<PAGE>
 
<PAGE>

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



                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 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 SEPTEMBER 30, 1996

                                       OR

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

  FOR THE TRANSITION PERIOD FROM _____________________ TO ___________________


                         COMMISSION FILE NUMBER 0-22376

                          TRANSNATIONAL RE CORPORATION

             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S>                                           <C>
         DELAWARE                                       13-3731572
(STATE OR OTHER JURISDICTION OF             (I.R.S. EMPLOYER IDENTIFICATION NO.)
 INCORPORATION OR ORGANIZATION)

      399 THORNALL STREET
      EDISON, NEW JERSEY                                  08837
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                (ZIP CODE)

</TABLE>


                                 (908) 906-8100
              (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        No
                                              __________     __________

        As of November 13, 1996,  5,365,400 shares of Class A Common Stock, $.01
par value per share,  and  1,535,948  shares of Class B Common  Stock,  $.01 par
value per share, of the Registrant were outstanding.

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


<PAGE>
 
<PAGE>



                          TRANSNATIONAL RE CORPORATION

                                      INDEX

<TABLE>
<S>                                                                                   <C>
PART I.  FINANCIAL INFORMATION

        Consolidated Balance Sheets
           at September 30, 1996 and December 31, 1995                                  3

        Consolidated Statements of Income and Stockholders' Equity
           for the three and nine months ended September 30, 1996 and 1995              4

        Consolidated Statements of Cash Flow
              for the three and nine months ended September 30, 1996 and 1995           5

        Notes to Consolidated Interim Financial Statements                              6

        Management's Discussion and Analysis of Financial Condition
           and Results of Operations                                                    9

PART II.  OTHER INFORMATION                                                            20


</TABLE>




                                        2






<PAGE>
 
<PAGE>

TRANSNATIONAL RE CORPORATION
Consolidated Balance Sheets
(Unaudited)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                                                  September 30,         December 31,
                                                                                                      1996                  1995
                                                                                                      ----                  ----
<S>                          <C>                                                                    <C>                 <C>
Assets                       Investments:
                               Fixed maturities, available for sale, at fair value
                                (amortized cost $155,517,000 and $151,158,000, respectively)       $ 155,350,104      $ 154,073,267
                               Short-term investments                                                 37,735,764         26,357,481
                                                                                                  --------------        -----------
                                 Total investments                                                   193,085,868        180,430,748
                             Cash                                                                      3,742,944          1,924,121
                             Accrued investment income                                                 2,240,416          1,873,205
                             Receivables:
                               Unreported premiums:    PXRE                                            4,328,401          4,631,112
                                                       Non-affiliates                                  1,202,238          4,924,574
                               Balances due from intermediaries and brokers:   PXRE                    2,058,720          1,016,420
                                                                               Non-affiliates            428,835          2,584,877
                             Deferred acquisition costs                                                1,510,350          1,009,994
                             Income tax recoverable                                                      320,330            904,997
                             Deferred income tax benefit                                               2,370,471            960,069
                             Investment in equity of Cat Fund, L.P.                                    2,082,027          2,024,195
                             Other assets                                                              1,388,525            156,986
                                                                                                  --------------        -----------
                                 Total assets                                                       $214,759,125       $202,441,298
                                                                                                  --------------        -----------
                                                                                                  --------------        -----------

Liabilities                  Losses and loss expenses:   PXRE                                       $ 13,263,663       $  8,966,592
                                                         Non-affiliates                                7,781,187         15,833,499
                             Unearned premiums                                                         9,035,608          5,499,201
                             Contingent commissions payable                                            6,472,622          3,396,809
                             Deferred incentive liability                                              3,920,746          2,998,847
                             Payable to PXRE                                                             292,450            443,469
                             Other liabilities                                                           458,003            431,920
                                                                                                  --------------        -----------
                               Total liabilities                                                      41,224,279         37,570,337
                                                                                                  --------------        -----------

Stockholders' Equity         Serial preferred stock, $.01 par value --
                               5,000,000 shares authorized; no shares issued and
                               outstanding                                                                     0                  0
                             Class A common stock, $.01 par value --
                               20,000,000 shares authorized; 5,750,000 shares
                               issued                                                                     57,500             57,500
                             Class B common stock, $.01 par value --
                               5,000,000 shares authorized; 1,535,948 shares
                               issued and outstanding                                                     15,359             15,359
                             Additional paid-in capital                                              120,708,243        120,708,243
                             Net unrealized (depreciation) appreciation on investments,
                               net of deferred income tax (benefit) expense
                               of ($58,000) and $1,020,000                                              (108,635)         1,894,945
                             Retained earnings                                                        60,636,646         47,449,119
                             Treasury stock at cost (384,600 and 270,100 shares,
                               respectively)                                                          (7,774,267)       (5,254,205)
                                                                                                   --------------       -----------
                               Total stockholders' equity                                            173,534,846        164,870,961
                                                                                                   --------------       -----------
                                 Total liabilities and stockholders' equity                         $214,759,125       $202,441,298
                                                                                                   --------------       -----------
                                                                                                   --------------       -----------

</TABLE>


        The accompanying notes are an integral part of these statements.




                                       3





<PAGE>
 
<PAGE>

TRANSNATIONAL RE CORPORATION
Consolidated Statements of Income and Stockholders' Equity
(Unaudited)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>


                                                                            Three Months Ended            Nine Months Ended
                                                                             September 30,                   September 30,
                                                                         1996            1995            1996             1995
                                                                         ----            ----            ----             ----
<S>           <C>                                                    <C>             <C>             <C>              <C>
Revenues      Net premiums earned:    PXRE                           $  5,366,707   $  5,860,961     $ 16,995,803    $ 17,540,661
                                      Non-affiliates                    8,120,133     12,631,406       23,326,258      34,396,960
              Net investment income                                     2,639,671      2,389,196        7,917,978       6,673,284
              Net realized investment (losses) gains                      (80,880)        22,796         (204,831)       (558,457)
                                                                     ------------   ------------     ------------     -----------
                                                                       16,045,631     20,904,359       48,035,208      58,052,448
                                                                     ------------   ------------     ------------     -----------

Losses and    Losses and loss expenses incurred: PXRE                   3,072,220        452,119       11,664,052       5,273,380
 Expenses                                        Non-affiliates         1,532,468      6,170,137        3,581,545       9,489,621
              Commissions and brokerage:         PXRE                     627,742        863,044        2,294,592       1,797,837
                                                 Non-affiliates         1,816,993      1,931,487        5,194,657       5,286,884
              Management fee expense - PXRE                               674,342        924,618        2,016,103       2,596,881
              Other operating expenses                                    669,787        978,346        2,401,805       2,881,483
                                                                     ------------   ------------     ------------     -----------
                                                                        8,393,552     11,319,751       27,152,754      27,326,086
                                                                     ------------   ------------     ------------     -----------

              Income before income taxes                                7,652,079      9,584,608       20,882,454      30,726,362
              Income tax provision                                      2,438,000      3,155,000        6,654,000      10,300,000
                                                                     ------------   ------------     ------------     -----------
              Net income                                             $  5,214,079   $  6,429,608     $ 14,228,454     $20,426,362
                                                                     ------------   ------------     ------------     -----------
                                                                     ------------   ------------     ------------     -----------


Per Share     Net income per share                                   $       0.76   $       0.92     $       2.05     $      2.88
                                                                     ------------   ------------     ------------     -----------
                                                                     ------------   ------------     ------------     -----------
              Weighted average shares outstanding                       6,907,551      7,021,848        6,943,634       7,102,096
                                                                     ------------   ------------     ------------     -----------
                                                                     ------------   ------------     ------------     -----------


Stockholders' Stockholders' equity at beginning of period            $168,368,267   $150,168,528     $164,870,961    $136,304,764
 equity       Change in unrealized appreciation (depreciation)
              on investments net of deferred income tax                   297,568        608,034       (2,003,580)      4,779,249
              Repurchase of common stock                                        0              0       (2,520,062)     (4,304,205)
              Net income                                                5,214,079      6,429,608       14,228,454      20,426,362
              Dividends to stockholders                                  (345,068)             0       (1,040,927)              0
                                                                     ------------   ------------     ------------     -----------
              Stockholders' equity at end of period                  $173,534,846   $157,206,170     $173,534,846    $157,206,170
                                                                     ------------   ------------     ------------     -----------
                                                                     ------------   ------------     ------------     -----------



</TABLE>

        The accompanying notes are an integral part of these statements.



                                       4



<PAGE>
 
<PAGE>


TRANSNATIONAL RE CORPORATION
Consolidated Statements of Cash Flow
(Unaudited)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                           Three Months Ended              Nine Months Ended
                                                                              September 30,                  September 30,
                                                                          1996            1995            1996           1995
                                                                          ----            ----            ----           ----
<S>             <C>                                                  <C>             <C>              <C>             <C>
Cash flow       Net income                                           $  5,214,079    $  6,429,608    $ 14,228,454    $ 20,426,362
from operating  Adjustments to reconcile net income to net cash
activities        provided by operating activities:
                     Losses and loss expenses                              65,870       4,669,907      (3,755,241)      3,710,314
                     Unearned premiums                                  1,953,291       3,908,393       3,536,407       8,331,999
                     Deferred acquisition costs                          (200,547)       (561,747)       (500,356)     (1,638,107)
                     Receivables                                        3,784,294      (2,550,891)      8,214,602      (4,386,868)
                Due to/from affiliates                                    (44,107)        100,130        (137,051)        294,035
                Current income tax                                      1,694,551        (662,555)        584,667        (184,749)
                Other                                                    (122,273)      1,937,943        (777,823)      2,261,797
                                                                      -----------     -----------     -----------     -----------
                    Net cash provided by operating activities          12,345,158      13,270,788      21,393,659      28,814,783
                                                                      -----------     -----------     -----------     -----------


Cash flow       Cost of fixed maturity investments                     (3,766,463)     (6,261,563)    (24,296,499)    (39,415,649)
from investing  Fixed maturity investments matured/disposed             9,431,731       2,278,943      19,660,935      30,334,334
activities      Investment in joint venture                                     0               0               0      (2,000,000)
                Payable for securities                                          0       5,317,813               0       5,317,813
                Net change in short-term investments                  (14,695,527)    (14,863,338)    (11,378,283)    (17,677,131)
                                                                      -----------     -----------     -----------     -----------
                     Net cash used by investing activities             (9,030,259)    (13,528,145)    (16,013,847)    (23,440,633)
                                                                      -----------     -----------     -----------     -----------

Cash flow from  Cost of treasury stock                                          0               0      (2,520,062)     (4,304,205)
financing       Dividends                                                (345,068)              0      (1,040,927)              0
activities                                                            -----------     -----------     -----------     -----------
                     Net cash used by financing activities               (345,068)              0      (3,560,989)     (4,304,205)
                                                                      -----------     -----------     -----------     -----------

                Net change in cash                                      2,969,831        (257,357)      1,818,823       1,069,945
                Cash, beginning of period                                 773,113       2,268,425       1,924,121         941,123
                                                                      -----------     -----------     -----------     -----------
                Cash, end of period                                   $ 3,742,944     $ 2,011,068     $ 3,742,944     $ 2,011,068
                                                                      -----------     -----------     -----------     -----------
                                                                      -----------     -----------     -----------     -----------


</TABLE>


        The accompanying notes are an integral part of these statements.


                                       5



<PAGE>
 
<PAGE>


Transnational Re  NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
Corporation
--------------------------------------------------------------------------------

1.  BASIS OF PRESENTATION

        The accompanying interim consolidated financial statements have been
prepared in conformity with generally accepted accounting principles ("GAAP").
These statements reflect the consolidated operations of Transnational Re
Corporation and its subsidiaries Transnational Reinsurance Company
("Transnational Reinsurance") and TREX Trading Corporation (collectively
referred to as "Transnational Re"). All material transactions between the
consolidated companies have been eliminated in preparing these financial
statements.

        The interim consolidated financial statements are unaudited; however, in
the opinion of management, the foregoing consolidated financial statements
include all adjustments, consisting only of normal recurring adjustments,
necessary for a fair statement of the results for the interim period. These
interim statements should be read in conjunction with the 1995 audited
consolidated financial statements and related notes. The preparation of interim
consolidated financial statements relies significantly upon estimates. Use of
such estimates, and the seasonal nature of a portion of the reinsurance
business, necessitates caution in drawing specific conclusions from interim
results.

2.  PREMIUMS ASSUMED AND CEDED

        Premiums on reinsurance business assumed are recorded as earned on a pro
rata basis over the contract period based on estimated subject premiums.
Adjustments based on actual subject premium are recorded once ascertained. The
portion of premiums written relating to unexpired coverages at the end of the
period is recorded as unearned premiums. Reinsurance premiums ceded are recorded
as incurred on a pro rata basis over the contract period.

3.  LOSSES AND LOSS EXPENSE LIABILITIES

        Liabilities for losses and loss expenses are established in amounts
estimated to settle incurred losses. Losses and loss expense liabilities are
based on individual case estimates provided for reported losses for known events
and estimates of incurred but not reported losses. Losses and loss expense
liabilities are necessarily based on estimates and the ultimate liabilities may
vary from such estimates primarily because of the significant delay in losses
being reported to insurance carriers, reinsurers and finally retrocessionaires,
such as Transnational Re. Any adjustments to these estimates are reflected in
income when known.



                                       6


<PAGE>
 
<PAGE>


Transnational Re  NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
Corporation
--------------------------------------------------------------------------------


4.  INVESTMENTS

        Fixed maturity investments are considered available for sale and are
reported at fair value. Unrealized gains and losses as a result of temporary
changes in fair value over the period such investments are held are reflected
net of income taxes in stockholders' equity. Unrealized losses which are not
temporary are charged to operations. Short-term investments are carried at
amortized cost which approximates fair value. Realized gains or losses on
disposition of investments are determined on the basis of specific
identification. The amortization of premiums and accretion of discounts for
fixed maturity investments are computed utilizing the interest method. The
effective yield under the interest method is adjusted for anticipated
prepayments.

5.  DEFERRED ACQUISITION COSTS

        Acquisition costs consist of commissions, fees and brokerage expenses
incurred in connection with contract issuance. These costs are deferred and
amortized over the period in which the related premiums are earned. Deferred
acquisition costs are reviewed periodically to determine that they do not exceed
recoverable amounts after allowing for anticipated investment income.

6.  MANAGEMENT FEES

        Management fees are incurred under an arrangement whereby PXRE
Reinsurance Company acts as underwriting manager for Transnational Reinsurance.
These fees are initially based on premium volume, but are adjusted through
contingent profit commissions related to underwriting results measured over a
period of years. These fees are expensed in the period that the related premiums
are earned.

7.  TREASURY STOCK

        In November 1994, Transnational Re was authorized to repurchase up to
500,000 shares of its stock. Since inception of its stock repurchase plan,
Transnational Re has repurchased a total of 384,600 shares of its common stock
in the open market. No shares of its stock were repurchased since the first
quarter of 1996.



                                       7


<PAGE>
 
<PAGE>


Transnational Re  NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
Corporation
--------------------------------------------------------------------------------


8.  PROPOSED TRANSACTION

        PXRE Corporation ("PXRE") and Transnational Re announced on August 22,
1996 that they had signed a definitive Agreement and Plan of Merger, pursuant
to which Transnational Re will merge with and into PXRE. After the merger, which
is designed to be on a tax-free basis, is consummated, Transnational Re will
cease to exist and PXRE will continue as the surviving corporation. As a result
of the merger, Transnational Re's reinsurance subsidiary, Transnational
Reinsurance, will become a subsidiary of PXRE Reinsurance Company, the
reinsurance underwriting subsidiary of PXRE.

        Under the merger agreement, each share of common stock of Transnational
Re will be exchanged for 1.0575 shares of PXRE common stock and cash in lieu of
fractional shares.

        Proxy materials related to the proposed merger of Transnational Re with
and into PXRE were mailed to stockholders on or about November 1, 1996, in
anticipation of a special meeting to be held on December 9, 1996, to consider
the merger. Transnational Re currently expects to complete the merger before
year end, subject to stockholder and regulatory approval as well as certain
other customary conditions.





                                       8



<PAGE>
 
<PAGE>


Transnational Re           MANAGEMENT'S DISCUSSION AND ANALYSIS OF
Corporation                FINANCIAL CONDITION AND RESULTS OF OPERATIONS
--------------------------------------------------------------------------------


GENERAL

        Transnational Re was incorporated on August 30, 1993 in the State of
Delaware and commenced operations in November 1993 following the November 9,
1993 closing of its initial public offering (the "Offering"). Transnational Re,
through its subsidiary Transnational Reinsurance, specializes in providing
brokered property retrocessional reinsurance in the United States and
international markets, currently focusing primarily on property catastrophe
retrocessional coverages.

        Transnational Re derives its business from its affiliation with PXRE
Reinsurance Company ("PXRE Reinsurance"), a wholly-owned subsidiary of PXRE
Corporation ("PXRE"), a publicly traded reinsurance group with a primary focus
on brokered property reinsurance, including catastrophe related coverages, in
both the United States and international markets. Pursuant to the Management
Agreement by and among Transnational Re, Transnational Reinsurance and PXRE
Reinsurance that has been in effect since November 8, 1993, PXRE Reinsurance has
responsibility for the day-to-day operations of Transnational Re and
Transnational Reinsurance, including all the reinsurance operations of
Transnational Reinsurance. Transnational Re and Transnational Reinsurance do not
have any operating properties, systems or paid employees. Pursuant to the
Management Agreement, PXRE Reinsurance provides all the operating facilities,
systems, equipment and management and clerical employees required to conduct the
businesses of Transnational Re and Transnational Reinsurance.

        Under the terms of the Management Agreement, Transnational Reinsurance
shares in certain specified business of PXRE Reinsurance that is classified as
property retrocessional reinsurance business, marine and aviation retrocessional
reinsurance or marine and aviation reinsurance and facultative reinsurance.
Transnational Reinsurance is also entitled to share in other property
reinsurance business, if any, which PXRE Reinsurance may, from time-to-time,
propose that Transnational Reinsurance underwrite and which Transnational
Reinsurance's Board of Directors may approve.

CERTAIN RISKS AND UNCERTAINTIES

        Pursuant to the Management Agreement, PXRE provides underwriting and
supervisory services relating to the reinsurance operations of Transnational Re,
and provides management and administrative services. Transnational Re does not
have any operating properties, systems or paid employees. There is no assurance
that Transnational Re can renew the Management Agreement with PXRE or with
comparable terms.



                                       9


<PAGE>
 
<PAGE>

        As a reinsurer principally of property catastrophe retrocessional
coverages in both the international and domestic markets, Transnational Re's
operating results in any given period depend to a large extent on the number and
magnitude of natural and man-made catastrophes such as hurricanes, windstorms,
floods, earthquakes, spells of severely cold weather, fires and explosions.

        The estimation of losses for catastrophe retrocessional reinsurers is
inherently less reliable than for reinsurers of risks which have an established
historical pattern of losses. In addition, insured events which occur near the
end of a reporting period, as well as the significant delay in losses being
reported to insurance carriers, reinsurers and finally, retrocessionaires such
as Transnational Re, require Transnational Re to make estimates of losses based
on limited information from ceding companies and based on its own underwriting
data. Because of the uncertainty in the process of estimating its losses from
insured events, there is a risk that Transnational Re's liabilities for losses
and loss expenses could prove to be inadequate, with a consequent adverse impact
on future earnings and stockholders' equity. Additionally, as a consequence of
its emphasis on property retrocessional reinsurance, Transnational Re may forgo
potential investment income because property losses are typically settled within
a short period of time.

        Because Transnational Re's current focus is primarily on catastrophe
retrocessional coverages which can involve significantly increased exposures,
principally as a consequence of the retrocessionaire's exposure to an
aggregation of losses from the same catastrophic event, and underwriting
limitations associated with retrocessional business, the occurrence of one or
more major catastrophes in any given period (such as Hurricanes Andrew and Iniki
in 1992 and the Northridge Earthquake in 1994) could have a material adverse
impact on Transnational Re's results of operations and financial condition and
result in substantial liquidation of investments and outflows of cash as losses
are paid.

        As Transnational Re underwrites risks from a large number of insurers
based on information generally supplied by retrocessional brokers, there is a
risk of developing a concentration of exposure to loss in certain geographic
areas prone to specific types of catastrophes. Transnational Re has systems and
software tools to monitor and manage the accumulation of its exposure to such
losses. Management has established guidelines for maximum tolerable losses from
a single or multiple catastrophic event based on historical data; however no
assurance can be given that these maximums will not be exceeded in some future
catastrophe.

        Premiums on reinsurance business assumed are recorded as earned on a pro
rata basis over the contract period based upon estimated subject premiums.
Management must estimate the subject premiums associated with the treaties in
order to determine the level of earned premiums for a reporting period. Such
estimates are based on information from brokers which can be subject to change
as new information becomes available. Because of the inherent uncertainty in
this process, there is the risk that premiums and related receivable balances
may turn out to be higher or lower than reported.



                                       10


<PAGE>
 
<PAGE>



        Although Transnational Re's investment guidelines stress conservation of
principal, diversification of risk, and liquidity, investments are subject to
market-wide risks and fluctuations, as well as to risk inherent in particular
securities. Accordingly, the estimated fair value of Transnational Re's
investments does not necessarily represent the amount which could be realized
upon future sale, particularly if Transnational Re were required to liquidate a
substantial portion of its portfolio to fund losses from catastrophic events.

        Premium receivables and loss reserves include business denominated in
currencies other than U.S. dollars. Transnational Re is exposed to the
possibility of significant claims in currencies other than U.S. dollars. While
Transnational Re holds positions denominated in foreign currencies to mitigate,
in part, the effects of currency fluctuations on its results of operations, it
does not hedge its currency exposures before a catastrophic event which may
produce a claim.

        Transnational Re (parent company) relies primarily on cash dividends and
net tax allocation payments from its subsidiary Transnational Reinsurance to pay
its operating expenses and to pay common stock dividends to Transnational Re's
stockholders. The payment of dividends by Transnational Reinsurance to
Transnational Re (parent company) is subject to limits imposed under the
insurance laws and regulations of Connecticut, the state of incorporation and
domicile of Transnational Reinsurance. In the event the amount of dividends
available, together with other sources of funds, are not sufficient to permit
Transnational Re to pay cash dividends, it would be necessary to obtain the
approval of the Connecticut Insurance Commissioner prior to Transnational
Reinsurance's payment of additional dividends. If such approval were not
obtained, Transnational Re would have to adopt one or more alternatives, such as
seeking additional equity. There can be no assurance that these strategies could
be effected on satisfactory terms, if at all.

        The reinsurance business is increasingly competitive and is undergoing a
variety of challenging developments. The industry has in recent years moved
toward greater consolidation as ceding companies have placed increased
importance on size and financial strength in the selection of reinsurers.
Additionally, reinsurers are tapping new markets and complementing their range
of traditional reinsurance products with innovative new products which bring
together capital markets and reinsurance experience. Transnational Re competes
with numerous major international and domestic reinsurance companies, many of
which have substantially greater financial, marketing and management resources
than Transnational Re.



                                       11


<PAGE>
 
<PAGE>



COMPARISON OF THIRD QUARTER RESULTS FOR
1996 WITH 1995

        Net premiums written for the three months ended September 30, 1996
decreased 31.1% to $15,440,000 from $22,401,000 for the corresponding period of
1995. Gross premiums written for the third quarter of 1996 decreased 29.5% to
$15,803,000 from $22,401,000 for the comparable period of 1995. Net premiums
earned for the third quarter of 1996 decreased 27.1% to $13,487,000 from
$18,492,000 in the corresponding period of 1995. Gross written, net written and
net earned premiums for the third quarter of 1996 declined from prior year
levels as Transnational Re continued its planned response to the increased
competitive trends that have characterized the property and marine
retrocessional reinsurance market since 1995. Third quarter net written premiums
were, as expected, significantly greater than those of the second quarter as a
substantial portion of Transnational Re's written premiums in the first and
third quarters represent semi-annual premium payments.

        Until 1996, Transnational Reinsurance had not maintained any
retrocessional coverage for its exposures on business written since the closing
of the Offering and had established its underwriting guidelines based upon the
assumption that it would not purchase retrocessional coverage. However, as the
cost of catastrophe retrocessional facilities has declined, Transnational
Reinsurance has begun selectively to purchase such coverages in 1996. Ceded
premiums written for the three months ended September 30, 1996 was $363,000
compared to $0 for the corresponding period of 1995.

        The underwriting results of a property and casualty insurer are
discussed frequently by reference to its loss ratio, underwriting expense ratio
and combined ratio. The loss ratio is the result of dividing losses and loss
expenses incurred by net premiums earned. The underwriting expense ratio is the
result of dividing underwriting expenses by net premiums written for purposes of
statutory accounting practices ("SAP") and net premiums earned for purposes of
GAAP. The combined ratio is the sum of the loss ratio and the underwriting
expense ratio. A combined ratio under 100% indicates underwriting profits and a
combined ratio exceeding 100% indicates underwriting losses. The combined ratio
does not reflect the effect of investment income on operating results. The
ratios discussed below have been calculated on a GAAP basis.

        The loss ratio was 34.1% for the three months ended September 30, 1996
compared with 35.8% for the corresponding period of 1995. The loss ratio for the
third quarter of 1996 reflected net incurred catastrophic losses of $2,268,000
for 1996 and prior accident years as compared with $4,791,000 in the same period
of 1995 for 1995 and prior accident years.



                                       12


<PAGE>
 
<PAGE>


        Significant losses affecting the third quarter of 1996 loss ratio are as
follows:

<TABLE>
<CAPTION>

        Loss Event                                        Amount of Losses
        ----------                                        ----------------
                                                            (in thousands)
<S>                                                         <C>
        Hurricane Fran                                         $2,000
        Three risk losses                                       1,010

</TABLE>

        Significant losses affecting the third quarter of 1995 loss ratio are as
follows:

<TABLE>
<CAPTION>

        Loss Event                                        Amount of Losses
        ----------                                        ----------------
                                                            (in thousands)
<S>                                                         <C>
        Hurricane Marilyn                                      $7,000
        Kobe, Japan Earthquake                                 (2,500)

</TABLE>

        During the third quarter of 1995, Transnational Re partially reversed
its first quarter provision for loss of $4.0 million for the Kobe, Japan
Earthquake based upon current reports of losses and industry estimates.

        The provision for losses and loss expenses includes the effect of
foreign exchange movements on Transnational Re's liability for losses and loss
expenses, resulting in a foreign currency exchange gain of $53,000 for the third
quarter of 1996 compared to a gain of $2,000 for the third quarter of 1995.

        During the third quarter of 1996, Transnational Re experienced a savings
of $71,000 net for prior year losses and loss expenses. The loss ratio for the
comparable quarter in 1995 was unfavorably affected by increases to reserves of
$647,000 net for prior year losses and loss expenses.

        The underwriting expense ratio was 28.1% for the three months ended
September 30, 1996 compared with 25.4% for the corresponding period of 1995. The
increase was principally due to an increase in contingent commissions payable to
clients related to profitable business and the decline in premiums earned. As a
result of the above, the combined ratio was 62.2% for the third quarter 1996
compared with 61.2% for the corresponding period of 1995.

        Under the terms of the Management Agreement with PXRE Reinsurance,
Transnational Re incurred management fees of $790,000 (5% of gross written
premiums) for the third quarter of 1996 compared to $1,120,000 in the third
quarter of 1995. These fees are expensed as the related premiums are earned, and
accordingly management fee expense for the third quarter of 1996 was $674,000
compared to $925,000 in the third quarter of 1995.



                                       13


<PAGE>
 
<PAGE>


        Other operating expenses decreased to $670,000 for the three months
ended September 30, 1996 from $978,000 for the corresponding period of 1995.
Other operating expenses reflect foreign currency exchange gains of $21,000 for
the third quarter of 1996 compared to gains of $6,000 for the corresponding
period of 1995. Officers incentive compensation decreased to $338,000 in the
third quarter of 1996 from $460,000 in the third quarter of 1995.

        Net investment income for the three months ended September 30, 1996
increased 10.5% to $2,640,000 from $2,389,000 for the corresponding period of
1995. The increase in net investment income was caused by an increase in average
investments for the third quarter of 1996 compared with the year-earlier period.
Transnational Re's pre-tax investment yield was 5.8% for the third quarter of
1996 and the third quarter of 1995, both calculated using amortized cost and
investment income gross of investment expenses. Net realized investment losses
for the third quarter of 1996 were $81,000 compared to gains of $23,000 for the
corresponding period of 1995.

        For the reasons discussed above, net income was $5,214,000 for the three
months ended September 30, 1996 compared to $6,430,000 for the corresponding
period of 1995. Net income per common share available to Transnational Re's
Class A and Class B common stockholders for the third quarter 1996 was $0.76
based on average shares outstanding of approximately 6,907,600 compared to $0.92
in the third quarter of 1995 based on average shares outstanding of
approximately 7,021,800.

COMPARISON OF YEAR-TO-DATE RESULTS FOR
1996 WITH 1995

        Net premiums written for the nine months ended September 30, 1996
decreased 27.1% to $43,858,000 from $60,191,000 for the corresponding period of
1995. Gross premiums written for the nine months ended September 30, 1996
decreased 25.7% to $44,705,000 from $60,191,000 for the comparable period of
1995. Net premiums earned for the nine months of 1996 decreased 22.4% to
$40,322,000 from $51,938,000 in the corresponding period of 1995. Gross written,
net written and net earned premiums for the nine months ended September 30, 1996
declined from prior year levels as Transnational Re continued its planned
response to the increased competitive trends that have characterized the
property and marine retrocessional reinsurance market since 1995.

        Until 1996, Transnational Reinsurance had not maintained any
retrocessional coverage for its exposures on business written since the closing
of the Offering, and had established its underwriting guidelines based upon the
assumption that it would not purchase retrocessional coverage. However, as the
cost of catastrophe retrocessional facilities has declined, Transnational
Reinsurance has begun selectively to purchase such coverages in 1996. Ceded
premiums written for the nine months ended September 30, 1996 was $847,000
compared to $0 for the corresponding period of 1995.



                                       14


<PAGE>
 
<PAGE>

        The loss ratio was 37.8% for the nine months ended September 30, 1996
compared with 28.4% for the corresponding period of 1995. The loss ratio for the
nine months of 1996 reflected net incurred catastrophic losses of $8,154,000 for
1996 and prior accident years as compared with $9,186,000 in the same period of
1995 for 1995 and prior accident years.

        Significant losses affecting the nine months ended September 30, 1996
loss ratio are as follows:

<TABLE>
<CAPTION>

        Loss Event                                        Amount of Losses
        ----------                                        ----------------
                                                            (in thousands)
<S>                                                         <C>
        Hurricane Luis                                         $3,683
        Large risk losses                                       3,161
        Hurricane Fran                                          2,000

</TABLE>

        Significant losses affecting the nine months ended September 30, 1995
loss ratio are as follows:

<TABLE>
<CAPTION>

        Loss Event                                        Amount of Losses
        ----------                                        ----------------
                                                            (in thousands)
<S>                                                         <C>
        Hurricane Marilyn                                      $7,000
        Kobe, Japan Earthquake                                  1,500

</TABLE>

        The provision for losses and loss expenses includes the effect of
foreign exchange movements on Transnational Re's liability for losses and loss
expenses, resulting in a foreign currency exchange gain of $50,000 for the first
nine months of 1996 compared to a gain of $29,000 for the corresponding period
of 1995.

        During the nine months ended September 30, 1996, Transnational Re
experienced a deficiency of $5,549,000 net for prior year losses and loss
expenses primarily due to development on Hurricane Luis. The loss ratio for the
comparable period in 1995 was unfavorably affected by increases to reserves of
$2,759,000 net for prior year losses and loss expenses.

        The underwriting expense ratio was 29.5% for the nine months ended
September 30, 1996 compared with 24.2% for the corresponding period of 1995. The
increase was principally due to an increase in contingent commissions payable to
clients related to profitable business and the decline in premiums earned. As a
result of the above, the combined ratio was 67.3% for 1996 compared with 52.6%
for 1995.



                                       15


<PAGE>
 
<PAGE>



        Under the terms of the Management Agreement with PXRE Reinsurance,
Transnational Re incurred management fees of $2,235,000 (5% of gross written
premiums) for the nine months ended September 30, 1996 compared to $3,010,000 in
the corresponding period of 1995. These fees are expensed as the related
premiums are earned, and accordingly management fee expense for the nine months
of 1996 was $2,016,000 compared to $2,597,000 in the corresponding period of
1995.

        Other operating expenses decreased to $2,402,000 for the nine months
ended September 30, 1996 from $2,881,000 for the corresponding period of 1995.
Other operating expenses reflect foreign currency exchange losses of $109,000
for the nine months ended September 30, 1996 compared to gains of $20,000 for
the corresponding period of 1995. Officers incentive plan expenses amounted to
$922,000 in the nine months of 1996 compared with $1,409,000 in the similar
period last year.

        Net investment income for the nine months ended September 30, 1996
increased 18.7% to $7,918,000 from $6,673,000 for the corresponding period of
1995. The increase in net investment income was caused by an increase in average
investments for the nine months of 1996 compared with the year-earlier period
and an increase in Transnational Re's pre-tax investment yield to 5.9% for the
nine months of 1996 from 5.7% in the corresponding period of 1995, both
calculated using amortized cost and investment income gross of investment
expenses. Net realized investment losses for the nine months ended September 30,
1996 were $205,000 compared with $558,000 for the corresponding period of 1995.

        For the reasons discussed above, net income was $14,228,000 for the nine
months ended September 30, 1996 compared to $20,426,000 for the corresponding
period of 1995. Net income per common share available to Transnational Re's
Class A and Class B common stockholders for the nine months ended September 30,
1996 was $2.05 based on average shares outstanding of approximately 6,943,600
compared to $2.88 based on average shares outstanding of approximately 7,102,100
in the year earlier-period.

LIQUIDITY AND CAPITAL RESOURCES

        Transnational Reinsurance's results may be influenced by a variety of
factors, the frequency and severity of catastrophe and other loss events,
changes in the property and casualty reinsurance market, insurance regulatory
changes and changes in general economic conditions. Transnational Reinsurance's
ability to pay dividends to Transnational Re is subject to provisions of the
Connecticut insurance law restricting the ability of Connecticut insurance
companies to make certain dividends and distributions without prior regulatory
notification and approval. Connecticut insurance law provides that the maximum
amount of dividends or other distributions that Transnational Reinsurance may
declare or pay to Transnational Re within any twelve-month period, without
regulatory approval, is limited to the lesser of (a) earned surplus or (b) the
greater of 10% of policyholder' surplus at December 31, of the preceding year or
100% of net income for the twelve-month period ended December 31 of the
preceding year, all determined in accordance with SAP. As of December 31, 1995,
Transnational Reinsurance had earned surplus



                                       16


<PAGE>
 
<PAGE>


of approximately $35,004,000, policyholder' surplus of $151,924,000 and its net
income for 1995 was $26,674,000. The maximum amount of dividends or
distributions that Transnational Reinsurance may declare and pay in 1996,
without regulatory approval, is therefore $26,674,000. Transnational Reinsurance
paid $5,000,000 in dividends to Transnational Re during the nine months ended
September 30, 1996.

        Transnational Re files federal income tax returns for itself and all of
its direct or indirect domestic subsidiaries that satisfy the stock ownership
requirements for consolidation for federal income tax purposes (collectively,
the "Subsidiaries"). Transnational Re is party to an Agreement Concerning Filing
of Consolidated Federal Income Tax Returns (the "Tax Allocation Agreement")
pursuant to which each Subsidiary makes tax payments to Transnational Re in an
amount equal to the federal income tax payment that would have been payable by
such Subsidiary for such year if it had filed a separate income tax return for
such year. Transnational Re is required to provide for payment of the
consolidated federal income tax liability for the entire group. If the aggregate
amount of tax payments made in any tax year by a Subsidiary is less than (or
greater than) the annual tax liability for such Subsidiary on a stand-alone
basis for such year, such Subsidiary will be required to make up such deficiency
(or receive a credit if payments exceed the separate return tax liability) to
(from) Transnational Re.

        Management expects that Transnational Reinsurance's capitalization will
provide it with sufficient resources to meet its liquidity requirements on both
a short-term and long-term basis, although no assurances can be given that such
expectation will prove to be correct.

        For the nine months ended September 30, 1996 and 1995, Transnational
Re's net cash flow provided by operations was $21,394,000 and $28,815,000,
respectively. The nine months ended September 30, 1996 reflected lower premiums
written and higher loss payments, offset in part by the timing of other
underwriting and operating payments.

        Transnational Re's management has established general procedures and
guidelines for its investment portfolio and oversees investment management
carried out by Phoenix Duff & Phelps Corporation, a public majority-owned
subsidiary of Phoenix Home Life Mutual Insurance Company, under an investment
advisory agreement. Although these investment guidelines stress conservation of
principal, diversification of risk, and liquidity, investments are subject to
market-wide risks and fluctuations, as well as risk inherent in particular
securities. As at September 30, 1996, Transnational Re's investment portfolio
consisted solely of fixed maturities and short-term investments. Although
Transnational Re's investment portfolio does not currently include any equity
securities, Transnational Re may in the future determine to invest a portion of
its investment portfolio in equity securities. The investment policies and all
investments of Transnational Re are approved by its Board of Directors.



                                       17


<PAGE>
 
<PAGE>


        Of Transnational Re's fixed maturities portfolio as at September 30,
1996, 98.7% of the fair value was in obligations rated "Aa" or "AA" or better by
Moody's Investors Service, Inc. or Standard & Poor's Corporation, respectively,
or in government or government-backed securities. Mortgage-backed and
asset-backed securities (principally GNMAs) accounted for 26.7% of fixed
maturities based on fair value at September 30, 1996. In addition, Transnational
Re has no investments in real estate or commercial mortgage loans. The average
market yield to maturity of Transnational Re's fixed maturities portfolio at
September 30, 1996 and 1995 was 5.9% and 4.6%, respectively.

        Fixed maturity investments are reported at fair value, with the net
unrealized gain or loss, net of tax, reported as a separate component of
stockholders' equity. Transnational Re recorded directly to equity a $2,004,000
after-tax unrealized decline in the value of its portfolio ($0.29 book value per
share) during the nine months of 1996, including an after-tax unrealized gain of
$298,000 in the third quarter of 1996 ($0.04 book value per share), the latter
reflecting the effect of decreasing interest rates during the third quarter of
1996. Short-term investments are carried at amortized cost which approximates
fair value. Transnational Re's short-term investments (principally high grade
commercial paper) were $37,736,000 at September 30, 1996 compared to $26,357,000
at December 31, 1995.

        Book value per common share was $25.15 at September 30, 1996.

        Transnational Re may be subject to gains and losses resulting from
currency fluctuations because substantially all of its investments are
denominated in U.S. dollars, while some of its net liability exposure is in
currencies other than U.S. dollars. Transnational Re expects to hold currency to
mitigate, in part, the effects of currency fluctuations on its results of
operations. Currency holdings and investments denominated in foreign currencies
do not constitute a material portion of Transnational Re's investment portfolio
and, in the opinion of Transnational Re's management, are sufficiently liquid
for its needs.

        During the third quarter of 1996, Transnational Re declared a quarterly
dividend on its common stock of $0.05 per share. The expected annual dividend,
based on shares outstanding at September 30, 1996, is approximately $1,380,000.

        In November 1994, Transnational Re's Board of Directors authorized the
repurchase of up to 500,000 shares of its Class A Common Stock from time-to-time
in open market or private block purchase transactions. Through September 30,
1996, Transnational Re has expended approximately $7,774,000 to repurchase a
total of 384,600 shares. No shares were repurchased since the first quarter of
1996.

        In March 1995, Transnational Re and PXRE entered into a joint venture
arrangement to trade in catastrophe futures and options contracts on the CBOT.
Transnational Re and PXRE have each contributed $2.5 million to capitalize this
venture. Although the joint venture has developed a number of trading
strategies, the low level of activity in the CBOT market for catastrophe futures
has kept trade volume to a minimum through September 30, 1996.


                                       18


<PAGE>
 
<PAGE>


        As of September 30, 1996, Transnational Re had no material commitments
for capital expenditures.

INCOME TAXES

        Transnational Re's effective tax rate for the nine months ended
September 30, 1996 and 1995 was 31.9% and 33.5%, respectively. The effective tax
rates differ from the applicable federal statutory tax rates due to tax exempt
interest income and state and local taxes.








                                       19





<PAGE>
 
<PAGE>


                           PART II. OTHER INFORMATION

Item 1.        Legal Proceedings

        As reported in the Form 10-Q for the quarter ended June 30, 1996, on May
15, 1996, a putative class action lawsuit (the "Action") was filed in the Court
of Chancery of the State of Delaware which names Transnational Re, the directors
of Transnational Re and PXRE as defendants. On or about August 23, 1996, an
agreement in principle was reached to settle the Action pursuant to terms
reflected in a memorandum of understanding and subject to agreement upon final
settlement documentation, confirmatory discovery and Court approval (the
"Settlement"). A Stipulation of Settlement reflecting the terms of the
Settlement was filed with the court on October 28, 1996. On October 29, 1996,
the Court issued an Order (i) preliminarily certifying the Action as a class
action by the named representative for settlement purposes only, (ii) scheduling
a hearing to be held on December 10, 1996 to (a) determine whether Plaintiff
adequately represents the Class and whether the Action can be maintained as a
class action, (b) consider any objections to the Settlement and determine
whether it is fair, reasonable and adequate to the stockholders of Transnational
Re and (c) consider class counsel's application for attorney's fees, (iii)
directing the provision of notice of the Action and the Settlement (including
the release contemplated being effected by the entry of a final judgment in the
Action) to the record holders of Transnational Re stock from May 10, 1996
through the date of the mailing of notice, and (iv) enjoining class members,
pending the final determination of whether the Settlement should be approved and
a final judgment issued, from instituting or prosecuting any claim contemplated
being released by the Settlement.

Item 6.        Exhibits and Reports on Form 8-K

               (a)    Exhibits:

                      Exhibit No. -         Description
                      None.

               (b)    Reports on Form 8-K

        Transnational Re filed a Current Report on Form 8-K with the Securities
and Exchange Commission on August 22, 1996 containing, under the heading "Other
Events", a description of the proposed merger between Transnational Re and PXRE.

        Transnational Re filed a Current Report on Form 8-K with the Securities
and Exchange Commission on August 26, 1996, indicating, under the head "Other
Events", that an agreement in principle had been reached to settle the lawsuit
described in Item 1 above.



                                       20


<PAGE>
 
<PAGE>

                                   SIGNATURES

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


                                            TRANSNATIONAL RE CORPORATION




November 13, 1996                           By:/s/ Sanford M. Kimmel
                                            ------------------------
                                            Sanford M. Kimmel
                                            Senior Vice President, Treasurer
                                            and Chief Financial Officer






                                       21






<PAGE>