incurred but not reported loss reserves following a review of assumptions used in setting loss reserves.

Operating expenses were $3.2 million for the quarter compared to $2.4 million for the corresponding quarter in 1999. The increase was primarily due to an increase in executive compensation levels associated with an outstanding grant of stock appreciation rights.