announced yesterday the sale of $75 million in preferred stock.

The move is part of LaSalle Re's capital management plan.

It comes at a time when directing capital back into the reinsurance market may be difficult. Rather than deploy the $75 million in a soft market, LaSalle has opted for an avenue which not only benefits shareholders but also lowers the company's cost of capital and maintains ratings.

LaSalle Re will use the $75 million plus $25 million in its existing capital base to repurchase $100 million in common stock, or 3.3 million to 3.7 million shares.

"Swapping'' common shares for preferred shares will lower the company's capital costs because the new preferred shares pay a lower dividend yield compared to common shares -- 8.75 percent versus about 11 percent on this $75 million.

The preferred shares will pay an annual rate of 8.75 percent through quarterly dividends starting June 1, 1997 and are redeemable by the company on or after March 27, 2007.

LaSalle Re chief financial officer Andrew Cook said it appeared earlier that the yield would be 8.875 percent, but "favourable'' demand led to the 8.75 percent yield.

The preferred shares, to be priced mid-April, will trade on the New York Stock Exchange.

LaSalle Re's common stock, which trades on NASDAQ, yields around 11 percent (a 71 cent dividend per share per quarter based on offering price of $24.50).

The new preferred share offering gives investors a choice between two types of stock in the company. Preferred shares have first call on the company's dividend pool but offer a lower yield. Common shares carry more risk but offer a higher yield.

LaSalle Re has, in its prospectus, stated its intent to pay 50 to 60 percent of the prior year's net income in dividends.

Mr. Cook also said that: "We have a significant amount (of our stock) held by financial investors. It can be a profitable exit route for them.'' About 35 percent of the company's stock is held by founding financial investors.

The preferred share offering was lead managed by Smith Barney, Inc. of New York. Other managers included Morgan Stanley & Co. and Lazard Freres & Co.

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