UNITED STATES
                     SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, DC 20549

                                 FORM 10-K/A

                              Amendment No. 1 to

    (Mark One)
    |X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
                            EXCHANGE ACT OF 1934

                For the fiscal year ended December 31, 2001

                                     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 000-23427

                   STIRLING COOKE BROWN HOLDINGS LIMITED
           (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                 BERMUDA                                  NOT APPLICABLE
    (STATE OR OTHER JURISDICTION OF                       (IRS EMPLOYER
     INCORPORATION OR ORGANIZATION)                   IDENTIFICATION NUMBER)

   VICTORIA HALL, 3RD FLOOR, 11 VICTORIA STREET, HAMILTON HM 11, BERMUDA
                 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

                      TELEPHONE NUMBER: (441) 295-7556
            (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

      SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE

        SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

                            TITLE OF EACH CLASS
                            -------------------
                 Ordinary Shares, Par Value $0.25 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 this Form 10-K. NOT APPLICABLE.

     The  aggregate  market  value of the  shares of all  classes of voting
stock of the registrant held by  non-affiliates  of the registrant on March
18, 2002 was  approximately  $2.8  million  computed  upon the basis of the
closing sales price of the Ordinary Shares on the Nasdaq National Market 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 March 18, 2002 there were 9,519,972 outstanding Ordinary Shares,
the only class of the registrant's  common stock outstanding,  of $0.25 par
value.

                    DOCUMENTS INCORPORATED BY REFERENCE

     Certain portions of the registrant's  Proxy Statement  relating to its
Annual General Meeting of Shareholders scheduled to be held on May 23, 2002
are incorporated by reference into Part III of this Form 10-K.

     Although  Stirling Cooke Brown Holdings  Limited is a "foreign private
issuer" within the meaning of Rule 3b-4 under the  Securities  Exchange Act
of 1934, as amended,  it is voluntarily  electing to file its Annual Report
for the year ended December 31, 2001 on a Form 10-K.

<PAGE>

                                   INDEX

                                                                       PAGE
                                                                       ----

                                   PART 1

Item 1    Business....................................................   1

Item 2    Properties..................................................  10

Item 3    Legal Proceedings...........................................  10

Item 4    Submission of Matters to a Vote of Security Holders.........  13

                                  PART II

Item 5    Market for Registrant's Common Equity and Related
          Stockholder Matters........................................   14

Item 6    Selected Financial Data....................................   15

Item 7    Management's Discussion and Analysis of Financial
          Condition and Results of Operations........................   16

Item 8    Financial Statements and Supplementary Data................   23

Item 9    Changes in and Disagreements with Accountants on
          Accounting and Financial Disclosure........................   53

                                  PART III

Item 10   Directors and Executive Officers of the Registrant.........   53

Item 11   Executive Compensation.....................................   53

Item 12   Security Ownership of Certain Beneficial Owners
          and Management.............................................   53

Item 13   Certain Relationships and Related Transactions.............   53

                                  PART IV

Item 14   Exhibits, Financial Statement Schedules and Reports
          on Form 8-K................................................   54

Note:  All dollar amounts are in U.S. dollars, unless otherwise
       specifically noted.

<PAGE>

                                   PART 1

ITEM 1--BUSINESS

THE COMPANY

Stirling Cooke Brown Holdings  Limited (the "Company") is a Bermuda holding
company incorporated on December 12, 1995, which, through its subsidiaries,
provides insurance services and products. The Company provides its range of
services and products to insurance  and  reinsurance  companies,  insurance
agents,  and  insureds.  The Company is involved  primarily in the workers'
compensation,  occupational  accident  and  health,  and  property/casualty
insurance  markets through its  subsidiaries  located in the United States,
London and Bermuda.


THE COMPANY'S OPERATIONS

The Company has three main business  segments; Insurance, Program Business,
and Brokerage.  In early 2001,  following a review of its  operations,  the
Company decided to discontinue its reinsurance and underwriting  management
segments.  Each business segment consists of one or more separate companies
and the  results  of each  segment  reflect  all fees,  income,  and direct
expenses for the companies in that segment.  For example,  revenues for the
insurance  segment include all of the insurance  company's income including
premiums, policy issuance fees, and investment income.

INSURANCE

The Company's  insurance segment consists of a New York-domiciled  insurer,
Realm National  Insurance  Company ("Realm  National").  Realm National was
acquired by the Company in September 1996 and earns net premiums and policy
issuance fees. The insurance segment generated revenues of $29.9 million in
2001,  $23.5 million in 2000,  and $12.6 million in 1999.  This increase in
revenues  reflects a reduced  amount of  reinsurance  purchased.  The World
Trade Center disaster of September 11, 2001 had an immaterial effect on the
results of  operations  of Realm  National for the year ended  December 31,
2001.

Realm National had shareholders'  equity of approximately  $17.8 million at
December  31, 2001  (2000--$17.8  million,  1999--$21.8  million),  and net
premiums earned of approximately  $27.8 million for the year ended December
31, 2001  (2000--$18.5  million,  1999--$9.5  million).  For the year ended
December 31,  2001,  Realm  National's  gross  premiums  written were $40.0
million (2000--$61.4 million,  1999--$47.2  million);  net premiums written
were $32.8 million  (2000--$22.2  million,  1999--$8.9  million),  of which
$27.1 million  (2000--$16.1  million,  1999--$7.9  million) were related to
workers'  compensation  insurance  and $5.7  million  (2000--$6.1  million,
1999--$1.0 million) were related to property and casualty insurance.  Realm
National is rated B+ (Very Good) by A.M. Best Company.

PROGRAM BUSINESS

The Company's program business segment consists of subsidiaries that market
insurance  products and manage insurance programs developed by the Company.
These programs  transfer risk from an insured to insurers and ultimately to
reinsurers  primarily in the workers'  compensation  market.  The segment's
subsidiaries  are integrated to provide a range of business  production and
administrative  services to insurers. The program business segment services
are provided to unaffiliated  primary insurers and a Company-owned  primary
insurer.  This  segment  consists  primarily  of  managing  general  agency
("MGA"), program management, third party claims administration ("TPA"), and
loss control and premium  audit  companies.  The program  business  segment
generated  revenues of $11.4 million in 2001,  $15.3  million in 2000,  and
$22.4 million in 1999.  This  continued  decrease in revenues was primarily
due to reduced fee margins on programs and a reduction in program  business
volume as a result  of  management's  decision  to  impose  more  selective
underwriting conditions on continuing programs.

The Company's  MGA  subsidiaries  are  responsible  for marketing  programs
through a network of retail and wholesale  insurance agents.  The MGA's are
also responsible for underwriting,  policy issuance,  policy servicing, and
administration  of the business bound.  The Company's MGA network  includes
offices  in Boca  Raton,  Florida  and New  York,  New  York.  As part of a
continuing  effort to streamline  operations and reduce ongoing costs,  the
Company  consolidated its Dallas,  Texas MGA office with its Boca Raton MGA
office effective December 31, 2001.

BROKERAGE

The Company's brokerage segment consists of subsidiaries that receive a fee
or commission  for brokering  insurance and  reinsurance  contracts.  These
subsidiaries  specialize in placing  insurance and reinsurance  business in
workers'  compensation,  accident and health, and specialty casualty lines.
The  Company  generates  fees  and  commission-based   revenues  from  this
business. The brokerage segment generated revenues of $5.8 million in 2001,
$11.2  million in 2000 and $24.9  million  in 1999.  The  segment  has been
adversely  affected  by the  disruption  caused by  widespread  reinsurance
market  disputes  and legal  proceedings,  including  those  involving  the
Company.  The decrease in brokerage segment revenues was also the result of
reduced business being brokered due to significantly diminished reinsurance
capacity for workers' compensation business.

DISCONTINUED OPERATION

Following a review of its operations,  the Company decided on March 6, 2001
to discontinue its reinsurance and underwriting management segments and put
these segments into run-off.

The Company's  reinsurance segment consists of its reinsurance  subsidiary,
Comp Indemnity  Reinsurance  Company  Limited  ("CIRCL").  CIRCL  primarily
reinsured  workers'  compensation and property and general liability risks.
Management  determined in early 1999 to cease  underwriting new programs in
the reinsurance segment due to unfavourable results, and for this reason, a
number of existing contracts were not renewed for the 1999 year. Due to the
history of operating losses in the segment,  together with the cessation of
the writing of new programs,  the Company decided to completely discontinue
the segment and place the  operation  into run-off  effective  December 31,
2000.

The reinsurance  segment generated revenues of ($0.1) million in 2001, $1.7
million in 2000 and $3.1 million in 1999.  For the year ended  December 31,
2001, CIRCL's gross premiums assumed were $0.3 million (2000--$0.3 million,
1999--$3.0 million), of which $0.2 million (2000--$0.2 million,  1999--$2.7
million) were related to workers'  compensation  insurance and $0.1 million
(2000--$0.1  million,  1999--$0.3  million)  were  related to property  and
general  liability  insurance.  Net premiums  assumed  were ($0.3)  million
(2000--$0.4 million, 1999--$1.1 million).

The  Company's  underwriting  management  segment is comprised of companies
that primarily  underwrote and administered  reinsurance business on behalf
of independent  reinsurance companies.  The underwriting management segment
earned  fees  for  providing  underwriting  and  associated  administrative
services   relating  to  the  business   underwritten.   Since  1999,   the
underwriting  management segment has experienced a significant reduction in
business written,  which has led to decreasing revenues over the period. In
view of the  reduction in revenues,  the  resulting  loss,  and the ongoing
business prospects for the segment,  the Company decided to discontinue the
segment and place the  operation in run-off.  The  underwriting  management
segment  generated  revenues of $0.6 million in 2001, $1.6 million in 2000,
and $4.1 million in 1999.

As a result of the  planned  run-off  of  operations  for the  underwriting
management  and  reinsurance   segments,   the  operating  results  of  the
underwriting  management  and  reinsurance  segments  in  the  accompanying
financial statements have been reported as discontinued  operations for all
periods  presented,  and,  accordingly,  the operating  results for periods
prior to 2000 have been restated.

MARKETING

The Company's marketing  strategies vary by business segment. The Company's
program  business  segment markets its workers'  compensation  programs and
other specialty lines to retail and wholesale  insurance agents in the U.S.
through  its MGA's.  Individual  MGA  offices  market  their  services  and
products  through sales  representatives,  targeted direct mail,  local and
regional advertising, seminars, and trade and industry conventions. Given a
general  reliance  on retail  agents  as an  important  source of  business
production,   special  emphasis  is  placed  on  building  and  maintaining
relationships  with individual retail agents and on expanding the Company's
network of retail  producers.  To encourage loyalty from the retail agents,
the  Company  seeks to provide a high  level of  service,  offer  insurance
products that satisfy the needs of clients and provide  certain  incentives
for the achievement of the Company's objectives.  The Company believes that
it has successfully  developed a reputation for providing  quality service,
cost-effective  products and strong marketing support, which has enabled it
to  develop  strong  relationships  with its retail  agents and  commercial
customers.  The Company's  insurance segment markets its insurance products
through the Company's own MGA network and to independent  insurance  agents
through  unaffiliated  agent  networks.  The  Company's  brokerage  segment
markets its services  directly to insurance and reinsurance  companies,  as
well as to insurance agents.

COMPETITION

The business of providing  insurance  services and products to the workers'
compensation  and  property  and  casualty   insurance  markets  is  highly
competitive.  The Company competes with providers of traditional  insurance
coverage  and with  providers of  alternative  market  services  (including
domestic and foreign insurance  companies,  reinsurers,  insurance brokers,
captive insurance companies,  rent-a-captives,  self-insurance  plans, risk
retention groups, state funds, assigned risk pools and other risk-financing
mechanisms).  The  Company  believes  that  the key  factors  in  competing
effectively in the risk management  market are price, the ability to tailor
programs to the needs of the  insured,  and the ability to rapidly  develop
new solutions to address changing market  conditions.  The Company believes
that its  services  and products  are  competitively  priced,  and that its
combination  of  services  and  products  enables  it to  develop  tailored
programs and be a competitive  provider of insurance services and products.
However,  in periods of soft  insurance  market  conditions,  the Company's
various business segments are subject to additional competitive pressure in
generating premium volume. In addition, the fees that they charge for their
services  come under  pressure as insurers  and  reinsurers  seek to reduce
their costs.

Realm  National is rated B+ (Very Good) by A.M.  Best  Company.  In certain
circumstances,  Realm  National  may be at a  competitive  disadvantage  to
insurers with higher ratings.  However,  the Company's MGA's also represent
insurers with higher ratings from A.M. Best Company,  thereby  allowing the
Company's MGA's to remain competitive in circumstances where Realm National
is not selected as the insurer due to its rating.

EMPLOYEES

As of December 31, 2001, the Company had 228 employees.  The service nature
of the Company's business makes its employees an important corporate asset.
While the market for  qualified  personnel  is extremely  competitive,  the
Company believes that its  relationships  with its employees are good. None
of the Company's employees is represented by a union.

REGULATION

The  Company's   subsidiaries   that  are  engaged  in  the  insurance  and
discontinued reinsurance segments (Realm National and CIRCL,  respectively)
are subject to regulation by government  agencies in the states and foreign
jurisdictions  in which  they do  business.  The  nature and extent of such
regulation varies from jurisdiction to jurisdiction, but typically involves
prior approval of the acquisition of control of an insurance  company or of
any  company  controlling  an  insurance  company;  regulation  of  certain
transactions  entered  into  by  an  insurance  company  with  any  of  its
affiliates;  approval of premium  rates and policy  forms for many lines of
insurance; standards of solvency and minimum amounts of capital and surplus
that  must  be  maintained;   establishment  of  reserves  required  to  be
maintained  for  unearned  premium,  losses  and loss  expense or for other
purposes; limitations on types and amounts of investments;  restrictions on
the size of risks which may be insured;  licensing  of insurers and agents;
deposits of securities for the benefit of policyholders;  and the filing of
periodic reports with respect to financial condition and other matters.

Most states  require  property and casualty  insurers  licensed to transact
insurance in those states to become members of insolvency funds or guaranty
associations,  which generally protect policyholders against the insolvency
of such insurers. Members of the fund or association must contribute to the
payment  of  certain  claims  made  against  insolvent  insurers.   Maximum
contributions  required  by law in any one year vary  between  1% and 2% of
annual  premiums  written  by a  member  in that  state.  Assessments  from
insolvency  funds  paid by  Realm  National  in 1999,  2000  and 2001  were
immaterial in relation to the Company's  consolidated financial statements.
The cost of some of these assessments is recoverable  through future policy
surcharges and premium tax deductions.

Realm National also is required to  participate  in various  state-mandated
insurance  facilities or in funding  mandatory  pools,  which are generally
designed to provide  insurance  coverage  for  consumers  who are unable to
obtain insurance in the voluntary  insurance  market.  One such pool is the
multi-state workers'  compensation pool operated by the National Council on
Compensation Insurance. These pools typically require all companies writing
applicable  lines of  insurance  in the  state  for which the pool has been
established  to fund  deficiencies  experienced by the pool based upon each
company's  relative premium writings in that state, with any excess funding
typically  distributed  to the  participating  companies on the same basis.
Total  assessments  incurred by Realm National from all such facilities for
1999,  2000,  and  2001  were  immaterial  in  relation  to  the  Company's
consolidated financial statements.

The company is subject to guaranty fund and other assessments by the states
in which it writes business. The company has paid $0.66 million and accrued
$0.2  million  liability  for  guaranty  fund and other  assessments.  This
accrual  represents   management's  best  estimates  based  on  information
received  from the  states in which the  Company  writes  business  and may
change due to many factors,  including the Company's  share of the ultimate
cost of current insolvencies.

Realm  National  also  is  subject  to  various  statutory  and  regulatory
restrictions,  generally  applicable to each insurance company in its state
of domicile,  which limit the amount of dividends or distributions  payable
by an insurance company to its shareholders. The restrictions are generally
based on  certain  levels of  surplus,  investment  income,  and  operating
income, as determined under statutory accounting practices.

The insurance laws of the State of New York (the "New York Insurance  Law")
regulate the distribution of dividends and other payments to the Company by
Realm  National.  Under  the  applicable  New York  statute,  unless  prior
regulatory  approval is obtained,  an insurer may not declare or distribute
any dividend to shareholders,  which,  together with all dividends declared
or distributed by it during the preceding twelve months, exceeds the lesser
of (i) 10% of its surplus to  policyholders  as shown by its last statement
on file with the New York Department of Insurance, or (ii) 100% of adjusted
net  investment  income  during  such  period.  Such  restrictions  or  any
additional  subsequently  imposed restrictions may in the future affect the
Company's ability to pay expenses,  principal and interest on its debt, and
cash dividends to its shareholders.

The National Association of Insurance  Commissioners ("NAIC") has adopted a
methodology for assessing the adequacy of statutory surplus of property and
casualty insurers that includes a risk-based capital requirement. Insurance
companies  are  required  to  calculate  and  report  information  under  a
risk-based  formula that attempts to measure  statutory capital and surplus
needs based on the risks in a  company's  mix of  products  and  investment
portfolio.  The formula is designed to allow state insurance  regulators to
monitor the adequacy of an insurer's capital.  Under the formula, a company
determines its risk-based  capital  ("RBC") by taking into account  certain
risks  related to the  insurer's  assets  (including  risks  related to its
investment  portfolio and ceded reinsurance) and the insurer's  liabilities
(including  underwriting  risks related to the nature and experience of its
insurance  business).  The  RBC  rules  provide  for  different  levels  of
regulatory  attention  depending on the ratio of a company's total adjusted
capital to its  "authorized  control  level" of RBC.  Under the formula,  a
higher ratio reflects a greater adequacy of capital.  Based on calculations
made by the Company,  the RBC level for the Company's insurance  subsidiary
exceeds  levels that would trigger  regulatory  attention.  At December 31,
2001,  Realm  National's  RBC  ratio  was  approximately  2.63:1,  and  the
threshold requiring minimum regulatory  involvement was 1.75:1.  Therefore,
the Company's  capital exceeded all requirements of the Risk-Based  Capital
Model Act. The NAIC has also developed an Insurance Regulatory  Information
System ("IRIS") to assist state insurance departments in their oversight of
the  financial   condition  of  insurance   companies  operating  in  their
respective states.  IRIS identifies 11 industry ratios and specifies "usual
values" for each  ratio.  Departure  from the usual  values in four or more
ratios  generally  leads  to  inquiries  from  individual  state  insurance
commissioners. At December 31, 2001, Realm National had four ratios outside
the normal ranges;  however,  management believes that they will be able to
satisfy any concerns raised by the regulators.

Realm  National is  organized  under New York  Insurance  Law. The New York
Insurance  Law provides  that the  acquisition  or change of "control" of a
domestic insurer, or any person who controls a domestic insurer,  cannot be
consummated without the prior approval of the relevant insurance regulatory
authority. A person seeking to acquire control,  directly or indirectly, of
a  domestic  insurance  company,  or  any  person  controlling  a  domestic
insurance company,  must seek approval and generally file with the relevant
insurance  regulatory  authority  an  application  for  change  of  control
(commonly known as a "Form A") containing certain  information  required by
statute and published  regulations and provide a copy of such Form A to the
domestic insurer.  Under the New York Insurance Law, control is presumed to
exist if any person,  directly or indirectly,  owns,  controls,  holds with
power to vote or holds  proxies  representing  ten  percent  or more of the
voting securities of any other person.

In addition to the oversight of the Company's insurance  subsidiaries,  the
Company,  as the ultimate  parent of a New  York-domiciled  insurer  (Realm
National),  is also  subject  to  regulation  under the New York  Insurance
Holding  Company  System  Regulatory Act (the "Holding  Company Act").  The
Holding Company Act contains certain reporting requirements including those
requiring the Company,  as the ultimate parent company, to file information
relating to its capital structure,  ownership,  and financial condition and
general  business  operations  of its insurance  subsidiaries.  The Holding
Company Act contains special reporting and prior approval requirements with
respect to transactions among affiliates.

In addition,  many state insurance  regulatory laws contain provisions that
require  pre-notification  to state  agencies  of a change in  control of a
non-domestic   insurance  company  admitted  in  that  state.   While  such
pre-notification  statutes do not  authorize the state agency to disapprove
the change of control,  such statutes do authorize  issuance of a cease and
desist order with respect to the  non-domestic  admitted insurer if certain
conditions exist, such as undue market concentration.

The  Company  intends,   when  appropriate,   to  eventually  expand  Realm
National's  licenses and business to  additional  states in which it is not
currently  licensed.  In order to obtain a license in a given state,  Realm
National must complete an application and demonstrate compliance with state
licensing  requirements.  The  applicable  insurance  regulatory  authority
reviews the  application,  which may take from three  months to two or more
years. If all the requirements are met, a license is issued.

In  determining  whether to issue a license to do business in a state,  the
state's insurance regulatory agency is required by statute or regulation to
consider  a number  of  factors,  largely  for the  purpose  of  protecting
policyholders  within the state.  Typically,  the application  process will
involve a review of the applicant's recent audited and statutory  financial
statements,   and,  in  many  states,   one  or  more  years  of  operating
projections,   to  assess  the   financial   strength  of  the   applicant;
biographical   information   concerning   the  experience  and  fitness  of
directors, officers and major shareholders;  reports of recent examinations
as to the applicant's  compliance record,  finances and market practices in
its state of domicile;  proposed policy forms and rate  schedules;  and the
applicant's  experience in underwriting the line or lines of business to be
offered.  During 2001, an  examination  of the  financial  statements as of
December 31, 2000 was completed,  and did not lead to any adjustments.  The
examination was led by the New York State Department of Insurance.

As a holding  company,  the  Company is not  subject  to Bermuda  insurance
regulations.  However,  the Bermuda  Insurance  Act 1978,  as amended  (the
"Insurance  Act"),  which  regulates  the  insurance  business of CIRCL,  a
discontinued reinsurance subsidiary of the Company, provides that no person
shall  carry  on  insurance  business  in or  from  within  Bermuda  unless
registered as an insurer under the Insurance Act by the Minister of Finance
(the "Minister"). The registration of an applicant as an insurer is subject
to its  compliance  with the  terms  of its  registration  and  such  other
conditions as the Minister may impose from time to time.

In general,  the  regulation  of insurers in Bermuda  relies  heavily  upon
auditors, loss reserve specialists, directors and managers who must certify
that an insurer  meets  minimum  capital and solvency  requirements.  Every
registered  insurer  must  appoint a  government-approved  auditor who will
annually  audit and report on the Statutory  Financial  Statements  and the
Statutory Financial Return of the insurer.

CIRCL is registered  as a Class 3 insurer and, as such:  (i) is required to
maintain a minimum  statutory capital and surplus equal to the greatest of:
(a) $1 million; (b) 20% of the first $6 million of its net premiums written
plus 15% of its net premiums written over $6 million; or (c) 15% of its net
outstanding  losses and loss  expenses;  (ii) is limited  in  declaring  or
paying any dividends  during any financial year with respect to a specified
minimum solvency margin or minimum liquidity ratio or if the declaration or
payment of such  dividends  would  cause it to fail to meet such  margin or
ratio;  (iii) is  prohibited,  without the approval of the  Minister,  from
reducing  by 15% or more its  total  statutory  capital,  as set out in its
previous year's  financial  statements;  and (iv) is required to report its
failure to meet its minimum  solvency margin to the Minister within 30 days
after  becoming aware of such failure or having reason to believe that such
failure  has  occurred.  CIRCL is also  required  to obtain an annual  loss
reserve opinion issued by a government approved loss reserve specialist. At
December  31,  2001,  CIRCL was  required to  maintain a minimum  statutory
capital and surplus of $1.0  million  (2000 - $1.3  million).  At that date
statutory  capital and surplus  (deficit)  was ($4.3)  million (2000 - $0.8
million) and the requirement was therefore not met.

The Insurance Act provides a minimum  liquidity ratio for general business.
An insurer engaged in general business is required to maintain the value of
its  relevant  assets  at not less than 75% of the  amount of its  relevant
liabilities.  Relevant  assets  include  cash  and  time  deposits,  quoted
investments,  unquoted  bonds and  debentures,  first liens on real estate,
investment  income  due and  accrued,  accounts  and  premiums  receivable,
reinsurance balances receivable and funds held by ceding reinsurers.  There
are certain categories of assets which,  unless  specifically  permitted by
the Minister,  do not  automatically  qualify as relevant  assets,  such as
unquoted equity securities, investments in and advances to affiliates, real
estate and collateral  loans.  The relevant  liabilities  are total general
business insurance  reserves,  total other liabilities less deferred income
tax and  sundry  liabilities  (by  interpretation,  those not  specifically
defined), letters of credit and guarantees. At December 31, 2001, CIRCL was
required to maintain relevant assets of at least $5.8 million (2000 - $17.2
million).  At that date  relevant  assets were  approximately  $3.4 million
(2000 -$23.7 million) and the requirement was therefore not met.

A Bermuda-registered  insurer is required to maintain a principal office in
Bermuda and to appoint and maintain a principal  representative  in Bermuda
to oversee the  business of the insurer and to report to the  Minister  and
the Bermuda Registrar of Companies in respect of certain events. Unless the
approval of the  Minister is  obtained,  an insurer may not  terminate  the
appointment   of  its   principal   representative,   and   the   principal
representative may not cease to act as such, unless 30 days notice is given
in writing to the Minister of the intention to do so. Within 30 days of the
principal  representative's  knowing or having  reason to believe  that the
insurer the representative represents is likely to become insolvent or that
an "event"  has  occurred,  the  principal  representative  must  provide a
written report to the Minister  setting out all the particulars of the case
that are  available  to the  representative.  Examples  of such an  "event"
include  failure by the  insurer to comply  substantially  with a condition
imposed upon the insurer by the Minister relating to a solvency margin or a
liquidity or other ratio. The Company  understands  that CIRCL's  principal
representative fully complied with these requirements.

The Minister may appoint an inspector with extensive  powers to investigate
the affairs of an insurer if the Minister believes that an investigation is
required in the interest of the insurer's  policyholders or persons who may
become  policyholders.   In  order  to  verify  or  supplement  information
otherwise  provided to him,  the  Minister may direct an insurer to produce
documents or information  relating to matters  connected with the insurer's
business. The Minister has not exercised such powers at this time; however,
management  of CIRCL  have been in  contact  with the  Regulators  to fully
apprise them of current and intended action. Detailed discussions have also
been held with CIRCL's principal creditors regarding the insolvency and the
various  alternative  actions  that  may  be  taken.  Such  creditors  have
communicated to the Minister their understanding of the situation.

If it appears to the Minister that there is a risk of the insurer  becoming
insolvent,  the  Minister  may  direct the  insurer  not to take on any new
insurance business;  not to vary any insurance contract if the effect would
be to increase the insurer's liabilities;  not to make certain investments;
to realize certain investments;  to maintain in Bermuda, or transfer to the
custody of a Bermuda bank,  certain assets; or to limit its premium income.
The Minister has directed  that CIRCL may not  undertake  any new insurance
business.

It is the  Company's  intention  not to pay  additional  funds to CIRCL for
losses it has  incurred.  CIRCL's  insolvency,  therefore,  will not have a
material effect on the consolidated financial position of the Company.

Certain of the  Company's  subsidiaries  are also subject to  regulation as
insurance intermediaries. Under the applicable regulations, an intermediary
is  responsible  as a fiduciary  for funds  received for the account of the
parties to the insurance or reinsurance transaction and is required to hold
such  funds  in  appropriate   bank  accounts  subject  to  restriction  on
withdrawals and prohibitions on commingling.

The  Company's  insurance  intermediaries  include  MGA's.  MGA's  produce,
underwrite, and administer business produced and manage claims on behalf of
insurance  companies in certain states,  and they are subject to regulation
under state laws regarding licensure, fiduciary obligations with respect to
premium, and the general management of the insurers' business.

The  activities of Stirling  Cooke Brown  Insurance  Brokers  Limited as an
insurance  broker in the UK  require  it to be  authorized  by the  General
Insurance Standards Council. Authorization by this body involves continuing
compliance  with rules made by the  Council,  which  require,  among  other
things,  that the company  maintain a minimum  level of  solvency,  that it
supply  reports  to the  Council,  and  that it  conduct  its  business  in
accordance with the conduct of business rules published by the Council.

OUTSTANDING LOSSES AND LOSS EXPENSES

Both Realm National and CIRCL maintain loss reserves to reflect anticipated
future claims and claims expense payments. The Company establishes reserves
for losses and loss adjustment  expenses  related to reported claims on the
basis of the evaluations of independent  claims adjusters and the Company's
own claims staff.  In addition,  reserves are  established for losses which
have occurred but have not yet been reported and for adverse development of
reserves on reported  losses.  The  Company and its  independent  actuaries
estimate claims and claims  expenses  arising for losses that have occurred
but not yet been  reported  based  upon  the  Company's  and the  insurance
industry's experience,  together with statistical  information with respect
to the probable number and nature of such claims.

The  following  table sets forth a  reconciliation  of beginning and ending
reserves for losses and loss adjustment expenses:

<TABLE>
           RECONCILIATION OF OUTSTANDING LOSSES AND LOSS EXPENSES

<CAPTION>

                                                           FOR THE YEARS ENDED DECEMBER 31,
                                                1999                     2000                    2001
                                                ----                     ----                    ----
                                      CONTINUING  DISCONTINUED CONTINUING  DISCONTINUED CONTINUING DISCONTINUED
                                       OPERATIONS  OPERATIONS  OPERATIONS   OPERATIONS  OPERATIONS  OPERATIONS
                                      ----------- ------------ ----------  ------------ ---------- ------------
<S>                                     <C>         <C>         <C>          <C>        <C>          <C>
Balance beginning of year.............  $ 30,789    $ 35,328    $ 59,421     $ 33,714   $ 79,820     $ 34,683
Less outstanding losses recoverable...    27,048      21,098      53,050       20,217     62,857       18,362
                                        --------    --------    --------     --------   --------     --------
Net balance                                3,741      14,230       6,371       13,497     16,963       16,321
                                        --------    --------    --------     --------   --------     --------
Incurred related to:
          Current year................     6,289       2,407      13,617          177     19,382           --
          Prior years.................       676       2,998       3,543        6,056      2,158        4,714
                                        --------    --------    --------     --------   --------     --------
          Total incurred..............     6,965       5,405      17,160        6,233     21,540        4,714
                                        --------    --------    --------     --------   --------     --------
Paid related to:
          Current year................     2,528         302       4,308           --      7,959           --
          Prior years.................     1,807       5,836       2,260        3,409      5,066        6,602
                                        --------    --------    --------     --------   --------     --------
          Total paid..................     4,335       6,138       6,568        3,409     13,025        6,602
                                        --------    --------    --------     --------   --------     --------
Net balance                                6,371      13,497      16,963       16,321     25,478       14,433
Plus outstanding losses recoverable...    53,050      20,217      62,857       18,362     54,029       12,822
                                        --------    --------    --------     --------   --------     --------
          Balance at end of year......  $ 59,421    $ 33,714    $ 79,820     $ 34,683   $ 79,507     $ 27,255
                                        ========    ========    ========     ========   ========     ========

</TABLE>

The adverse  development  during 2000 and 2001 on prior years in continuing
operations  primarily  reflects the  strengthening  of loss reserves at the
Company's  U.S.-based  insurance carrier relating primarily to two programs
terminated in 2000.

The  adverse  development  during  1999,  2000 and  2001 on prior  years in
discontinued  operations  primarily reflects the increase in provisions for
doubtful  reinsurance  recoveries of $2.1 million in 1999,  $2.4 million in
2000 and $1.0 million in 2001,  as discussed in Note 9 to the  Consolidated
Financial  Statements,  as well as an increase in claims  frequency  on one
particular  program that covers  bodily  injury and  property  risks in the
construction  industry. The provision is included in the balance sheet as a
component of paid and outstanding losses  recoverable from reinsurers.  The
provision is an estimate and amounts not  collectible  from  reinsurers may
ultimately be significantly greater or less than the provision established.

The Company's underwriting loss ratio (i.e. the ratio of net losses and net
loss expenses to net premium earned) for 2001 for continuing operations was
77.5% (2000--92.8%).

The Company  believes that the provision  for  outstanding  losses and loss
expenses  is  adequate  to cover the  ultimate  net cost of losses and loss
expenses incurred;  however, such a provision is an estimate and the losses
may  ultimately  be  significantly  greater  or  less  than  the  provision
established.  The Company has limited historical loss experience  available
to serve as a basis for the  estimation of ultimate  losses.  The Company's
exposure to the effect of future  movements  in its loss  reserves has been
increased by the reduction in the level of  reinsurance  purchased by Realm
National on its programs in 2000 and 2001.

The previous table  represents a  reconciliation  of reserves in accordance
with generally accepted accounting principals ("GAAP"). The following table
reconciles  the difference  between those  reserves and those  contained in
regulatory  filings made by the Company's  subsidiaries  in accordance with
statutory accounting practices ("SAP").

<TABLE>
                  RECONCILIATION OF SAP AND GAAP RESERVES

<CAPTION>

                                                                FOR THE YEARS ENDED DECEMBER 31,
                                                       1999                    2000                    2001
                                                       ----                    ----                    ----
                                            CONTINUING  DISCONTINUED CONTINUING  DISCONTINUED CONTINUING DISCONTINUED
                                             OPERATIONS  OPERATIONS   OPERATIONS  OPERATIONS  OPERATIONS  OPERATIONS
                                            ----------- ------------ ----------- ------------ ---------- ------------
                                                                    (DOLLARS IN THOUSANDS)
<S>                                           <C>         <C>          <C>         <C>        <C>          <C>
Reserves for losses and loss adjustment
      expenses, end of year SAP.............  $  4,765    $ 13,497     $ 14,877    $ 16,321   $ 23,841     $  14,433
Gross-up for ceded reinsurance reserves.....    53,050      20,217       62,857      18,362     54,029        12,822
Provision for salvage receivable not
      included on a SAP basis...............       (31)         --           --          --         --            --
Provision for uncollectible reinsurance.....     1,637          --        1,637          --      1,637            --
Reclassification of other liabilities.......        --          --          449          --                       --
                                              --------    --------     --------    --------   ---------    ---------
Reserves for losses and loss adjustment
      expenses, end of year GAAP............  $ 59,421    $ 33,714     $ 79,820    $ 34,683   $ 79,507     $  27,255
                                              ========    ========     ========    ========   ========     =========

</TABLE>

The following table presents the  development of the Company's  ongoing net
reserves  for 1996  through  2001.  The top  line of the  table  shows  the
estimated  reserve for unpaid losses and loss adjustment  expenses recorded
at the  balance  sheet date for each of the  indicated  years.  This amount
represents the estimated amount of losses and loss adjustment  expenses for
claims that are unpaid at the balance  sheet  date,  including  losses that
have been  incurred  but not yet  reported to the  Company.  The table also
shows the re-estimated  amount of the previously  recorded reserve based on
experience as of the end of each succeeding  year. The estimate  changes as
more  information  becomes known about the frequency and severity of claims
for individual years. The "Cumulative Redundancy  (Deficiency)"  represents
the aggregate  change in the estimates over all prior years.  The Company's
insurance entities were both purchased in 1996 so,  accordingly,  there has
only been five years'  movement  in the  Company's  reserves.  It should be
noted  that the  following  table  presents  an  analysis  of loss and loss
expense  development.  Therefore,  each  amount in the table  includes  the
effects of changes in reserves for all prior years.

<TABLE>
               ANALYSIS OF LOSS AND LOSS EXPENSE DEVELOPMENT
                  (NET OF OUTSTANDING LOSSES RECOVERABLE)

<CAPTION>

CONTINUING OPERATIONS                                        FOR THE YEARS ENDED DECEMBER 31,
                                                             --------------------------------
                                                    1996       1997       1998       1999       2000      2001
                                                   ------     ------     ------     ------     ------    ------
                                                                 (DOLLARS IN THOUSANDS)

<S>                                               <C>        <C>        <C>        <C>        <C>        <C>
Gross reserve for losses and loss adjustment
  expenses......................................  $ 14,371   $ 14,968   $ 30,789   $ 59,421   $ 79,820   $ 79,507
Less outstanding losses recoverable.............    12,610     12,869     27,048     53,050     62,857     54,029
                                                  --------   --------   --------   --------   --------   --------
Net reserve for losses and loss adjustment
  expenses......................................     1,761      2,099      3,741      6,371     16,963     25,478
  Reserve re-estimated as of:
                 One year later.................     1,486      2,077      4,417      8,272     19,121         --
                 Two years later................     1,278      2,814      4,509      8,546         --         --
                 Three years later..............     1,268      2,455      4,438         --         --         --
                 Four years later...............     1,265      2,592         --         --         --         --
                 Five years later...............     1,265         --         --         --         --         --
                                                  --------   --------   --------   --------   --------   --------
  Cumulative redundancy (deficiency)............       496       (853)      (697)    (2,175)    (2,158)        --
                                                  --------   --------   --------   --------   --------   --------
  Percentage                                          28.2%    (40.6%)    (18.6%)    (34.1%)    (12.7%)        --
                                                  --------   --------   --------   --------   --------   --------

  Cumulative amount of reserve paid through:
                 One year later.................       955      1,461      1,547      2,702      8,412         --
                 Two years later................     1,095      1,980      2,190      5,126         --         --
                 Three years later..............     1,263      2,249      3,352         --         --         --
                 Four years later...............     1,265      2,889         --         --         --         --
                 Five years later...............     1,265         --         --         --         --         --

</TABLE>

The increase in reserves one year later,  two years later,  three years and
four years later on 1997, 1998, 1999, and 2000 reserves reflects  primarily
the  strengthening of loss reserves at the Company's  U.S.-based  insurance
carrier relating primarily to two programs terminated in 2000.

<TABLE>
<CAPTION>

DISCONTINUED OPERATIONS                                      FOR THE YEARS ENDED DECEMBER 31,
                                                             --------------------------------
                                                  1996      1997      1998      1999      2000      2001
                                                 ------    ------    ------    ------    ------    ------
                                                                 (DOLLARS IN THOUSANDS)

<S>                                              <C>      <C>       <C>       <C>       <C>       <C>
Gross reserve for losses and loss adjustment
  expenses...................................... $ 9,930  $ 21,308  $ 35,328  $ 33,714  $ 34,683  $ 27,255
Less outstanding losses recoverable.............   3,978    10,203    21,098    20,217    18,362    12,822
                                                 -------  --------  --------  --------  --------  --------
Net reserve for losses and loss adjustment
  expenses......................................   5,952    11,105    14,230    13,497    16,321    14,433
Reserve re-estimated as of:
                 One year later.................   7,004    15,820    17,228    19,552    21,035        --
                 Two years later................  10,552    19,980    23,257    24,496        --        --
                 Three years later..............  11,824    25,750    28,044        --        --        --
                 Four years later...............  14,900    29,617        --        --        --        --
                 Five years later...............  17,580        --        --        --        --        --
                                                 -------  --------  --------  --------  --------  --------
Cumulative redundancy (deficiency)............   (11,628)  (18,512)  (13,814)  (10,999)  (4,714)        --
                                                 -------  --------  --------  --------  --------  --------

  Percentage                                     (195.4%)  (166.7%)   (97.1%)   (81.5%)  (28.9%)        --
                                                 -------  --------  --------  --------  --------  --------


  Cumulative amount of reserve paid through:
                 One year later.................   2,494     7,977    5,836     3,408     6,602         --
                 Two years later................   6,574    12,117    8,788    10,011        --         --
                 Three years later..............   8,975    14,139   15,099        --        --         --
                 Four years later...............  10,599    19,581       --        --        --         --
                 Five years later...............  13,867        --       --        --        --         --

</TABLE>

The increase in net reserves one year later,  two years later,  three years
later, four years later, and five years later on 1996, 1997, 1998, 1999 and
2000  reserves  reflects  primarily an increase in claims  frequency on one
particular  program that covers  bodily  injury and  property  risks in the
construction   industry,   and  an  increase  in  provisions  for  doubtful
reinsurance  recoveries  discussed in Note 9 to the consolidated  financial
statements.

ITEM 2--PROPERTIES

The Company's  head office is located in Hamilton,  Bermuda.  This facility
currently serves as the  headquarters for the financial and  administrative
departments  of the Company and the  Company's  Bermuda  subsidiaries.  The
following table sets forth additional  information concerning the Company's
facilities:

                                        APPROXIMATE
                PROPERTY                SQUARE FEET     LEASE  EXPIRATION
--------------------------------------- -----------  ------------------------

            Hamilton, Bermuda..........      5,900   June 20, 2006
            London, England............     10,750   August 10, 2009
            Dallas, Texas..............     14,700   August 31, 2003
            New York, New York.........      7,900   September 3, 2003
            New York, New York.........      2,800   September 14, 2004
            Bradenton, Florida.........     12,350   June 28, 2008
            Boca Raton, Florida........     13,750   January 15, 2005

All of the Company's  facilities are leased.  Aggregate  lease payments for
2001 were $1.9 million (2000 - $1.9 million).  The Company anticipates that
it will be able to extend  these  leases as they expire or, if necessary or
desirable, locate substitute facilities on acceptable terms.


ITEM 3--LEGAL PROCEEDINGS

(a) The trial in the  proceedings  which  Sphere  Drake  Insurance  Limited
("Sphere  Drake")  caused to be issued on  February  29, 2000 in the London
Commercial  Court  (equivalent to a civil complaint in U.S.  jurisdictions)
against two of the  Company's  U.K.  subsidiaries,  two former  officers of
those  subsidiaries  and others,  is underway and  currently is expected to
conclude  during  the second  quarter of 2002.  Sphere  Drake  alleges,  in
substance,  that  each  and  every  contract  placed  with it  through  its
underwriting agent by the Company's U.K. broker subsidiary was commercially
unreasonable.  Sphere  Drake  further  alleges that this was obvious to the
broker and that,  accordingly,  the London  Commercial Court should infer a
conspiracy  between the broker and the underwriting agent to defraud Sphere
Drake,  thereby  allowing  it to treat as void from the  outset  all of the
inwards  reinsurance   contracts  placed  with  Sphere  Drake  through  its
underwriting agent by the Company's broker subsidiary.

It is the opinion of management that the claims described in Sphere Drake's
action  are  without  merit  and the  case is being  and  will be  defended
vigorously.

(b) On December 6, 2001, a jury  returned a verdict  dismissing  all of the
claims  asserted  against  the  Company,  together  with one of its  London
subsidiaries  and a former  employee of that  subsidiary,  in a third party
action in the New York State Supreme Court brought by AXA Reassurance  S.A.
("AXA").  The verdict also  encompassed all of the claims asserted  against
these same defendants by New Hampshire Insurance Company ("NHIC").  In that
action,  AXA had sought indemnity and damages resulting from its efforts to
void  reinsurance   contracts  entered  into  in  connection  with  certain
"reinsurance-backed   gap  film  financing"   arrangements  ("Film  Finance
Covers") brokered by the Company's London subsidiary. Certain claims in the
action  relating to other parties remain to be resolved by the Court,  with
the  result  that a final  judgment  subject  to  appeal  has not yet  been
entered.

On July 2, 2001, the third-party complaint filed by defendant AXA Corporate
Solutions  (U.K.)  Ltd.  ("ACS")  against  the  Company,  one of its London
subsidiaries   and  a  former   employee  of  that   subsidiary  (the  "SCB
Defendants")  in an  existing  action  originally  brought  by the  insured
Silicon  Valley  Bank was  dismissed  without  prejudice.  The third  party
complaint had alleged  fraudulent  and/or wrongful  inducement to contract,
allegedly  resulting in exposure to liability for claims under another Film
Finance Cover  brokered by the  Company's  London  subsidiary.  ACS filed a
motion seeking reconsideration of that decision, which motion was denied by
the Court on March 18, 2002. Two of the Company's London  subsidiaries were
served with a separate third-party complaint in this action alleging claims
for fraudulent inducement, negligent misrepresentation and fraud and deceit
by a  different  insurer  defendant,  NHIC.  The London  subsidiaries  have
entered into a tolling  agreement  with NHIC that will suspend for the time
being the  prosecution  of  NHIC's  claims  as well as the  running  of the
statute of limitations pertaining thereto.

Two of the  Company's  London  subsidiaries  have been named as third party
defendants in a federal court action  instituted by Silicon  Valley Bank in
California  involving a different  Film Finance Cover.  These  subsidiaries
also were named as defendants in a federal  district  court action by NHIC,
which action has been dismissed  without  prejudice.  The tolling agreement
referred to above also applies to these claims.

Two of the Company's  London  subsidiaries,  together with other  unrelated
parties, have been named as third-party defendants in an existing action in
the New York State  Supreme  Court,  filed on March 16, 2001 by NHIC.  Each
pleading alleges  identical  claims of fraudulent  inducement and negligent
misrepresentation  against  two of the  Company's  London  subsidiaries  in
connection  with another Film Finance  Cover.  A motion to dismiss has been
made and is awaiting decision by the court.

It is the opinion of management that the claims  described in these actions
are without merit and the cases are being and will be defended vigorously.

Certain of the Company's  subsidiaries  acted as brokers in connection with
other Film  Finance  Covers which either have become the subject of inquiry
by one or more of the parties involved therein, or which have given rise to
disputes not directly  involving the Company or its subsidiaries.  Although
no assurances  can be given as to the outcome of these disputes or of other
potential  proceedings  related to the Film Finance Covers and their effect
on the Company,  the Company believes,  based on the information  presently
available  to it, that any such effect  should not have a material  adverse
effect on the Company's financial condition.

(c)  Several  arbitration  proceedings  currently  are  pending  in England
between reinsurers and ceding insurers relating to reinsurance transactions
involving the personal accident excess of loss market in London ("LMX") for
the account years 1993, 1994,  1995, 1996, 1997 and 1998.  Although neither
the  Company  nor  its  broker  subsidiaries  is a  party  to any of  these
arbitrations,  certain of the Company's subsidiaries acted as a reinsurance
broker  for  ceding  insurer  clients  that are  parties  to certain of the
arbitrations.

In addition,  the Company's  reinsurance  subsidiary is party to one of the
LMX  arbitrations.  This  particular  arbitration has been dormant for some
time.

The reinsurers  generally have alleged that they sustained losses due to an
"artificial"  spiral in the LMX market,  the existence of which, as well as
other  information,  was not  disclosed  to them by the ceding  insurers or
their reinsurance brokers. In others, there are specific  misrepresentation
and  non-disclosure  allegations  that are not of a  generic  nature.  As a
consequence, these reinsurers have asserted that they are no longer obliged
to honor their reinsurance agreements and have suspended payment of claims.

During 1998 and 1999  certain of the  reinsurers  and  reinsureds  that are
parties to the  arbitrations  described  above  issued  proceedings  in the
English courts against one or more of the Company's brokerage  subsidiaries
and one  underwriting  management  subsidiary,  apparently  for the primary
purpose of tolling  the statute of  limitations  pending the outcome of the
arbitrations. In one proceeding against the same subsidiaries, three former
officers of the subsidiaries  were also named. In none of these proceedings
did the  complainant  specify an amount of damages  sought.  If one or more
reinsurers  succeed in avoiding its contracts in the pending  arbitrations,
it is possible that ceding insurer  clients,  on whose behalf the Company's
broker subsidiaries placed the reinsurance,  may seek to pursue a claim for
indemnification or other claims against one or more of those  subsidiaries.
Similarly,  if one or more of the reinsurers  fail to avoid their contracts
in the pending arbitrations,  it also is possible that those reinsurers may
seek  to  pursue  some  type  of  claim   against  one  or  more  of  those
subsidiaries.

The Company  understands that awards already have been made in favor of the
reinsurer  in  three   arbitrations.   However,   based  on  the  Company's
understanding  of the  reasons  given by the  arbitration  panels for their
awards in favor of the  reinsurer in two of those  cases,  the Company does
not  believe  there is any valid  basis for its ceding  insurer  clients in
those  cases  to  assert  a  claim   against  the  Company  or  its  broker
subsidiaries.  The Company  has  insufficient  information  to make a valid
assessment in relation to the third.

With the exception of: (a) one inactive  proceeding  which the subsidiaries
have been  informed  will be  withdrawn;  and (b) two  related  proceedings
pending against certain subsidiaries of the Company and certain current and
former  officers  of  these  subsidiaries,  each of  which  is in an  early
procedural   stage,   all  judicial   proceedings   against  the  Company's
subsidiaries relating to these matters have been stayed or held in abeyance
pursuant to standstill agreements or court order.

One of the arbitration awards referenced above allowed a reinsurer to avoid
certain of its reinsurance contracts with a Lloyd's syndicate. According to
reports in the London  press,  that award may have  caused the  syndicate's
liabilities to increase beyond the financial  resources available to it and
its Names,  requiring the syndicate to avail itself of the Lloyd's  Central
Fund. Thereafter,  Lloyd's initiated an investigation of that syndicate and
all "market participants,"  including the Company's U.K. subsidiaries.  The
Company  is  aware  that the  investigation  is  ongoing,  but has no other
information  as to the  progress  of the  investigation  or when it will be
completed.

The Company understands that substantial progress has been and continues to
be made by various  market  participants  in settling  ongoing  reinsurance
disputes, including many of the market participants that are parties to the
arbitrations and other proceedings described above. The Company understands
that a settlement by certain market  participants  of reinsurance  disputes
arising in the 1994 year of account (the "1994 Year of Account Settlement")
has been executed. The Company further understands that working groups have
been established to attempt to arrive at similar  settlements in respect of
the 1995 and 1996 years of account.

A subsidiary of the Company has been  notified of a potential  claim by one
of the parties to the 1994 Year of Account  Settlement  for the recovery of
costs  arising out of the  settlement as well as for the costs and expenses
incurred by the party in connection with its overall involvement in the LMX
market. The subsidiary has denied any liability for this potential claim.

Although no  assurances  can be given as to the outcome of the pending U.K.
arbitrations  or pending or potential  arbitration or judicial  proceedings
related to the LMX spiral reinsurance  arbitrations and their effect on the
Company, the Company believes, based on the information presently available
to it, that any such effect  should not have a material  adverse  effect on
the Company's financial condition.

(d) Beginning in late 1998 and 1999, the  reinsurance  markets in which the
Company historically has been involved experienced  considerable disruption
for a variety  of  reasons,  including  but not  limited  to the LMX market
disputes  described  above and other disputes  involving the North American
workers'  compensation  reinsurance  market. The effects of this disruption
have continued up to the present time.

One result of this market disruption has been that certain  reinsurers with
whom the Company's broker  subsidiaries placed business on behalf of ceding
insurer clients  suspended claims payments to those clients,  as well as to
the Company's insurance and reinsurance subsidiaries,  in certain instances
also claiming a right to rescind the reinsurance contracts.  As a result, a
number of  arbitrations  were commenced  between  Company clients and their
reinsurers.  The Company has endeavored  consistently to provide support to
its  clients  in  connection  with  these   proceedings.   In  one  ongoing
arbitration  involving the Company's  insurer  subsidiary,  Realm National,
that company has succeeded in obtaining $4.8 million in interim relief from
a reinsurer by order of the arbitration panel pending a final determination
of the matters in issue,  which is  expected in the second  quareter of the
year.

In some instances,  disputes or potential  disputes have arisen  concerning
whether   reinsurance   was  properly   placed  by  the  Company's   broker
subsidiaries. In other instances, the Company's ceding insurer clients have
demanded  indemnification  by  the  Company  if  the  client's  reinsurance
contracts ultimately are avoided by its reinsurers.

Although no assurances  can be given as to the effect on the Company of the
various  disputes  in the  worker's  compensation  reinsurance  market,  or
related  arbitrations,  the  Company  believes,  based  on the  information
presently  available to it, that any such effect should not have a material
adverse effect on the Company's financial condition.

(e) The  Company is  subject to other  litigation  and  arbitration  in the
ordinary course of its business. While any of these proceedings contains an
element of uncertainty,  management presently believes the outcome of these
currently  pending  proceedings  will not have a material adverse effect on
the Company's financial condition.


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

     No  matters were submitted to a vote of shareholders during the fourth
quarter of the fiscal year 2001.


               PRINCIPAL EXECUTIVE OFFICERS OF THE REGISTRANT

The following sets forth certain information regarding the Principal
Executive Officers of the Company at March 18, 2001.

     NAME                       AGE                 POSITION
     ----                       ---    ---------------------------------
     Stephen A. Crane.........  56     President, Chief Executive Officer
                                       and Director (1)
     Len Quick................  59     Chief Operating Officer and Director (2)
     Anthony J. Del Tufo......  57     Chief Financial Officer
     James Lawless, IV........  47     Senior Vice President, General Counsel
                                       and Corporate Secretary


(1)  Term as Director expires at Annual General Meeting in 2002.

(2)  Term as Director expires at Annual General Meeting in 2003.

STEPHEN A. CRANE was  appointed as President & Chief  Executive  Officer in
November,  1999.  Prior to joining the  Company,  Mr. Crane served for five
years as President & Chief  Executive  Officer of Gryphon  Holdings Inc., a
specialty property-casualty underwriting organization.

LEN QUICK was appointed as Chief Operating  Officer in July,  1999,  having
previously   served  as  Chief  of  Operations   of  the  Company's   North
American-based subsidiaries from 1997. Between 1994 and 1997, Mr. Quick was
President of the Company's  Dallas-based  subsidiary,  North  American Risk
Inc.

ANTHONY  J.  DEL TUFO was  appointed  acting  Chief  Financial  Officer  in
October, 2001. Mr. Del Tufo had been serving since June, 2001 as the acting
Chief Financial Officer of Realm National  Insurance  Company, a subsidiary
of the Company. Prior to assuming that role, he was Chief Financial Officer
of W.R.  Berkley  Corporation.  Mr. Del Tufo had also been a partner in the
insurance auditing practice of KPMG.

JAMES LAWLESS, IV was appointed Senior Vice President,  General Counsel and
Corporate Secretary in March 2000. In the five-year period prior to joining
the Company,  Mr. Lawless practiced law in New York with LeBouef Lamb Green
and MacRae, Werner & Kennedy and Battle Fowler LLP.



                                  PART II

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

The Company's  ordinary  shares,  $0.25 par value,  have been quoted on the
Nasdaq  National  Market under the symbol  "SCBHF" since November 26, 1997.
The ordinary  shares were listed in connection  with the Company's  initial
public  offering,  completed in December  1997.  As of March 18, 2002,  the
approximate number of holders of the Company's ordinary shares was 900.

The  following  table sets forth the high and low  closing  sale prices per
share of the Company's  ordinary  shares on the Nasdaq  national market for
the calender quarters of 2000 and 2001:

                                                          HIGH         LOW
                                                         ------       -----
Year ended December 31, 2000
         First Quarter................................    $3-11/16    $1-7/8
         Second Quarter...............................    $3-1/8      $1-13/16
         Third Quarter................................    $2-1/4      $1-15/16
         Fourth Quarter...............................    $2          $1
Year ended December 31, 2001
         First Quarter................................    $1.63       $0.75
         Second Quarter...............................    $2.03       $0.98
         Third Quarter................................    $2.04       $1.47
         Fourth Quarter...............................    $1.58       $0.61


The closing sale price per share of the Company's  ordinary  shares on
the Nasdaq national market on March 18, 2002 was $0.55.

On February 14, 2002,  the Company was advised by Nasdaq that it was not in
compliance  with  certain  Nasdaq  Marketplace  Rules,  specifically  those
relating to the minimum bid price of the Company's  Ordinary  Stock and the
minimum  market value of its publicly held shares.  The Company was further
advised  that it would  have  until  May 15,  2002  within  which to regain
compliance with the Marketplace  Rules,  failing which the Company would be
provided with written  notification  that its securities would be delisted.
The Company  would be able to appeal any such  determination  to the Nasdaq
Listing  Qualifications Panel. The Company has the option, prior to May 15,
2002, to apply to transfer its  securities to The Nasdaq  SmallCap  Market,
which  application  would  have  the  effect  of  staying  notification  of
delisting but, in the event that the Company's  transfer  application  were
not approved, notification of delisting would then be issued, again subject
to a possible  appeal.  The Company cannot presently  determine  whether it
will be in  compliance  with the  applicable  Marketplace  Rules by May 15,
2002, and is evaluating the decision to file an application to transfer its
securities to The Nasdaq SmallCap Market.

During  2001 the  Company  paid  three  quarterly  dividends  of $0.03  per
ordinary  share,  and in the fourth  quarter  discontinued  the  payment of
quarterly  dividends for the foreseeable  future.  During 2000, the Company
paid quarterly  dividends of $0.03 per ordinary share.  The declaration and
payment of future  dividends is at the discretion of the Company's Board of
Directors  and will depend  upon,  among  other  things,  future  earnings,
capital  requirements,  the general  financial  condition  of the  Company,
general business conditions and other factors. The Company's ability to pay
dividends is partially restricted due to various insurance  regulations and
tax considerations relating to certain of its subsidiaries. See "Management
Discussion  and Analysis of Financial  Condition and Results of Operations"
and Note 18 to the Consolidated Financial Statements.

During 1999,  the Company  purchased  356,400  ordinary  shares on the open
market at a total cost of $4.4  million.  These  shares  were  recorded  as
treasury stock at cost.  The Company now holds a total of 443,400  ordinary
shares in treasury at a total cost of $5.7 million.

In November  2000,  the Company  issued  100,000  restricted  shares to Mr.
Stephen A.  Crane.  The  shares  issued  are  subject  to certain  transfer
restrictions  which  lapsed with  respect to 33 1/3% of these shares on the
date of  their  issuance  and 33 1/3% of these  shares  in  November  2001.
Restrictions  on the  balance of the shares  will lapse in  November  2002,
contingent on Mr. Crane's continued employment with the Company.

Under current Bermuda law, there is no Bermuda income tax, withholding tax,
captial gains or capital transfer tax on the Company or its shareholders in
respect of the payment of dividends or capital transactions.


ITEM 6--SELECTED FINANCIAL DATA

The  selected   consolidated   financial  data  below  should  be  read  in
conjunction  with  the  Consolidated  Financial  Statements  and the  notes
thereto presented under Item 8.

<TABLE>
<CAPTION>

                                                                       AS OF OR FOR THE YEARS ENDED DECEMBER 31,
                                                        -------------------------------------------------------------
                                                           1997       1998        1999        2000           2001
                                                          ------     ------      ------      ------         ------
                                                            (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S>                                                  <C>           <C>         <C>         <C>            <C>
INCOME STATEMENT DATA:
Revenues......................................       $    51,754   $ 70,634    $ 60,560    $  50,933      $   50,027
Income (loss) from continuing operations before
   taxation...................................            13,370     21,090      (7,403)     (18,499)        (16,411)
Taxation......................................             2,925      3,790      (2,583)      (2,523)         (1,268)
Net income (loss) before discontinued segments            10,445     17,300      (4,820)     (15,976)        (15,143)
Net income (loss) from discontinued segments..             2,548     (1,282)     (1,590)     (11,029)         (6,187)
Net income (loss) before cumulative effect
   of a change in accounting principle........            12,993     16,018      (6,410)     (27,005)        (21,330)
Cumulative effect of a change in accounting
   principle (1)..............................                 0          0        (307)           0               0
Net income (loss) from operations.............           $12,993   $ 16,018    $ (6,717)   $ (27,005)     $  (21,330)

BASIC EARNINGS PER SHARE
Net income (loss) per share (2)...............           $  1.55   $   1.63    $  (0.71)   $   (2.86)     $    (2.24)
Weighted average number of ordinary
   shares outstanding.........................         8,383,482  9,814,101   9,480,356    9,434,219       9,519,972
DILUTED EARNINGS PER SHARE
Net Income (loss) per share assuming dilution (2)          $1.53      $1.63    $(0.71)       $(2.86)        $(2.24)
Weighted average number of ordinary
   shares outstanding assuming dilution.......         8,515,473  9,840,159   9,840,356     9,434,219      9,519,972

Dividends paid per ordinary share.............             $0.00      $0.12       $0.12         $0.12         $0.09

BALANCE SHEET DATA:
Total assets (3)..............................          $406,330   $649,641  $1,011,409    $1,139,007     $1,237,168
Long term debt................................                 0          0           0             0              0
Ordinary shares subject to redemption (4).....                 0          0           0             0              0
Total shareholders' equity....................           $83,103 $   97,632     $84,832       $56,879     $   35,505

<FN>

(1)  See Note 2(q) of Notes to the Consolidated Financial Statements for an
     explanation  of  the  cumualtive  effect  of a  change  in  accounting
     principle.

(2)  See Note 2(l) of Notes to the Consolidated Financial Statements for an
     explanation of the methods used to determine Net Income per share.

(3)  Total assets  comprise  corporate  assets  together with cash held and
     insurance balances receivable in a fiduciary  capacity.  See Note 5 to
     the Consolidated Financial Statements.

(4)  The  ordinary  shares  subject  to  redemption  were  reclassified  to
     shareholders'  equity upon consummation of the Initial Public Offering
     since those shares were no longer redeemable.
</FN>
</TABLE>




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

The following is a discussion of the  Company's  results of operations  and
financial  condition.  This  discussion  and  analysis  should  be  read in
conjunction  with  the  consolidated  financial  statements  and the  notes
thereto presented under Item 8.

Results of Operations For the Years Ended December 31, 2001, 2000 and 1999.

Net loss from  operations for 2001 was $21.3 million,  compared to 2000 net
loss from  operations of $27.0 million and 1999 net loss from operations of
$6.7 million.

Net loss from continuing  operations before discontinued  segments for 2001
was $15.1 million, compared to a net loss from continuing operations before
discontinued segments of $16.0 million in 2000 and net loss from continuing
operations  before  discontinued  segments  of $4.8  million  in 1999.  The
results for the year for continuing operations were affected by a number of
different  factors.  The U.S.  workers'  compensation  market, in which the
Company conducts most of its business,  remained a difficult environment in
which to operate.  The Company's  risk-taking  insurance  segment  recorded
increased underwriting losses for the year, primarily arising from programs
which were  discontinued  in 2000. The program  business  segment  suffered
increased  losses  for the  year,  primarily  due to costs  and  provisions
pertaining to the  consolidation  of its Dallas MGA with its Boca Raton MGA
and a charge of $2.9 million for future losses that the Company projects it
will  pay in  connection  with its  indemnification  of its  major  issuing
company for losses in excess of a specific loss ratio on business  produced
by the MGA's during 2000.  The  brokerage  segment also recorded a loss for
the period,  primarily  due to a  significant  decrease  in business  being
brokered  following a substantial  diminuition in reinsurance  capacity for
workers'  compensation  business.  The Company has also incurred charges in
connection  with its  restructuring  program begun in 1999, in an effort to
reduce  expenses and increase  efficiencies.  The Company also continued to
suffer   from    continuing    costs   and    provisions    pertaining   to
reinsurance-related  disputes in which the Company and others were involved
during the year, including certain litigation.

<TABLE>
<CAPTION>
                          REVENUES AND NET INCOME

                                                              For the Years Ended December 31,
                                                         ----------------------------------------
                                                              1999           2000           2001
                                                              ----           ----           ----
                                                                  (dollars in thousands)
    <S>                                                  <C>              <C>            <C>
    Revenues from continuing operations                  $   60,560       $  50,933      $  50,027
    Expenses from continuing operations                      67,963          69,432         66,438
                                                         ----------       ---------      ---------
    Loss before taxation                                     (7,403)        (18,499)       (16,411)
    Taxation from continuing operations                      (2,583)         (2,523)        (1,268)
                                                         -----------      ----------     ----------
    Net loss from continuing operations before
        discontinued segments                                (4,820)        (15,976)       (15,143)
    Net loss from discontinued segments                      (1,590)        (11,029)        (6,187)
                                                         -----------      ----------     ----------
    Net loss before cumulative effect of a change
        in accounting principle                              (6,410)        (27,005)       (21,330)
    Cumulative effect of a change in accounting
    principle                                                   307              --             --
                                                         ----------       ---------      ---------
    Net loss from operations                             $   (6,717)      $ (27,005)     $ (21,330)
                                                         ===========      ==========     ==========

    Net loss per Share - Basic                           $    (0.71)      $   (2.86)      $  (2.24)

    Net loss per Share assuming dilution                 $    (0.71)      $   (2.86)      $  (2.24)

</TABLE>

Revenues from continuing  operations of $50.0 million in 2001 represented a
$0.9 million  decrease versus 2000 revenues from  continuing  operations of
$50.9 million,  which were $9.7 million below 1999 revenues from continuing
operations of $60.6 million.  Net loss from  operations of $21.3 million in
2001  compares to a net loss from  operations  of $27.0 million in 2000 and
net loss from  operations of $6.7 million in 1999.  The decline in revenues
from  continuing   operations  in  2001  reflected  the  difficult   market
conditions in the brokerage and program business segments. This decline was
partially  offset by increased net premium volume written and earned in the
insurance  segment  as the  insurance  segment  retained  more  busines  by
reducing the amount of  reinsurance  purchased for its  programs.  Expenses
from continuing operations,  including insurance costs, of $66.4 million in
2001 represent a $3.0 million  decrease from 2000 expenses from  continuing
operations  of $69.4  million,  which  increased  $1.4  million  over  1999
expenses from continuing  operations of $68.0 million.  Insurance costs for
the year 2001 increased to $26.9 million, compared to $22.6 million in 2000
and $10.1 million in 1999.  The  increases in insurance  costs for the year
were primarily due to the increases in net premiums earned.

Total expenses from continuing operations excluding insurance costs for the
year  2001 were  $39.5  million,  versus  $46.8  million  in 2000 and $57.9
million in 1999.  This  decrease in  expenses  from  continuing  operations
reflects the effects of the restructuring  program begun in 1999,  together
with a general  reduction  in  administrative  costs as a result of reduced
business volume.  This decrease in expenses from continuing  operations was
partially offset by costs and provisions pertaining to its Dallas MGA. In a
continuing  effort to streamline  operations and reduce ongoing costs,  the
Company  consolidated its Dallas MGA office with its Boca Raton MGA office.
The Company recognized  restructuring costs of $1.1 million associated with
this  merger,  and  those  expenses  were  charged  to  fourth-quarter  and
full-year  results.  Consistent  with this decision,  the Company wrote off
$0.7 million of remaining goodwill associated with the Dallas MGA. Finally,
there was a charge of $2.9  million  for  future  losses  that the  Company
projects it will pay in connection  with its  indemnification  of its major
issuing  company for losses in excess of a specific  loss ratio on business
produced by the MGA's during 2000. In addition,  expenses  from  continuing
operations  continued to be impacted by costs and provisions  pertaining to
reinsurance-related  disputes in which the Company is  involved,  including
certain litigation.

Basic net loss per share was $2.24 in 2001,  as  compared to basic net loss
per  share of $2.86 in 2000 and  basic net loss per share of $0.71 in 1999.
Diluted  net loss per share was $2.24 in 2001,  as  compared to diluted net
loss per share of $2.86 in 2000 and  diluted net loss per share of $0.71 in
1999.

<TABLE>
<CAPTION>

                                                        REVENUES AND NET INCOME BY SEGMENT

                                                Revenues                        Income (loss) before tax
                                    For the Years Ended December 31,        For the Years Ended December 31,
                                    --------------------------------        --------------------------------
                                      1999         2000        2001         1999           2000          2001
                                      ----         ----        ----         ----           ----          ----
                                         (dollars in thousands)                  (dollars in thousands)
<S>                                   <C>         <C>         <C>         <C>             <C>         <C>
CONTINUING OPERATIONS:
Insurance                            $12,557     $23,532     $29,900      $(2,139)      $ (5,046)   $  (2,597)
Program Business                      22,444      15,337      11,371       (2,716)        (5,057)      (7,621)
Brokerage                             24,879      11,190       5,845        2,706         (4,838)      (4,283)
Other                                    680         874       2,911       (5,749)        (3,558)      (1,910)
                                     -------     -------     -------      --------      ---------   ----------
Total                                $60,560    $ 50,933   $  50,027      $(7,898)      $(18,499)   $ (16,411)
                                     =======    ========   =========      ========      =========   ==========

DISCONTINUED OPERATIONS:
Underwriting management                4,123       1,598         599        1,812         (4,937)        (509)
Reinsurance                            3,138       1,738         (90)      (3,402)        (6,092)      (5,678)
                                     -------     -------     -------      --------      ---------   ----------
Total                                 $7,261      $3,336   $     509    $  (1,590)      $(11,029)   $  (6,187)
                                     =======    ========   =========      ========      =========   ==========
</TABLE>


Insurance
---------

The Company's  insurance  segment  consists of its wholly owned  U.S.-based
insurance  company,  Realm National  Insurance  Company.  Insurance segment
revenues of $29.9 million in 2001  represented  an increase of $6.4 million
from insurance segment revenues of $23.5 million in 2000, which reflected a
$10.9 million increase from insurance  segment revenues of $12.6 million in
1999. Gross written premiums were $40.0 million in 2001, which  represented
a $21.4  million  decrease  from  $61.4  million  in  2000,  which  in turn
reflected a $14.2 million increase from $47.2 million in 1999. Net premiums
earned  were  $27.8  million  in 2001,  which  represented  a $9.3  million
increase from $18.5 million in 2000, which was a $9.0 million increase from
$9.5 million in 1999. Policy issuance fees were $0.5 million in 2001, which
represented a $2.7 million  decrease from $3.2 million in 2000, which was a
$0.7 million  increase from $2.5 million in 1999. The increase in insurance
segment revenues reflects an increase in net premium earned.  Gross written
premium  decreased due to the decision to discontinue  certain  loss-making
programs in 2000.  Despite the  decrease in gross  premiums,  net  premiums
written and earned increased as a result of reduced reinsurance ceded.

Loss  before  tax  for  the  insurance  segment  of  $2.6  million  in 2001
represented  an  improvement  of $2.4  million from loss before tax of $5.0
million in 2000,  which in turn had increased $2.9 million from loss before
tax of $2.1 million in 1999. The decreased loss before tax resulted from an
improvement in losses incurred on business written.

The World Trade  Center  disaster of September  11, 2001 had an  immaterial
effect on the results of operations  of Realm  National and the Company for
the year ended December 31, 2001.

Program Business
----------------

The Company's program business segment consists of subsidiaries that market
insurance  products  and  administer  programs  developed  by the  Company.
Program  business  revenues of $11.4 million in 2001 represented a decrease
of $3.9 million from program  business  revenues of $15.3  million in 2000,
which had decreased  $7.1 million from program  business  revenues of $22.4
million in 1999. This decrease was due to reduced fee margins on programs.

The  program  business  segment  loss  before  tax of $7.6  million in 2001
represented an increase in loss before tax of $2.1 million from loss before
tax of $5.1  million in 2000,  which had  increased  $2.4 million from loss
before tax of $2.7 million in 1999.  In a continuing  effort to  streamline
operations and reduce ongoing costs,  the Company  consolidated  its Dallas
MGA  office  with  its  Boca  Raton  MGA  office.  The  Company  recognized
restructuring  costs of $1.1 million associated with this merger, and those
expenses were charged to fourth-quarter and full-year  results.  Consistent
with this  decision,  the  Company  wrote  off $0.7  million  of  remaining
goodwill associated with the Dallas MGA. Finally,  there was a provision of
$2.9  million for future  losses  that the Company  projects it will pay in
connection with its indemnification of its major issuing company for losses
in excess of a specific loss ratio on business produced by the MGA's during
2000.

Brokerage
---------

The Company's brokerage segment consists of subsidiaries that receive a fee
or commission for brokering insurance and reinsurance contracts.  Brokerage
segment  revenues of $5.8  million in 2001  represented  a decrease of $5.4
million from brokerage segment revenues of $11.2 million in 2000, which had
decreased $13.7 million from brokerage segment revenues of $24.9 million in
1999. The segment has been adversely  affected by the disruption  caused by
widespread  reinsurance  market disputes and legal  proceedings,  including
those involving the Company. The decrease in brokerage segment revenues was
also the result of reduced  business  being  brokered due to  significantly
diminished reinsurance capacity for workers' compensation business.

The brokerage segment's loss before tax of $4.3 million in 2001 represented
an  improvement  of $0.5  million  from loss before tax of $4.8  million in
2000,  which had  decreased  $7.5  million  from income  before tax of $2.7
million in 1999. The 2001 net loss reflects the decrease in revenues, which
was offset by a decrease in brokerage  segment  expenses.  Expenses for the
segment  continued  to be  impacted  by  significant  costs and  provisions
associated with widespread  reinsurance  disputes  involving the Company or
its clients, including certain litigation.


Other
-----

Other revenues include  primarily the Company's holding companies and other
non-operating  subsidiaries,  as well as provisions against  investments in
non-consolidating  affiliates.  Other  revenues  of  $2.9  million  in 2001
represented an increase of $2.0 million from other revenues of $0.9 million
in 2000,  which in turn  reflected  an increase of $0.2  million from other
revenues  of $0.7  million in 1999.  Loss  before tax for the year was $1.9
million,  compared to a loss before tax of $3.6  million in 2000 and income
before tax of $5.7 million in 1999. The  improvement in revenues and income
from 2000 to 2001 was the  result of a gain of $1.1  million on the sale of
an investment and a write-back of a provision  against an  investment,  and
was partially  offset by decreased  interest  income earned that was due to
falling interest rates. The loss before tax for the year primarily reflects
costs in respect of ongoing operating expenses.

Discontinued operations
-----------------------

Following a review of its operations,  the Company decided on March 6, 2001
to discontinue its  loss-making  reinsurance  and  underwriting  management
segments,  effective  December 31,  2000.  In light of this  decision,  the
Company took a charge  against  income in 2000 of $5.2 million to write off
goodwill in respect of these operations.

The  Company's  discontinued   underwriting  management  segment  comprises
companies that primarily  underwrote and administered  reinsurance business
on behalf of independent  reinsurance  companies.  Underwriting  management
revenues of $0.6  million in 2001  represented  a decrease of $1.0  million
from  underwriting  management  revenues of $1.6 million in 2000, which had
decreased  $2.5  million  from  underwriting  management  revenues  of $4.1
million in 1999.

Underwriting management loss before tax of $0.5 million in 2001 represented
an  improvement  of $4.4  million  from loss before tax of $4.9  million in
2000,  which in turn  reflected a $6.7 million  decrease from income before
tax of $1.8  million  in 1999.  In view of the  reduction  in  underwriting
management  revenues,  the  resulting  net loss,  and the ongoing  business
prospects  for  the  segment,   the  Company  decided  to  discontinue  the
underwriting management segment,  effective December 31, 2000. The net loss
for  the  year  2000  reflects  the  decreased  revenues,  together  with a
write-off of  associated  goodwill  following  the decision to  discontinue
these operations.

The Company's discontinued  reinsurance segment consists of its reinsurance
subsidiary,  CIRCL.  CIRCL primarily  reinsured  workers'  compensation and
property  and general  liability  risks.  Reinsurance  segment  revenues of
($0.1)  million  in  2001  represented  a  decrease  of $1.8  million  from
reinsurance  segment  revenues of $1.7  million in 2000,  which in turn had
decreased $1.4 million from reinsurance segment revenues of $3.1 million in
1999. Net premiums earned of ($0.3) million in 2001  represented a decrease
of $1.2 million from net premiums earned of $0.9 million in 2000,  which in
turn reflected a $1.5 decrease from net premiums  earned of $2.4 million in
1999.

Reinsurance  segment loss before tax of $5.7 million in 2001 represented an
improvement  of $0.4  million from loss before tax of $6.1 million in 2000,
which in turn was a increase in loss of $2.7  million  from loss before tax
of $3.4 million in 1999.  The primary reason for the loss before tax during
2001 was a  strengthening  of reserves on discontinued  programs,  together
with  an  increase  of  $1.0  million  in  provisions  against  reinsurance
recoveries.  CIRCL has  experienced  substantial  delays in  collection  of
reinsurance  recoverables  from certain of its reinsurers.  CIRCL therefore
has  established  a  provision  in  the  amount  of  $8.0  million  against
reinsurance contracts with projected reinsurance recoverables of a total of
$61.0  million.  This provision has been included in the balance sheet as a
reduction of paid losses recoverable from reinsurers and outstanding losses
recoverable  from  reinsurers.  The above increases in loss reserves caused
CIRCL's shareholder equity to become negative in the third quarter of 2001.
It is the  Company's  intention  not to pay  additional  funds to CIRCL for
losses it has  incurred.  CIRCL's  insolvency,  therefore,  will not have a
material  effect on the  consolidated  financial  position of the  Company.


Liquidity and Capital Resources
-------------------------------

At December 31, 2001,  the Company held cash and  marketable  securities of
$46.6 million, compared to $76.0 million at December 31, 2000. In addition,
the Company held cash in fiduciary  accounts  relating to insurance  client
premiums amounting to $33.8 million at December 31, 2001, compared to $39.0
million at December 31, 2000.  These  decreased  cash balances  reflect the
slow-down in the  Company's  business  activities  for 2001,  the impact of
delays in receiving outstanding  reinsurance  recoveries,  and the net loss
for the year. Of the $46.6 million of cash and marketable  securities  held
by the Company at year end, $29.4 million (2000--$49.3 million) was held by
subsidiaries  whose  payment of  dividends  to the  Company  was subject to
regulatory restrictions or possible tax liabilities.  At December 31, 2001,
the Company's  investment  portfolio (at fair market value)  totalled $30.1
million  (2000--$34.6  million).  The portfolio consisted primarily of U.S.
Treasury   obligations,   short-term   cash  and  A-rated   corporate  debt
securities.

During the year ended December 31, 2001, the Company's operating activities
used $29.2 million of net cash,  compared to using $7.8 million of net cash
during 2000 and $4.1 million in 1999. The cash used by operating activities
varies  according to the Company's  net loss and the timing of  collections
and payments of the Company's insurance and reinsurance  balances. In light
of continuing  losses,  the Company is continuing to review all  operations
and take steps to restructure those operations in an attempt to reduce cash
usage.

The  increase  of $168.0  million in  insurance  and  reinsurance  balances
receivable,  along with the  corresponding  increase  of $141.3  million in
insurance and reinsurance  balances payable,  primarily reflects the growth
in clients' claims balances recorded in the Company's broking subsidiaries.
As a result of various  disputes between insurers and reinsurers on various
reinsurance  contracts,  a number of the reinsurers  have suspended  paying
claims due under the contracts.  The Company's  brokerage and  underwriting
management segment subsidiaries  experienced a significant growth in client
balances receivable and payable recorded at the end of the year, reflecting
this  accumulation of claims due from one party to another.  These balances
are  reflected  as an  asset  or  liability,  as the  case  may be,  on the
Company's balance sheet.

The Company  used $4.4 million  during the year ended  December 31, 1999 to
repurchase 356,400 of its own shares on the open market.

Shareholders'  equity  decreased by $21.4  million,  to $35.5  million,  at
December 31, 2001 from $56.9 million at December 31, 2000, due primarily to
the net loss incurred for the year.

On February 14, 2002,  the Company was advised by Nasdaq that it was not in
compliance  with  certain  Nasdaq  Marketplace  Rules,  specifically  those
relating to the mimnimum bid price of the Company's  Ordinary Stock and the
minimum  market value of its publicly held shares.  The Company was further
advised  that it would  have  until  May 15,  2002  within  which to regain
compliance with the Marketplace  Rules,  failing which the Company would be
provided with written  notification  that its securities would be delisted.
The Company  would be able to appeal any such  determination  to the Nasdaq
Listing  Qualifications Panel. The Company has the option, prior to May 15,
2002, to apply to transfer its  securities to The Nasdaq  SmallCap  Market,
which  application  would  have  the  effect  of  staying  notification  of
delisting but, in the event that the Company's  transfer  application  were
not approved, notification of delisting would then be issued, again subject
to a possible  appeal.  The Company cannot presently  determine  whether it
will be in  compliance  with the  applicable  Marketplace  Rules by May 15,
2002,  and is evaluating  the option to file an application to transfer its
securities to The Nasdaq SmallCap Market.

The Company had no outstanding debt at December 31, 2000 and 2001.

Critical accounting policies and estimates
------------------------------------------

The  preparation  of financial  statements  in conformity  with  accounting
principles  generally accepted in the United States requires  management to
make  estimates and  assumptions  for those  transactions  that are not yet
complete or for which the ultimate effects cannot be precisely  determined.
Such estimates and  assumptions  affect the reported  amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the  financial  statements  and the  reported  amounts of  revenues  and
expenses  during the  reporting  period.  Actual  results could differ from
those  estimates.  The most  significant  estimates  include  those used in
determining  the  liability  for  outstanding  losses  and  loss  expenses,
uncollectible   insurance   and   reinsurance   balances   receivable   and
recoverable,   and  potential   losses  from   litigation.   Although  some
variability is inherent in these estimates, management believes the amounts
provided  for are  adequate.  The  Company  has  identified  the  following
critical  accounting  policies and estimates  utilized by management in the
preparation  of  the  Company's  financial  statements:   losses  and  loss
expenses, and premiums written, assumed and ceded.

Losses and loss expenses:  Losses and related loss adjustment  expenses are
charged to income as they are incurred and are net of losses  recovered and
recoverable.  Amounts recoverable from reinsurers are estimated in a manner
consistent  with the  underlying  liability  associated  with the reinsured
policy.   Outstanding  losses  recoverable  are  shown  separately  on  the
consolidated  balance sheets. The Company  establishes  reserves for losses
and loss adjustment expenses related to reported claims on the basis of the
evaluations  of independent  claims  adjusters and the Company's own claims
staff. In addition, reserves are established for losses which have occurred
but have not yet been reported and for adverse  development  of reserves on
reported losses.  The Company's  independent  actuaries estimate claims and
claims  expenses  arising  for losses that have  occurred  but not yet been
reported based upon the Company's and the insurance industry's  experience,
together  with the  statistical  information  with  respect to the probable
number and nature of such  claims.  The  program  business  established  an
accrual in 2001 in connection with an  indemnification to its major issuing
company.  While the liability is not included in loss reserves, it is based
on losses and is subject to the same estimation  processes discussed above.
The Company  believes that the provision  for  outstanding  losses and loss
expenses  is  adequate  to cover the  ultimate  net cost of losses and loss
expenses  incurred;  however,  such a  provision  is an  estimate  and  may
ultimately be significantly greater or less than the provision established.
The Company has limited historical loss experience  available to serve as a
basis for the estimation of ultimate losses. It is possible that management
will revise the  estimate of  outstanding  losses and loss  expenses in the
future.

Premiums  written,  assumed  and ceded:  Premiums  written  and assumed are
recorded on an accrual  basis and  included  in income on a pro-rata  basis
over the life of the  policies  or  reinsurance  agreements  to which  they
relate,  with the unearned  portion  deferred in the  consolidated  balance
sheets. Adjustment premiums arising from premium audits are recorded in the
period  in which  they  are  determined.  Reinsurance  premiums  ceded  are
similarly  pro-rated  over the terms of the  reinsurance  contract with the
unearned  portion  being  deferred in the  consolidated  balance  sheets as
deferred reinsurance premiums ceded.


Accounting Pronouncements
-------------------------

During 1998, the AICPA  Accounting  Standards  Executive  Committee  issued
Statement of Position  ("SOP")  98-5,  "Reporting  on the Costs of Start-up
Activities". The accounting guidance of this SOP requires that the costs of
start-up  activities be expensed as incurred and any costs that are carried
as an asset prior to adoption of SOP 98-5 would be written off by reporting
a cumulative effect of a change in accounting principle in the statement of
income  as of  January  1,  1999.  The  cumulative  effect  of a change  in
accounting  principle  that was recorded in the statement of income for the
first quarter of 1999 was approximately $307 (net of tax of $188).

In June 1999, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standard ("SFAS") No. 137,  "Accounting
for  Derivative  Instruments  and  Hedging  Activities  -  Deferral  of the
Effective Date of FASB Statement No. 133".  This statement  amends SFAS No.
133 to defer its  effective  date for one year,  to fiscal years  beginning
after June 15, 2000. In June 2000, the Financial Accounting Standards Board
issued SFAS No. 138,  "Accounting  for Certain  Derivative  Instruments and
Certain Hedging Activities." This statement is an amendment of SFAS No. 133
with  respect  to  the  accounting  and  reporting  standards  for  certain
derivative instruments and certain hedging activities.  The Company adopted
this standard  effective January 1, 2001, and it did not have a significant
impact on the Company's financial position or results of operations.

In June 2001, the FASB issued SFAS No. 141, "Business  Combinations."  SFAS
No.  141  eliminates  the  pooling-of-interest  method  of  accounting  for
business combinations,  requiring all business combinations to be accounted
for under  the  purchase  method.  Accordingly,  net  assets  acquired  are
recorded at fair value, with any excess of cost over net assets assigned to
goodwill.  SFAS No.  141  also  requires  that  certain  intangible  assets
acquired in a business  combination be recognized apart from goodwill.  The
provisions  of SFAS No.  141 apply to all  business  combinations  intiated
after June 30, 2001.  Use of the  pooling-of-interest  method of accounting
for those  transactions  is  prohibited.  Adoption of SFAS No. 141 will not
have a material impact on the Company's  financial  condition or results of
operations.

In June 2001, the FASB issued SFAS No. 142,  "Goodwill and Other Intangible
Assets."  Under  SFAS No.  142,  amortization  of  goodwill  is  precluded;
however,  its fair value is periodically  (at least annually)  reviewed and
tested for  impairment.  Goodwill must be tested for impairment in the year
of adoption,  including an initial test performed within six months. If the
initial  test  indicates  a  potential  impairment,  then a  more  detailed
analysis to determine  the extent of  impairment  must be completed  within
twelve  months.  SFAS No. 142 requires  that useful  lives for  intangibles
other than goodwill be reassessed  and  remaining  amortization  periods be
adjusted accordingly. The reassessment must be completed prior to the first
quarter of 2002. The provisions of SFAS No. 142 are effective for financial
statements  issued for fiscal years  beginning after December 15, 2001. All
provisions  of SFAS No. 142 will be applied  beginning  January 1, 2002, to
goodwill and other intangible assets. Goodwill amortization totaled $928 in
2001,  and the  Company  expects  it would have  approximated  $150 in 2002
before application of the  non-amortization  provisions of this  statement.
The  Company  is  in  the  process  of  assessing   the  impacts  from  the
implementation of the other provisions of SFAS No. 142.

In August 2001,  the FASB issued  Statement  No. 144,  "Accounting  for the
Impairment or Disposal of Long Lived  Assets,"  which updates and clarifies
the accounting and reporting for impairment of assets held in use and to be
disposed of. SFAS No. 144, among other things,  will require the Company to
classify the  operations  and cash flow of  properties to be disposed of as
discontinued  operations.  The provisions of SFAS No. 144 are effective for
financial  statements  issued for fiscal years beginning after December 15,
2001, and interim periods within those fiscal years, with early application
encouraged.  The  provisions  of SFAS No. 144  generally  are to be applied
prospectively. The Company expects to adopt the provisions of the Statement
January  1, 2002,  and does not expect it to have a material  impact on the
Company's financial position or results from operations.


Note on Forward-Looking Statements
----------------------------------

The  Private  Securities  Litigation  Reform  Act of 1995  provides a "safe
harbor"  for  forward-looking  statements.  This Form 10-K,  or any oral or
written  statements  made  by or on  behalf  of the  Company,  may  include
forward-looking  statements which reflect the Company's  current views with
respect to future events and financial  performance.  These forward-looking
statements  are  identified  by their  use of such  terms  and  phrases  as
"intends,"   "intend,"   "intended,"   "goal,"   "estimate,"   "estimates,"
"expects," "expect,"  "expected,"  "project,"  "projected,"  "projections,"
"plans,"   "anticipates,"    "anticipated,"    "should,"   "designed   to,"
"foreseeable  future,"  "believe,"  "believes,"   "scheduled"  and  similar
expressions.  Readers are  cautioned  not to place undue  reliance on these
forward-looking  statements,  which speak only as of the date the statement
was made. The Company undertakes no obligation to publicly update or revise
any  forward-looking  statements,  whether as a result of new  information,
future events or otherwise.

Reference is made to the cautionary  statements  contained in Exhibit 99 to
this Form  10-K for a  discussion  of the  factors  that may  cause  actual
results  to  differ  from  any  results   expressed  or  implied  by  these
forward-looking statements.


Inflation
---------

The Company does not believe its operations have been  materially  affected
by inflation.  The potential  adverse impacts of inflation  include:  (a) a
decline in the market  value of the  Company's  fixed  maturity  investment
portfolio;  (b) an increase in the ultimate  cost of settling  claims which
remain unresolved for a significant  period of time; and (c) an increase in
the Company's operating expenses.  However, the Company generally holds its
fixed  maturity  investments  to maturity and  currently  believes  that an
acceptable  amount is included in the yield to  compensate  the Company for
the risk of inflation.  Any increase in the cost of settling  claims should
be offset by increases  in  investment  income  earned and,  generally,  an
increase in operating  expenses  resulting from inflation should be matched
by similar  increases in investment  income earned on the Company's general
surplus funds.


ITEM 7A--MARKET RISK

The  Company's   investment   portfolio  is  comprised  of   fixed-maturity
investments,  equity securities, and short-term investments.  The Company's
exposure to market risk is limited  primarily to changing  interest  rates,
primarily  in the United  States,  as all fixed  maturity  investments  are
denominated  in  U.S.  dollars.   The  fair  value  of  the  fixed-maturity
investments  at December 31, 2001 was $26.5  million.  A change in interest
rates will affect the fair value of the Company's investments and will lead
to fluctuations in "Accumulated Other Comprehensive  Income" on the balance
sheet. The Company does not use derivative financial  instruments to manage
market risk in its portfolio.

The table below  (expressed in millions of U.S.  dollars)  presents the par
value  amounts  and  related  weighted  average  interest  rates by year of
maturity for the Company's U.S. dollar-denominated investment portfolio.

<TABLE>
<CAPTION>

                            2002  2003   2004  2005   2006   2007  2008   2009  2010   2011   2014  2016   2028  2031   TOTAL
                            ----  ----   ----  ----   ----   ----  ----   ----  ----   ----   ----  ----   ----  ----   -----
<S>                         <C>   <C>    <C>   <C>    <C>    <C>   <C>    <C>   <C>    <C>    <C>   <C>    <C>   <C>    <C>
Fixed Maturity Investments  0.2   3.1    3.7   3.7    1.6    2.1   2.8    1.7   2.1    1.5    0.4   0.5    0.5   0.9    24.8
($ millions)                ---   ---    ---   ---    ---    ---   ---    ---   ---    ---    ---   ---    ---   ---    ----
Weighted average
interest rate (%)           5.2   5.7    5.7   6.1    6.2    7.3   6.1    6.1   7.1    6.4    6.0   6.4    6.7   6.5    5.53
                            ---   ---    ---   ---    ---    ---   ---    ---   ---    ---    ---   ---    ---   ---    ----

</TABLE>

Given the limited value of balances and transactions in foreign currencies,
the Company's  exposure to foreign  currency  movements is considered to be
insignificant.

ITEM 8--FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     Index to Consolidated Financial Statements and Related Notes:

                                                                         PAGE #
       Report of Independent Public Accountants........................       24
       Consolidated Balance Sheets.....................................       25
       Consolidated Statements of Income and Comprehensive Income......       26
       Consolidated Statements of Changes in Shareholders' Equity......       27
       Consolidated Statements of Cash Flows...........................       28
       Notes to Consolidated Financial Statements......................    29-52

<PAGE>

                  REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

The Board of Directors and Shareholders of
Stirling Cooke Brown Holdings Limited

We have audited the  consolidated  balance  sheets of Stirling  Cooke Brown
Holdings Limited and subsidiaries as of December 31, 2000 and 2001, and the
related consolidated statements of income and comprehensive income, changes
in  shareholders'  equity and cash flows for each of the three years in the
period ended December 31, 2001. These consolidated financial statements are
the  responsibility of the Company's  management.  Our responsibility is to
express an opinion on these consolidated  financial statements based on our
audits.

We conducted our audits in accordance  with  auditing  standards  generally
accepted in the United  States.  Those  standards  require that we plan and
perform  the  audit  to  obtain  reasonable  assurance  about  whether  the
financial statements are free of material  misstatement.  An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in  the  financial  statements.   An  audit  also  includes  assessing  the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

In our opinion,  the consolidated  financial  statements  referred to above
present  fairly,  in all  material  respects,  the  financial  position  of
Stirling Cooke Brown Holdings  Limited and  subsidiaries as of December 31,
2000 and 2001 and the results of their  operations and their cash flows for
each of the three years in the period ended December 31, 2001 in conformity
with accounting principles generally accepted in the United States.



/s/ Arthur Andersen LLP

Arthur Andersen LLP
New York, New York
March 18, 2002

<PAGE>

<TABLE>
                                       STIRLING COOKE BROWN HOLDINGS LIMITED

                                            CONSOLIDATED BALANCE SHEETS

                                            DECEMBER 31, 2000 AND 2001
                (EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT SHARE AND PER SHARE DATA)

<CAPTION>
                                                                                                  2000          2001
                                                                                                --------      --------
                                   ASSETS
                                   ------
<S>                                                                                         <C>           <C>
Marketable securities, at fair value (Note 6)
     Debt securities (amortized cost, 2000--$26,166, 2001--$24,263)......................   $    26,091   $    24,824
     Equity securities (cost, 2000--$2,567, 2001--$1,553)................................         2,636         1,704
     Short term investments (amortized cost, 2000--$5,887, 2001--$3,535).................         5,887         3,535
                                                                                            -----------   -----------
Total marketable securities..............................................................        34,614        30,063
Cash and cash equivalents (Note 4).......................................................        41,358        16,520
Fiduciary funds--restricted (Notes 4 and 5)..............................................        39,015        33,825
Insurance and reinsurance balances receivable (Notes 4 and 5)............................       872,666     1,040,649
Paid losses recoverable from reinsurers (Note 9) ........................................        26,254        24,558
Outstanding losses recoverable from reinsurers (Notes 9 and 10)..........................        81,219        66,851
Deferred acquisition costs...............................................................         2,033         3,591
Deferred reinsurance premiums ceded (Note 9).............................................        13,088         2,693
Deferred tax asset (Note 13).............................................................         5,783         6,193
Goodwill (Note 2(j)).....................................................................         1,969         1,041
Other assets (Note 7)....................................................................        16,060         8,411
Income taxes receivable (Note 13) .......................................................         1,113           740
Assets related to deposit liabilities (Note 8)...........................................         3,835         2,033
                                                                                            -----------   -----------
          Total assets...................................................................   $ 1,139,007   $ 1,237,168
                                                                                             ==========   ===========

<CAPTION>
                                      LIABILITIES
                                      -----------
<S>                                                                                         <C>           <C>
Outstanding losses and loss expenses (Note 10)...........................................   $   114,503   $   106,762
Unearned premiums........................................................................        21,087        15,573
Deferred income..........................................................................         2,970         2,978
Insurance and reinsurance balances payable (Note 5)......................................       910,437     1,051,703
Funds withheld...........................................................................         1,565            60
Accounts payable and accrued liabilities.................................................        27,731        22,554
Deposit liabilities (Note 8).............................................................         3,835         2,033
                                                                                            -----------   -----------
          Total liabilities..............................................................     1,082,128     1,201,663
                                                                                            -----------   -----------

Commitments and Contingencies (Notes 17 and 20)

<CAPTION>
                                   SHAREHOLDERS' EQUITY
                                   --------------------
<S>                                                                                         <C>           <C>
Share capital
   Authorized 20,000,000 ordinary shares of par value $0.25 each. Issued and fully paid
   9,963,372 ordinary shares (2000--9,963,372) (Note 11)..................................        2,466         2,491
Deferred compensation....................................................................            --           (50)
Additional paid in capital...............................................................        54,167        54,317
Accumulated other comprehensive income (loss)............................................           (29)          650
Retained earnings (deficit)..............................................................         5,932       (16,246)
                                                                                            -----------   -----------
                                                                                                 62,536        41,162
Less: Ordinary shares in treasury (2000--443,400, 2001--443,400) at cost (Note 11).........      (5,657)       (5,657)
                                                                                            -----------   -----------
          Total shareholders' equity.....................................................        56,879        35,505
                                                                                            -----------   -----------
          Total liabilities and shareholders' equity.....................................   $ 1,139,007   $ 1,237,168
                                                                                            ===========   ===========

                          The accompanying notes are an integral part of these statements


</TABLE>

<PAGE>

<TABLE>


                                       STIRLING COOKE BROWN HOLDINGS LIMITED

                            CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

                                   YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
                         (EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT PER SHARE DATA)

<CAPTION>
                                                                        1999       2000       2001
                                                                     ---------  ---------  ---------
                                                                     (restated)
<S>                                                                 <C>         <C>        <C>
REVENUES
     Risk management fees (Note 2 (g))............................  $  47,111   $  26,965  $  16,506
     Net premiums earned (Note 9).................................      9,451      18,494     27,794
     Net investment income (Note 6)...............................      5,753       6,142      4,045
     Other income (loss) (Note 2(i))..............................     (1,755)       (668)     1,682
                                                                    ---------   ---------  ---------
          Total revenues..........................................      60,560     50,933     50,027
                                                                    ---------   ---------  ---------
EXPENSES
     Net losses and loss expenses incurred (Notes 2(f) and 10)....      6,965      17,160     21,540
     Acquisition costs (Note 2(e))................................      3,141       5,454      5,408
     Depreciation and amortization of capital assets (Note 2(k))..      1,594       1,442      1,172
     Amortization and write-down of goodwill (Note 2(g))..........        847       1,443        928
     Salaries and benefits........................................     25,450      19,688     17,782
     Other operating expenses.....................................     29,966      24,245     19,608
                                                                    ---------   ---------  ---------
          Total expenses..........................................     67,963      69,432     66,438
                                                                    ---------   ---------  ---------
LOSS FROM CONTINUING OPERATIONS BEFORE TAXATION...................     (7,403)    (18,499)   (16,411)
     Taxation (Note 13)...........................................     (2,583)     (2,523)    (1,268)
                                                                    ---------   ---------  ---------
NET LOSS FROM CONTINUING OPERATIONS BEFORE DISCONTINUED SEGMENTS..
                                                                       (4,820)   (15,976)   (15,143)
Discontinued segments (Note 3):
     Net loss from operations of discontinued segments............     (1,590)    (5,788)    (6,187)
     Net loss resulting from discontinuance of segments...........          -     (5,241)        --
                                                                    ---------   ---------  ---------
     Total net loss from discontinued segments....................     (1,590)   (11,029)    (6,187)
                                                                    ---------   ---------  ---------

NET LOSS FROM OPERATIONS BEFORE CUMULATIVE EFFECT
     OF A CHANGE IN ACCOUNTING PRINCIPLE..........................     (6,410)   (27,005)   (21,330)
     Cumulative effect of a change in accounting
     principle, net of tax (Note 2(q)) ...........................       (307)         -          -
                                                                    ---------   ---------  ---------

NET LOSS FROM OPERATIONS..........................................  $  (6,717)  $(27,005) $ (21,330)
                                                                    ---------   ---------  ---------

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
     Unrealized holding gains  (losses) arising during
     the year (net of tax of $168, $111 and $89)..................       (716)       682        881
     Less: reclassification adjustments for realized losses (gains)
     included in net income (net of tax of ($169), $257 and $51)..        186       (500)      (202)
                                                                    ---------   ---------  ---------
     Other comprehensive income (loss), net of tax ...............       (530)       182        679
     Comprehensive loss...........................................  $  (7,247)  $(26,823) $ (20,651)
                                                                    =========   ========= ==========

NET LOSS PER SHARE (NOTE 14)
     Loss from continuing operations..............................  $   (0.51)  $    (1.69)    (1.59)
     Loss from discontinued segments..............................      (0.17)       (1.17)    (0.65)
     Cumulative effect of a change in accounting principle........      (0.03)         -          -
                                                                    ---------   ---------  ---------
     Net loss per share...........................................  $   (0.71)  $    (2.86) $  (2.24)
                                                                    =========   ========= ==========

NET LOSS PER SHARE ASSUMING DILUTION (NOTE 14)
     Loss from continuing operations..............................  $   (0.51)  $    (1.69)    (1.59)
     Loss from discontinued segments..............................      (0.17)       (1.17)    (0.65)
     Cumulative effect of a change in accounting principle........      (0.03)         -          -
                                                                    ---------   ---------  ---------
     Net loss per share...........................................  $   (0.71)  $    (2.86)    (2.24)
                                                                    =========   ========= ==========

                          The accompanying notes are an integral part of these statements

</TABLE>

<PAGE>

<TABLE>

                                       STIRLING COOKE BROWN HOLDINGS LIMITED

                            CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

                                  YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
                    (EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS, EXCEPT PER SHARE DATA)

<CAPTION>

                                                                    1999       2000       2001
                                                                  --------- ---------- -------
<S>                                                               <C>         <C>       <C>
Ordinary shares of par value $0.25 each
     Balance at beginning of year................................ $   2,466   $  2,466  $  2,466
     Issuance of restricted stock................................        --         --        25
                                                                  ---------   --------  --------
     Balance at end of year...................................... $   2,466   $  2,466  $  2,491
                                                                  ---------   --------  --------
Additional paid in capital
     Balance at beginning of year................................ $  54,167   $ 54,167  $ 54,167
     Issuance of restricted stock................................        --         --       150
                                                                  ---------   --------  --------
     Balance at end of year...................................... $  54,167   $ 54,167  $ 54,317
                                                                  ---------   --------  --------
Deferred compensation
     Balance at beginning of year................................ $      --   $     --  $     --
     Issuance of restricted stock................................        --         --      (175)
     Amortization during period..................................        --         --       125
                                                                  ---------   --------  --------
     Balance at end of year...................................... $      --   $     --  $    (50)
                                                                  ---------   --------  --------
Accumulated other comprehensive income (loss)
     Balance at beginning of year................................ $     319   $   (211) $    (29)
     Change in unrealized gain (loss)............................      (530)       182       679
                                                                  ----------  --------  --------
     Balance at end of year...................................... $    (211)  $    (29) $    650
                                                                  ----------  --------- --------
Retained earnings (deficit)
     Balance at beginning of year................................ $  41,914   $ 34,067  $  5,932
     Net loss....................................................    (6,717)   (27,005)  (21,330)
     Dividends...................................................    (1,130)    (1,130)     (848)
                                                                  ----------  --------- --------
     Balance at end of year...................................... $  34,067   $  5,932  $(16,246)
                                                                  ---------   --------  --------
Treasury stock
     Balance at beginning of year................................ $  (1,234)  $ (5,657) $ (5,657)
     Purchase of ordinary shares in treasury.....................    (4,423)        --        --
                                                                  --------------------  --------
     Balance at end of year...................................... $  (5,657)  $ (5,657) $ (5,657)
                                                                  ----------  --------- --------
     Total shareholders' equity.................................. $  84,832   $ 56,879  $ 35,505
                                                                  =========-  ========  ========

     Dividends paid per share were $0.12, $0.12 and $0.09 for the years ended December 31, 1999,
2000 and 2001, respectively.

                    The accompanying notes are an integral part of these statements

</TABLE>

<PAGE>

<TABLE>

                                       STIRLING COOKE BROWN HOLDINGS LIMITED

                                       CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
                                 (EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS)
<CAPTION>
                                                                       1999     2000       2001
                                                                      ------   ------     ------

<S>                                                                   <C>      <C>       <C>
Operating activities
Net loss                                                              $(6,717) $(27,005) $(21,330)
Adjustments to reconcile net loss to net cash used by operating
activities:
    Depreciation and amortization of capital assets................     1,674     1,503     1,203
    Amortization and write-down of goodwill........................       847     6,695       928
    Amortization of marketable securities..........................       104        93       (44)
    Net realized losses (gains) on sale of marketable securities...       355      (757)     (252)
    Writedown  of affiliates.......................................     2,018       --        --
    Losses on sale of capital assets...............................       120       184        69
    Amortization of deferred compensation..........................        --        --       125
Changes in operating assets and liabilities:
    Fiduciary funds................................................     7,066    17,814     5,190
    Insurance and reinsurance balances receivable..................   (352,451)(137,798) (167,982)
    Paid losses recoverable from reinsurers........................    (4,377)  (12,961)    1,696
    Outstanding losses recoverable from reinsurers.................   (25,121)   (7,951)   14,368
    Deferred acquisition costs.....................................       541      (288)   (1,558)
    Deferred reinsurance premiums ceded............................     2,567     3,056    10,396
    Other assets...................................................      (955)   (4,785)    6,741
    Income taxes receivable........................................    (2,600)    1,487       373
    Deferred tax asset.............................................    (1,565)   (2,314)     (411)
    Assets related to deposit liabilities..........................      (203)     (319)    1,802
    Outstanding losses and loss expenses...........................    27,018    21,369    (7,742)
    Unearned premiums..............................................    (4,078)      127    (5,514)
    Insurance and reinsurance balances payable.....................   336,432   135,548   141,266
    Funds withheld.................................................     8,221    (8,015)   (1,505)
    Accounts payable and accrued liabilities.......................     9,084     7,929    (5,177)
    Income taxes payable...........................................    (3,016)       --        --
    Deferred income................................................       703    (1,725)        9
    Deposit liabilities............................................       203       319    (1,802)
                                                                      -------   -------   --------
        Net cash used by by operating activities...................    (4,130)   (7,794)  (29,151)
                                                                      --------  --------  --------
Investing activities
    Purchase of capital assets.....................................    (2,265)   (1,072)     (511)
    Sale of capital assets.........................................     1,083       461       102
    Purchase of debt securities....................................   (24,509)      (58)  (20,808)
    Purchase of equity securities..................................    (3,555)   (2,102)       --
    Purchase of short-term investments, net........................     8,387    (4,631)    2,455
    Proceeds on sale of debt securities............................    11,469     3,319    22,958
    Proceeds on sale of equity securities..........................     2,349     3,659       965
    Purchase of subsidiaries, net of cash acquired.................      (735)       --        --
                                                                      --------  --------  -------
        Net cash (used) provided by investing activities...........    (7,776)     (424)    5,161
                                                                      --------  --------  -------
Financing activities
    Dividends......................................................    (1,130)   (1,130)     (848)
    Purchase of ordinary shares in treasury........................    (4,423)       --        --
                                                                      --------  --------  -------
        Net cash used by financing activities......................    (5,553)   (1,130)     (848)
                                                                      --------  --------  --------
Decrease in cash and cash equivalents..............................   (17,459)   (9,348)  (24,838)
Cash and cash equivalents at beginning of year.....................   $68,165   $50,706   $41,358
                                                                      --------  --------  --------
Cash and cash equivalents at end of year...........................   $50,706   $41,358   $16,520
                                                                      ========  ========  ========
Supplemental disclosure of cash flow information
        Cash paid (received) during the year for income taxes......   $ 1,959   $(1,563)  $  (606)
                                                                      ========  ========= ========

                          The accompanying notes are an integral part of these statements

</TABLE>

<PAGE>

                   STIRLING COOKE BROWN HOLDINGS LIMITED
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      DECEMBER 31, 1999, 2000 AND 2001
             (EXPRESSED IN THOUSANDS OF UNITED STATES DOLLARS,
                     EXCEPT SHARE AND PER SHARE DATA)

1.   GENERAL

Stirling  Cooke  Brown  Holdings  Limited  was  incorporated  in Bermuda on
December  12,  1995.   Stirling  Cooke  Brown  Holdings   Limited  and  its
majority-owned  subsidiaries  (collectively  referred to as the  "Company")
provide insurance services and products.  The Company provides its range of
services and products to insurance  and  reinsurance  companies,  insurance
agents,  and  insureds.  The Company is involved  primarily  in the workers
compensation   occupational   accident  and  health  and  property/casualty
insurance  markets  through its  subsidiaries  based in the United  States,
London  and  Bermuda.  In  January  1996,  the  Company  acquired  all  the
outstanding  common  shares  of Realm  Investments  Ltd.  in  exchange  for
1,999,980 of its newly issued ordinary  shares.  The Company also acquired,
in September 1996, its own United States domiciled insurance company, Realm
National  Insurance  Company  ("Realm  National"),  which writes  insurance
business  in  the  workers  compensation  and  property/casualty  insurance
markets.

On  December  2,  1997,  the  Company  and  certain  selling   shareholders
consummated an initial public  offering of 3,421,250  ordinary  shares.  Of
these shares, 1,375,000 were sold by the Company and 2,046,250 were sold by
selling shareholders.  Net proceeds of $26,832 were received by the Company
upon consummation of the initial public offering.

Following a review of its operations,  the Company decided on March 6, 2001
to discontinue its reinsurance and  underwriting  management  segments,  as
discussed  in Note 3. In  addition,  the Company  consolidated  its Dallas,
Texas Managing  General Agency ("MGA") office with its Boca Raton,  Florida
MGA office, effective December 31, 2001.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The  accompanying   consolidated   financial  statements  are  prepared  in
accordance  with  accounting  principles  generally  accepted in the United
States.  The following are the significant  accounting  policies adopted by
Stirling Cooke:

   a) Basis of presentation

These consolidated financial statements include the financial statements of
Stirling  Cooke  Brown  Holdings  Limited  and  all of  its  majority-owned
subsidiaries.  All significant  intercompany balances and transactions have
been eliminated on  consolidation.  The results of a number of subsidiaries
have been included from the dates of their acquisition.

   b) Use of estimates

The  preparation  of financial  statements  in conformity  with  accounting
principles  generally accepted in the United States requires  management to
make  estimates and  assumptions  for those  transactions  that are not yet
complete or for which the ultimate effects cannot be precisely  determined.
Such estimates and  assumptions  affect the reported  amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the  financial  statements  and the  reported  amounts of  revenues  and
expenses  during the  reporting  period.  Actual  results could differ from
those  estimates.  The most  significant  estimates  include  those used in
determining  the  liability  for  outstanding  losses  and  loss  expenses,
uncollectible   insurance   and   reinsurance   policies   receivable   and
recoverable,   and  potential   losses  from   litigation.   Although  some
variability is inherent in these estimates, management believes the amounts
provided for are adequate.

   c) Marketable securities

Marketable  securities  comprise  investments in debt and equity securities
and short-term investments. All investments are classified as available for
sale in accordance with SFAS 115,  "Accounting  for Certain  Investments in
Debt and Equity Securities".  Accordingly,  these securities are carried at
fair value,  with the  difference  between fair value and cost or amortized
cost being recorded as accumulated other comprehensive income as a separate
component of shareholders' equity, net of applicable deferred income taxes.
Bond  discounts and premiums are amortized  over the remaining  term of the
securities.  Such amortization is included as a component of net investment
income in the consolidated  statements of income. Realized gains and losses
are determined on the basis of specific  identification.  Investment income
is recorded as earned and accrued to the balance sheet date.

   d) Premiums written, assumed and ceded

Premiums  written and assumed are recorded on an accrual basis and included
in income on a pro-rata  basis over the life of the policies or reinsurance
agreements to which they relate,  with the unearned portion deferred in the
consolidated  balance  sheets.  Adjustment  premiums  arising  from premium
audits are recorded in the period in which they are determined. Reinsurance
premiums  ceded are similarly  pro-rated  over the term of the  reinsurance
contract,  with the unearned  portion  being  deferred in the  consolidated
balance sheets as deferred reinsurance premiums ceded.

   e) Acquisition costs

Acquisition  costs  associated  with  the  acquisition  of new  or  renewal
business, including commissions,  premium taxes and brokerage, are deferred
and amortized to expense over the periods in which the premiums are earned.
The method followed in determining the deferred acquisition expenses limits
the amount of the deferral to its realizable value by giving  consideration
to losses and  expenses  expected to be  incurred  as premiums  are earned.
Future  investment  income is also  anticipated  in  determining  whether a
premium deficiency exists.

   f) Losses and loss expenses

Losses and related loss  adjustment  expenses are charged to income as they
are incurred and are net of losses  recovered and  recoverable  of $53,863,
$50,040 and $25,272 for the years ended  December 31,  1999,  2000 and 2001
respectively. Amounts recoverable from reinsurers are estimated in a manner
consistent  with the  underlying  liability  associated  with the reinsured
policy.   Outstanding  losses  recoverable  are  shown  separately  on  the
consolidated balance sheets.

The Company  establishes  reserves for losses and loss adjustment  expenses
related to reported  claims on the basis of the  evaluations of independent
claims adjusters and the Company's own claims staff. In addition,  reserves
are  established  for  losses  which  have  occurred  but have not yet been
reported and for adverse  development of reserves on reported  losses.  The
Company's independent actuaries estimate claims and claims expenses arising
for losses  that have  occurred  but not yet been  reported  based upon the
Company's  and  the   insurance   industry's   experience,   together  with
statistical  information  with respect to the probable number and nature of
such claims. The Company believes that the provision for outstanding losses
and loss  expenses is adequate to cover the ultimate net cost of losses and
loss expenses incurred; however, such a provision is an estimate and losses
may  ultimately  be  significantly  greater  or  less  than  the  provision
established.  The Company has limited historical loss experience  available
to serve as a basis for the estimation of ultimate  losses.  It is possible
that  management  will revise the estimate of  outstanding  losses and loss
expenses in the future.

   g) Recognition of risk management fees

                                                       FOR THE YEARS ENDED
                                                       -------------------
                                                          DECEMBER 31,
                                                          ------------
                                                     1999      2000      2001
                                                    -------  --------  --------
    Brokerage fees and commissions...............   $24,577  $  8,920  $  4,771
    Managing general agency fees.................    10,164     8,974     6,240
    Program and captive management fees..........     2,298       483       151
    Loss control and audit fees..................     7,577     5,358     4,883
    Policy issuance fees.........................     2,495     3,230       461
                                                    -------  --------  --------
                   Total risk management fees....   $47,111  $ 26,965  $ 16,506
                                                    =======  ========  ========

    Underwriting management fees from
            discontinued segment.................   $ 3,900  $  1,281  $    599
                                                    =======  ========  ========


          (i)  Brokerage  fees and  commissions  are recorded and earned as
     premiums are billed since  substantially  all placement  services have
     been  provided at that time.  Any  subsequent  adjustments,  including
     adjustments due to policy cancellations,  premium rate adjustments and
     profit commissions are recognized in risk management fees when advised
     by the client.

          (ii) Managing  general  agency fees are included  within  program
     business segment revenue and are reported net of commission expense to
     agents. These fees and are initially recorded as of the effective date
     of the related  insurance policy and are recognized in income over the
     period of the  underlying  policy (which is typically one year).  Fees
     for claims handling  services are recognized in income over the period
     that  services  are   performed  in  accordance   with  the  Company's
     contractual obligations,  typically ranging up to five years, based on
     the Company's  estimation of expected claims handling  requirements in
     each  accounting  period.  Such  estimation  is  based  upon  industry
     standards.  Any subsequent  adjustments,  including adjustments due to
     policy cancellation and premium adjustments, are recorded when advised
     by the client or agent.  The portion that will be earned in the future
     is  deferred  and  reported  as  deferred  income in the  consolidated
     balance sheets.

          (iii)  Program and captive  management  fees are included  within
     program business segment revenue, and are initially recorded as of the
     effective date of the insurance  policy or, in the case of installment
     premiums, when the installment is billed and are earned in income over
     the period of the  underlying  policy (which is typically one year) in
     proportion to the level of services  provided in  accordance  with the
     Company's  contractual  obligations.  Any subsequent  adjustments  are
     recognized in income when advised by the client or agent.  The portion
     of  recorded  management  fees that  will be  earned in the  future is
     deferred and reported as deferred income in the  consolidated  balance
     sheets.

          (iv) Loss  control  and audit fees are  included  within  program
     business segment revenue, and comprise claims administration handling,
     loss and safety  control  fees and premium  audit fees.  Such fees are
     recorded as the fees are billed and are  recognized in income over the
     period that services are  performed in  accordance  with the Company's
     contractual obligations, typically ranging up to five years, depending
     on the type of service provided, and based on the Company's estimation
     of expected  claims handling  requirements in each accounting  period.
     Such estimation is based upon industry standards.  The proportion that
     will be earned in the future is  deferred  and  reported  as  deferred
     income in the consolidated balance sheets.

          (v) Policy  issuance  fees are recorded as the premium is written
     and earned over the  applicable  policy period (which is typically one
     year).  The  unearned  portion is included  in deferred  income in the
     consolidated balance sheet.

          (vi)  Underwriting  management  fees are  initially  recorded and
     earned when the premium is billed in  accordance  with terms of trade.
     Fee income for claims  handling  services is recognized in income over
     the  period  that  services  are  performed  in  accordance  with  the
     Company's contractual obligations.  Such fees are recognized in income
     over the period that contractual services are performed,  typically up
     to five years,  based on the Company's  estimation of expected  claims
     handling  requirements in each accounting  period.  Such estimation is
     based upon the Company's claims handling experience over recent years.
     Any  subsequent  adjustments,  including  adjustments  due  to  policy
     cancellations  and premium  adjustments,  are recorded when advised by
     the client or agent.  The portion of recorded fees that will be earned
     in the future is  deferred  and  reported  as  deferred  income in the
     consolidated balance sheets.

   h) Cash and cash equivalents

The Company  considers time deposits with original  maturity dates of three
months or less to be equivalent  to cash.  Fiduciary  funds are  restricted
from use and are not considered cash equivalents.

   i) Investments in affiliates

The Company's  investments  in affiliated  companies  that are not majority
owned or  controlled  are  accounted  for  using the  equity  method if the
Company is able to exert significant  influence upon such companies.  Other
investments in affiliates are carried at cost. Investments in affiliates of
$248 and $171 as of December 31, 2000 and 2001, respectively,  are recorded
in  other  assets.  The  Company's  equity  share  in  the  net  income  of
affiliates, for the years ended December 31, 1999, 2000 and 2001 was $0. In
addition,  for 1999,  the Company  recorded a write-down of $2,018 in Other
income (loss) to recognize a decrease in the value of several of its equity
holdings. Dividends received from affiliated companies were $0 during 1999,
2000 and 2001.

   j) Goodwill

Goodwill  in the  amounts of $1,969 and $1,041 at December  31,  2000,  and
2001, respectively, represents the excess of purchase price over fair value
of net assets acquired. Goodwill is amortized on a straight-line basis over
the expected periods to be benefited,  generally 5 to 20 years. Accumulated
amortization  at  December  31,  2000  and  2001 was  $9,399  and  $10,327,
respectively.  The Company assesses the  recoverability  of this intangible
asset by determining  whether the amortization of the goodwill balance over
its remaining life can be recovered through  undiscounted  future operating
cash flows of the acquired operation. The amount of goodwill impairment, if
any, is measured based on projected  discounted future operating cash flows
using a discount rate reflecting the Company's  average cost of funds.  The
Company  consolidated  its Dallas,  Texas  Managing  General Agency ("MGA")
office with its Boca Raton MGA office effective December 31, 2001. In light
of this decision,  the Company took a charge of $654 against  operations in
2001 in respect of a write-off of goodwill. In addition, following a review
of its operations,  the Company decided on March 6, 2001 to discontinue its
reinsurance and underwriting management segments. In light of this decision
and following a comprehensive  review of the value of all of its intangible
assets,  the Company took a charge  against  operations in the year 2000 in
respect of the  write-off of a  significant  portion of its  goodwill.  The
write-off of goodwill, together with the annual amortization, resulted in a
total charge against  operations for the year 2000 of $6,695,  the majority
of which  related to the  write-off of goodwill in respect of  discontinued
segments.

   k) Capital assets and depreciation

Capital   assets  are  stated  at  cost  less   accumulated   depreciation.
Depreciation is calculated using the straight-line method over four to five
years, which are the estimated useful lives of the related assets.

   l) Earnings (loss) per share

Earnings (loss) per share have been calculated in accordance with Statement
of Financial  Accounting  Standards ("SFAS") No. 128, "Earnings per Share".
Net  income  (loss)  per share is  calculated  by  dividing  income  (loss)
available  to  ordinary  shareholders  by the  weighted  average  number of
ordinary  shares  outstanding.  Shares held in treasury are not  considered
outstanding  for purposes of the  computation.  Net income (loss) per share
assuming  dilution is computed by  dividing  income  available  to ordinary
shareholders  by  the  weighted  average  number  of  ordinary  shares  and
potentially  dilutive  securities  such as stock options.  During the years
1999,  2000 and 2001 stock options were not included in the  calculation as
the effect would be anti-dilutive.

   m) Income taxes

Under the asset and  liability  method  used by the  Company as outlined in
SFAS No.  109,  "Accounting  for  Income  Taxes",  deferred  tax assets and
liabilities are recognized for the future tax consequences  attributable to
temporary  differences  between  the  consolidated   financial  statements'
carrying  amounts of existing assets and  liabilities and their  respective
tax bases.  A valuation  allowance  is provided for a portion or all of the
deferred  tax assets when it is more  likely than not that such  portion or
all such deferred assets will not be realized.

   n) Foreign exchange

The United  States  Dollar is the Company's  functional  currency.  Foreign
currency  monetary  assets and liabilities are translated at exchange rates
in effect at the balance sheet date.  Fixed assets and deferred  income are
translated at their historical  exchange rates.  Foreign currency  revenues
and expenses are  translated at exchange rates in effect at the date of the
transaction. Net exchange losses of ($117), ($392) and ($333) were recorded
for the years ended December 31, 1999, 2000 and 2001, respectively.

   o) Derivative financial instruments

During  the  year,  the  Company  was a party to  transactions  in  certain
derivative financial  instruments,  specifically,  forward foreign exchange
contracts which are used to manage foreign  currency  exposures on non-U.S.
dollar denominated  assets and liabilities.  The Company does not engage in
derivatives for any other purpose. The Company's policy on such derivatives
is that  forward  foreign  exchange  contracts  are  recorded at their fair
value, and the fair values of open contracts are based on the quoted market
prices of forward contracts with similar maturities. Changes in fair values
are  recognized in other income as  appropriate  in the period in which the
changes occur. Amounts receivable or payable on open positions are recorded
in other assets or accounts payable and accrued liabilities as appropriate.
See Note 15(c).

   p) Stock compensation plans

As permitted by SFAS No. 123,  "Accounting for  Stock-Based  Compensation",
the Company has elected to continue to account for stock  option  grants in
accordance  with APB  Opinion  No.  25,  "Accounting  for  Stock  Issued to
Employees",  and,  accordingly,  recognizes  compensation expense for stock
option  grants to the extent  that the fair value of the stock  exceeds the
exercise  price  of the  option  at the  measurement  date.  Any  resulting
compensation expense is recorded over the shorter of the vesting or service
period.

   q) Accounting pronouncements

During 1998, the AICPA  Accounting  Standards  Executive  Committee  issued
Statement of Position  ("SOP")  98-5,  "Reporting  on the Costs of Start-up
Activities". The accounting guidance of this SOP requires that the costs of
start-up  activities be expensed as incurred and any costs that are carried
as an asset prior to adoption of SOP 98-5 would be written off by reporting
a cumulative effect of a change in accounting principle in the statement of
income  as of  January  1,  1999.  The  cumulative  effect  of a change  in
accounting  principle  that was recorded in the statement of income for the
first quarter of 1999 was approximately $307 (net of tax of $188).

In June 1999, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 137,  "Accounting for Derivative  Instruments and Hedging  Activities -
Deferral of the Effective Date of FASB  Statement No. 133".  This statement
amends  SFAS No. 133 to defer its  effective  date for one year,  to fiscal
years beginning after June 15, 2000. In June 2000, the Financial Accounting
Standards  Board issued SFAS No. 138,  "Accounting  for Certain  Derivative
Instruments and Certain Hedging Activities." This statement is an amendment
of SFAS No. 133 with respect to the accounting and reporting  standards for
certain derivative instruments and certain hedging activities.  The Company
adopted  this  standard  effective  January 1, 2001,  and it did not have a
significant  impact on the  Company's  financial  position  or  results  of
operations.

In June 2001, the FASB issued SFAS No. 141, "Business  Combinations."  SFAS
No.  141  eliminates  the  pooling-of-interest  method  of  accounting  for
business combinations,  requiring all business combinations to be accounted
for under  the  purchase  method.  Accordingly,  net  assets  acquired  are
recorded at fair value with any excess of cost over net assets  assigned to
goodwill.  SFAS No.  141  also  requires  that  certain  intangible  assets
acquired in a business  combination be recognized apart from goodwill.  The
provisions  of SFAS No. 141 apply to all  business  combinations  initiated
after June 30, 2001.  Use of the  pooling-of-interest  method of accounting
for those  transactions  is  prohibited.  Adoption of SFAS No. 141 will not
have a material impact on the Company's  financial  condition or results of
operations.

In June 2001, the FASB issued SFAS No. 142,  "Goodwill and Other Intangible
Assets."  Under  SFAS No.  142,  amortization  of  goodwill  is  precluded;
however,  its fair value is periodically  (at least annually)  reviewed and
tested for  impairment.  Goodwill must be tested for impairment in the year
of adoption,  including an initial test performed within six months. If the
initial  test  indicates  a  potential  impairment,  then a  more  detailed
analysis to determine  the extent of  impairment  must be completed  within
twelve  months.  SFAS No. 142 requires  that useful  lives for  intangibles
other than goodwill be reassessed  and  remaining  amortization  periods be
adjusted accordingly. The reassessment must be completed prior to the first
quarter of 2002. The provisions of SFAS No. 142 are effective for financial
statements  issued for fiscal years  beginning after December 15, 2001. All
provisions  of SFAS No. 142 will be applied  beginning  January 1, 2002, to
goodwill and other intangible assets. Goodwill amortization totaled $928 in
2001,  and the  Company  expects  it would have  approximated  $150 in 2002
before  application of the  non-amortization  provisions of this statement.
The  Company  is  in  the  process  of  assessing   the  impacts  from  the
implementation of the other provisions of SFAS No. 142.

In August 2001,  the FASB issued  Statement  No. 144,  "Accounting  for the
Impairment or Disposal of Long Lived  Assets,"  which updates and clarifies
the accounting and reporting for impairment of assets held in use and to be
disposed of. SFAS No. 144, among other things,  will require the Company to
classify the  operations  and cash flow of  properties to be disposed of as
discontinued  operations.  The provisions of SFAS No. 144 are effective for
financial  statements  issued for fiscal years beginning after December 15,
2001, and interim periods within those fiscal years, with early application
encouraged.  The  provisions  of SFAS No. 144  generally  are to be applied
prospectively. The Company expects to adopt the provisions of the Statement
January  1, 2002,  and does not expect it to have a material  impact on the
Company's financial position or results from operations.

   r) Reclassifications

Certain amounts in 1999 and 2000 have been reclassified to conform with the
current-year  presentation.  These  reclassifications  had no impact on net
income or shareholders' equity.

3.   DISCONTINUED OPERATIONS

Following a review of its operations,  the Company decided on March 6, 2001
to discontinue its reinsurance and underwriting management segments and put
these segments into run-off.

The Company's  reinsurance segment consists of its reinsurance  subsidiary,
Comp Indemnity  Reinsurance  Company  Limited  ("CIRCL").  CIRCL  primarily
reinsured  workers'  compensation and property and general liability risks.
Management  determined in early 1999 to cease  underwriting new programs in
the reinsurance segment due to unfavourable results, and for this reason, a
number of exisiting  contracts  were not renewed for the 1999 year.  During
2000,  further  losses were  realized in this  segment,  primarily due to a
strengthening  of  reserves  on  discontinued  programs,  together  with an
increase in provisions against reinsurance  recoveries.  Due to the history
of operating losses for the segment, together with the cessation of writing
new programs, the Company decided to completely discontinue the segment and
place the operation into run-off. At December 31, 2001, reinsurance segment
assets were primarily cash and cash equivalents,  insurance and reinsurance
balances  receivable,  and paid and  outstanding  losses  recoverable  from
reinsurers.  Segment  liabilities were primarily  insurance and reinsurance
balances payable, and outstanding losses and loss expenses.

The  Company's  underwriting  management  segment is comprised of companies
that primarily  underwrote and administered  reinsurance business on behalf
of  independent   reinsurance  companies.   Since  1999,  the  underwriting
management  segment has  experienced  a  significant  reduction in business
written,  which has led to decreasing  revenues over the period. In view of
the reduction in revenues,  the resulting  loss,  and the ongoing  business
prospects for the segment,  the Company  decided to discontinue the segment
and place the operation  into run-off.  At December 31, 2001,  underwriting
management  segment assets were primarily  cash and cash  equivalents,  and
insurance and reinsurance  balances  receivable.  Segment  liabilities were
primarily insurance and reinsurance balances payable.

As a result  of the  planned  run-off  of  operations  of the  underwriting
management  and  reinsurance   segments,   the  operating  results  of  the
underwriting  management  and  reinsurance  segments  in  the  accompanying
financial statements have been reported as discontinued  operations for all
periods  presented,  and,  accordingly,  the operating  results for periods
prior to 2000 have been restated.

4.   LETTERS OF CREDIT AND ASSETS HELD IN TRUST

In the normal course of insurance and reinsurance  operations the Company's
bankers  have  issued  letters  of credit  totaling  $14,609  and $7,629 at
December  31,  2000 and 2001,  respectively  in favor of  ceding  insurance
companies. At December 31, 2000 and 2001, $14,609 and $7,629, respectively,
of cash and cash  equivalents  were pledged as collateral for these letters
of credit.

One of the  Company's  subsidiaries  was  registered  with the  Society  of
Lloyd's as a registered Lloyd's Broker.  Until July 3, 2000, as required by
Lloyd's Brokers Byelaw (No. 5 of 1988), the subsidiary entered into a trust
deed under which all  insurance  broking  account  assets were subject to a
floating  lien held in trust for the  Society of Lloyd's for the benefit of
the insurance creditors.  With effect from July 3, 2000, in common with all
Lloyd's  Brokers,  the security held under the trust deed was released as a
result of  changes  to  Lloyd's  Distribution  Policy  enacted  by  Lloyd's
Regulatory Bulletin dated May 31, 2000.

5.   FIDUCIARY ASSETS AND LIABILITIES

In its various capacities as an insurance intermediary, the Company acts as
a conduit for  insurance and  reinsurance  premiums from insureds and other
intermediaries,  and after  deducting its risk  management  fee and,  where
appropriate,  surplus lines taxes and stamping fees,  remits the premium to
the respective insurance company or underwriter.  Additionally, the Company
acts as a conduit for loss  payments.  Pending the remittance of such funds
to the insurance  company or underwriter in accordance  with the applicable
insurance contract, the Company holds collected funds in its own segregated
bank  accounts and is entitled to any accrued  interest on such funds.  The
obligation  to remit these funds is recorded as insurance  and  reinsurance
balances  payable on the Company's  balance sheet. The period for which the
Company holds such funds is dependent  upon the date the insured remits the
payment of the  premium to the Company and the date the Company is required
to forward such payment to the insurer.

Insurance balances  receivable of $1,039,012 (2000 -- $872,666) and payable
of $1,051,703 (2000 -- $910,437)  primarily  consist of clients' claims and
premiums   balances   recorded  by  the  Company  in  its  capacity  as  an
intermediary.  As  a  result  of  various  disputes  between  insurers  and
reinsurers on various  reinsurance  contracts,  a number of the  reinsurers
have  suspended  paying  claims  due under  the  contracts.  The  Company's
brokerage and discontinued  underwriting  management  segment  subsidiaries
have  experienced  a  significant  growth in  claims  due from one party to
another.  These  balances are  reflected as assets and  liabilities  of the
Company in its role as an intermediary.

6.   MARKETABLE SECURITIES

     a)   The cost or amortized cost and estimated fair value of marketable
          securities held as 'available for sale' are as follows:

<TABLE>
<CAPTION>
                                                                             DECEMBER 31, 2000
                                                                -------------------------------------------
                                                                    COST/     GROSS     GROSS     ESTIMATED
                                                                  AMORTIZED UNREALIZED  UNREALIZED   FAIR
                                                                    COST     GAINS      LOSSES      VALUE
                                                                    ----     -----      ------      -----
<S>                                                                <C>        <C>       <C>       <C>
U.S. Treasury securities and obligations of U.S. Government
   agencies  ...................................................   $  8,010   $    69   $     2   $ 8,077
Foreign government..............................................         30       --        --         30
Obligations of states and political subdivisions................      6,624        37         9     6,652
Corporate securities............................................     11,502        22       192    11,332
                                                                   --------   -------   --------  -------
Debt securities.................................................     26,166       128       203    26,091
Equity securities...............................................      2,567       117        48     2,636
Short-term investments..........................................      5,887       --        --      5,887
                                                                   --------   -------   -------   -------
          Total.................................................   $ 34,620   $   245   $   251   $34,614
                                                                   ========   =======   ========  =======

<CAPTION>
                                                                             DECEMBER 31, 2000
                                                                  ---------------------------------------
                                                                    COST/     GROSS     GROSS     ESTIMATED
                                                                  AMORTIZED UNREALIZED UNREALIZED  FAIR
                                                                     COST     GAINS     LOSSES    VALUE
                                                                     ----     -----     ------    -----
<S>                                                                <C>        <C>       <C>       <C>
U.S. Treasury securities and obligations of U.S. Government
   agencies  ...................................................   $  3,492   $   111   $    --   $ 3,603
Foreign government..............................................         30       --        --         30
Obligations of states and political subdivisions................      3,568        74        --     3,642
Corporate securities............................................     17,174       411        36    17,549
                                                                   --------   -------   --------  -------
Debt securities.................................................     24,264       596        36    24,824
Equity securities...............................................      1,553       151       --      1,704
Short-term investments..........................................      3,535       --        --      3,535
                                                                   --------   -------   -------   -------
          Total.................................................   $ 29,352   $   747   $    36   $30,063
                                                                   ========   =======   ========  =======

</TABLE>

Deferred  tax  liabilities  of $24 and $61 at  December  31, 2000 and 2001,
respectively,  have been provided  against  unrealized  gains on marketable
securities  held as "available for sale",  which have been presented net as
accumulated other comprehensive income within shareholders' equity.

     b) The amortized cost and estimated  fair value of debt  securities by
contractual  maturity are shown in the following table.  Actual  maturities
may differ from contractual maturities because borrowers may have the right
to call or prepay obligations with or without call or prepayment penalties.

                                                          DECEMBER 31, 20001
                                                       ------------------------
                                                       AMORTIZED   ESTIMATED
                                                       ---------   ---------
                                                          COST    FAIR VALUE
                                                          ----    ----------
            Due in one year or less..................       $182        $183
            Due after one year through five years....     11,712      12,077
            Due after five years through ten years...     10,031      10,189
            Due after ten years through twenty years.      2,339       2,375
                                                     ------------ -----------
                                                         $24,264     $24,824
                                                     ============ ===========
     c) Proceeds from sales of investments in debt  securities  during 2000
and 2001 were  $3,319 and  $22,958,  respectively.  Proceeds  from sales of
investments in equity securities during 2000 and 2001 were $3,659 and $965,
respectively.  There were $27 of realized losses and $784 of realized gains
during 2000.  There were $110 of realized losses and $362 of realized gains
during 2001.

     d) At December 31, 2000 and 2001, debt securities  having an amortized
cost of $1,630 and $1,600,  respectively,  were on deposit with  government
authorities as required by law.

     e)  At  December  31,  2000  and  2001,   there  were  no   individual
investments,  other than investments in U.S. Government  securities,  which
exceeded 10% of shareholders' equity.

     f) Net  investment  income by  source,  including  realized  gains and
losses, is as follows:

<TABLE>
<CAPTION>
                                                 1999                      2000                      2001
                                               --------                  --------                  --------
                                        Continuing  Discontinued  Continuing  Discontinued  Continuing  Discontinued
                                        operations  operations    operations  operations    operations  operations
                                        ----------  ------------  ----------  ------------  ----------  ------------
<S>                                        <C>         <C>         <C>         <C>           <C>         <C>
       Debt securities..................   $ 1,488     $  --       $1,438      $   --        $2,030      $   --
       Equity securities................      (166)       --          955          --           173          --
       Cash, cash equivalents and
          short-term investments........     4,576       961        3,728       1,201         1,766         187
       Other        ....................        13        --           91          --           175          --
                                           -------     -----       ------      ------        ------      ------
       Total investment income..........     5,911       961        6,212       1,201         4,144         187
       Less applicable expenses.........       158        --           70          --            99          --
                                           -------     -----       ------      ------        ------      ------
           Net investment income........   $ 5,753     $ 961       $6,142      $1,201        $4,045      $  187
                                           =======     =====       ======      ======        ======      ======
</TABLE>

7. CAPITAL ASSETS

Included within other assets are capital assets as follows:

<TABLE>
<CAPTION>
                                          2000                            2001
                                         ------                           ----
                                    ACCUMULATED  NET BOOK              ACCUMULATED  NET BOOK
                            COST   DEPRECIATION   VALUE       COST     DEPRECIATION  VALUE
                           ------  ------------   -----      ------    ------------  -----
<S>                        <C>         <C>       <C>        <C>           <C>      <C>
Furniture and fixtures...  $  2,052    $1,239    $   813    $  2,117      $1,473   $   644
Computer equipment.......     3,933     2,507      1,426       3,761       2,846       915
Office equipment.........       828       609        219         730         624       106
Motor vehicles...........       453       281        172         275         176        99
                           --------    ------    -------    --------      ------   -------
          Total..........  $  7,266    $4,636    $ 2,630    $  6,883      $5,119   $ 1,764
                           ========    ======    =======    ========      ======   =======

</TABLE>

8.   DEPOSIT LIABILITIES AND RELATED ASSETS

Certain  of  the   Company's   reinsurance   contracts,   referred   to  as
rent-a-captive  programs,  do not satisfy the  conditions  for  reinsurance
accounting as the maximum exposure to loss is fully funded by premium, cash
and other collateral and indemnity agreements. Accordingly, these contracts
are  accounted  for as deposit  liabilities.  The  assets  related to these
programs  represent funds under management as the insured retains the risks
and rewards of  ownership.  Such assets are  recorded as assets  related to
deposit  liabilities  in the  consolidated  balance  sheets.  These  assets
comprised cash and  short-term  deposits at December 31, 2000 and 2001. The
Company  receives  a fee based on a  percentage  of  premiums  written  and
investment income earned for structuring and providing  ongoing  management
of the programs.

In addition,  deposit  liabilities  and related  assets  include $2,629 and
$1,664 of deposits  received  from  customers  as  security  for the timely
payment of premiums  for  workers'  compensation  insurance at December 31,
2000 and 2001,  respectively.  The  deposit is  restricted  from use by the
Company,  and is the property of the  customer.  The deposit is refunded to
the customer after the policy expires or is canceled and all claims related
to the insurance  policy have been settled.  The interest  income earned by
these restricted  deposit accounts is the property of the customer,  and is
therefore excluded from the Company's operating results.


9.   REINSURANCE ASSUMED AND CEDED

The Company  accounts for reinsurance  assumed and ceded in accordance with
SFAS 113 "Accounting and Reporting for  Reinsurance of  Short-Duration  and
Long-Duration  Contracts".  Net  premiums  earned  are  the  result  of the
following:

<TABLE>
<CAPTION>
                                              1999                    2000                   2001
                                             ------                  ------                 ------
                                     CONTINUING DISCONTINUED CONTINUING  DISCONTINUED CONTINUING DISCONTINUED
                                     OPERATIONS  OPERATIONS  OPERATIONS   OPERATIONS  OPERATIONS  OPERATIONS
                                     ----------  ----------  ----------   ----------  ----------  ----------
<S>                                     <C>        <C>        <C>          <C>        <C>         <C>
    Premiums written.................   $47,216    $    --    $53,849      $    --    $32,154     $    --
    Premiums assumed.................        --      2,952      7,546          321      7,816         272
    Change in unearned premiums......     2,640      1,749     (1,082)         851      5,421          --
                                        -------    -------    --------     -------    -------     -------
    Premiums earned..................    49,856      4,701     60,313        1,172     45,391         272
                                        -------    -------    -------      -------    -------     -------
    Premiums ceded...................    38,308      1,832     39,182         (100)     7,201         620
    Change in deferred reinsurance
        premiums ceded...............     2,097        470      2,637          419     10,396          --
                                        -------    -------    -------      -------    -------     -------
    Net premiums ceded...............    40,405      2,302     41,819          319     17,597         620
                                        -------    -------    -------      -------    -------     -------
    Net premiums earned..............   $ 9,451    $ 2,399    $18,494      $   853    $27,794     $  (348)
                                        =======    =======    =======      =======    =======     ========

</TABLE>

The Company,  in the ordinary course of business,  reinsures  certain risks
with other  companies.  Such  arrangements  serve to enhance the  Company's
capacity to write business and limit the Company's maximum loss on large or
more hazardous classes of risks.

Reinsurance  contracts  do not relieve the  Company of its  obligations  to
policyholders.  Failure of  reinsurers  to honor  their  obligations  could
result in losses to the Company;  consequently,  allowances are established
for amounts  deemed  uncollectible.  The Company  evaluates  the  financial
condition of its reinsurers and monitors  concentrations  of credit risk to
minimize its exposure to significant  losses from  reinsurer  insolvencies.
The Company has experienced substantial delays in collection of reinsurance
recoverables from certain of its reinsurers.  Realm National,  a subsidiary
of the Company, has commenced  arbitration against two of these reinsurers.
Management  believes  that  approximately  $9,342  and  $10,537 of paid and
outstanding   losses   recoverable   from  reinsurers  for  2000  and  2001
respectively  may prove  uncollectible  and has established a provision for
doubtful  recoveries  accordingly.  This  provision  of $9,342 for 2000 and
$10,537  for 2001  against  reinsurance  recoveries  of $34,964 in 2000 and
$34,281 in 2001  represents  management's  best  estimate at this time of a
shortfall in recoveries. This provision is included in the balance sheet as
an offset against paid and outstanding  losses recoverable from reinsurers.
The provision is an estimate and amounts not  collectible  from  reinsurers
may  ultimately  be  significantly  greater  or  less  than  the  provision
established.  It is possible that  management  will revise this estimate in
the future.  Any  subsequent  differences  arising  will be recorded in the
period in which they occur.

At December  31, 2000 there were  amounts  due from seven  reinsurers  that
totaled  $82,383,  each in  excess  of 10% of the  Company's  shareholders'
equity.  At December 31, 2001 there were amounts due from twelve reinsurers
that totaled $100,521, each in excess of 10% of the Company's shareholders'
equity. These reinsurers are rated `Superior' by A.M. Best.

The Company recognizes  reinsurance  recoveries when the associated loss is
booked.

Realm  National is a property and casualty  insurance  company,  and writes
principally  workers  compensation,  commercial  fire,  allied  lines,  and
general liability.

Realm National  ceded  business to reinsurance  companies for the following
programs:

With  respect to 1999 and prior  years,  one of the programs was subject to
quota share  reinsurance  whereby Realm National  retained 25% of the first
$1,000  on any  one  risk  and  purchased  excess  of loss  per  occurrence
reinsurance  for  limits  above  $1,000.  A  portion  of  Realm  National's
retention under its quota share treaties was further  protected through the
use of excess coverage that reduced Realm National's net retention to under
$20 on any one risk. In addition,  Realm National  purchased excess of loss
reinsurance  above the quota share treaty with limits of at least $100,000.
For the year 2000,  Realm  National  purchased  excess of loss  reinsurance
above  $250.  The  excess of loss limit was  $50,000.  In  addition,  Realm
National  purchased an 80% quota share reinsurance cover to further protect
the $250 net retention that reduced Realm  National's net retention to $50.
In 2001, Realm National  purchased  excess of loss reinsurance  above $250.
The excess of loss limit was $50,000.

With respect to its other main workers'  compensation  program for 1998 and
prior,  the business was subject to quota share  reinsurance  whereby Realm
National  retained  25% of the first  $1,000 on any one risk and  purchased
excess of loss per  occurrence  reinsurance  for  limits  above  $1,000.  A
portion of Realm  National's  retention  under its quota share treaties was
further  protected by excess  coverage  that reduced Realm  National's  net
retention  to  under  $3 on any  one  risk.  In  addition,  Realm  National
purchased  excess of loss  reinsurance  above the quota  share  treaty with
limits of  $100,000 or higher.  For the years 1999 and 2000 Realm  National
purchased excess of loss reinsurance  above $1,000 up to limits of $50,000.
In addition,  Realm National  purchased a 75% reinsurance  cover to further
protect part of the $1,000 net retention.  This business was  substantially
reduced in 2001 as it was put into runoff.  Catastrophy  coverage in excess
of $1,000 was purchased.

Realm  National   writes   property   business  and  purchased  a  property
reinsurance program related to 2000 and prior years whereby it retained 25%
of the first $1,000 on any one risk and purchased  facultative  reinsurance
for limits above $1,000.  In addition,  Realm  National's net retention was
further protected with excess catastrophe limits to $10,000.

With respect to its general  liability risks prior to 2000,  Realm National
purchased a reinsurance  program  whereby it retained 25% of the first $300
on any one risk and purchased  facultative  per-risk excess reinsurance for
limits above $300. In 2000 and 2001, Realm National retained the first $300
for any one loss and purchased an excess-of-loss treaty providing limits of
$700 excess of $300.

Due to the diminished  availability of  cost-effective  reinsurance  during
2000 and  2001,  Realm  National  decreased  the  level of  reinsurance  it
purchased on its programs,  resulting in a greater retention of premium but
also a  greater  exposure  to the  underwriting  risk  on  those  programs.
Further,  the events of September  11, 2001,  have  prompted  reinsurers to
restrict  terms under their  agreements,  as they are no longer  willing to
provide  automatic  coverage  for  exposure  of  loss  caused  by  acts  of
terrorism.  Beginning in 2002,  most  reinsurance  agreements now contain a
specific  exclusion  for  terrorism  coverage.  Simultaneously,  two states
(including  New  York,  from  which  Realm  National  derives  most  of its
business)  have  precluded  primary  insurance  companies from exclusion of
terrorism  risk. As such,  primary  companies in those states are forced to
carry the exposure  alone.  While the United States Federal  Government and
emerging  reinsurance  markets are  exploring and  introducing  options for
potential relief,  management has adopted new guidelines in underwriting in
an effort to measure and mitigate its exposure to loss.

Comp Indemnity  Reinsurance Company Limited ("CIRCL"),  a subsidiary of the
Company,  assumed various quota share reinsurance of workers'  compensation
and  employers'  liability  on both a primary  and  excess  basis.  CIRCL's
exposure  under  the  reinsurance  contracts  assumed  is  limited  in most
instances to between $25 to $300 for workers'  compensation  and $1,000 per
occurrence for employers'  liability and in some instances is subject to an
annual  aggregate  limit based on various  percentages  of  original  gross
written  premium  income.  CIRCL further  limited its exposure  through the
purchase of reinsurance  protection  for certain risks  covering  losses in
excess of $1 to $3 for workers'  compensation  and $50 per  occurrence  for
employers' liability.

CIRCL also assumed  bodily injury,  difference in conditions,  and property
risks through a general liability treaty covering risks in the construction
industry.  CIRCL's  exposure  under the  reinsurance  contracts  assumed is
limited in most instances to $250 per occurrence. In most instances,  CIRCL
further limited this exposure through the purchase of reinsurance  covering
losses  in excess  of $63 per  occurrence.  In  addition,  CIRCL  purchased
aggregate  reinsurance with limits based on various percentages of original
gross written premium income.

Management  decided in early 1999 to cease underwriting any new programs in
CIRCL due to unfavourable  results, and a number of existing contracts were
not  renewed for the 1999 year.  In early  2001,  following a review of its
operations,  the Company decided to completely  discontinue its reinsurance
segment, as discussed in Note 3.

10.  OUTSTANDING LOSSES AND LOSS EXPENSES

Outstanding   losses  and  loss  expenses   relate  to  the  insurance  and
reinsurance activities of Realm National and CIRCL.

The changes in  outstanding  losses and loss  expenses  are  summarized  as
follows:

<TABLE>
<CAPTION>
                                          1999                  2000                  2001
                                          ----                  ----                  ----
                                Continuing Discontinued Continuing Discontinued Continuing Discontinued
                                operations operations   operations operations   operations operations
                                 ---------- ----------  ---------- ----------  ---------- ----------
<S>                                <C>        <C>        <C>        <C>        <C>        <C>
   Balance beginning of year.....  $30,789    $35,328    $59,421    $33,714    $79,820    $34,683
   Less outstanding losses          27,048     21,098     53,050     20,217     62,857     18,362
        recoverable..............  -------    -------    -------    -------    -------    -------
   Net balance...................    3,741     14,230      6,371     13,497     16,963     16,321
                                   -------    -------    -------    -------    -------    -------
   Incurred related to:
        Current year.............    6,289      2,407     13,617        177     19,382         --
        Prior years..............      676      2,998      3,543      6,056      2,158      4,714
                                   -------    -------    -------    -------    -------    -------
        Total incurred...........    6,965      5,405     17,160      6,233     21,540      4,714
                                   -------    -------    -------    -------    -------    -------
   Paid related to:
        Current year.............    2,528        302      4,308         --      7,959         --
        Prior years..............    1,807      5,836      2,260      3,409      5,066      6,602
                                   -------    -------    -------    -------    -------    -------
             Total paid..........    4,335      6,138      6,568      3,409     13,025      6,602
                                   -------    -------    -------    -------    -------    -------
   Net balance...................    6,371     13,497     16,963     16,321     25,478     14,433
   Plus outstanding losses          53,050     20,217     62,857     18,362     54,029     12,822
        recoverable..............  -------    -------    -------    -------    -------    -------
        Balance at end of year...  $59,421    $33,714    $79,820    $34,683    $79,507    $27,255
                                   =======    =======    =======    =======    =======    =======

</TABLE>

The adverse  development  during 2000 and 2001 on prior years in continuing
operations  primarily  reflects the  strengthening  of loss reserves at the
Company's  U.S.-based  insurance carrier relating primarily to two programs
terminated in 2000.

The  adverse  development  during  1999,  2000 and  2001 on prior  years in
discontinued  operations  primarily reflects the increase in provisions for
doubtful  reinsurance  recoveries  of 2.1 million in 1999,  $2.4 million in
2000  and  $1.0  million  in 2001,  as  discussed  in Note 9, as well as an
increase in claims  frequency on one particular  program that covers bodily
injury and property risks in the construction industry.

11.  SHARE CAPITAL AND ADDITIONAL PAID IN CAPITAL

The  Company's  authorized  share  capital at  December  31,  2000 and 2001
comprised  20,000,000  ordinary  shares of par value $0.25  each,  of which
9,963,372  ordinary  shares were issued and fully paid at December 31, 2000
and 2001.  Outstanding  shares at December 31, 2000 and 2001 were 9,519,972
and 9,519,972,  respectively,  which were net of 443,400 treasury shares at
each date.

In December 1997, under a put and call option  originally  granted in April
1997,  the Company  purchased  40,000  ordinary  shares for a total cost of
$667.  These  shares were held as treasury  stock at December  31, 2000 and
2001.

In October  1998,  the Company  purchased a further  47,000 of its ordinary
shares on the open market for a total cost of $567.  These shares were held
as treasury stock at cost at December 31, 2000 and 2001.

In the first quarter of 1999,  the Company  purchased a further  356,400 of
its  ordinary  shares on the open market for a total cost of $4,423.  These
shares were held as treasury stock at cost at December 31, 2000 and 2001.

Effective  November,  2000, the Company issued 100,000 restricted shares to
Mr.  Stephen A. Crane.  The shares  issued are subject to certain  transfer
restrictions  which  lapsed with  respect to 33 1/3% of these shares on the
date of  their  issuance  and 33 1/3% of these  shares  in  November  2001.
Restrictions  on  the  balance  of  the  shares  lapse  in  November  2002,
contingent on Mr. Crane's continued employment with the Company.

12.  STOCK OPTIONS

Employees  and  directors  have been granted  options to purchase  Ordinary
Shares in the Company. These options have been issued as follows:


          On  November  25,  1997 the Company  granted  300,000  options to
          certain employees.  The options have an exercise price of $22 per
          share,  which reflected the estimated fair value of the shares at
          the grant date. The options vest ratably over a three-year period
          and may be exercised  at any time prior to November 25, 2007.  At
          December 31, 2000 and 2001,  140,850 and 94,800 of these  options
          remained outstanding. The balance of the options were forfeited.

          On  October  26,  1999 the  Company  granted  285,000  options to
          certain  officers  and  directors.  The options  have an exercise
          price of $2.31 per share, which reflected the market price of the
          shares on that date.  The options  vest ratably over a three-year
          period and may be  exercised  at any time  prior to  October  26,
          2009. All of these options were outstanding at December 31, 2001.

          On March 7,  2000,  the  Company  granted  25,000  options  to an
          officer.  The options have an exercise  price of $3.25 per share,
          which  reflected  the  estimated  fair value of the shares at the
          grant date. The options vest ratably over a three-year period and
          may be exercised at any time prior to March 7, 2010. All of these
          options were outstanding at December 31, 2001.

          On May 25, 2000,  the Company  granted  30,000 options to certain
          non-executive  directors.  The options have an exercise  price of
          $2.50 per share,  which reflected the estimated fair value of the
          shares  at the  grant  date.  The  options  vest  ratably  over a
          three-year  period  and may be  exercised  at any  time  prior to
          August 8, 2010. All of these options were outstanding at December
          31, 2001.

          On August 8, 2000, the Company granted 357,500 options to certain
          employees.  The  options  have an  exercise  price of $2.0625 per
          share,  which reflected the estimated fair value of the shares at
          the grant date. The options vest ratably over a three-year period
          and may be  exercised  at any time  prior to August 8,  2010.  At
          December 31, 2000 and 2001,  337,500 and 312,500 of these options
          remained outstanding. The balance of the options were forfeited.

          On January  16,  2001,  the  Company  granted  10,000  options to
          certain  employees.  The options have an exercise  price of $1.38
          per share, which reflected the estimated fair value of the shares
          at the grant date.  The options  vest  ratably  over a three-year
          period and may be  exercised  at any time  prior to  January  16,
          2011. All of these options were outstanding at December 31, 2001.

          On May 7, 2001 the  Company  granted  57,500  options  to certain
          employees. The options have an exercise price of $1.42 per share,
          which  reflected  the  estimated  fair value of the shares at the
          grant date. The options vest ratably over a three-year period and
          may be exercised  at any time prior to May 7, 2011.  All of these
          options were outstanding at December 31, 2001.

          On August 7, 2001, the Company granted  30,000 options to certain
          employees. The options have an exercise price of $2.00 per share,
          which  reflected  the  estimated  fair value of the shares at the
          grant date. The options vest ratably over a three-year period and
          may be  exercised  at any time  prior to August 7,  2011.  All of
          these options were outstanding at December 31, 2001.


In accordance  with the  provisions of FASB  Statement No. 123, the Company
applies APB Opinion 25 and related  interpretations  in accounting  for its
stock option plans and, accordingly,  recognizes compensation cost based on
the  intrinsic  value of the options at the grant date.  If the Company had
elected  to  recognize  compensation  cost  based on the fair  value of the
options  granted at the grant date, as prescribed by SFAS 123, net loss and
loss per share would have been adjusted to the pro forma amounts  indicated
in the table below:

<TABLE>
<CAPTION>
                                                                    1999       2000      2001
                                                                   ------     ------    ------
<S>                                                                  <C>      <C>        <C>
   Net loss--as reported.......................................   $(6,717) $(27,005)  $(21,330)
   Net loss--pro forma..........................................  $(6,606) $(27,170)  $(21,733)
   Net loss per share--as reported..............................  $ (0.71) $  (2.86)  $  (2.24)
   Net loss per share--pro forma................................  $ (0.70) $  (2.88)  $  (2.28)
   Net loss per share assuming dilution--as reported............  $ (0.71) $  (2.86)  $  (2.24)
   Net loss per share assuming dilution--pro forma..............  $ (0.70) $  (2.88)  $  (2.28)

</TABLE>

These pro forma compensation costs may not be representative of those to be
expected  in  future  years  due to the  timing  of  option  issuances  and
pro-ration of the corresponding compensation costs.

The  weighted  average  fair value of each option grant is estimated on the
date of the grant using the  Black-Scholes  option pricing model,  with the
following assumptions used:

                                                 1999        2000        2001
                                                 ----        ----        ----
       Expected dividend yield..........         4.5%    3.7-5.8%          0%
       Expected stock price volatility..       87.46%         92%         90%
       Risk-free interest rate..........        6.72%  6.07-6.64%  5.35-5.39%
       Expected life of options.........     10 years    10 years    10 years

The weighted  average fair value of options  granted  during 2001 was $1.38
per share.  The weighted  average fair value of options granted during 2000
was $1.09 per  share.  The fair value of options  granted  during  1999 was
$1.25 per share.

13.  TAXATION

Under current  Bermuda law, the Company is not required to pay any taxes in
Bermuda on either  income or capital  gains.  The Company  has  received an
undertaking  from the Minister of Finance in Bermuda  that, in the event of
any such taxes being  imposed,  the Company will be exempted  from taxation
until the year 2016.

Total income tax benefit attributable to income from continuing  operations
for the years ended  December  31,  1999,  2000 and 2001 was  allocated  as
follows:

<TABLE>
<CAPTION>
                                                                       1999      2000      2001
                                                                      ------    ------    ------
<S>                                                                  <C>       <C>        <C>
       Taxation on loss from continuing operations.................  $(2,583)  $ (2,523)  $ (1,268)
       Tax effect of change in accounting method (Note 2(q)).......     (188)        --         --
                                                                     --------  --------   --------
                                                                     $ (2,771) $ (2,523)  $ (1,268)
                                                                     ========= =========  =========

</TABLE>

Income  tax  benefit  attributable  to income  from  continuing  operations
consists of:

<TABLE>
<CAPTION>
                                                        CURRENT      DEFERRED       TOTAL
                                                        -------      --------       -----
<S>                                                  <C>          <C>           <C>
            Year ended December 31, 1999
                 U.S. Federal and State..............$ (1,377)    $    (1,432)  $   (2,621)
                 Foreign (U.K.)......................      38            --             38
                                                     ---------    ------------  -----------
                                                     $ (1,339)    $    (1,432)  $   (2,583)
                                                     =========    ============  ===========
            Year ended December 31, 2000
                 U.S. Federal and State..............$   (327)    $    (2,318)  $   (2,645)
                 Foreign (U.K.)......................     122            --            122
                                                     ---------    ------------  -----------
                                                     $   (205)    $    (2,318)  $   (2,523)
                                                     =========    ============  ===========
            Year ended December 31, 2001
                 U.S. Federal and State..............$   (740)    $      (528)  $   (1,268)
                 Foreign (U.K.)......................     --             --           --
                                                     ---------    ------------  -----------
                                                     $   (586)    $      (528)  $   (1,268)
                                                     =========    ============  ===========

</TABLE>

Income tax benefit  attributable  to loss from  continuing  operations  and
change in  accounting  method was  ($2,771),  ($2,523) and ($1,268) for the
years ended  December 31, 1999,  2000 and 2001  respectively,  and differed
from the amounts  computed by applying the U.S.  federal income tax rate of
34% and U.S.  state  tax at an  effective  rate of 2.64% to  income  before
taxation as a result of the following:

<TABLE>
<CAPTION>
                                                                        1999          2000        2001
                                                                       ------        ------      -----
<S>                                                                 <C>             <C>         <C>
            Computed expected tax benefit.........................   $(3,226)       $(10,040)    $(8,280)
            Foreign income not subject to US taxes................       420           5,933       2,088
            Foreign income subject to tax at foreign rates........         3               -         294
            Change in valuation allowance........................       --             1,800       3,951
            Miscellaneous permanent differences...................        21             (36)       (318)
            Deferred U.S. interest withholding tax...............        351               -           -
            State taxes...........................................      (340)           (180)       (361)
                                                                     --------       ---------   ---------
            Actual tax benefit...................................    $(2,771)       $ (2,523)   $ (1,268)
                                                                     ========       =========   =========

</TABLE>

The tax  effects of  temporary  differences  that give rise to  significant
portions  of the  deferred  tax  assets and  deferred  tax  liabilities  at
December 31, 2000 and 2001 are presented below:

<TABLE>
<CAPTION>
                                                                                      2000      2001
                                                                                     ------    ------
<S>                                                                                   <C>       <C>
            Deferred tax assets:
                 Deferred revenue.................................................    $  712    $  853
                 Discount on unearned premiums and outstanding loss reserves......     1,350     2,594
                 Deferred interest deductions.....................................        67        59
                 U.K. net operating loss carryforward.............................     1,800     2,624
                 Allowance for doubtful accounts..................................     1,714     2,559
                 Restructuring reserve............................................       164       411
                 U.S. federal and state net operating loss carryforward...........     2,173     4,096
                 Other............................................................        60        90
                                                                                      -------   ------
                                                                                       8,040    13,286
            Deferred tax liabilities:
                 Deferred policy acquisition costs................................      (411)   (1,196)
                 Unrealized investment gains......................................       (28)     (146)
                 Other............................................................       (18)       --
                                                                                      -------   -------
                 Net deferred tax asset...........................................     7,583    11,944
            Less valuation allowance..............................................    (1,800)   (5,751)
                                                                                      -------   -------
                 Adjusted net deferred tax asset..................................    $5,783    $6,193
                                                                                      =======   =======

</TABLE>

A valuation  allowance of $2,624 has been  recorded as of December 31, 2001
($1,800  at  December  31,  2000)  against  the tax  effect  of  losses  in
connection  with  the  Company's  U.K.  operations.  With  respect  to U.S.
taxation,  a valuation allowance of $3,127 has been recorded as of December
31, 2001,  ($01 at December 31,  2000)  against the value of net  operating
loss  carryforwards,  as  management  believes  that  portions  of the  net
operating  loss  carryforwards  may not be  utilized  within  the next five
years.  U.S.  federal  and state tax loss  carryforwards  in the  amount of
approximately $11,000 are available to offset future U.S. federal and state
taxable income.  The federal net operating loss carryforwards are scheduled
to expire in 2020 and 2021.

As of  December  31, 1999 the Company  had not  recognized  a deferred  tax
liability for the undistributed earnings of its United States subsidiaries.
(A 30% tax is generally  imposed in the United States on dividends  paid by
United  States  corporations  to  non-United  States  shareholders).  As of
December 31, 2000 and 2001 the Company had no undistributed earnings of its
U.S.  subsidiaries  on a  consolidated  basis.  The deferred tax  liability
relating  to these  unremitted  earnings,  which is not  recognized  by the
Company, is approximately $2,442, $0 and $0 at December 31, 1999, 2000, and
2001, respectively.

14.  EARNINGS PER SHARE

Earnings per share have been calculated in accordance with SFAS 128:

<TABLE>
<CAPTION>
                                                                   1999          2000          2001
                                                                  ------        ------        ------
<S>                                                             <C>           <C>           <C>
      Net loss..............................................    $   (6,717)   $  (27,005)   $  (21,330)
                                                                -----------   -----------   -----------
      Weighted average number of ordinary shares
         outstanding........................................     9,480,356     9,434,219     9,519,972
                                                                ----------    ----------    ----------
      Net loss per share....................................    $    (0.71)    $   (2.86)    $   (2.24)
                                                                ==========    ==========    ==========
      Loss available to ordinary shareholders...............    $   (6,717)   $  (27,005)   $  (21,330)
                                                                -----------   -----------   -----------
      Weighted average number of ordinary shares
         outstanding........................................     9,480,356     9,434,219     9,519,972
      Plus: incremental shares from assumed exercise of
         options............................................            --            --            --
                                                                ----------    ----------    ----------
      Adjusted weighted average number of ordinary
         shares outstanding.................................     9,480,356     9,434,219     9,519,972
                                                                ----------    ----------    ----------
      Net loss per share assuming dilution..................    $    (0.71)    $   (2.86)    $   (2.24)
                                                                ==========    ==========    ==========

</TABLE>

Potential  shares that are issued during a year are normally  considered as
outstanding  throughout  the year for  purposes of  calculating  net income
(loss) per share assuming dilution unless a net loss is incurred,  in which
case the shares are  considered  anti-dilutive  and are therefore  excluded
from the calculation. Due to losses in both continuing operations and total
operations during 2000 and 2001, the anti-dilutive effect of the restricted
share issuance described in Note 11 is excluded from the calculation of net
loss per share assuming dilution.

See Notes 11 and 12 to the  consolidated  financial  statements for further
discussion of share capital and share option transactions.

15.  FINANCIAL INSTRUMENTS

   a) Fair value

The carrying  values of all financial  instruments,  as defined by SFAS 107
and as recorded in the consolidated balance sheets,  approximate their fair
value.  The  Company  does  not  have  any  significant   off-balance-sheet
financial  instruments.  The following methods and assumptions were used by
the Company in estimating fair values:

     Cash and cash equivalents and fiduciary funds: The carrying values for
cash and cash  equivalents  and fiduciary  funds  approximated  fair market
values due to the short-term maturities of these instruments.

     Marketable  securities:  The fair values of debt and equity securities
are based on quoted  market  prices and dealer  quotes at the  consolidated
balance sheet dates.

     Deposit   liabilities  and  related  assets:   Underlying  assets  are
comprised  mainly of cash and  deposits.  The  carrying  values for deposit
liabilities and related assets  approximated  fair market values due to the
short-term maturities of these instruments.

     Other assets and  liabilities:  The fair values of all other financial
instruments,  as defined by SFAS 107, approximate their carrying values due
to their short-term nature.

The estimates of fair values  presented herein are subjective in nature and
are not  necessarily  indicative  of the  amounts  that the  Company  would
actually realize in a current market exchange. Any differences would not be
expected to be material.  Certain amounts such as prepaid  expenses,  other
assets,  goodwill and deferred expenses,  deferred fee income,  outstanding
losses  recoverable  from  reinsurers,  and  outstanding  losses  and  loss
expenses are excluded from fair value disclosure. Thus the total fair value
amounts cannot be aggregated to determine the underlying  economic value of
the Company.

   b) Concentrations of credit risk and provision for doubtful accounts

The Company's financial  instruments exposed to possible  concentrations of
credit risk consist primarily of its cash and cash equivalents, outstanding
losses  recoverable from reinsurers and insurance and reinsurance  balances
receivable.

The  Company  maintains  a  substantial   portion  of  its  cash  and  cash
equivalents  in two financial  institutions  that the Company  considers of
high credit quality.

Concentrations  of credit risk with respect to other financial  instruments
are to some  extent  limited  due to the number of  reinsurers,  agents and
customers  comprising the Company's  receivable  base. At December 31, 2000
there were amounts due from seven reinsurers that totaled  $82,383,  and at
December  31,  2001 there were  amounts  due from  twelve  reinsurers  that
totaled  $100,521,  as  discussed in Note 9. At December 31, 2000 and 2001,
management  believes  that  approximately  $9,342  and  $10,537 of paid and
outstanding losses recoverable from reinsurers may prove  uncollectible and
has established a provision for doubtful accounts accordingly, as discussed
in Note 9.


   c) Forward foreign exchange contracts

The  Company's  functional  currency is the U.S.  dollar;  however,  as the
Company  operates  internationally,  it has  exposure to changes in foreign
currency  exchange  rates.  These  exposures  include  net cash  inflows on
non-U.S. dollar-denominated transactions.

To manage the Company's  exposure to these risks,  the Company  enters into
forward foreign  exchange  contracts in the currencies to which the Company
is exposed.  These contracts generally involve the exchange of one currency
for another at some future  date.  The Company had one  notional  principal
amount  outstanding  at December  31,  2000,  relating to  contracts to buy
British Pounds Sterling in the future.  This contract had a cost of $2,305,
a fair value of $2,230,  and an unrealized net loss of $70. The Company had
no notional principal amounts  outstanding at December 31, 2001 relating to
contracts to buy British Pounds Sterling in the future.  Net realized gains
(losses)  of $0,  ($132)  and $0 have  been  recorded  in the  consolidated
statements  of income in respect of such  contracts  during the years ended
December 31, 1999, 2000 and 2001, respectively.

16.  SEGMENTAL INFORMATION

     (a)  The Company has three continuing  business  segments;  Insurance,
          Program Business, and Brokerage. The insurance segment represents
          a subsidiary  that  underwrites  and retains,  subject to its own
          reinsurance,  certain  insurance and reinsurance  risks,  and its
          revenues include premiums earned on insurance polices, investment
          income and policy  issuance  fees. The program  business  segment
          comprises  subsidiaries that market insurance products and manage
          programs   developed  by  the  Company.   The  brokerage  segment
          comprises  subsidiaries  that  receive  a fee or  commission  for
          brokering insurance and reinsurance contracts. Other includes the
          Company's  holding  companies and group  services  companies.  In
          early  2001,  following a review of its  operations,  the Company
          decided  to  discontinue   its   reinsurance   and   underwriting
          management  segments,   as  discussed  in  Note  3.  Intercompany
          transactions   are   recorded   under   normal  terms  of  trade.
          Adjustments  and  eliminations  to  revenue  are  in  respect  of
          intersegmental  revenues that are eliminated at the  consolidated
          level.  Adjustments  and  eliminations of assets are primarily in
          respect of intersegmental  insurance balances receivable that are
          eliminated at the consolidated level.

<TABLE>
<CAPTION>
                                   DECEMBER 31, 1999                  DECEMBER 31, 2000                 DECEMBER 31, 2001
                                       Income                             Income                            Income
                                       (loss)                             (loss)                            (loss)
                            Revenues  before tax    Assets     Revenues  before tax   Assets     Revenues  before tax   Assets
                            --------  ----------    ------     --------  ----------   ------     --------  ----------   ------
<S>                          <C>        <C>        <C>          <C>       <C>        <C>         <C>        <C>        <C>
CONTINUING OPERATIONS:
Insurance                    $12,557    $(2,139)   $ 112,916    $23,532   $ (5,046)  $ 130,621   $ 29,900   $ (2,597) $  123,784
Program business              22,444     (2,716)      34,927     15,337     (5,057)     29,201     11,371     (7,621)     24,596
Brokerage                     24,879      2,706      787,818     11,190     (4,838)    962,071      5,845     (4,283)  1,113,396
Other                            680     (5,749)      35,199        874     (3,558)     30,578      2,911     (1,910)     25,295
                             -------    --------  ----------    -------   ---------  ---------   --------   ---------  ---------
   Total from Continuing
       Operations             60,560     (7,898)     970,860     50,933    (18,499)  1,152,471     50,027    (16,411)  1,287,071

DISCONTINUED OPERATIONS:
Underwriting management        4,123      1,812       88,975      1,598     (4,937)     88,567        599       (509)    103,917
Reinsurance                    3,138     (3,402)      54,758      1,738     (6,092)     64,431        (90)    (5,678)     64,599
                             -------    --------  ----------    -------   ---------  ---------   --------   ---------  ---------
   Total from Discontinued
       Operations              7,261     (1,590)     143,733      3,336    (11,029)    152,998        509     (6,187)    168,516
Adjustments & eliminations        --          --    (103,184)        --         --    (166,462)        --         --    (218,419)
                             -------    --------  ----------    -------   ---------  ---------   --------   ---------  ---------
  Total from all operations  $67,821    $(9,488)  $1,011,409    $54,269   $(29,528)  $1,139,007   $50,536   $(22,598) $ 1,237,168
                             =======    ========  ==========    =======   =========  ==========   =======   ========= ===========

</TABLE>

     (b)  Summarized  financial   information  by  geographic  location  of
          subsidiary for the years ended  December 31, 1999, 2000 and 2001,
          is as follows:

<TABLE>
<CAPTION>

REVENUES FOR THE                         Continuing operations
                                         ---------------------
YEAR ENDED
                                                       Adjustments          Discontinued
                                                            &               operations -
                        Bermuda     U.K     U.S.A.   Eliminations Total     Bermuda   Consolidated
                        -------     ---     ------   ------------ -----     -------   ------------
<S>                       <C>      <C>      <C>      <C>          <C>       <C>          <C>
   December 31, 1999      $6,094  $20,295  $34,582   $(411)       $60,560   $7,261       $67,821
   December 31, 2000       2,296    8,031   40,606       --        50,933    3,336        54,269
   December 31, 2001       1,939    5,171   42,917       --        50,027     509         50,536

<CAPTION>

IDENTIFIABLE ASSETS AT            Continuing operations               Discontinued  Adjustments
THE YEAR ENDED                    ---------------------               operations -       &
                        Bermuda      U.K      U.S.A.      Total       Bermuda      eliminations  Consolidated
                        -------      ---      ------      -----       --------     ------------  ------------
<S>                       <C>      <C>        <C>             <C>        <C>        <C>             <C>
   December 31, 1999     $90,931   $793,641  $151,671   $1,036,243    $146,061      $(170,895)    $1,011,409
   December 31, 2000      91,404    934,028   153,884    1,179,316     148,262       (188,571)     1,139,007
   December 31, 2001      54,350  1,107,982   143,702    1,306,034     168,516       (237,382)     1,237,168

</TABLE>

     (c)  The Company's  Program  Business  subsidiaries  market and manage
          insurance  products  and  programs  developed  by the  Company on
          behalf  of  independent  insurance  carriers.  In  addition,  the
          Company,  through its brokerage  operations,  provides additional
          business and services to certain of these  independent  insurance
          carriers in respect of these  products  and other  insurance  and
          reinsurance policies. For the years ended December 31, 1999, 2000
          and 2001 revenues received from one independent insurance carrier
          accounted for  approximately  the  following  percentage of total
          revenues.

                                                     December 31,
                                           1999            2000        2001
                                           ----            ----        ----
     CONTINUING OPERATIONS:
     Insurance                               0%            17%          25%
     Program business                       70%            74%          92%
     Brokerage                              19%            14%          11%
     Other                                   0%             0%           0%
                                             --             --           --
        Total for continuing
           operations                       34%            33%          37%

     DISCONTINUED OPERATIONS:
     Underwriting management                91%           100%          62%
     Reinsurance                            72%            74%           0%
                                            ---            ---           --
        Total for Discontinued              83%            85%          73%
           operations                       ---            ---          ---
        Total for all operations            39%            37%          37%


The loss of this  carrier  could  have a  material  adverse  effect  on the
Company.  However, the Company believes that, subject to market conditions,
the availability of alternative underwriting capacity at Realm National and
other  independent  insurance  carriers  would  reduce the impact of such a
loss.

17.  COMMITMENTS

Future  minimum lease  payments  under  non-cancelable  operating  property
leases as at December 31, 2001 are as follows:

                    2002..................   $ 2,023
                    2003..................     1,795
                    2004..................     1,549
                    2005..................     1,060
                    2006..................       949
                    2007 and thereafter...     2,519
                                             -------
                                             $ 9,895

Total rental expense for continuing operations for the years ended December
31, 1999,  2000 and 2001,  was $3,089,  $1,854,  and $2,175,  respectively.
Total  rental  expense  for  discontinued  operations  for the years  ended
December 31, 1999, 2000 and 2001, was $114, $117, and $120, respectively.

Certain lease commitments are subject to annual adjustment, under escalation
clauses, for real estate taxes and the landlord's operating expenses.  Such
adjustments will not be material to the Company.

18.  STATUTORY SURPLUS AND DIVIDEND RESTRICTIONS

The Company's ability to pay dividends is subject to certain  restrictions,
including the following:

          a) The  Company is subject  to a 30%  withholding  tax on certain
     dividends and interest received from its United States subsidiaries.

          b) Under New York law, Realm National may pay cash dividends only
     from earned surplus  determined on a statutory basis.  Further,  Realm
     National is restricted  (on the basis of the lower of 10% of statutory
     surplus at the end of the preceding  twelve-month  period,  or 100% of
     the  adjusted net  investment  income for the  preceding  twelve-month
     period) as to the  amount of  dividends  it may  declare or pay in any
     twelve- month period without the approval of the Insurance  Department
     of the State of New York.

     No  dividends  were  declared  or paid  from  1999 to 2001  due to its
     statutory basis accumulated deficit.

     Realm National's  total capital and surplus and net income  determined
     on a New York statutory basis are as follows:

                                                           2000       2001
                                                           ----       ----
      Total capital and surplus at December 31,.......   $14,116    $13,840
      Net income (loss) for year ended December 31,...   $(4,167)   $(4,558)

     New York  insurance  law does not  allow  deferred  tax  assets  to be
     carried as an admitted asset and included in statutory  surplus.  NAIC
     rules do allow the asset to be included in  statutory  surplus.  Total
     capital  and  surplus  was  $14,699 at  December  31, 2001 on the NAIC
     basis.

          c) The NAIC has a model law  which  establishes  certain  minimum
     risk-based   capital  ("RBC")   requirements   for   property-casualty
     insurance companies. The RBC calculation serves as a benchmark for the
     regulation of insurance companies by state insurance  regulators.  The
     Authorized  Control Level RBC is equal to 200% of the RBC requirement.
     Realm  National  total  Adjusted  Capital  at  December  31,  2001 was
     $13,840,  compared to the Authorized  Control Level RBC requirement of
     $5,265.

          d)  The  Company's  Bermuda  reinsurance  subsidiary,  CIRCL,  is
     required by its license to maintain capital and surplus greater than a
     minimum  statutory  amount  determined  as the  greatest of $1,000,  a
     percentage of outstanding losses and loss expenses (net of reinsurance
     recoverable) or a given fraction of net written premiums.  At December
     31,  2000 and 2001,  respectively,  CIRCL was  required  to maintain a
     minimum statutory  capital and surplus of $1,272 and $1,000.  CIRCL is
     currently unable to meet this minimum statutory requirement.

     CIRCL's total surplus  (deficit) and net loss  determined on a Bermuda
     statutory basis is as follows:

                                                          2000       2001
                                                         ------     ------
        Total surplus (deficit) at December 31.......   $   752    $(4,333)
        Net loss for year ended December 31..........   $(5,641)   $(5,678)

     CIRCL is also required to maintain a minimum  liquidity  ratio whereby
     the value of its relevant assets is not less than 75% of the amount of
     its relevant liabilities.  Certain categories of assets do not qualify
     as relevant  assets under the statute.  At December 31, 2000 and 2001,
     respectively,  CIRCL was  required to maintain  relevant  assets of at
     least  $17,234  and  $5,808.  At  those  dates  relevant  assets  were
     approximately  $23,718 and $3,370 and the minimum  liquidity ratio was
     therefore not met at December 31, 2001.

     Increases in loss reserves caused CIRCL's shareholder equity to become
     negative  in the  third  quarter  of  2001,  and  CIRCL  is  therefore
     insolvent and remained  insolvent at December 31, 2001.  Additionally,
     as CIRCL has not met its two key statutory requirements, management of
     CIRCL have been in contact wtih the  Regulators  to fully apprise them
     of current and intended  action.  Detailed  discussions have also been
     held with CIRCL's principal creditors regarding the insolvency and the
     various  alternatives of action that may be taken. It is the Company's
     intention not to provide  additional  funds to CIRCL for losses it has
     incurred.  CIRCL's  insolvency,  therefore,  will not have a  material
     effect on the consolidated financial position of the Company.

19.  RELATED PARTY TRANSACTIONS

Goldman,  Sachs & Co.  or  certain  of its  affiliates  maintained  certain
contractual  relationships with the Company and provided investment banking
services to the  Company.  Goldman,  Sachs & Co. also  provided  investment
management  services to Realm National until December 31, 2000, pursuant to
a  Corporate  Account  Agreement  dated  December  24,  1996  and  received
customary fees and expenses of approximately  $35 during 2000 and $0 during
2001 for such services.

20.  CONTINGENCIES

(a) The trial in the  proceedings  which  Sphere  Drake  Insurance  Limited
("Sphere  Drake")  caused to be issued on  February  29, 2000 in the London
Commercial  Court  (equivalent to a civil complaint in U.S.  jurisdictions)
against two of the  Company's  U.K.  subsidiaries,  two former  officers of
those  subsidiaries  and others,  is underway and  currently is expected to
conclude  during  the second  quarter of 2002.  Sphere  Drake  alleges,  in
substance,  that  each  and  every  contract  placed  with it  through  its
underwriting agent by the Company's U.K. broker subsidiary was commercially
unreasonable.  Sphere  Drake  further  alleges that this was obvious to the
broker and that,  accordingly,  the London  Commercial Court should infer a
conspiracy  between the broker and the underwriting agent to defraud Sphere
Drake,  thereby  allowing  it to treat as void from the  outset  all of the
inwards  reinsurance   contracts  placed  with  Sphere  Drake  through  its
underwriting agent by the Company's broker subsidiary.

It is the opinion of management that the claims described in Sphere Drake's
action  are  without  merit  and the  case is being  and  will be  defended
vigorously.

(b) On December 6, 2001, the jury returned a verdict  dismissing all of the
claims  asserted  against  the  Company,  together  with one of its  London
subsidiaries  and a former  employee of that  subsidiary,  in a third party
action in the New York State Supreme Court brought by AXA Reassurance  S.A.
("AXA").  The verdict also  encompassed all of the claims asserted  against
these same defendants by New Hampshire Insurance Company ("NHIC").  In that
action,  AXA had sought indemnity and damages resulting from its efforts to
void  reinsurance   contracts  entered  into  in  connection  with  certain
"reinsurance-backed   gap  film  financing"   arrangements  ("Film  Finance
Covers") brokered by the Company's London subsidiary. Certain claims in the
action  relating to other parties remain to be resolved by the Court,  with
the  result  that a final  judgment  subject  to  appeal  has not yet  been
entered.

On July 2, 2001, the third-party complaint filed by defendant AXA Corporate
Solutions  (U.K.)  Ltd.  ("ACS")  against  the  Company,  one of its London
subsidiaries   and  a  former   employee  of  that   subsidiary  (the  "SCB
Defendants")  in an  existing  action  originally  brought  by the  insured
Silicon  Valley  Bank was  dismissed  without  prejudice.  The third  party
complaint had alleged  fraudulent  and/or  wrongful  inducement to contract
allegedly  resulting in exposure to liability for claims under another Film
Finance Cover  brokered by the  Company's  London  subsidiary.  ACS filed a
motion seeking reconsideration of that decision, which motion was denied by
the Court on March 18, 2002. Two of the Company's London  subsidiaries were
served with a separate third-party complaint in this action alleging claims
for fraudulent inducement, negligent misrepresentation and fraud and deceit
by a  different  insurer  defendant,  NHIC.  The London  subsidiaries  have
entered into a tolling  agreement  with NHIC that will suspend for the time
being the  prosecution  of  NHIC's  claims  as well as the  running  of the
statute of limitations pertaining thereto.

Two of the  Company's  London  subsidiaries  have been named as third party
defendants in a federal court action  instituted by Silicon  Valley Bank in
California  involving a different  Film Finance Cover.  These  subsidiaries
also were named as defendants in a federal  district  court action by NHIC,
which action has been dismissed  without  prejudice.  The tolling agreement
referred to above also applies to these claims.

Two of the Company's  London  subsidiaries,  together with other  unrelated
parties, have been named as third-party defendants in an existing action in
the New York State  Supreme  Court,  filed on March 16, 2001 by NHIC.  Each
pleading alleges  identical  claims of fraudulent  inducement and negligent
misrepresentation  against  two of the  Company's  London  subsidiaries  in
connection  with another Film Finance  Cover.  A motion to dismiss has been
made and is awaiting decision by the court.

It is the opinion of management that the claims  described in these actions
are without merit and the cases are being and will be defended vigorously.

Certain of the Company's  subsidiaries  acted as brokers in connection with
other Film  Finance  Covers which either have become the subject of inquiry
by one or more of the parties involved therein, or which have given rise to
disputes not directly  involving the Company or its subsidiaries.  Although
no assurances  can be given as to the outcome of these disputes or of other
potential  proceedings  related to the Film Finance Covers and their effect
on the Company,  the Company believes,  based on the information  presently
available  to it, that any such effect  should not have a material  adverse
effect on the Company's financial condition.

(c)  Several  arbitration  proceedings  currently  are  pending  in England
between reinsurers and ceding insurers relating to reinsurance transactions
involving the personal accident excess of loss market in London ("LMX") for
the account years 1993, 1994,  1995, 1996, 1997 and 1998.  Although neither
the Company nor any of its broker  subsidiaries  is a party to any of these
arbitrations,  certain of the Company's subsidiaries acted as a reinsurance
broker  for  ceding  insurer  clients  that are  parties  to certain of the
arbitrations.

In addition,  the Company's  reinsurance  subsidiary is party to one of the
LMX  arbitrations.  This  particular  arbitration has been dormant for some
time.

The reinsurers  generally have alleged that they sustained losses due to an
"artificial"  spiral in the LMX market,  the existence of which, as well as
other  information,  was not  disclosed  to them by the ceding  insurers or
their reinsurance brokers. In others, there are specific  misrepresentation
and  non-disclosure  allegations  that are not of a  generic  nature.  As a
consequence, these reinsurers have asserted that they are no longer obliged
to honor their reinsurance agreements and have suspended payment of claims.

During 1998 and 1999  certain of the  reinsurers  and  reinsureds  that are
parties to the  arbitrations  described  above  issued  proceedings  in the
English courts against one or more of the Company's brokerage  subsidiaries
and one  underwriting  management  subsidiary,  apparently  for the primary
purpose of tolling  the statute of  limitations  pending the outcome of the
arbitrations. In one proceeding against the same subsidiaries, three former
officers of the subsidiaries  were also named. In none of these proceedings
did the  complainant  specify an amount of damages  sought.  If one or more
reinsurers succeed in avoiding their contracts in the pending arbitrations,
it is possible that ceding insurer  clients,  on whose behalf the Company's
broker subsidiaries placed the reinsurance,  may seek to pursue a claim for
indemnification or other claims against one or more of those  subsidiaries.
Similarly,  if one or more of the reinsurers  fail to avoid their contracts
in the pending arbitrations,  it also is possible that those reinsurers may
seek  to  pursue  some  type  of  claim   against  one  or  more  of  those
subsidiaries.

The Company  understands that awards already have been made in favor of the
reinsurer   in  two   arbitrations.   However,   based  on  the   Company's
understanding  of the  reasons  given by the  arbitration  panels for their
awards in favor of the  reinsurer in two of those  cases,  the Company does
not  believe  there is any valid  basis for its ceding  insurer  clients in
those  cases  to  assert  a  claim   against  the  Company  or  its  broker
subsidiaries.  The Company  has  insufficient  information  to make a valid
assessment in relation to the third.

With the exception of: (a) one inactive  proceeding  which the subsidiaries
have been  informed  will be  withdrawn;  and (b) two  related  proceedings
pending  against certain  subsidiaries of the Company,  and certain current
and former  officers  of these  subsidiaries,  each of which is in an early
procedural   stage,   all  judicial   proceedings   against  the  Company's
subsidiaries relating to these matters have been stayed or held in abeyance
pursuant to standstill agreements or court order.

One of the arbitration awards referenced above allowed a reinsurer to avoid
certain of its reinsurance contracts with a Lloyd's syndicate. According to
reports in the London  press,  that award may have  caused the  syndicate's
liabilities to increase beyond the financial  resources available to it and
its Names,  requiring the syndicate to avail itself of the Lloyd's  Central
Fund. Thereafter,  Lloyd's initiated an investigation of that syndicate and
all "market participants,"  including the Company's U.K. subsidiaries.  The
Company  is  aware  that the  investigation  is  ongoing,  but has no other
information  as to the  progress  of the  investigation  or when it will be
completed.

The Company understands that substantial progress has been and continues to
be made by various  market  participants  in settling  ongoing  reinsurance
disputes, including many of the market participants that are parties to the
arbitrations and other proceedings described above. The Company understands
that a settlement by certain market  participants  of reinsurance  disputes
arising in the 1994 year of account (the "1994 Year of Account Settlement")
has been executed. The Company further understands that working groups have
been established to attempt to arrive at similar  settlements in respect of
the 1995 and 1996 years of account.

A subsidiary of the Company has been  notified of a potential  claim by one
of the parties to the 1994 Year of Account  Settlement  for the recovery of
costs  arising out of the  settlement as well as for the costs and expenses
incurred by the party in connection with its overall involvement in the LMX
market. The subsidiary has denied any liability for this potential claim.

Although no  assurances  can be given as to the outcome of the pending U.K.
arbitrations  or pending or potential  arbitration or judicial  proceedings
related to the LMX spiral reinsurance  arbitrations and their effect on the
Company, the Company believes, based on the information presently available
to it, that any such effect  should not have a material  adverse  effect on
the Company's financial condition.

(d) Beginning in late 1998 and 1999, the  reinsurance  markets in which the
Company historically has been involved experienced  considerable disruption
for a variety  of  reasons,  including  but not  limited  to the LMX market
disputes  described  above and other disputes  involving the North American
workers'  compensation  reinsurance  market. The effects of this disruption
have continued up to the present time.

One result of this market disruption has been that certain  reinsurers with
whom the Company's broker  subsidiaries placed business on behalf of ceding
insurer clients  suspended claims payments to those clients,  as well as to
the Company's insurance and reinsurance subsidiaries,  in certain instances
also claiming a right to rescind the reinsurance contracts.  As a result, a
number of  arbitrations  were commenced  between  Company clients and their
reinsurers.  The Company has endeavored  consistently to provide support to
its  clients  in  connection  with  these   proceedings.   In  one  ongoing
arbitration  involving the Company's  insurer  subsidiary,  Realm National,
that company has succeeded in obtaining $4.8 million in interim relief from
a reinsurer by order of the arbitration panel pending a final determination
of the matters in issue,  which is  expected  in the second  quarter of the
year.

In some instances,  disputes or potential  disputes have arisen  concerning
whether   reinsurance   was  properly   placed  by  the  Company's   broker
subsidiaries. In other instances, the Company's ceding insurer clients have
demanded  indemnification  by  the  Company  if  the  client's  reinsurance
contracts ultimately are avoided by its reinsurers.

Although no assurances  can be given as to the effect on the Company of the
various  disputes  in the  worker's  compensation  reinsurance  market,  or
related  arbitrations,  the  Company  believes,  based  on the  information
presently  available to it, that any such effect should not have a material
adverse effect on the Company's financial condition.

(e) The  Company is  subject  to other  litigation  and arbitration  in the
ordinary course of its business. While any of these proceedings contains an
element of uncertainty,  management presently believes the outcome of these
currently  pending  proceedings  will not have a material adverse effect on
the Company's financial condition.

21.  QUARTERLY FINANCIAL DATA--UNAUDITED

<TABLE>
<CAPTION>
                                                     FIRST       SECOND      THIRD       FOURTH
                                                   QUARTER      QUARTER     QUARTER      QUARTER
                                                   -------      -------     -------      -------
<S>                                                  <C>        <C>         <C>          <C>
YEAR ENDED DECEMBER 31, 2000
     Total revenues from continuing operations..     $ 15,285   $ 10,000     $13,546     $12,102
     Net loss                                          (1,022)    (2,206)     (2,556)    (21,221)
     Net loss per share.........................       (0.11)      (0.23)      (0.27)      (2.25)
     Net loss per share assuming dilution.......     $ (0.11)   $  (0.23)    $ (0.27)    $ (2.25)
YEAR ENDED DECEMBER 31, 2001
     Total revenues from continuing operations..     $ 11,421   $ 11,852     $12,686     $14,068
     Net loss                                          (1,929)    (2,276)     (5,854)    (11,272)
     Net loss per share.........................       (0.20)      (0.24)      (0.61)      (1.18)
     Net loss per share assuming dilution.......     $ (0.20)   $  (0.24)    $ (0.61)    $ (1.22)

</TABLE>

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

None.

                                  PART III

ITEM 10--DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Certain of the  information  required by this item is included in Part 1 of
this Form 10-K.

The  remainder  of this item is omitted  because  the  information  will be
contained in a definitive proxy  statement,  which involves the election of
directors,  to be filed with the  Securities  and Exchange  Commission  not
later than 120 days after  December 31, 2001.  Such  information  is hereby
incorporated by reference.


ITEM 11--EXECUTIVE COMPENSATION

This  item is  omitted  because  the  information  will be  contained  in a
definitive proxy statement, which involves the election of directors, to be
filed with the Securities  and Exchange  Commission not later than 120 days
after  December  31,  2001.  Such  information  is hereby  incorporated  by
reference.


ITEM 12--SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

This  item is  omitted  because  the  information  will be  contained  in a
definitive proxy statement, which involves the election of directors, to be
filed with the Securities  and Exchange  Commission not later than 120 days
after  December  31,  2001.  Such  information  is hereby  incorporated  by
reference.


ITEM 13--CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Certain of the  information  required  by this item is  included in Part 2,
Item 8 of this Form 10-K.

The  remainder  of this item is omitted  because  the  information  will be
contained in a definitive proxy  statement,  which involves the election of
directors,  to be filed with the  Securities  and Exchange  Commission  not
later than 120 days after  December 31, 2001.  Such  information  is hereby
incorporated by reference.

<PAGE>

                                  PART IV

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

     (A)  EXHIBITS

          EXHIBIT NO.                           DESCRIPTION
---------------------    -----------------------------------------------------

          3.l            Memorandum of Association of the Company (1)

          3.2            Bye-Laws of the Company (1)

          4.1            Shareholders' Agreement, dated as of January 24,
                         1996, among the Management Shareholders (as
                         defined therein), Bridge Street Fund 1995, L.P.,
                         Goldman Sachs & Co. Verwaltungs GmbH (for GS
                         Capital Partners II German Civil Law Partnership),
                         GS Capital Partners II, L.P., GS Capital Partners
                         Offshore, L.P., Stone Street Fund 1995, L.P. and
                         the Company (1)

          4.2            Registration Rights Agreement, dated January 24,
                         1996, between the Company, the Management
                         Shareholders (as defined therein) and the
                         Investors (as defined therein) (1)

          10.1           Stirling Cooke Brown Holdings Limited 1997 Equity
                         Incentive Plan (1)*

          10.2           Employment Agreement dated September 1, 1997
                         between Realm Investments Ltd. and Nicholas Mark
                         Cooke (1)*

          10.4           Employment Agreement dated September 1, 1997
                         between Stirling Cooke Brown Holdings Limited and
                         George W. Jones (l)*

          10.5           Agency Agreement dated as of June 1, 1995 between
                         Clarendon National Insurance Company and Stirling
                         Cooke Insurance Services, Inc. (1)

          10.6           Amendment Number One to Agency Agreement dated as
                         of June 1, 1995 between Clarendon National
                         Insurance Company and Stirling Cooke Insurance
                         Services, Inc. (1)

          10.7           Amendment Number Two to Agency Agreement dated as
                         of June 1, 1995 between Clarendon National
                         Insurance Company and Stirling Cooke Insurance
                         Services, Inc. (1)

          10.8           Addendum dated April 1, 1997 to Agency Agreement
                         dated as of June 1, 1995 between Clarendon
                         National Insurance Company and Stirling Cooke
                         Insurance Services, Inc. (1)

          10.9           Agency Agreement dated as of October 1, 1995
                         between Clarendon National Insurance Company and
                         Stirling Cooke Texas, Inc. (1)

          11.            Statement of Computation of Per Share Earnings

          16.            Letter of KPMG regarding change in certifying
                         accountant (2)

          21.            Subsidiaries of the Company

          99.            Forward-Looking Information

          99.1           Letter to Commission Pursuant to Temporary Note 3T

(1)  Incorporated by reference from Registration Statement on Form S-1
     (No. 333-32995) of Stirling Cooke Brown Holdings Limited.

(2)  Incorporated by reference from the Company's form 8-K filed April 28,
     1999.

*Management Compensation


     (B)   REPORTS ON FORM 8-K.

           None.

     (C)   FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

           1.  Financial Statements

               Included in Part II--Item 8 of this report.

          2.   Index to Financial Statement Schedules

               Included in Part IV of this report:

<TABLE>
<CAPTION>

                       ----------------------------------------------                             SCHEDULE
                                                                                                   NUMBER    PAGE
                                                                                                   ------    ----
<S>                                                                                                   <C>    <C>
               Report of Independent Accountants on financial statement schedules included
                  in Form 10-K.                                                                                 56
               Schedule of Investments excluding Investments in Related Parties as of
                  December 31, 2001                                                                       I     57
               Condensed Financial Information of Registrant as of and for the years ended
                  December 31, 1999, 2000 and 2001                                                       II  58-60
               Supplementary Insurance Information as of and for the years ended December
                  31, 1999, 2000 and 2001                                                               III     61
               Reinsurance for the years ended December 31, 1999, 2000 and 2001                          IV     62
               Valuation and Qualifying Accounts for the years ended December 31, 1999, 2000
                  and 2001                                                                                V     63
               Supplmental Information concerning Property-Casualty Insurance Operations for
                  the years ended December 31, 1999, 2000 and 2001                                       VI     64

</TABLE>

<PAGE>



                  REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

The Board of Directors and Shareholders of
Stirling Cooke Brown Holdings Limited

Under date of March 18,  2002,  we  reported  on the  consolidated  balance
sheets of Stirling  Cooke Brown  Holdings  Limited and  subsidiaries  as of
December  31, 2000 and 2001,  and the related  consolidated  statements  of
income and comprehensive  income,  changes in shareholders' equity and cash
flows for each of the three years in the period  ended  December  31, 2001.
These consolidated  financial  statements referred to above are included in
Item 8 of this  Annual  Report on Form 10-K for each of the three  years in
the period ended  December 31, 2001. In  connection  with our audits of the
three aforementioned consolidated financial statements, we also audited the
related  financial  statement  schedules listed in the accompanying  index.
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 audits.

In our opinion,  the amounts included in the financial  statement schedules
fairly state in all material respects the financial data required to be set
forth  therein in relation  to the basic  financial  statements  taken as a
whole.




/s/ Arthur Andersen LLP

Arthur Andersen LLP
New York, New York
March 18, 2002

<PAGE>

<TABLE>
<CAPTION>
                   STIRLING COOKE BROWN HOLDINGS LIMITED
      SCHEDULE OF INVESTMENTS EXCLUDING INVESTMENTS IN RELATED PARTIES
                                 SCHEDULE I

                                                                                       AMOUNT AT WHICH
                                                                                         SHOWN IN THE
                                                                                        BALANCE SHEET
                                                                               FAIR     -------------
                                                                    COST      VALUE    DECEMBER 31, 2001
                                                                  --------  ---------  -----------------
<S>                                                                 <C>      <C>           <C>
Fixed maturities
   Bonds:
     United States Government and government agencies and
        authorities..............................................   $3,492   $  3,603       $  3,603
     States, municipalities and political subdivisions...........    3,568      3,642          3,642
     Foreign governments.........................................       30         30             30
     All other corporate bonds...................................   17,174     17,549         17,549
                                                                    ------   --------       --------

          Total fixed maturities.................................   24,264     24,824         24,824
Equity securities
   Common stocks:
   Industrial, miscellaneous and other...........................    1,553      1,704          1,704
                                                                    ------   --------       --------

          Total equity securities................................    1,553      1,704          1,704
Short-term investments...........................................    3,535      3,535          3,535
                                                                    ------   --------       --------

          Total investments......................................   $29,352  $ 30,063       $ 30,063
                                                                    =======  ========       ========

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                   STIRLING COOKE BROWN HOLDINGS LIMITED

               CONDENSED FINANCIAL INFORMATION OF REGISTRANT

              PARENT COMPANY ONLY BALANCE SHEETS--SCHEDULE II

                         DECEMBER 31, 2000 AND 2001
 (Expressed in thousands of United States Dollars, except share and per share data)

                                                                                               2000       2001
                                                                                             --------   --------
<S>                                                                                            <C>       <C>
Assets
     Cash and cash equivalents............................................................     $ 5,486   $ 5,566
     Due from subsidiaries................................................................      29,972    36,281
     Investments in subsidiaries..........................................................       7,529   (12,304)
     Other assets.........................................................................         322       (16)
     Marketable securities................................................................      14,065     6,789
                                                                                               -------   -------
          Total Assets....................................................................     $57,374   $36,316
                                                                                               =======   =======

Liabilities
     Accounts payable and accrued liabilities.............................................       $ 495   $   336
     Due to subsidiaries..................................................................                   475
                                                                                               -------   -------
          Total Liabilities...............................................................         495       811
                                                                                               -------   -------
Shareholders' equity
     Share capital
        Authorized 20,000,000 ordinary shares of par value $0.25 each issued and fully
          paid 9,963,372 ordinary shares..................................................       2,466     2,491
     Deferred compensation................................................................          --       (50)
     Additional paid in capital...........................................................      54,167    54,317
     Accumulated other comprehensive income (loss)........................................         (29)      650
     Retained earnings (deficit)..........................................................       5,932   (16,246)
                                                                                               -------   -------


                                                                                                62,536    41,162
     Less: ordinary shares in treasury (2000--443,400, 2001--443,400) at cost.............      (5,657)   (5,657)
                                                                                               -------   -------
          Total shareholders' equity......................................................      56,879    35,505

Total Liabilities and Shareholders' equity................................................     $57,374   $36,316
                                                                                               ======= --=======
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                   STIRLING COOKE BROWN HOLDINGS LIMITED

               CONDENSED FINANCIAL INFORMATION OF REGISTRANT

 PARENT COMPANY ONLY STATEMENTS OF INCOME AND COMPREHENSIVE INCOME--SCHEDULE II

                YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
             (Expressed in thousands of United States Dollars,
                      except share and per share data)

                                                                             1999         2000          2001
                                                                            ------       ------        ------
<S>                                                                         <C>          <C>          <C>
REVENUES
     Net investment income...................................               $  1,717     $   1,370    $     960
                                                                            ---------    ----------   ---------
Total Revenues...............................................                  1,717         1,370          960
EXPENSES
     Salaries and benefits...................................                    536           746        1,173
     Other operating expenses................................                  3,178         7,230          933
                                                                            ---------    ----------   ---------

Total Expenses...............................................                  3,714         7,976        2,106
NET LOSS BEFORE EQUITY IN LOSS OF SUBSIDIARIES ..............                 (1,997)       (6,606)      (1,146)
Equity in loss of subsidiaries...............................                 (4,720)      (20,399)     (20,184)
                                                                            ----------   -----------  ----------

NET LOSS.....................................................               $ (6,717)    $ (27,005)   $ (21,330)
                                                                            ----------   -----------  ----------

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
   Unrealized holding gains (losses) arising during
        the year (net of tax of $168, $111 and $89)                             (716)          682          881
   Less: reclassification adjustments for realized gains (losses)
        included in net income (net of tax of ($169), $257 and $51)              186          (500)        (202)
                                                                            --------  --------------------------
   Other comprehensive income (loss), net of tax                                (530)          182          679
                                                                            ---------    ---------    ---------
   COMPREHENSIVE LOSS                                                       $ (7,247)    $ (26,823)   $ (20,651)
                                                                            =========    ==========   ==========
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                   STIRLING COOKE BROWN HOLDINGS LIMITED

               CONDENSED FINANCIAL INFORMATION OF REGISTRANT

         PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS--SCHEDULE II

                YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
 (Expressed in thousands of United States Dollars, except share and per share data)

                                                                         1999          2000         2001
                                                                        ------        ------       ------
<S>                                                                     <C>          <C>           <C>
OPERATING ACTIVITIES
     Net loss.........................................................  $ (6,717)    $(27,005)     $(21,330)
Items not effecting cash
     Amortization and write-off of goodwill...........................       373        5,977             0
     Amortization of marketable securities............................        10            8             3
     Amortization of deferred compensation............................         0            0           125
     Depreciation and amortization of capital assets..................        10           10             7
     Equity in loss of subsidiaries...................................     4,720       20,399        20,183
     Gain on sale of marketable securities............................      (143)           0          (102)
     Changes in non cash operating assets and liabilities
        Other assets..................................................       (80)         165           331
        Accounts payable and accrued liabilities......................       472         (226)         (159)
        Due to subsidiaries...........................................         0            0           475
                                                                        --------     --------      --------

          Net cash used by operating activities.......................    (1,355)        (672)         (467)

INVESTING ACTIVITIES
     Investments in subsidiaries......................................        15            6             0
     Due from subsidiaries............................................    (3,606)      (6,213)       (6,349)
     Dividends received from subsidiaries.............................     6,000            0             0
     Purchase of debt securities......................................   (11,156)           0             0
     Purchase of equity securities....................................    (1,000)      (2,000)            0
     Proceeds on sale of marketable securities........................     3,143        1,000         7,744
                                                                        --------     --------      --------

          Cash (used) provided by investing activities................    (6,604)      (7,207)        1,395

FINANCING ACTIVITIES
     Dividends........................................................    (1,130)      (1,130)         (848)
     Purchase of ordinary shares in treasury..........................    (4,423)           0             0
                                                                        --------     ---------     --------

          Cash used by financing activities...........................    (5,553)      (1,130)         (848)
                                                                        --------     ---------     ---------

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS......................   (13,512)      (9,009)           80
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR........................    28,007       14,495         5,486
                                                                        --------     ---------        -----

CASH AND CASH EQUIVALENTS AT END OF YEAR..............................  $ 14,495     $  5,486       $ 5,566
                                                                        ========     ========      =========

All dividends received were from consolidated subsidiaries.

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                   STIRLING COOKE BROWN HOLDINGS LIMITED

             SUPPLEMENTARY INSURANCE INFORMATION--SCHEDULE III

                YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
 (Expressed in thousands of United States Dollars, except share and per share data)

                                         FUTURE
                                         POLICY
                                        BENEFITS,           OTHER                      BENEFITS, AMORTIZATION
                             DEFERRED    LOSSES,            POLICY                      CLAIMS,   OF DEFERRED
                              POLICY     CLAIMS             CLAIMS             NET     LOSSES AND   POLICY      OTHER
                            ACQUISITION AND LOSS  UNEARNED   AND    PREMIUM INVESTMENT SETTLEMENT ACQUISITION OPERATING PREMIUMS
                              COSTS     EXPENSES  PREMIUMS BENEFITS REVENUE   INCOME    EXPENSES     COSTS    EXPENSES  WRITTEN
                              -----     --------  -------- -------- -------   ------    --------     -----    --------  -------

<S>                           <C>       <C>     <C>      <C>        <C>     <C>        <C>        <C>        <C>       <C>
YEAR ENDED DECEMBER 31, 1999
  Insurance.................  $  1,723  $59,422 $ 20,108  $     0   $9,451   $   558   $6,965     $3,141    $  4,590   $8,907
  Program Business..........         0        0        0        0        0       424        0          0      25,160        0
  Brokerage.................         0        0        0        0        0     2,573        0          0      25,160        0
  Other.....................         0        0        0        0        0     2,197        0          0       6,063        0
     Total continuing         -------- -------- --------  -------  -------  --------   ------     -------    -------   ------
       operations...........     1,723   59,422   20,108        0    9,451     5,752    6,965       3,141     57,986    8,907

  Underwriting Management...         0        0        0        0        0       223        0           0      2,677        0
  Reinsurance...............        22   33,713      851        0    2,399       739    5,405         719        416    1,121
     Total discontinued       -------- -------- --------  -------  -------   -------   ------     -------    -------   ------
       operations...........        22   33,713      851             2,399       962    5,405         719      3,093    1,121
                              -------- -------- --------  -------  -------   -------   ------     -------    -------   ------

        Total all operations  $  1,745 $ 93,135 $ 20,959  $     0  $11,850  $  6,714  $12,370     $ 3,860    $61,079  $10,028
                              ======== ======== ========  =======  =======  ========  =======     =======    =======  =======

YEAR ENDED DECEMBER 31, 2000
  Insurance.................  $  2,033 $ 79,820 $ 21,087  $     0  $18,494  $  1,788  $17,160     $ 5,454    $ 5,964  $22,213
  Program Business..........         0        0        0        0        0       539        0           0     20,395        0
  Brokerage.................         0        0        0        0        0     2,377        0           0     20,395        0
  Other.....................         0        0        0        0        0     1,438        0           0      4,432        0
     Total continuing         -------- -------- -------- --------  -------  --------   ------   ---------    -------   ------
       operations...........     2,033   79,820   21,087        0   18,494     6,142   17,160       5,454     46,818   22,213

  Underwriting Management...         0        0        0        0        0       316        0           0      6,534        0
  Reinsurance...............         0   34,683        0        0      853       885    6,233         129      1,468      421
     Total discontinued       -------- -------- -------- --------  -------  --------   ------   ---------    -------   ------
       operations...........         0   34,683        0        0      853     1,201    6,233         129      8,002      421
                              -------- -------- -------- --------  -------  --------   ------   ---------    -------   ------

     Total all operations     $  2,033 $114,503 $ 21,087 $      0  $19,347  $  7,343  $23,393   $   5,583    $54,820  $22,634
                              ======== ======== ======== ========  =======  ========   ======   =========    =======   ======

YEAR ENDED DECEMBER 31, 2001
  Insurance.................  $  3,591  $79,507  $15,573       $0  $27,794  $  1,638  $21,540   $   5,408    $ 5,548  $32,769
  Program Business..........         0        0        0        0        0       401        0           0     18,992        0
  Brokerage.................         0        0        0        0        0     1,074        0           0     10,128        0
  Other.....................         0        0        0        0        0       932        0           0      4,822        0
     Total continuing         -------- -------- -------- --------  -------  --------   ------   ---------    -------   ------
       operations...........     3,591   79,507   15,573        0   27,794     4,045   21,540       5,408     39,490   32,769


  Underwriting Management...         0        0        0        0        0       187        0           0      1,108        0
  Reinsurance...............         0   27,255        0        0     (348)      258    4,714          38        836     (348)
     Total discontinued       -------- -------- -------- --------  -------  --------   ------   ---------    -------   ------
       operations...........         0   27,255        0        0     (348)      445    4,414          38      1,944     (348)
                              -------- -------- -------- --------  -------  --------   ------   ---------    -------   ------

        Total all operations  $  3,591 $106,762 $ 15,573     $  0  $27,446  $  4,490  $26,254   $   5,446    $41,434  $32,421
                              ======== ======== ======== ========  =======  ========  =======   =========    =======   ======

</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                  STIRLING COOKE BROWN HOLDINGS LIMITED

                          REINSURANCE--SCHEDULE IV

                YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
(Expressed in thousands of United States Dollars, except share and per share data)

                                                                                            PERCENTAGE
                                                                                            OF GROSS
                                                                                            PREMIUMS
                                        GROSS        GROSS        GROSS          NET       ASSUMED TO
                                       PREMIUMS     PREMIUMS     PREMIUMS     PREMIUMS    NET PREMIUMS
                                        WRITTEN      CEDED        ASSUMED      EARNED         EARNED
                                        -------      -----        -------      ------     -------------
<S>                                     <C>          <C>          <C>          <C>              <C>
Year ended December 31, 1999
     Continuing operations.........     $  49,856    $ 40,405     $      0     $    9,451          0%
     Discontinued operations.......             0       2,302        4,701          2,399        196%
                                        ---------    --------     --------     ----------        ----
         Total for all operations..     $  49,856    $ 42,707     $  4,701     $   11,850         40%
                                        =========    ========     ========     ==========

Year ended December 31, 2000
     Continuing operations.........     $  53,767    $ 41,819     $  7,546     $   18,494          0%
     Discontinued operations.......             0         319        1,172            853        137%
                                        ---------    --------     --------     ----------        ----
         Total for all operations..     $  53,767    $ 42,138     $  8,718     $   19,347          6%
                                        =========    ========     ========     ==========

Year ended December 31, 2001
     Continuing operations.........     $  37,575    $ 17,597     $  7,816     $   27,794          0%
     Discontinued operations.......             0         620          272           (348)       N/A%
                                        ---------    --------     --------     -----------       ----
         Total for all operations..     $  37,575    $ 18,217     $  8,088     $   27,446          1%
                                        =========    ========     ========     ==========

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                   STIRLING COOKE BROWN HOLDINGS LIMITED

               VALUATION AND QUALIFYING ACCOUNTS--SCHEDULE V
             (Expressed in thousands of United States Dollars)


                                            BALANCE AT    CHARGED TO     CHARGED TO
                                            BEGINNING      COSTS AND        OTHER                      BALANCE AT
                 DESCRIPION                 OF PERIOD      EXPENSES        ACCOUNTS    DEDUCTIONS     END OF PERIOD
                                            ---------      --------        --------    ----------     -------------
<S>                                           <C>         <C>              <C>            <C>           <C>
Year ended December 31, 1999
   Allowance for Doubtful Accounts
         Continuing operations                $  --       $ 2,182          $ --           $ --          $ 2,182
         Discontinued operations               2,500        2,060            --             --            4,560
                                              ------      -------         -----          -----           ------
         Total operations                     $2,500      $ 4,242          $ --           $ --          $ 6,742

Year ended December 31, 2000
   Allowance for Doubtful Accounts
         Continuing operations                $2,182      $   200          $ --           $ --          $ 2,382
         Discontinued operations               4,560        2,400            --             --            6,960
                                              ------      -------         -----          -----           ------
         Total operations                     $6,742      $ 2,600          $ --           $ --          $ 9,342

Year ended December 31, 2001
   Allowance for Doubtful Accounts
         Continuing operations                $2,382      $   200          $ --           $ --          $ 2,582
         Discontinued operations               6,960          995            --             --            7,955
                                              ------      -------         -----          -----          -------
         Total operations                     $9,342      $ 1,195          $ --           $ --          $10,537


</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                   STIRLING COOKE BROWN HOLDINGS LIMITED

                    SUPPLEMENTARY INSURANCE INFORMATION
       CONCERNING PROPERTY/CASUALTY INSURANCE OPERATIONS--SCHEDULE VI

                YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
 (Expressed in thousands of United States Dollars, except share and per share data)



                                                                                          LOSSES AND LOSS
                                                                                        ADJUSTMENT EXPENSES
                                                                                        INCURRED RELATED TO
                                       RESERVE                                          -------------------  AMORTIZATION
                                      FOR LOSSES                                                              OF DEFERRED
                            DEFERRED   AND LOSS   DISCOUNT,                     NET                             POLICY
                           ACQUISITION ADJUSTMENT  IF ANY, UNEARNED EARNED   INVESTMENT  CURRENT              ACQUISITION
                             COSTS     EXPENSES   DEDUCTED PREMIUMS PREMIUMS   INCOME     YEAR    PRIOR YEAR     COSTS
                           ----------- ---------  -------- -------- -------- ----------  -------  ---------- ------------
<S>                          <C>       <C>         <C>     <C>      <C>       <C>       <C>       <C>          <C>
Year ended December 31, 1999
  Property/Casualty
    entities...............
    Continuing.............  $1,723    $ 59,422    $ --    $20,108  $ 9,451   $   558   $ 6,289    $   676     $   3,141
    Discontinued...........      22      33,713      --        851    2,399       739     2,407      2,998           719
                             ------    --------    ----    -------  -------   -------   -------    -------     ---------
    All                      $1,745    $ 93,135    $ --    $20,959  $11,850   $ 1,297   $ 8,696    $ 3,674     $   3,860

Year ended December 31, 2000
  Property/Casualty
    entities...............
    Continuing.............  $2,033    $ 79,820    $ --    $21,087  $18,494   $ 1,788   $13,617    $ 3,543     $   5,454
    Discontinued...........      --      34,683      --         --      853       885       177      6,056           129
                             ------    --------    ----    -------  -------   -------   -------    -------     ---------
    All                      $2,033    $114,503    $ --    $21,087  $19,347   $ 2,673   $13,794    $ 9,599     $   5,583

Year ended December 31, 2001
  Property/Casualty
    entities...............
    Continuing.............  $3,591    $ 79,507    $ --    $15,573  $27,794   $ 1,638   $19,382    $ 2,158     $   5,408
    Discontinued...........      --      27,255      --         --     (348)      258        --      4,714            38
                             ------    --------    ----     ------  -------   -------   -------    -------     ---------
    All                      $3,591    $106,762    $ --    $15,573  $27,446   $ 1,896   $19,382    $ 6,872     $   5,446


<CAPTION>
                               PAID LOSSES
                                AND LOSS
                               ADJUSTMENT PREMIUMS
                                EXPENSES   WRITTEN
                                --------   -------
<S>                             <C>       <C>
Year ended December 31, 1999
  Property/Casualty
    entities...............
    Continuing.............     $ 4,335   $ 8,907
    Discontinued...........       6,138     1,121
                                -------   -------
    All                         $10,473   $10,028

Year ended December 31, 2000
  Property/Casualty
    entities...............
    Continuing.............     $ 6,568   $61,396
    Discontinued...........       3,408       321
                                -------   -------
    All                         $ 9,976   $61,717

Year ended December 31, 2001
  Property/Casualty
    entities...............
    Continuing.............     $13,025   $39,970
    Discontinued...........       6,602       272
                                -------   -------
    All                         $19,627   $40,242

</TABLE>

<PAGE>

                                 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 BE
SIGNED ON ITS  BEHALF BY THE  UNDERSIGNED,  THEREUNTO  DULY  AUTHORIZED  IN
HAMILTON, BERMUDA, ON THE 28TH DAY OF MARCH, 2002.

                                       STIRLING COOKE BROWN HOLDINGS LIMITED

                                                   /S/ STEPHEN A. CRANE
                                       By
                                                     Stephen A. Crane
                                                  Chief Executive Officer

     PURSUANT TO THE  REQUIREMENTS OF THE SECURITIES  EXCHANGE ACT OF 1934,
THIS REPORT HAS BEEN SIGNED  BELOW AS OF THIS 28TH DAY OF MARCH,  2002,  BY
THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED:


           SIGNATURE                               TITLE
------------------------------       -------------------------------------

       /S/ STEPHEN A. CRANE       President, Chief Executive Officer and
                                  Director (Principal Executive Officer)
-
         Stephen A. Crane

          /S/ LEN QUICK           Chief Operating Officer and Director

             Len Quick

     /S/ PATRICK J. MCDONOUGH     Director

       Patrick J. McDonough

       /S/ DAVID H. ELLIOTT       Director

         David H. Elliott

        /S/ HADLEY C. FORD        Director

          Hadley C. Ford

      /S/ PETER S. CHRISTIE       Director

        Peter S. Christie

      /S/ JEAN DE POURTALES       Director

         Jean de Pourtales