<PAGE>   1
                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-K

   /X/   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934
                   For the fiscal year ended OCTOBER 31, 1997

   / /      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                         Commission File Number 0-22118
                                MID OCEAN LIMITED
             (Exact name of registrant as specified in its charter)

             Cayman Islands                              Not Applicable
     (State or other jurisdiction of                      (IRS Employer
     incorporation or organization)                  Identification Number)

          Richmond House, 12 Par-la-Ville Road, Hamilton HM 08, Bermuda
                    (Address of principal executive offices)
                        Telephone Number: (441) 292 1358
              (Registrant's telephone number, including area code)

           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                               Title of each class
               Class A Ordinary Shares, Par Value $0.20 per Share

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   No
    ---     ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to the
Form 10-K.
           ---

The aggregate market value of the shares of all classes of voting stock of the
registrant held by non-affiliates of the registrant on January 12, 1998 was
approximately $2,121 million computed upon the basis of the closing sales price
of the Ordinary Shares on that date. For purposes of this computation, shares
held by directors and officers of the registrant have been excluded. Such
exclusion is not intended, nor shall it be deemed, to be an admission that such
persons are affiliates of the registrant.

As of January 12, 1998 there were outstanding 36,077,267 Class A Ordinary
Shares, 1,190,292 Class B Ordinary Shares and 1,860,000 Class C Ordinary Shares,
each of $0.20 par value, of the registrant.

Documents Incorporated by Reference

Portions of the Registrant's annual report to security holders for the fiscal
year ended October 31, 1997 (the "1997 Annual Report") are incorporated by
reference in Parts II and IV of this Form 10-K.

The registrant's definitive proxy statement filed with the Securities and
Exchange Commission pursuant to Regulation 14A relating to the annual meeting of
shareholders scheduled to be held on March 5, 1998, is incorporated by reference
in Part III of this Form 10-K.

Portions of the Registrant's Registration Statement on Form S-1 (File No.
33-63298) are incorporated by reference in Part I of this Form 10-K.
<PAGE>   2
INDEX




<TABLE>
<CAPTION>
PART I                                                                      PAGE
--------------------------------------------------------------------------------
<S>                                                                         <C>
Item 1    Business .....................................................       1
Item 2    Properties ...................................................      12
Item 3    Legal Proceedings ............................................      12
Item 4    Submission of Matters to a Vote of Security Holders ..........      12



PART II
--------------------------------------------------------------------------------

Item 5    Market for the Registrant's Common Equity and Related
          Stockholder Matters ..........................................      13
Item 6    Selected Financial Data ......................................      15
Item 7    Management's Discussion and Analysis of Results of
          Operations and Financial Condition ...........................      15
Item 8    Financial Statements and Supplementary Data ..................      15
Item 9    Changes in and Disagreements with Accountants on Accounting
          and Financial Disclosure .....................................      15



PART III
--------------------------------------------------------------------------------

Item 10   Directors and Executive Officers of the Registrant ...........      15
Item 11   Executive Compensation .......................................      15
Item 12   Security Ownership of Certain Beneficial Owners and
          Management ...................................................      15
Item 13   Certain Relationships and Related Transactions ...............      15



PART IV
--------------------------------------------------------------------------------

Item 14   Exhibits, Financial Statement Schedules and Reports on Form
          8-K ..........................................................      15
</TABLE>


Note:  All dollar amounts are in United States dollars.
<PAGE>   3
                                                                               1




                                     PART I



ITEM 1 - BUSINESS

INTRODUCTION

Mid Ocean Limited ("the Company") is a holding company incorporated in the
Cayman Islands.  Its principal offices are located in Bermuda.  The Company
is the parent company of Mid Ocean Holdings Limited ("Holdings) which has two
wholly owned subsidiaries; Mid Ocean Reinsurance Company Ltd. ("Mid Ocean
Reinsurance") and Ridgewood Holdings Ltd. ("Ridgewood"). Ridgewood is the
Bermuda based holding company of The Brockbank Group plc ("Brockbank").   The
Company, through its subsidiaries, provides a broad range of reinsurance and
insurance products on a global basis.

Mid Ocean Reinsurance is a leading reinsurer, writing property catastrophe,
property excess of loss, property pro rata, marine and energy, aviation and
satellite and various other risks to insurers and reinsurers on a worldwide
basis. Organized in August 1992, Mid Ocean Reinsurance was the first company
formed specifically to capitalize on the opportunity created by the then
existing supply/demand imbalance for worldwide property catastrophe reinsurance.
This had arisen from several factors; a series of catastrophic events after 1987
causing large losses for existing reinsurers, significant increases in premium
rates and a reduction of property catastrophe reinsurance coverage available to
primary insurance companies in the United States and other significant markets.
Mid Ocean Reinsurance initially focused its efforts primarily on providing
property catastrophe reinsurance to the world's leading insurers, many of whom
are now reinsureds of Mid Ocean Reinsurance. Since the beginning of 1995
however, premium rates across most classes of business and in most markets have
declined where a lack of significant losses and an increased supply of
reinsurance coverage available have caused pricing pressures. In order to
diversify its spread of business, Mid Ocean Reinsurance has written other
primarily short tail lines that are not necessarily catastrophe-related. Mid
Ocean Reinsurance assumes risks which are diversified both geographically and
across ceding companies and which generally have aggregate limits and varying
attachment points. Property catastrophe gross written premiums represented
approximately 46% of Mid Ocean Reinsurance total gross written premiums in 1997.
Property catastrophe loss experience, as well as loss experience on many of the
other lines of business Mid Ocean Reinsurance writes, is generally characterized
as low frequency but high severity in nature and may result in volatility in the
Company's financial results for any fiscal quarter or year.


In August 1995, Mid Ocean Reinsurance opened a branch office in London which
writes marine and energy, and aviation excess of loss reinsurance. In August
1996, Mid Ocean Reinsurance Consulting GmbH was established, a wholly owned
subsidiary of Mid Ocean Reinsurance located in Munich, Germany, which is its
Continental European contact office. In September 1996, Mid Ocean Reinsurance
opened a branch office in Singapore which writes treaty, facultative, and a
small amount of casualty business.


Brockbank is a leading Lloyd's managing agency which manages five Lloyd's
syndicates, two of which are dedicated corporate syndicates ("corporate
syndicates") whose capital is provided solely by the Company. In December 1995,
Mid Ocean Reinsurance acquired 51% of Brockbank. In August 1997, the Company
acquired the remaining 49% of Brockbank for an estimated cost of $ 144.4 million
in the form of cash, loan notes and issued shares of the Company. The two
corporate syndicates commenced underwriting with effect from January 1, 1996 and
write property, marine and energy, aviation and satellite, professional
indemnity, motor and other specialty lines primarily of insurance but also
reinsurance to a globally diverse group of clients. In 1996 they had an
aggregate premium limit (i.e. underwriting capacity) of approximately $155
million. This was increased to approximately $230 million effective January 1,
1997 and approximately $340 million effective January 1, 1998. Capacity under
management by Brockbank was
<PAGE>   4
                                                                               2


approximately $840 million for 1997 and will be approximately $896 million in
1998. The managing agency receives fees and commissions in respect of the
underwriting services it provides to the syndicates. Mid Ocean Reinsurance has,
from time to time, provided quota share reinsurance to the syndicates managed by
Brockbank.

The Company will continue to seek, on a selected basis, additional business
opportunities with the goal of enhancing shareholder value.

Mid Ocean Reinsurance is a registered Bermuda reinsurance company and is subject
to regulation and supervision in Bermuda, the United Kingdom, Germany and
Singapore. Brockbank is subject to United Kingdom and Lloyd's regulations and
supervision.

Mid Ocean Reinsurance is not registered or licensed as an insurance company in
any jurisdiction in the United States of America ("United States" or "US").
Brockbank, via Lloyd's, is a licensed insurer in the states of Illinois,
Kentucky and the US Virgin Islands ("USVI"). It is also an eligible surplus
lines writer in all states other than Kentucky and USVI, and an accredited
reinsurer in every state other than Michigan.

The Company's fiscal year end is October 31. References to 1997, 1996 and 1995
refer to the fiscal years ended October 31, 1997, 1996 and 1995 respectively.
Brockbank's fiscal year end is December 31. Results of operations relating to
Brockbank for the nine month period from January 1, 1996, (the date of
acquisition of a 51% interest) to September 30, 1996 are included in the
Company's fiscal year end October 31, 1996 whereas results of Brockbank's
operations for the twelve month period ended September 30, 1997 are included in
the Company's fiscal year end October 31, 1997.

For the years ended October 31, 1997, 1996 and 1995, the Company reported net
premiums written of $505.5 million, $525.7million and $435.0 million
respectively. The following table sets forth the Company's net premiums written
by lines of business:


<TABLE>
<CAPTION>
   ($ in millions)                    1997                      1996                      1995
                              -------------------------------------------------------------------------
                                   Net                       Net                       Net
                              Premiums      Percent     Premiums      Percent     Premiums      Percent
                               Written     of Total      Written     of Total      Written     of Total
                              -------------------------------------------------------------------------
<S>                           <C>          <C>          <C>          <C>          <C>          <C>
   Property Catastrophe         $146.1        28.9%       $162.5        30.9%       $204.4        47.0%
   Other Property                 93.4        18.5%        131.8        25.1%        127.0        29.2%
   Marine and Energy              40.7         8.0%         53.3        10.1%         59.3        13.6%
   Aviation and Satellite         37.6         7.4%         38.2         7.3%         32.6         7.5%
   Corporate syndicates          181.3        35.9%        125.6        23.9%           --          -%
   Other                           6.4         1.3%         14.3         2.7%         11.7         2.7%
                                ------       -----        ------       -----        ------       -----
   Total                        $505.5       100.0%       $525.7       100.0%       $435.0       100.0%
                                ------       -----        ------       -----        ------       -----
</TABLE>

PROPERTY CATASTROPHE REINSURANCE

Mid Ocean Reinsurance's property catastrophe reinsurance account is generally
"all risk" in nature. Mid Ocean Reinsurance is therefore exposed to losses from
sources as diverse as windstorms, earthquakes, freezes, riots, floods,
industrial explosions, fires or any number of other potential disasters. In
accordance with market practice, Mid Ocean Reinsurance's property reinsurance
policies generally exclude certain risks such as war, nuclear contamination or
radiation. Mid Ocean Reinsurance's predominant exposure under such coverage is
to property damage. However, other risks, including business interruption, death
and injury under workers compensation policies and other non-property losses may
also be covered under a property reinsurance contract when arising from a
covered peril. Property catastrophe reinsurance provides coverage on an excess
of loss basis when aggregate losses and loss adjustment expenses from a single
occurrence of a covered peril exceed the attachment point specified in the
policy. Some of Mid Ocean Reinsurance's property catastrophe contracts limit
coverage to one occurrence in any policy year, but most contracts generally
provide for one reinstatement. Property
<PAGE>   5
                                                                               3


catastrophe premium rates, measured on an exposure adjusted basis were down in
1997 by approximately 12% on major United States risks. The United Kingdom,
Japan and Australian markets saw rates decline between approximately 15% and
20%.

The table below presents Mid Ocean Reinsurance's property catastrophe net
premiums written by geographic area for the years ended October 31, 1997, 1996
and 1995. The table also includes net premiums written with respect to
retrocessions which cannot be allocated geographically.


<TABLE>
<CAPTION>
   ($ in millions)                      1997                       1996                       1995
                               ----------------------------------------------------------------------------
                                    Net                        Net                        Net
                               Premiums       Percent     Premiums       Percent     Premiums       Percent
                                Written      of Total      Written      of Total      Written      of Total
                               ----------------------------------------------------------------------------
<S>                            <C>           <C>          <C>           <C>          <C>           <C>
  Geographic Area:
  United States (1)              $ 77.6         58.6%       $ 74.1         51.4%       $ 87.1         49.2%
  United Kingdom                   15.5         11.7%         19.4         13.5%         25.5         14.4%
  Japan                             8.7          6.6%         12.3          8.5%         18.8         10.6%
  Worldwide                         8.3          6.3%          4.8          3.3%          8.5          4.8%
  Continental Europe                7.2          5.4%         11.0          7.6%         11.6          6.6%
  Australasia                       8.5          6.4%         13.1          9.1%         14.4          8.2%
  Caribbean                         4.5          3.4%          5.4          3.7%          6.2          3.5%
  Other                             2.2          1.6%          4.0          2.9%          4.9          2.7%
                                 ------         ----        ------         ----        ------         ----

  Sub-Total                       132.5          100%        144.1          100%        177.0          100%
                                                ----                       ----                       ----

Retrocessions                      13.6                       18.4                       27.4
                                 ------                     ------                     ------

Total Property Catastrophe       $146.1                     $162.5                     $204.4
                                 ======                     ======                     ======
</TABLE>

(1) 1997 net premiums written included $13 million relating to a contract with
    the California Earthquake Authority which covers the 1997 and 1998
    underwriting years.

OTHER PROPERTY REINSURANCE

Other property reinsurance written by Mid Ocean Reinsurance includes property
risk excess and property pro rata business. Risk excess of loss reinsurance
responds to a loss of the reinsured on a single "risk" of the type reinsured
rather than to aggregate losses for all covered risks as does catastrophe
reinsurance. The risk excess of loss policy protects the reinsured from losses
in excess of its retention level on a single risk. A "risk" in this context
might mean the insurance coverage on one building or a group of buildings or the
insurance coverage under a single policy, which the reinsured treats as a single
risk. Risk excess contracts are generally "all risk" in nature, similar to
property catastrophe reinsurance.

Property risk excess contracts have traditionally provided for unlimited
reinstatement, sometimes with payment of an additional premium. Most of the risk
excess treaties Mid Ocean Reinsurance participates in have limited
reinstatements and contain a per event limit on Mid Ocean Reinsurance's
liability, which limits Mid Ocean Reinsurance's per event exposure on its risk
excess business in the event of a catastrophe of the type to which property
catastrophe reinsurance responds.

Mid Ocean Reinsurance's property pro rata account includes proportional
reinsurance of direct written property insurance. Mid Ocean Reinsurance
considers this business to be related to its catastrophe and other property
exposures. In proportional reinsurance, Mid Ocean Reinsurance assumes a
specified proportion of the risk on the specified coverage and receives an equal
proportion of the premium. The ceding insurer receives a commission, based upon
the premiums ceded to the reinsurer, and the ceding insurer may also be entitled
to receive a profit commission based on the ratio of losses, loss adjustment
expense and the reinsurer's expenses to premiums ceded. A proportional reinsurer
is dependent upon the ceding insurer's underwriting, pricing and claims
administration to yield an underwriting profit. In some
<PAGE>   6
                                                                               4


instances, Mid Ocean Reinsurance may be entitled to the benefit of other
reinsurance, known as common account reinsurance, purchased by the ceding
company on an account reinsured by Mid Ocean Reinsurance on a proportional
basis.

MARINE AND ENERGY

Mid Ocean Reinsurance's marine and energy account is written on both a
proportional and excess of loss basis. The proportional business is based on
specific areas of account that are clearly defined with the exception of the
reinsurance of Brockbank Syndicate 861 which is written on a "whole account"
basis. Premium rates, both at an insurance and reinsurance level, have been
under significant pricing pressure during 1997.

AVIATION AND SATELLITE

Mid Ocean Reinsurance's aviation portfolio comprises both direct insurance and
reinsurance, on both a proportional and excess of loss basis. The exposures are
derived through proportional relationships on defined segments of account
following market leaders in the field, with the exception of the reinsurance of
Brockbank Syndicate 861 which is written on a "whole account" basis. Due to the
highly technical nature of the satellite business, the exposures retained by Mid
Ocean Reinsurance under this portfolio are acquired mostly through proportional
reinsurances of specialist underwriters. The aerospace market remains
competitive, both at an insurance and reinsurance level.

CORPORATE SYNDICATES

Corporate syndicate number 1209 writes property, marine and energy, aviation and
satellite, professional indemnity, and other specialty lines primarily of
insurance but also reinsurance to a globally diverse group of clients. Corporate
syndicate number 2253 writes direct and broker based motor insurance in the
United Kingdom. These corporate syndicates underwrite parallel to the other
syndicates managed by Brockbank (syndicate number 253 which writes direct motor
insurance and syndicate numbers 588 and 861 which write a composite book of
business.)

OTHER

Other reinsurance written by Mid Ocean Reinsurance includes nuclear, accident,
fidelity and professional indemnity.

OUTWARD RETROCESSIONS - REINSURANCE PROTECTIONS PURCHASED

For the years ended October 31, 1997, 1996 and 1995, Mid Ocean Reinsurance
participated in limited retrocessions. Initially the majority of such
retrocessions originated from common account reinsurance on assumed business.
However in 1997 and 1996, Mid Ocean Reinsurance purchased specific reinsurance
protection covering certain aspects of its book of business.

Brockbank, as a part of its business strategy, has historically purchased a
significant amount of reinsurance for its syndicates, including the corporate
syndicates. Corporate syndicate 1209 benefits from the same reinsurance programs
as its parallel syndicates 861 and 588. Reinsurance cover is purchased to
protect the syndicates against extraordinary loss and/or loss involving one or
more of their underwriting classes. The amount purchased is determined with
reference to the syndicates aggregate exposure and potential loss scenarios.

Corporate syndicate 2253 benefits from the same reinsurance programmes as its
parallel syndicate 253. Reinsurance cover is purchased on a quota share and
excess of loss basis.
<PAGE>   7
                                                                               5


MARKETING

Mid Ocean Reinsurance utilizes approximately 55 non-US brokers to market
substantially all of its business on a worldwide basis. The broker is an
integral part of Mid Ocean Reinsurance's strategy to become a leading reinsurer.
Mid Ocean Reinsurance has established strong relationships with brokers by
providing their respective clients with property catastrophe and other
reinsurance that is supported by a sufficient level of capital and surplus. Mid
Ocean Reinsurance is able to market cost-effectively and limit the amount of
employees required to market its products. The Company believes that by
maintaining close relationships with brokers, it obtains access to a broad range
of potential insureds and reinsureds. Business submissions to Mid Ocean
Reinsurance are underwritten in Mid Ocean Reinsurance's offices in Bermuda,
London or Singapore.

Brockbank markets business through approximately 102 brokers excluding personal
lines, which are written through a significant number of brokers. The Brockbank
business is underwritten in the United Kingdom.

The Company writes a significant amount of business through subsidiaries of J&H
Marsh and McLennan, Incorporated.

The following table sets forth the percentage of the Company's business placed
in the years ended October 31, 1997, 1996 and 1995 through each broker and its
affiliates placing more than 10% of the Company's gross premiums written:


<TABLE>
<CAPTION>
Name (4)                                              Year Ended          Year Ended         Year Ended
                                                October 31, 1997    October 31, 1996   October 31, 1995
                                                ----------------    ----------------   ----------------
<S>                                             <C>                 <C>                <C>
J&H Marsh and McLennan, Incorporated (1)(3)                21.3%               25.5%              40.9%
Aon Corporation (2)(3)                                     13.0%               13.1%              13.5%
Willis Corroon Group                                       11.1%                8.6%              6.71%
</TABLE>

(1)      J&H Marsh & McLennan, Incorporated and Marsh & McLennan Risk Capital
         Holdings, Ltd., (one of the Company's principal shareholders) are both
         subsidiaries of Marsh & McLennan Companies, Incorporated. During 1997,
         Marsh & McLennan, Incorporated acquired Johnson & Higgins and several
         other companies.

(2)      During 1997, Aon Corporation acquired Alexander & Alexander Services,
         Inc. and Bain Hogg and several other companies. For 1996, the
         percentage of business placed by Aon Corporation, Alexander & Alexander
         Services, and Bain Hogg was 2.9%, 5.2% and 2.3% respectively. In 1995,
         the amounts were 3.4%, 6.5% and 2.7% respectively.

(3)      The percentages shown in the table for 1997 reflect the business placed
         by the combined entities and their affiliates for the entire year.

(4)      Note that 1997 and 1996 include Brockbank whereas 1995 was Mid Ocean
         Reinsurance only.

UNDERWRITING

The Company employs a disciplined, analytical approach to underwriting designed
to specify an adequate premium for a given exposure that is intended to be
commensurate with the amount of capital it anticipates placing at risk. For its
property catastrophe reinsurance business, Mid Ocean Reinsurance has developed
underwriting guidelines under which it generally limits the amount of exposure
it will directly underwrite for any one reinsured and the amount of the
aggregate exposure to catastrophe losses in any geographic zone. Mid Ocean
Reinsurance believes it has defined zones such that a single occurrence, such as
an earthquake or hurricane, generally should not affect more than one zone. The
definition of Mid Ocean Reinsurance's zones are subject to periodic review and
change. Mid Ocean Reinsurance also generally seeks an attachment point for its
property catastrophe reinsurance anticipated to be high
<PAGE>   8
                                                                               6


enough to produce a low frequency of loss. Mid Ocean Reinsurance limits its
aggregate exposure in the retrocessional and pro rata business because it is
sometimes difficult to allocate risks associated with such business to specific
geographic areas.

As part of its underwriting process, Mid Ocean Reinsurance typically assesses a
variety of factors, including: the reputation of the proposed cedent and the
likelihood of establishing a long-term relationship with the cedent; the
geographic area in which the cedent does business and its market share; a
detailed assessment of catastrophe and risk exposures; historical loss data for
the cedent and, where available, for the industry as a whole in the relevant
regions, in order to compare the cedent's historical catastrophe loss experience
to industry averages; and the perceived financial strength of the cedent.

At Brockbank, the daily acceptance of risks is performed by the active
underwriter, the class underwriters and senior underwriting assistants.
Underwriting authority limits are agreed between the active underwriter, the
director of underwriting and the class underwriter. All risks are reviewed by
one of the two deputy underwriters.

CLAIMS ADMINISTRATION

Claims arising from contracts written by Mid Ocean Reinsurance in Bermuda are
managed in Bermuda by its own claims department. Loss notifications are received
from brokers, reviewed and entered into a claims database and loss reserves are
established for Mid Ocean Reinsurance's share of the loss. Loss reserves are
adjusted based on receipt of further notifications from brokers. The claims
handled by the Singapore branch are done in a similar manner at that location.

Claims in respect of business written by corporate syndicate 1209 and Mid Ocean
Reinsurance's London branch are entered into a claims databases held at each
location. Losses are primarily notified by various central market bureaus, such
as through a daily electronic data interchange message. Where a syndicate is a
"leading" syndicate on a Lloyd's policy then it will act with its underwriters
and claims adjusters in dealing with the broker or insured on behalf of itself
and the following market in dealing with the broker and/or insured for any
particular claim. This may involve appointing attorneys and/or loss adjusters.
The claims bureaus and the leading syndicate advise movements in loss reserves
to all syndicates participating on the risk. The claims departments can vary the
case reserves it records from those advised by the bureaus and all adjustments
are recorded on the claims system.

Claims in respect of the direct motor business written by corporate syndicate
2253 are handled by Admiral Insurance Services ("Admiral") at their two
tele-servicing centres in Cardiff and Swansea, Wales. The majority of accidental
damage claims are handled by Admiral's national network of 135 approved
repairers, most of which have direct video links with Admiral's in-house
engineering team. Personal injury cases are handled by a team of in-house
specialists who, where necessary, appoint attorneys from a preferred panel.

RESERVES

Under United States generally accepted accounting principles, the Company is not
permitted to establish loss reserves until the occurrence of an event which may
give rise to a claim. Once such an event occurs, the Company establishes
reserves based upon estimates of total losses incurred by the insured or
reinsured as a result of the event and the Company's estimate of it's portion of
such loss. Such reserves will be adjusted as the Company receives notices of
claims and proofs of loss from insureds and reinsureds and as estimates of
severity of damages and the Company's share of the total loss are revised.

Generally, reserves are established without regard to whether the claim may
subsequently be contested by the Company. The Company's policy is to establish
reserves for reported losses based upon reports received from insureds and
reinsureds supplemented by the Company's case reserve estimates. Loss reserves
represent estimates of what the Company ultimately expects to pay on claims at a
given time, based on facts and circumstances then known, and it is possible that
the ultimate liability may exceed or be less than such estimates. During the
loss settlement period, it often becomes necessary to refine and
<PAGE>   9
                                                                               7


adjust the estimates of liability on a claim either upward or downward. Even
after such adjustments, the ultimate liability may exceed or be less than the
revised estimates.

The Company establishes reserves for incurred but not reported losses ("IBNR").
In determining the IBNR portion of loss and loss expenses for the year, the
Company classifies the business written into segments that could reasonably be
expected to have similar loss characteristics. Reporting patterns and initial
expected loss ratios are developed based upon available industry data, actual
experience, knowledge of the business written by the Company and general market
trends in the reinsurance industry. The Company employs its own actuaries who
develop the IBNR loss reserves. In addition, Mid Ocean Reinsurance's IBNR loss
reserves undergo a review by independent consulting actuaries.

Mid Ocean Reinsurance expects that most claims under its property catastrophe
and property risk excess treaties will generally become known and ascertainable
within approximately 18 to 24 months from the date of the occurrence giving rise
to a claim. Brockbank expects that claims under a significant majority of its
policies, with the exception of motor, will generally become known and
ascertainable within 36 months of the date of the occurrence giving rise to a
claim. The motor business claims will generally be known and paid within 12
months of the date of the occurrence giving rise to the claim.

The Company incurred losses and loss expenses for the years ended October 31,
1997, 1996 and 1995 of $216.2 million, $211.9 million and $198.7 million net of
reinsurance recoveries of $ 26.1 million, $4.6 million and $1.4 million
respectively. The only significant catastrophe loss events during these three
years affecting the Company was in 1995 with the Great Hanshin, Kobe earthquake
where the Company established a $5.0 million provision and a $21.5 million
provision in respect of Hurricanes Luis and Marilyn. The Company paid net losses
of $159.3 million during the year ended October 31, 1997 compared to $118.6
million and $84.7 million in 1996 and 1995 respectively. The lack of significant
loss events during 1997 and 1996 together with a release of loss reserves
established in prior years, has contributed to lower loss ratios (net incurred
losses as a percentage of net earned premium) for Mid Ocean Reinsurance. This
reduction is offset by higher incurred loss ratios applicable to business
written by the corporate syndicates in 1997 and 1996. Net incurred loss and loss
expense ratios for the Company were 44.4%, 48.6% and 52.4% for the 1997, 1996
and 1995 years respectively.

At fiscal year end 1997, net loss reserves amounted to $479.2 million compared
to $422.3 million at fiscal year end 1996. Net reserves for IBNR losses were
$351.0 million and $318.0 million respectively.

INVESTMENTS

The Finance Committee of the Board of Directors is responsible for the
establishment of the Company's investment policy consistent with the Company's
strategies, goals and objectives. The investment policy is reviewed with and
approved by the Board of Directors. Mid Ocean Reinsurance has developed specific
investment guidelines for the management of its investment portfolio. Although
these guidelines stress diversification of risks and conservation of principal
and liquidity, investments are subject to market-wide risks and fluctuations, as
well as to risks inherent in particular securities. The primary objective of the
portfolio, as set forth in the guidelines, is to preserve the capital assets of
Mid Ocean Reinsurance's while achieving a total return commensurate with market
conditions. These guidelines, which are subject to change at the discretion of
the Company's Board of Directors, are discussed below. Mid Ocean Reinsurance
letter of credit facility also contains certain restrictions on the type of
investments included in the portion of the portfolio pledged to secure such
facility. The Company invests in both fixed maturity and equity securities.

FIXED MATURITY SECURITIES

At fiscal year end 1997, approximately 59% of the Company's fixed maturity
investment portfolio was managed internally. In addition, Mid Ocean Reinsurance
has entered into investment management agreements (the "Investment Management
Agreements") with the following companies: Loomis Sayles and Company Inc, Miller
Anderson and Sherrerd LLP and Mercury Asset Management (collectively, the
"Investment Managers").
<PAGE>   10
                                                                               8


Under the Investment Management Agreements, the Investment Managers are subject
to Mid Ocean Reinsurance's investment guidelines. Mid Ocean Reinsurance is
obligated to pay the Investment Managers fees based on the value of the assets
under management. The performance of, and the fees paid to, the Investment
Managers under the Investment Management Agreements are reviewed periodically by
management and the Finance Committee of the Board of Directors.

At October 31, 1997 approximately 84.7% of the Company's investment debt
portfolio was in US Government securities or in obligations rated A or better by
Moody's Investors Service Inc. or Standard & Poors Corporation. No more than 5%
of Mid Ocean Reinsurance's investment debt portfolio will generally be invested
in the securities of any single issuer with the exception of securities issued
or ultimately guaranteed by sovereign governments or agencies, including
supranational agencies.

At October 31, 1997, 1996 and 1995, the weighted average duration of the
portfolio was 3.7 years for each of the three years. The annualized effective
yield calculated on the average of the beginning and ending values of
investments, net of pending trades, and cash and cash equivalents was 6.5%, 6.2%
and 6.4% for fiscal years 1997, 1996 and 1995 respectively.

The Company's primary reinsurance risk exposures and premiums receivable are
denominated in US Dollars, British Pounds and Japanese Yen. The investment debt
portfolio may, from time to time, be partially invested in non-US Dollar
component currencies of its expected liability profile, thereby reducing, to
some extent, the currency exposure on the underlying reinsurance risks.

EQUITY SECURITIES

During 1997, Mid Ocean Reinsurance invested in equity securities for the first
time, as permitted under the investment guidelines which allow up to a maximum
15% of the total portfolio. At October 31, 1997 the Company held $ 23.5 million
of equity securities.


Investments, both fixed maturity and equity securities, held by Brockbank are
monitored by an investment committee. Asset positions and investment strategy
are communicated to the Board of Directors of Brockbank on a weekly basis. The
investment committee approve significant strategy changes and monitors
investment results against set targets. The investment portfolio returns are
monitored against Lloyd's investment rules and guidelines.

The Company has classified its investment portfolio as available for sale and
consequently the portfolio is carried at fair value in accordance with the
Financial Accounting Standards Board Statement of Financial Accounting
Standard ("SFAS") 115.

For additional information regarding the investment portfolio see note 3 to the
consolidated financial statements included in the 1997 Annual Report.

REGULATION

Bermuda

The Insurance Act of 1978 (as amended by the Insurance Amendment Act 1995) and
related regulations (the "Act"), regulates the business of Mid Ocean
Reinsurance. The Act imposes on Bermuda insurance companies solvency and
liquidity standards and auditing and reporting requirements and grants to the
Minister of Finance powers to supervise, investigate and intervene in the
affairs of insurance companies. The Act provides for four classes of insurance
company. Mid Ocean Reinsurance is designated as a Class 4 insurer which is the
designation for the largest companies requiring capital and surplus in excess of
$100 million. Each class 4 insurer must appoint a loss reserve specialist, whom
must be approved by the minister, to review and report on the loss reserves of
the insurer on an annual basis.

United States

The insurance laws of each state of the United States and of many foreign
countries regulate the sale of insurance within their jurisdiction by alien
insurers, such as Mid Ocean Reinsurance. The Company and its insurance
subsidiaries, excluding its Lloyd's operations, are not admitted to do business
as reinsurers
<PAGE>   11
                                                                               9


in any jurisdiction in the U.S. Each state in the U.S. licenses insurers and
prohibits, with some exceptions, the sale of insurance products by non-admitted
reinsurers within their applicable jurisdictions.

Mid Ocean Reinsurance conducts its reinsurance business from its offices in
Bermuda, London and Singapore. All of Mid Ocean Reinsurance's US clients are
obtained through non-U.S. insurance brokers and non-U.S. affiliates of U.S.
insurance brokers. All insurance policies are issued and delivered and premiums
are received in Bermuda, London and Singapore. Mid Ocean Reinsurance believes it
is not in violation of the insurance laws of any state in the US or any foreign
country.

From time to time, various proposals for federal legislation within the United
States have been circulated which could require Mid Ocean Reinsurance to, among
other things, register as a surplus lines insurer. Mid Ocean Reinsurance does
not believe such legislation would have a material impact on the ability of Mid
Ocean Reinsurance to conduct its business.

Brockbank is required to deposit funds in the United States to cover a
proportion of its gross liabilities for certain US based risks.

United Kingdom

London Branch Office

The United Kingdom Department of Trade and Industry ("DTI") regulates
reinsurance entities that are "effecting and carrying on" insurance business in
the United Kingdom. Mid Ocean Reinsurance, through its London branch, "effects
and carries on" business in the United Kingdom and is therefore regulated by the
DTI.

Lloyd's

As a result of the Brockbank acquisition, the Company and Brockbank are subject
to the regulatory jurisdiction of the Council of Lloyd's (the "Council"). Unlike
other financial markets in the UK, Lloyd's is not subject to direct UK
government regulation through The Financial Services Act of 1986 but, instead,
is self regulating by virtue of The Lloyd's Act of 1982 through bye-laws,
regulations and codes of conduct written by the Council, which governs the
market. Under the Council, there are two boards, the Market Board and the
Regulatory Board. The former is led by working members of the Council and is
responsible for strategy and the provision of services such as premium and
claims handling, accounting and policy signing. The Regulatory Board is
responsible for the regulation of the market, compliance and the protection of
policyholders. Under the regulations, the approval of the Council has to be
obtained before any person can be a "major shareholder" or "controller" of a
corporate Name or a managing agency. The Company has been approved as both a
"major shareholder" and a "controller" of its corporate Names (the CCVs) and
managing agencies.

A person would be viewed by Lloyd's as a "major shareholder" of the CCVs if such
person owns 15% or more of the Company's outstanding capital stock and as a
"controller" if it owns 30% or more of the Company's outstanding capital stock.
Therefore, any person that becomes the owner of 15% or more of the Company's
stock may be required to deliver a declaration and undertaking to Lloyd's, in
the form prescribed by Lloyd's, unless Lloyd's exempts such person from this
requirement.

As a "controller", the Company is required to give certain undertakings,
directed principally towards ensuring that there is no direct interference in
the conduct of the business of the relevant managing agency, but there are no
provisions in The Lloyd's Act of 1982, the bye-laws or the regulations which
provide for any liabilities of the CCVs or the Brockbank group as a whole to be
met by the Company. In addition, a managing agency is required to comply with
various capital and solvency requirements, and to submit to regular monitoring
and compliance procedures. The CCVs, as corporate members of Lloyd's, are each
required to commit a specified amount approximately equal to 50% of their
underwriting capacity on the syndicates to support its underwriting on those
syndicates.
<PAGE>   12
                                                                              10


The Lloyd's Act of 1982 generally restricts certain direct or indirect equity
cross-ownership between a Lloyd's broker and a Lloyd's managing agent.

Singapore

The Monetary Authority of Singapore ("MAS") regulates reinsurance entities
operating in Singapore and, as such, Mid Ocean Reinsurance's Singapore branch is
regulated by the MAS.

Germany

The Company has established, for marketing purposes, a representative office in
Munich, Germany. However, all underwriting operations continue to be conducted
in Bermuda, Singapore and the United Kingdom.

TAX MATTERS

United States

Corporate Income Tax

The Company is a Cayman Islands company and has never paid United States
corporate income taxes on the basis that it is not engaged in a trade or
business in the United States.

Related Person Insurance Income

Each US Shareholder of the Company who owns shares (directly or through foreign
entities) on the last day of the Company's fiscal year may have to include in
such shareholder's gross income for US tax purposes a proportionate share of the
Company's "related person insurance income" ("RPII") if the RPII of the
Company's insurance and reinsurance subsidiaries, determined on a gross basis,
is 20% or more of each insurance and reinsurance subsidiary's gross insurance
income in such fiscal year and 20% or more of the total voting power or value of
each insurance and reinsurance subsidiary's common stock is held by insureds or
reinsureds or persons related thereto. RPII is income attributable to insurance
policies where the direct or indirect insureds are US shareholders or are
related to US shareholders. RPII is included in a US shareholder's gross income
for US tax purposes regardless of whether such shareholder is a policyholder.

While there can be no assurance, the Company does not believe 20% or more of the
gross insurance income of its insurance and reinsurance subsidiaries for fiscal
1997 constituted RPII and does not anticipate that 20% or more of its insurance
and reinsurance subsidiaries gross insurance income in future taxable years will
constitute RPII. For a more detailed discussion of RPII and other tax matters
pertaining to an investment in the Company's Ordinary Shares, reference is
hereby made to the section entitled "Certain Tax Considerations" in the
Company's Registration Statement on Form S-1 (File No. 33-63298), which section
is incorporated by reference herein.

Cayman Islands

Under current Cayman Islands law, the Company is not required to pay any taxes
in the Cayman Islands on either income or capital gains. The Company has
received an undertaking that in the event of any such taxes being imposed the
Company will be exempted from Cayman Islands income or capital gains tax until
the year 2013.

Bermuda

Under current Bermuda law, neither the Company nor Mid Ocean Reinsurance is
required to pay any taxes in Bermuda on either income or capital gains. The
Company and Mid Ocean Reinsurance have received an undertaking from the Minister
of Finance in Bermuda that in the event of any such taxes being imposed, the
Company and Mid Ocean Reinsurance will be exempted from income or capital gains
taxation until the year 2016.
<PAGE>   13
                                                                              11


United Kingdom

Lloyd's Names are required to pay US income tax on US connected income ("US
income") written by Lloyd's syndicates on which they participate. Lloyd's has a
closing agreement with the IRS whereby the amount of tax due on this business is
calculated by Lloyd's and remitted directly to the IRS. These amounts are then
charged to the personal accounts of the Names in proportion to their
participation in the relevant syndicates. The CCVs are subject to this
arrangement but, as UK domiciled companies, will receive UK corporation tax
credits for any US income tax incurred up to the value of the equivalent UK
corporation income tax charge.

Brockbank is subject to UK corporation tax and value added tax. The Company's
London branch has been advised that it is deemed to be doing insurance business
in the UK and therefore is subject to taxation in the UK on business written in
the UK.

With effect from October 1, 1994, the UK imposed an insurance premium tax on
that portion of policies relating to certain UK risks. Brockbank, including its
syndicates, are registered to collect and pay this tax on behalf of UK domiciled
policyholders.

Singapore

Profits of the Singapore branch are subject to Singapore corporation taxes.

Germany

The German subsidiary is subject to taxation in Germany. However under its
current role as a consulting operation it is not expected to generate any
taxable revenue.

EMPLOYEES

At October 31, 1997 Mid Ocean Reinsurance employed a total of 65 persons and
Brockbank (including only its direct operations) employed approximately 200
persons. None of these employees is represented by a labor union. Mid Ocean
Reinsurance and Brockbank believe that relations with their employees are
excellent.

COMPETITION

The reinsurance industry and the Lloyd's market are highly competitive. Mid
Ocean Reinsurance competes with US and other insurers and reinsurers, some of
which have greater financial, marketing and management resources while Brockbank
competes with other Lloyd's market managing agencies, Lloyd's syndicates, London
market companies and other insurers and reinsurers. Competition in the types of
business that Mid Ocean Reinsurance and Brockbank underwrite is based on many
factors, including the perceived financial strength of the underwriting
syndicate or the reinsurer, pricing and other terms and conditions, services
provided, ratings assigned by independent rating organizations, speed of claims
payment and reputation and experience in the line of reinsurance to be written.

Lloyd's of London is a long established insurance marketplace, where many varied
forms of insurance and reinsurance are sold by syndicates, which are annual
joint ventures of Names. Participation as a Name on a syndicate carries with it
unlimited liability for the Name's share of any insurance losses incurred by the
syndicate (each Name participating severally). In 1994, the rules surrounding
participation were changed to allow limited liability "corporate names" to enter
the Lloyd's marketplace as capital providers.

Several of the underwriting years of the late 1980s and early 1990s proved to be
particularly unprofitable for many of the syndicates operating at Lloyd's. This
proved to be financially disastrous for some of the Names on the affected
syndicates due to the unlimited liability of their participation. Lloyd's
governing body sought to implement a reconstruction and renewal plan to allow
the market to continue and in August 1996 this plan was formally approved by the
required parties. A new company, Equitas, was authorized to reinsure the
liabilities of the 1992 and prior years of account of all syndicates at Lloyd's.
Funding came from a variety of sources including the premiums on the liabilities
assumed by Equitas as well as a series of levies charged to entities that had
historically provided services to the Lloyd's insurance market (including
managing agencies and insurance brokers).
<PAGE>   14
                                       12


Participation in selected syndicates in the Lloyd's insurance market provides
the Mid Ocean Reinsurance with access to various lines of business providing the
opportunity to diversify its insurance risk profile to markets to which it would
otherwise not have access. The Company's participation through the dedicated
corporate syndicates limits the liability of the Company.

The Company has received a rating of A+ (Superior) from A.M. Best Company
Inc. ("A.M. Best") and an AA (Excellent)  claims  paying rating from Standard
& Poor's Corporation ("S&P").  A.M. Best and S&P ratings are based upon
factors relevant to policyholders, agents and intermediaries and are not
directed toward the protection of investors.  Such ratings are not
recommendations to buy, sell or hold securities.

ITEM 2 - PROPERTIES

Mid Ocean Reinsurance leases office space in Richmond House, Hamilton, Bermuda,
where the Company's principal offices are also located. Mid Ocean Reinsurance
also leases office space in the London Underwriting Centre, London, England, at
which its London branch office is located. In addition, Mid Ocean Reinsurance
leases office space at 6 Raffles Quay, John Hancock Tower, Singapore at which
its Singapore branch is located. Office space is also leased at Bavariaring 44,
Munich, Germany where Mid Ocean Reinsurance Consulting GmbH is located.
Brockbank leases office space at Fitzwilliam House and Rood Lane, London where
its principal offices are located. Other Brockbank operations lease space in
Cardiff and Swansea, Wales and Haywards Heath, England.

ITEM 3 - LEGAL PROCEEDINGS

The Company is subject to litigation and arbitration in the ordinary course of
its business.

While any proceeding contains an element of uncertainty, management presently
believes the outcome thereof will not have a material adverse effect on the
Company.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of stockholders during the fourth quarter of
the fiscal year covered by this report.

EXECUTIVE OFFICERS OF THE COMPANY

The table sets forth the names, ages and titles of the persons who are the
executive officers of the Company and its subsidiaries:


<TABLE>
<CAPTION>
Name                      Age      Position
----                      ---      --------
<S>                       <C>      <C>
Robert J. Newhouse, Jr.    72      Chairman of the Board
Michael A. Butt            55      President & Chief Executive Officer
Mark E. Brockbank          45      Chief Executive Officer of The Brockbank Group plc
Charles F. Hays            51      Senior Vice President, Chief Financial & Administrative Officer
Henry C. V. Keeling        42      President, Chief Operating & Underwriting Officer
                                   of Mid Ocean Reinsurance Company Ltd.
</TABLE>

Robert J. Newhouse, Jr. serves as Chairman of the Board of the Company and
Holdings.  He served as Vice Chairman of Marsh & McLennan Companies Inc., as
a member of the Office of the Chairman of Marsh & McLennan Companies Inc. and
as a member of the Executive Committee of Marsh & McLennan Companies Inc.
until 1990.  Mr. Newhouse was elected a director of Marsh & McLennan
Companies Inc. in 1971, Executive Vice President in 1974 and President in
1976.  He was elected Vice Chairman of Marsh & McLennan Companies Inc. in
1988.  Mr. Newhouse also serves as a director of Trident Corp.
<PAGE>   15
                                                                              13


Michael A. Butt serves as President & Chief Executive Officer of the Company
(since May 1993) and has been a director since June 1993.  Mr. Butt also is
the President & Chief Executive Officer and a director of Holdings.  Mr. Butt
was appointed Chairman of the Board of Mid Ocean Reinsurance in September
1997 in addition to his position of Chief Executive Officer.  Mr. Butt has
served as a director of the Instituto Nazionale di Assicurazioni ("INA"),
Rome from November 1993 to December 1997, and the Bank of N. T. Butterfield &
Son, Limited since October 1996. From 1992 to April 1993, Mr. Butt served as
director of Phoenix  Securities Limited, a private investment banking firm
based in London.  From 1987 to 1992 he was a director of BAT Industries and
Chairman and Chief Executive Officer of Eagle Star Holdings Plc and Eagle
Star Insurance Company. From 1982 to 1986, Mr. Butt was Chairman of Sedgwick
Limited and Vice Chairman of Sedgwick Group Plc.

Mark E. Brockbank is Vice Chairman of Holdings and Director & Chief Executive
Officer of The Brockbank Group plc. Mr. Brockbank is also Chairman of Admiral
Insurance Services Ltd., Brockbank Personal Lines Ltd and Active Underwriter of
syndicate 861. Mr. Brockbank has been employed at Lloyd's since 1974 when he
joined Willis Faber Dumas as a Marine broker. He became underwriter of syndicate
861 in 1983. He was appointed a Director of Brockbank Syndicate Management Ltd
in 1983 and of The Brockbank Group plc in 1988. He is currently a serving member
on various Lloyd's committees including the Lloyd's Corporate Capital
Association and Lloyd's Market Board.

Charles F. Hays serves as Senior Vice President, Chief Financial &
Administrative Officer of the Company, is a director of Holdings, and
Executive Vice President, Chief Financial & Administrative Officer of Mid
Ocean Reinsurance.  He also serves as a director of Harris & Harris Group.
Mr. Hays served as Managing Director and Chief Financial Officer of Marsh &
McLennan Incorporated from 1984 to 1993.

Henry C. V. Keeling, is a director of Holdings and serves as President, Chief
Operating & Underwriting Officer of Mid Ocean Reinsurance.  Mr Keeling served
as a director of Taylor Clayton (Underwriting Agencies) Ltd. and deputy
underwriter  for syndicate 51 at Lloyd's from 1984 through 1992.

                                     PART II

ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
         MATTERS

The Company's Class A Ordinary Shares, $0.20 par value, have been included for
trading on The New York Stock Exchange, Inc since May 30, 1996, under the symbol
"MOC" and, before that, on The Nasdaq National Market since August 4, 1993,
under the symbol "MOCNF".

The following table sets forth the high and low closing sales prices per share
of the Company's Class A Ordinary Shares for each fiscal quarter period from
November 1, 1995 to October 31, 1997.

<TABLE>
<CAPTION>
                                      High               Low
                                      ----               ---
<S>                                <C>               <C>
1996
          First Quarter            $41.625           $35.563
         Second Quarter             42.000            35.625
          Third Quarter             42.625            35.500
         Fourth Quarter             48.125            39.625

1997
          First Quarter            $53.750           $47.000
         Second Quarter             51.125            45.250
          Third Quarter             60.500            44.500
         Fourth Quarter             64.875            56.437
</TABLE>

As of January 12, 1998, there were approximately 17,000 holders of Class A
Ordinary Shares.
<PAGE>   16
                                                                              14


DIVIDENDS

The following table sets forth for the fiscal quarters of the two most recent
fiscal years all dividends declared during such period:

<TABLE>
<CAPTION>
                                                     Dividends
                                                     per share
<S>                                                  <C>
1996           First Quarter                           $  0.25
               Second Quarter                          $ 0.275
               Third Quarter                           $0.4125
               Fourth Quarter                          $0.4125

1997           First Quarter                           $  0.75
               Second Quarter                          $  0.75
               Third Quarter                           $  0.75
               Fourth Quarter                          $  0.75
</TABLE>


The Company declared a dividend per Ordinary Share of $0.25 on December 7, 1995,
$0.275 on February 29, 1996, $0.4125 on June 18, 1996 and September 13, 1996.
The Company declared a dividend of $ 0.75 on December 5, 1996, March 6, 1997,
June 5, 1997,and September 11, 1997. On December 4,1997 the dividend declared by
the Company was increased to $0.825.

The Company is a holding company whose principal source of income is dividends
from its operating subsidiaries. The ability of the operating subsidiaries to
pay dividends to the Company and the Company's ability to pay dividends to its
shareholders are each subject to legal and regulatory restrictions. Future
payment of dividends will be at the discretion of the Board of Directors and
will be dependent upon the profits and financial requirements of the Company and
other factors, including legal restrictions on the payment of dividends and such
other factors as the Board of Directors deems relevant.

Neither the Cayman Islands, where the Company is incorporated, nor Bermuda,
where its executive offices are located, presently imposes any income or
withholding taxes upon dividends by the Company to non-resident shareholders, or
presently imposes any exchange control that would affect dividends or other
payments to non-resident holders of Ordinary Shares.


RESTRICTIONS ON VOTING AND TRANSFER

The Articles of Association of the Company contain various provisions affecting
the transferability of Ordinary Shares. Under the Articles of Association, the
Board of Directors may decline to register any transfer of Ordinary Shares if
the Board of Directors determines that such transfer would result in a United
States Person having Controlled Shares that constitute more than 9.9% of the
voting power of the Ordinary Shares. The Articles of Association also provide
that the Board of Directors may decline to register the transfer of Ordinary
Shares that have not been sold pursuant to an effective registration statement
under the Securities Act or pursuant to Rule 144 thereunder. A transferee will
be permitted to dispose of any Ordinary Shares purchased which violate the
restrictions and as to the transfer of which registration is refused. The
transferor of such Ordinary Shares will be deemed to own such Ordinary Shares
for dividend, voting and reporting purposes until a transfer of such Ordinary
Shares has been registered on the stock transfer records of the Company. If and
so long as the Controlled Shares (as defined below) of any United States Person
(as defined below) constitute 10% or more of the voting power of the issued
Ordinary Shares, the voting rights with respect to the Controlled Shares owned
by such person shall be limited, pursuant to a formula specified in the Articles
of Association, in the aggregate, to less than 10%. "Controlled Shares" shall
include among other things, all Ordinary Shares which such person is deemed to
beneficially own directly, indirectly or constructively (within the meaning of
Section 13(d) of the Securities Internal Review Code of 1986, as amended, (the
"Code"). "United States Person" means a United States person as defined in
Section 7701 (a) (3) of the Code.
<PAGE>   17
                                                                              15


ITEM 6 - SELECTED FINANCIAL DATA

This item is incorporated by reference to the Selected Financial Data table
contained in the 1997 Annual Report.

ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
         FINANCIAL CONDITION

This item is incorporated by reference to Management's Discussion and Analysis
of Results of Operations and Financial Condition in the 1997 Annual Report.

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

This item is incorporated by reference to the financial statements in the 1997
Annual Report.

ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

There have been no changes in nor any disagreements with accountants on
accounting and financial disclosure within the three years ending October 31,
1997.


                                    PART III


ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

This item is omitted because a definitive proxy statement which involved the
election of directors will be filed with the Securities and Exchange Commission
not later than 120 days after the close of the fiscal year pursuant to
Regulation 14A.

ITEM 11 - EXECUTIVE COMPENSATION

This item is omitted because a definitive proxy statement which involved the
election of directors will be filed with the Securities and Exchange Commission
not later than 120 days after the close of the fiscal year pursuant to
Regulation 14A.

ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

This item is omitted because a definitive proxy statement which involved the
election of directors will be filed with the Securities and Exchange Commission
not later than 120 days after the close of the fiscal year pursuant to
Regulation 14A.

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

This item is omitted because a definitive proxy statement which involved the
election of directors will be filed with the Securities and Exchange Commission
not later than 120 days after the close of the fiscal year pursuant to
Regulation 14A.


                                     PART IV

ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K



(A)   FINANCIAL STATEMENTS AND EXHIBITS

1.    Consolidated Financial Statements

      The following Consolidated Financial Statements of Mid Ocean Limited and
      Report of Independent Auditors are incorporated by reference to pages 28
      through 51 of the registrant's 1997 Annual Report to Shareholders:

      Independent Auditors' Report

      Consolidated Balance Sheets - October 31, 1997 and 1996

      Consolidated Statements of Operations - Years ended October 31, 1997, 1996
      & 1995
<PAGE>   18
                                                                              16


      Consolidated Statements of Shareholders' Equity - Years ended October 31,
      1997, 1996 & 1995

      Consolidated Statements of Cash Flows - Years ended October 31, 1997, 1996
      & 1995

      Notes to Consolidated Financial Statements

2.    Financial Statement Schedules

<TABLE>
<S>               <C>   <C>
      Schedule    I     Consolidated Summary of Investments
                  III   Supplementary Insurance Information
                  IV    Reinsurance
</TABLE>

      Other Schedules have been omitted as they are not applicable to the
      Company.

3.    Exhibits

3.1   -     Memorandum of Association of the Company (incorporated by reference
            from the Company's Registration Statement on Form S-1 (File No.
            33-63298) (the "Registration Statement").

3.2   -     Articles of Association of the Company (incorporated by reference
            from the Registration Statement).

4.1   -     Rights Agreement, dated September 12, 1996, between Mid Ocean
            Limited and the Bank of New York, as Rights Agent (incorporated by
            reference from the Company's Report on Form 8-K filed September 12,
            1996).

10.01 -     1993 Long-Term Incentive and Share Award Plan (incorporated by
            reference from the Registration Statement).

10.02 -     Letter of Credit Facility and Security Agreement (incorporated by
            reference from the Registration Statement).

10.03 -     Investment Management Agreement, dated as of November 1, 1993
            between Brinson Partners Inc and Mid Ocean (incorporated by
            reference to the Company's Form 10-K for the year ended October 31,
            1993)

10.04 -     Investment Management Agreement, dated as of November 1, 1993
            between Warburg Asset Management and Mid Ocean Reinsurance
            (incorporated by reference to the Company's Form 10-K for the year
            ended October 31, 1993).

10.05 -     Employment Agreement (amended and restated as of August 19, 1996)
            between Michael A. Butt and Mid Ocean Reinsurance Company Ltd. and
            Mid Ocean Limited (incorporated by reference to the Company's Form
            10-K for the year ended October 31, 1996).

10.06 -     Service Agreement (amended and restated as of August 19, 1996)
            between Robert J. Newhouse Jr. and Mid Ocean Reinsurance Company
            Ltd. and Mid Ocean Limited (incorporated by reference to the
            Company's Form 10-K for the year ended October 31, 1996).

10.07 -     Employment Agreement (amended and restated as of August 19, 1996)
            between Henry C. V. Keeling and Mid Ocean Reinsurance Company Ltd
            (incorporated by reference to the Company's Form 10-K for the year
            ended October 31, 1996).

10.08 -     Employment Agreement (amended and restated as of August 19, 1996)
            between Charles F. Hays and Mid Ocean Reinsurance Company Ltd. and
            Mid Ocean Limited (incorporated by reference to the Company's Form
            10-K for the year ended October 31, 1996).

11.1  -     Statement of Computation of Earnings Per Share for the fiscal years
            ended October 31, 1997, 1996 and 1995.

13.1  -     Pages 12 - 51 of the Mid Ocean Limited 1997 Annual Report to
            Shareholders.

21.1  -     List of subsidiaries of the Registrant.
<PAGE>   19
                                                                              17


23.1  -     Consent of  KPMG Peat Marwick.

24.1  -     Powers of Attorney

27.1  -     Financial Data Schedule


(B)    REPORTS ON FORM 8-K


No reports on form 8-K were filed by the Company in the quarter ended October
31, 1997.
<PAGE>   20
                                                                              18


AUDITOR'S REPORT ON FINANCIAL STATEMENT
SCHEDULES INCLUDED IN FORM 10-K




The Board of Directors and Shareholders
Mid Ocean Limited




Under date of November 21, 1997, we reported on the consolidated balance sheets
of Mid Ocean Limited and subsidiaries as of October 31, 1997 and 1996, and the
related consolidated statements of operation, shareholders' equity and cash
flows for each of the years in the three year period ended October 31, 1997, as
contained in the 1997 Annual Report to Shareholders. These consolidated
financial statements and our report thereon are incorporated by reference in the
annual report on Form 10-K for the year 1997. In connection with our audit of
the aforementioned consolidated financial statements, we also have audited the
related consolidated financial statement schedules as listed in Part IV on page
16. These financial statement schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statement schedules based on our audit.

In our opinion, such financial statement schedules, when considered in relation
to the basic financial statements taken as whole, present fairly, in all
material respects, the information set forth therein.




KPMG PEAT MARWICK
Hamilton, Bermuda
November 21, 1997
<PAGE>   21
                                                                              19




                             SUPPLEMENTAL SCHEDULE I

                       CONSOLIDATED SUMMARY OF INVESTMENTS



                                OCTOBER 31, 1997
                            (US DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
                                                          COST OR                              AMOUNT AT WHICH
                                                         AMORTIZED              FAIR             SHOWN IN THE
                                                          COST(1)               VALUE            BALANCE SHEET
                                                          -------               -----            -------------

TYPE OF INVESTMENT
------------------
<S>                                                      <C>                   <C>             <C>
Fixed Maturities:

      US government and government agencies
      and authorities                                     $  305.1             $  308.2             $  308.2
      Taxable municipal bonds                                 22.5                 23.1                 23.1
      Corporate Bonds                                        447.1                452.8                452.8
      Non-US sovereign governments                           248.7                251.7                251.7
      Asset-backed securities                                427.6                431.6                431.6
      Mortgage -backed securities                             33.4                 34.8                 34.8
                                                          --------             --------             --------

Total fixed maturities                                     1,484.4              1,502.2              1,502.2

Short-term investments                                        21.1                 21.1                 21.1

Equity securities:
      Industrial, miscellaneous and all other                 22.4                 23.5                 23.5
                                                          --------             --------             --------

Total Investments                                         $1,527.9             $1,546.8             $1,546.8
                                                          ========             ========             ========
</TABLE>




(1) Investments in fixed maturities and short-term investments are shown at
amortized cost.
<PAGE>   22
                                                                              20



                                                                    SCHEDULE III




                                MID OCEAN LIMITED


                       SUPPLEMENTARY INSURANCE INFORMATION


                         OCTOBER 31, 1997, 1996 AND 1995
                            (US DOLLARS IN MILLIONS)




<TABLE>
<CAPTION>
                                        Losses,                                                   Amortization
                           Deferred    Claims and                          Net       Losses and   of Deferred     Other
                         Acquisition     Claim     Unearned   Premium   Investment   Settlement   Acquisition   Operating   Premiums
Year Ended                  Costs       Expenses   Premiums   Revenue     Income      Expenses       Costs      Expenses    Written
----------                  -----       --------   --------   -------     ------      --------       -----      --------    -------
<S>                      <C>           <C>         <C>        <C>       <C>          <C>          <C>           <C>         <C>
October 31, 1997
Property and Liability
  Insurance                 $ 45.9       $497.0     $321.8    $486.7      $103.4       $216.2        $ 85.9      $ 54.0      $505.5


October 31, 1996
Property and Liability
  Insurance                 $ 42.6       $427.7     $303.3    $436.1      $ 83.3       $211.9        $ 70.1      $ 34.4      $525.7



October 31, 1995
Property and Liability
  Insurance                 $ 22.8       $336.1     $206.3    $379.4      $ 73.8       $198.6        $ 53.4      $ 17.3      $435.0
</TABLE>
<PAGE>   23
                                                                              21




                                                                     SCHEDULE IV




                                MID OCEAN LIMITED

                                   REINSURANCE


                         OCTOBER 31, 1997, 1996 AND 1995
                            (US DOLLARS IN MILLIONS)



<TABLE>
<CAPTION>
                                                                                                                          PERCENTAGE
                                                               CEDED TO           ASSUMED                                 OF AMOUNT
                                             GROSS              OTHER            FROM OTHER             NET                ASSUMED
YEAR ENDED                                   AMOUNT           COMPANIES          COMPANIES            AMOUNT               TO NET
----------                                   ------           ---------          ---------            ------               ------
<S>                                          <C>              <C>                <C>                  <C>                 <C>
October 31, 1997
Property and Liability Insurance             $ 83.2             $ 56.7             $460.2             $486.7               94.5%


October 31, 1996
Property and Liability Insurance             $ 36.3             $ 29.9             $429.7             $436.1               98.5%


October 31, 1995
Property and Liability Insurance             $   --             $ 10.2             $389.6             $379.4              102.7%
</TABLE>
<PAGE>   24
                                                                              22



                                   SIGNATURES



Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to the registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized.

MID OCEAN LIMITED


By:

        /s/ Michael Butt
        -----------------------------------------
            Michael A. Butt
            President and Chief Executive Officer

January  27, 1998


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons in the capacities and on the
dates indicated.


<TABLE>
<CAPTION>
         Signatures                     Title                                        Date
         ----------                     -----                                        ----
<S>                                <C>                                          <C>
           *
---------------------------
    Robert J. Newhouse, Jr.        Chairman of the Board                        January 27, 1998


/s/ Michael Butt
---------------------------
    Michael A. Butt                President & Chief Executive Officer          January 27, 1998
                                   (Principal Executive Officer)

/s/ Charles Hays
---------------------------
    Charles F. Hays                Senior Vice President, Chief Financial       January 27, 1998
                                   & Administrative Officer (Principal
                                   Financial and Accounting Officer)


           *
---------------------------
    Frank J. Borelli               Director                                     January 27, 1998


           *
---------------------------
    Sir Brian Corby                Director                                     January 27, 1998

           *
---------------------------
    Geoffrey Elliott               Director                                     January 27, 1998


           *
---------------------------
    Michael P. Esposito, Jr.       Director                                     January 27, 1998



           *
---------------------------
    Robert R. Glauber              Director                                     January 27, 1998
</TABLE>
<PAGE>   25
                                                                              23




<TABLE>
<S>                                <C>                                          <C>
           *
---------------------------
    Henry U. Harder                Director                                     January 27, 1998

           *
---------------------------
    Paul Jeanbart                  Director                                     January 27, 1998


           *
---------------------------
    Roberto Mendoza                Director                                     January 27, 1998


           *
---------------------------
    Brian O'Hara                   Director                                     January 27, 1998

           *
---------------------------
    John Pasquesi                  Director                                     January 27, 1998


           *
---------------------------
    Henry H. Peters                Director                                     January 27, 1998


           *
---------------------------
    Jeffrey S. Tabak               Director                                     January 27, 1998


           *
---------------------------
    Frank J. Tasco                 Director                                     January 27, 1998
</TABLE>



 *By:
      /s/ Michael Butt
      --------------------
          Michael  A. Butt
          Attorney in Fact
<PAGE>   26
                                EXHIBIT INDEX

Exhibit                           Description
  No.                     

3.1   -     Memorandum of Association of the Company (incorporated by reference
            from the Company's Registration Statement on Form S-1 (File No.
            33-63298) (the "Registration Statement").

3.2   -     Articles of Association of the Company (incorporated by reference
            from the Registration Statement).

4.1   -     Rights Agreement, dated September 12, 1996, between Mid Ocean
            Limited and the Bank of New York, as Rights Agent (incorporated by
            reference from the Company's Report on Form 8-K filed September 12,
            1996).

10.01 -     1993 Long-Term Incentive and Share Award Plan (incorporated by
            reference from the Registration Statement).

10.02 -     Letter of Credit Facility and Security Agreement (incorporated by
            reference from the Registration Statement).

10.03 -     Investment Management Agreement, dated as of November 1, 1993
            between Brinson Partners Inc and Mid Ocean (incorporated by
            reference to the Company's Form 10-K for the year ended October 31,
            1993)

10.04 -     Investment Management Agreement, dated as of November 1, 1993
            between Warburg Asset Management and Mid Ocean Reinsurance
            (incorporated by reference to the Company's Form 10-K for the year
            ended October 31, 1993).

10.05 -     Employment Agreement (amended and restated as of August 19, 1996)
            between Michael A. Butt and Mid Ocean Reinsurance Company Ltd. and
            Mid Ocean Limited (incorporated by reference to the Company's Form
            10-K for the year ended October 31, 1996).

10.06 -     Service Agreement (amended and restated as of August 19, 1996)
            between Robert J. Newhouse Jr. and Mid Ocean Reinsurance Company
            Ltd. and Mid Ocean Limited (incorporated by reference to the
            Company's Form 10-K for the year ended October 31, 1996).

10.07 -     Employment Agreement (amended and restated as of August 19, 1996)
            between Henry C. V. Keeling and Mid Ocean Reinsurance Company Ltd
            (incorporated by reference to the Company's Form 10-K for the year
            ended October 31, 1996).

10.08 -     Employment Agreement (amended and restated as of August 19, 1996)
            between Charles F. Hays and Mid Ocean Reinsurance Company Ltd. and
            Mid Ocean Limited (incorporated by reference to the Company's Form
            10-K for the year ended October 31, 1996).

11.1  -     Statement of Computation of Earnings Per Share for the fiscal years
            ended October 31, 1997, 1996 and 1995.

13.1  -     Pages 12 - 51 of the Mid Ocean Limited 1997 Annual Report to
            Shareholders.

21.1  -     List of subsidiaries of the Registrant.

23.1  -     Consent of  KPMG Peat Marwick.

24.1  -     Powers of Attorney

27.1  -     Financial Data Schedule