---



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



---



FORM 10-Q



Quarterly Report Under Section 13 or 15 (d)

of the Securities Exchange Act of 1934



For Quarter Ended September 30, 2003



Commission file Number 0-11538



---



Overseas Partners Ltd.

(Exact name of registrant as specified in its charter)



|Islands of Bermuda                                            |  | N/A                                
|------------------------------------------------------------- |  | -----------------------------------
|(State or other jurisdiction ofincorporation or organization) |  | (I.R.S. EmployerIdentification No.)



Cumberland House,
One Victoria Street, Hamilton HM 11, Bermuda

(Address of principal executive offices) (Zip Code)



Registrants telephone number, including area code (441) 295-0788



N/A

Former name, former address and former fiscal year, if changed since last report



---



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, and (2) has been subject to such filing requirements
for the past 90 days.  YES  x  NO ̈



Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).YES  x  NO ̈



Common Stock, par value $.10 per share

(Title of Class)



118,816,666 Shares

Outstanding at
November 10, 2003



---



---

PART I. FINANCIAL INFORMATION

OVERSEAS PARTNERS LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)



|                                                                                                                                    |  | September 30,2003 |           |   | December 31,2002 |  
|----------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | --------- | - | ---------------- | -
|                                                                                                                                    |  | (Unaudited)       |           |   |                  |  
|ASSETS:                                                                                                                             |  |                   |           |   |                  |  
|Investments:                                                                                                                        |  |                   |           |   |                  |  
|Trading, at fair value                                                                                                             |  |                   |           |   |                  |  
|Equity securities (cost: 2003  $450,193, 2002  $450,193)                                                                          |  | $                 | 563,726   |   |                  | $
|Available-for-sale, at fair value                                                                                                  |  |                   |           |   |                  |  
|Debt securities (amortized cost: 2003  $214,770, 2002  $153,096)                                                                  |  |                   | 214,902   |   |                  |  
|Restricted debt securities (amortized cost: 2003  $706,447, 2002  $599,749)                                                       |  |                   | 742,455   |   |                  |  
|Equity securities (cost: 2003  $85,548, 2002  $280,191)                                                                           |  |                   | 105,552   |   |                  |  
|                                                                                                                                    |  |                   |           |   |                  |  
|                                                                                                                                    |  |                   | 1,626,635 |   |                  |  
|                                                                                                                                    |  |                  
|Cash and cash equivalents                                                                                                           |  |                   | 179,638   |   |                  |  
|Restricted cash and cash equivalents                                                                                                |  |                   | 170,057   |   |                  |  
|Reinsurance balances receivable                                                                                                     |  |                   | 71,104    |   |                  |  
|Funds withheld                                                                                                                      |  |                   | 179,960   |   |                  |  
|Losses and loss expenses recoverable                                                                                                |  |                   | 89,517    |   |                  |  
|Deferred acquisition costs                                                                                                          |  |                   | 6,835     |   |                  |  
|Unearned premiums ceded                                                                                                             |  |                   | 5         |   |                  |  
|Real estate and leasing:                                                                                                            |  |                   |           |   |                  |  
|Finance lease                                                                                                                       |  |                   | 40,528    |   |                  |  
|Other assets                                                                                                                        |  |                   |           |   |                  |  
|Investment in and advances to affiliate                                                                                             |  |                   | 7,260     |   |                  |  
|Investment in private equity funds, at cost                                                                                         |  |                   | 21,931    |   |                  |  
|Goodwill                                                                                                                            |  |                   | 3,333     |   |                  |  
|Insurance licenses                                                                                                                  |  |                   |          |   |                  |  
|Other                                                                                                                               |  |                   | 28,613    |   |                  |  
|                                                                                                                                    |  |                   |           |   |                  |  
|Total assets                                                                                                                        |  | $                 | 2,425,416 |   |                  | $
|                                                                                                                                    |  |                   |           |   |                  |  
|LIABILITIES AND MEMBERS EQUITY:                                                                                                    |  |                   |           |   |                  |  
|Liabilities:                                                                                                                        |  |                   |           |   |                  |  
|Accrued losses and loss expenses                                                                                                    |  | $                 | 1,133,288 |   |                  | $
|Unearned premiums                                                                                                                   |  |                   | 37,109    |   |                  |  
|Reinsurance balances payable                                                                                                        |  |                   | 109,406   |   |                  |  
|Accounts payable and other liabilities                                                                                              |  |                   | 52,768    |   |                  |  
|Deferred income taxes                                                                                                               |  |                   | 248       |   |                  |  
|Long-term debt                                                                                                                      |  |                   | 98,598    |   |                  |  
|                                                                                                                                    |  |                   |           |   |                  |  
|Total liabilities                                                                                                                   |  | $                 | 1,431,417 |   |                  | $
|                                                                                                                                    |  |                   |           |   |                  |  
|Commitments and contingencies                                                                                                       |  |                   |          |   |                  |  
|Preference Stock, par value $0.10 per share; authorized 200 million shares; none issued                                             |  |                   |          |   |                  |  
|                                                                                                                                    |  |                  
|Members equity:                                                                                                                    |  |                   |           |   |                  |  
|Common Stock, par value $0.10 per share; authorized 900 million shares; issued 127.5 million shares; outstanding 118,816,666
shares |  |                   | 12,750    |   |                  |  
|Contributed surplus                                                                                                                 |  |                   | 37,650    |   |                  |  
|Retained earnings                                                                                                                   |  |                   | 1,069,120 |   |                  |  
|Treasury stock (2003  8,683,334 shares, 2002  8,644,658 shares), at cost                                                          |  |                   | (158,363  | ) |                  |  
|Deferred compensation                                                                                                               |  |                   | (70       | ) |                  |  
|Accumulated other comprehensive income                                                                                              |  |                   | 32,912    |   |                  |  
|                                                                                                                                    |  |                   |           |   |                  |  
|Total members equity                                                                                                               |  |                   | 993,999   |   |                  |  
|                                                                                                                                    |  |                   |           |   |                  |  
|Total liabilities and members equity                                                                                               |  | $                 | 2,425,416 |   |                  | $
|                                                                                                                                    |  |                   |           |   |                  |  
|Net book value per share                                                                                                            |  | $                 | 8.37      |   |                  | $
|                                                                                                                                    |  |                   |           |   |                  |  



See condensed notes to
unaudited consolidated financial statements.





---

OVERSEAS PARTNERS LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share
amounts)

(Unaudited)



|                                                  |  | Three Months EndedSeptember 30, |         |   | Nine Months EndedSeptember 30, |  
|------------------------------------------------- |  | ------------------------------- | ------- | - | ------------------------------ | -
|                                                  |  | 2003                            |         |   | 2002                           |  
|REVENUES:                                         |  |                                 |         |   |                                |  
|Gross reinsurance premiums written                |  | $                               | (66,493 | ) |                                | $
|Reinsurance premiums ceded                        |  |                                 | (22     | ) |                                |  
|                                                  |  |                                 |         |   |                                |  
|Reinsurance premiums written                      |  |                                 | (66,515 | ) |                                |  
|Change in unearned premiums                       |  |                                 | 99,640  |   |                                |  
|                                                  |  |                                 |         |   |                                |  
|Reinsurance premiums earned                       |  |                                 | 33,125  |   |                                |  
|Commission and fee income                         |  |                                 | (410    | ) |                                |  
|Operating lease with UPS                          |  |                                 |        |   |                                |  
|Finance lease                                     |  |                                 | 821     |   |                                |  
|Hotel                                             |  |                                 |        |   |                                |  
|Office building                                   |  |                                 |        |   |                                |  
|Gain on sales of real estate assets               |  |                                 |        |   |                                |  
|Interest                                          |  |                                 | 8,791   |   |                                |  
|Realized gain (loss) on securities                |  |                                 | 1,351   |   |                                |  
|Unrealized gain (loss) on trading securities      |  |                                 | 6,442   |   |                                |  
|Amortization of fixed income securities           |  |                                 | (1,980  | ) |                                |  
|Dividends                                         |  |                                 | 498     |   |                                |  
|                                                  |  |                                 |         |   |                                |  
|                                                  |  |                                 | 48,638  |   |                                |  
|                                                  |  |                                 |         |   |                                |  
|EXPENSES:                                         |  |                                 |         |   |                                |  
|Reinsurance losses and loss expenses              |  |                                 | 45,888  |   |                                |  
|Reinsurance commissions, taxes and other expenses |  |                                 | 5,717   |   |                                |  
|Depreciation expense                              |  |                                 |        |   |                                |  
|Real estate and leasing operating expenses        |  |                                 | 185     |   |                                |  
|Interest expense                                  |  |                                 | 2,321   |   |                                |  
|Minority interest in earnings                     |  |                                 |        |   |                                |  
|Investment expenses                               |  |                                 | 1,051   |   |                                |  
|Impairment of intangible assets                   |  |                                 |        |   |                                |  
|Other operating expenses                          |  |                                 | 12,312  |   |                                |  
|                                                  |  |                                 |         |   |                                |  
|                                                  |  |                                 | 67,474  |   |                                |  
|                                                  |  |                                 |         |   |                                |  
|(Loss) income before income taxes                 |  |                                 | (18,836 | ) |                                |  
|Income taxes                                      |  |                                 | 3,520   |   |                                |  
|                                                  |  |                                 |         |   |                                |  
|Net (loss) income                                 |  | $                               | (15,316 | ) |                                | $
|                                                  |  |                                 |         |   |                                |  
|Basic and diluted net (loss) income per share     |  | $                               | (0.13   | ) |                                | $
|                                                  |  |                                 |         |   |                                |  
|Weighted average number of shares outstanding     |  |                                 | 118,818 |   |                                |  
|                                                  |  |                                 |         |   |                                |  



See condensed notes to
unaudited consolidated financial statements.





---

OVERSEAS PARTNERS LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands,
except per share amounts)

(Unaudited)



|                                                                            |  | Three Months EndedSeptember 30, |         |   | Nine Months EndedSeptember 30, |  
|--------------------------------------------------------------------------- |  | ------------------------------- | ------- | - | ------------------------------ | -
|                                                                            |  | 2003                            |         |   | 2002                           |  
|Net (loss) income                                                           |  | $                               | (15,316 | ) |                                | $
|                                                                            |  |                                 |         |  
|Other comprehensive income:                                                 |  |                                 |         |   |                                |  
|Net unrealized holding gains (losses) on available-for-sale securities      |  |                                 | 1,600   |   |                                |  
|Less: reclassification adjustment for (gains) losses included in net income |  |                                 | (1,351  | ) |                                |  
|                                                                            |  |                                 |         |   |                                |  
|Other comprehensive income before income tax                                |  |                                 | 249     |   |                                |  
|                                                                            |  |                                 |         |  
|Income tax (payable) receivable related to other comprehensive income items |  |                                 | (39     | ) |                                |  
|                                                                            |  |                                 |         |   |                                |  
|Other comprehensive income                                                  |  |                                 | 210     |   |                                |  
|                                                                            |  |                                 |         |   |                                |  
|Comprehensive (loss) income                                                 |  | $                               | (15,106 | ) |                                | $
|                                                                            |  |                                 |         |   |                                |  



See condensed notes to
unaudited consolidated financial statements.





---

OVERSEAS PARTNERS LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF MEMBERS EQUITY

Nine Months Ended
September 30, 2003 and 2002

(In thousands)

(Unaudited)



|                                                                 |  | PreferenceStock |   | Common Stock |         | Treasury Stock |   |        | DeferredCompensation |        |   | ContributedSurplus |   | RetainedEarnings |   |  | AccumulatedOtherComprehensive(Loss) Income |        |   | TotalMembersEquity |  
|---------------------------------------------------------------- |  | --------------- | - | ------------ | ------- | -------------- | - | ------ | -------------------- | ------ | - | ------------------ | - | ---------------- | - |  | ------------------------------------------ | ------ | - | ------------------- | -
|                                                                 |  | Shares          |   | Amount       |         | Shares         |   |        | Amount               |        |   |                    |   |                  |  
|Balance, January 1, 2002                                         |  | $               |  |              | 127,500 |                | $ | 12,750 |                      | (8,406 | ) |                    | $ | (155,406         | ) |  | $                                          | (3,115 | ) |                     | $
|Net loss                                                         |  |                 |  |              |        |                |   |       |                      |       |   |                    |   |                 |   |  |                                            |       |   |                     |  
|Restricted shares forfeited                                      |  |                 |  |              |        |                |   |       |                      | (1     | ) |                    |   | (19              | ) |  |                                            | 19     |   |                     |  
|Purchase of shares                                               |  |                 |  |              |        |                |   |       |                      | (238   | ) |                    |   | (2,622           | ) |  |                                            |       |   |                     |  
|Amortization of restricted common stock compensation             |  |                 |  |              |        |                |   |       |                      |       |   |                    |   |                 |   |  |                                            | 2,540  |   |                     |  
|Net unrealized gain on available-for-sale securities, net of tax |  |                 |  |              |        |                |   |       |                      |       |   |                    |   |                 |   |  |                                            |       |   |                     |  
|                                                                 |  |                 |   |              |         |                |   |        |                      |        |   |                    |   |                  |   |  |                                            |        |   |                     |  
|Balance, September 30, 2002                                      |  | $               |  |              | 127,500 |                | $ | 12,750 |                      | (8,645 | ) |                    | $ | (158,047         | ) |  | $                                          | (556   | ) |                     | $
|                                                                 |  |                 |   |              |         |                |   |        |                      |        |   |                    |   |                  |   |  |                                            |        |   |                     |  
|Balance, January 1, 2003                                         |  | $               |  |              | 127,500 |                | $ | 12,750 |                      | (8,645 | ) |                    | $ | (158,047         | ) |  | $                                          | (310   | ) |                     | $
|Net income                                                       |  |                 |  |              |        |                |   |       |                      |       |   |                    |   |                 |   |  |                                            |       |   |                     |  
|Purchase of shares                                               |  |                 |  |              |        |                |   |       |                      | (38    | ) |                    |   | (316             | ) |  |                                            |       |   |                     |  
|Liquidating distribution paid ($2.00 per share)                  |  |                 |  |              |        |                |   |       |                      |       |   |                    |   |                 |   |  |                                            |       |   |                     |  
|Amortization of restricted common stock compensation             |  |                 |  |              |        |                |   |       |                      |       |   |                    |   |                 |   |  |                                            | 240    |   |                     |  
|Net unrealized gain on available-for-sale securities, net of tax |  |                 |  |              |        |                |   |       |                      |       |   |                    |   |                 |   |  |                                            |       |   |                     |  
|                                                                 |  |                 |   |              |         |                |   |        |                      |        |   |                    |   |                  |   |  |                                            |        |   |                     |  
|Balance, September 30, 2003                                      |  | $               |  |              | 127,500 |                | $ | 12,750 |                      | (8,683 | ) |                    | $ | (158,363         | ) |  | $                                          | (70    | ) |                     | $
|                                                                 |  |                 |   |              |         |                |   |        |                      |        |   |                    |   |                  |   |  |                                            |        |   |                     |  



See condensed notes to
unaudited consolidated financial statements.





---

OVERSEAS PARTNERS LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S.$ in thousands)

(Unaudited)



|                                                                                  |  | Nine Months EndedSeptember 30, |         
|--------------------------------------------------------------------------------- |  | ------------------------------ | --------
|                                                                                  |  | 2003                           |         
|CASH FLOW FROM OPERATING ACTIVITIES:                                              |  |                                |         
|Net income (loss)                                                                 |  | $                              | 17,356  
|Adjustments to reconcile net income to net cash expended by operating activities: |  |                                |         
|Deferred income taxes                                                             |  |                                | 1,466   
|Depreciation expense                                                              |  |                                |        
|Minority interest in earnings                                                     |  |                                |        
|Realized (gain) loss on securities                                                |  |                                | (19,734 
|Unrealized (gain) loss on trading securities                                      |  |                                | (38,980 
|Amortization of fixed income securities                                           |  |                                | 3,539   
|Amortization of restricted common stock compensation                              |  |                                | 240     
|Gain on sales of real estate assets                                               |  |                                |        
|Premium on debt repurchase                                                        |  |                                |        
|Other                                                                             |  |                                | 711     
|Changes in assets and liabilities:                                                |  |                                |         
|Reinsurance balances receivable                                                   |  |                                | 289,645 
|Losses and loss expenses recoverable                                              |  |                                | 25,103  
|Funds withheld                                                                    |  |                                | 90,558  
|Deferred acquisition costs                                                        |  |                                | 13,846  
|Unearned premiums ceded                                                           |  |                                | 2,060   
|Other assets                                                                      |  |                                | 10,781  
|Accrued losses and loss expenses                                                  |  |                                | (377,282
|Unearned premiums                                                                 |  |                                | (145,742
|Reinsurance balances payable                                                      |  |                                | (188,980
|Accounts payable and other liabilities                                            |  |                                | 14,840  
|Proceeds from sale of trading investments                                         |  |                                |        
|Purchase of trading investments                                                   |  |                                |        
|                                                                                  |  |                                |         
|Net cash flow expended by operating activities                                    |  |                                | (300,573
|                                                                                  |  |                                |         
|CASH FLOW FROM INVESTING ACTIVITIES:                                              |  |                                |         
|Proceeds from sales and maturities of available-for-sale investments              |  |                                | 829,042 
|Purchase of available-for-sale investments                                        |  |                                | (786,569
|Proceeds from maturities of held-to-maturity investments                          |  |                                |        
|Purchase of held-to-maturity investments                                          |  |                                |        
|Net movement in restricted cash and cash equivalents                              |  |                                | 185,331 
|Net cash outflow from sale of Overseas Partners Cat Ltd.                          |  |                                |        
|Net proceeds from sales of real estate assets                                     |  |                                |        
|Additions to real estate and leasing assets                                       |  |                                |        
|                                                                                  |  |                                |         
|Net cash flow generated by investing activities                                   |  |                                | 227,804 
|                                                                                  |  |                                |         
|CASH FLOW FROM FINANCING ACTIVITIES:                                              |  |                                |         
|Purchases of treasury stock                                                       |  |                                | (316    
|Repayment and repurchase of debt                                                  |  |                                | (1,724  
|Liquidating distribution                                                          |  |                                | (237,711
|Distributions to minority interest                                                |  |                                |        
|                                                                                  |  |                                |         
|Net cash flow expended by financing activities                                    |  |                                | (239,751
|                                                                                  |  |                                |         
|Net decrease in cash and cash equivalents                                         |  |                                | (312,520
|Cash and cash equivalents:                                                        |  |                                |         
|Beginning of period                                                               |  |                                | 492,158 
|                                                                                  |  |                                |         
|End of period                                                                     |  | $                              | 179,638 
|                                                                                  |  |                                |         
|Supplemental disclosures of cash flow information:                                |  |                                |         
|Cash paid during the period:                                                      |  |                                |         
|U.S. income taxes                                                                 |  | $                              | 3,479   
|Interest                                                                          |  | $                              | 5,144   
|Assignment of debt in partial consideration for sale of office building           |  | $                              |        
|                                                                                  |  |                                |         



See condensed notes to
unaudited consolidated financial statements.





---

OVERSEAS PARTNERS LTD. AND SUBSIDIARIES

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30,
2003

(Unaudited)



|1. | GENERAL
|-- | -------



The accompanying unaudited interim condensed consolidated financial statements include the accounts of Overseas Partners Ltd. and its subsidiaries (collectively OPL or the Company). OPL is engaged in the property,
casualty and finite risk reinsurance business and in the real estate and leasing business. On February 13, 2002 the Board of Directors of OPL announced its decision to restructure OPL and cause its operations to begin an orderly runoff. OPL and its
reinsurance subsidiaries have discontinued writing new business. OPL has continued to dispose of its real estate assets such that as of September 30, 2003 OPL has only one remaining leased asset.



The decision to put the reinsurance operations into runoff has significantly changed the
ongoing results of OPLs operations and the associated cash flows and will continue to do so. There has been no new business written; therefore the cash received from premiums has significantly decreased. The Company has become cash flow
negative in its reinsurance operations and expects this to continue in the future. Nevertheless, OPL management believes that the Companys current cash holdings and future sales and maturities of investments are adequate sources of liquidity
for the future payment of claims and operating expenses.



The results of
operations for the three and nine-month periods ended September 30, 2003 and 2002 are not necessarily indicative of the results to be expected for the full year.



|2. | SIGNIFICANT ACCOUNTING POLICIES
|-- | -------------------------------



The interim financial statements have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and footnotes
required by generally accepted accounting principles for complete financial statements are not included herein. The interim financial statements should be read in conjunction with the Overseas Partners Ltd. Annual Report on Form 10-K for the fiscal
year ended December 31, 2002.



Interim financial statements are subject to
possible adjustments in connection with the annual audit of the Companys financial statements for the full year; in the Companys opinion, all adjustments necessary for a fair presentation of these interim statements have been included
and are of a normal and recurring nature.



Except as described above, the
financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. All activity is recorded in U.S. dollars. Inter-company balances and transactions have been eliminated in
consolidation.



Investments classified as available-for-sale are reviewed
periodically to determine if they have sustained an impairment in value that is considered to be other than temporary. The identification of potentially impaired investments and the assessment of whether any decline in value is other than temporary
involves significant management judgment. If investments are determined to be impaired, the cost basis of the investment is written down to fair value at the balance sheet date and a corresponding realized loss is charged to the income statement in
the period in which it is determined.



In January 2003, the Financial
Accounting Standards Board (FASB) issued Interpretation 46, Consolidation of Variable Interest Entities (FIN 46). FIN 46 requires the primary beneficiary of a variable interest entity (VIE) to include
the assets, liabilities and results of the activities of the VIE in its consolidated financial statements, as well as disclosure of information about the assets and liabilities, and the nature, purpose and activities of consolidated VIEs. In
addition, FIN 46 requires disclosure of information about the nature, purpose and activities on unconsolidated VIEs in which the Company holds a significant variable interest. For the purposes of FIN 46 OPL is a nonpublic entity and therefore FIN 46
is effective immediately for any interests in VIEs acquired after January 31, 2003 and effective at the end of 2004 for all VIEs acquired before February 1, 2003. The Company did not acquire any VIEs subsequent to January 31, 2003 and is still
evaluating the impact of FIN 46 on its financial statements related to VIEs acquired prior to February 1, 2003.



During the second quarter of 2003, the Company elected to adopt the fair value based employee stock-based compensation expense recognition provisions of Statement of
Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation (SFAS 123) prospectively. The Company previously applied the intrinsic value based expense recognition provisions set forth in APB Opinion No. 25, Accounting
for Stock Issued to Employees. SFAS 123 states that the adoption of the fair value based method is a change to a preferable method of accounting. The adoption of the fair value based method had no effect on net income for the three and nine-month
periods ended September 30, 2003 as no stock-based compensation awards were made in 2003. The adoption of SFAS 123 in the current year is applied only to awards granted subsequent to January 1, 2003. As a result of OPLs decision to runoff its
operations, it is unlikely that any further stock-based compensation awards will be made.





---

OVERSEAS PARTNERS LTD. AND SUBSIDIARIES

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2003

(Unaudited)



|3. | TAXES
|-- | -----



OPL and certain of its subsidiaries are incorporated under the laws of the Islands of Bermuda. OPL believes that neither it nor its Bermuda subsidiaries carry on business through a permanent establishment in the
United States. Therefore, it does not expect itself or its Bermuda subsidiaries to be subject to United States income taxes. Under current Bermuda law, OPL and its Bermuda subsidiaries are not obligated to pay any tax in Bermuda based upon income or
capital gains.



As previously reported, the United States Internal Revenue
Service (IRS) challenged OPLs position regarding United States federal income taxes and asserted that OPL was liable to pay such taxes for various years. The IRS based its challenges on the assertion that OPL was engaged in a U.S.
business with respect to two lines of business: (1) the reinsurance of certain shippers risk coverage for United Parcel Service of America, Inc. (UPS) customers and (2) the reinsurance of certain workers compensation coverage
for UPS. Those issues were before the United States Tax Court for the 1988 through 1990 tax years, before the IRS Appellate Division for the 1991 through 1994 tax years and under IRS examination for years after 1994.



In the first quarter of 2003, OPL and the IRS reached a settlement with respect to the
shippers risk program for all years from 1988 through 1999 (when that program was terminated). More specifically, OPL and the IRS agreed that there is no adjustment to OPLs income deriving from or relating to premiums earned in
connection with the shippers risk program. Separately, in the third quarter of 2003, there was a favorable resolution of the workers compensation reinsurance issue for all years from 1988 through 1999, as reflected in a stipulated
decision filed in the United States Tax Court and IRS action to close out the appeals and examination cases, all without adjustment.



Certain of OPLs subsidiaries are incorporated in the United States, including Overseas Partners Capital Corp. (OPCC) and Overseas Partners US Reinsurance Company
(OPUS Re). These subsidiaries are subject to United States income and other taxes.





---

OVERSEAS PARTNERS LTD. AND SUBSIDIARIES

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2003

(Unaudited)



|4. | BUSINESS SEGMENTS
|-- | -----------------



The Companys operations are presently conducted through two segmentsreinsurance and real estate and leasing. The reinsurance segment is managed from the
Bermuda and Philadelphia offices (through United States subsidiaries) and includes the runoff of accident & health, agricultural, aviation, casualty, professional liability, property, workers compensation and finite risk business. Real
estate and leasing activities are owned and managed through United States subsidiaries of OPCC, a wholly-owned subsidiary of OPL. There were no inter-segment revenues earned for the three-month periods ended September 30, 2003 and 2002.
Inter-segment expenses, such as corporate overhead, were allocated based on estimated utilization for the three and nine-month periods ended September 30, 2003 and 2002.



The accounting policies of the segments are the same as those described in the summary of significant accounting policies disclosed in the
Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2002. Income before income taxes by segment consists of revenues less expenses related to the respective segments operations. The reinsurance segment maintains a
portfolio of cash and liquid investments to support its reserves for accrued losses and loss expenses and unearned premiums as well as its capital requirements. At September 30, 2003 the portfolio included $798.1 million (at December 31, 2002,
$875.5 million) of cash and investments that are restricted and are used to collateralize obligations to our cedants. Investments relating to real estate and leasing of $114.4 million are restricted and used to collateralize long-term debt
originally issued in connection with the purchase of assets held for leasing. Summary financial information about the Companys segments is presented in the following tables:



|                               |  | Three months endedSeptember 30, |         |   | Nine months endedSeptember 30, |  
|------------------------------ |  | ------------------------------- | ------- | - | ------------------------------ | -
|(In thousands)                 |  | 2003                            |         |   | 2002                           |  
|REVENUES                       |  |                                 |         |   |                                |  
|Reinsurance:                   |  |                                 |         |   |                                |  
|Premiums earned                |  | $                               | 33,125  |   |                                | $
|Commission and fee income      |  |                                 | (410    | ) |                                |  
|Investment income (loss)       |  |                                 | 13,494  |   |                                |  
|                               |  |                                 |         |   |                                |  
|                               |  |                                 | 46,209  |   |                                |  
|                               |  |                                 |         |   |                                |  
|Real estate and leasing:       |  |                                 |         |   |                                |  
|Rentals                        |  |                                 | 821     |   |                                |  
|Gain on sale of assets         |  |                                 |        |   |                                |  
|Investment income              |  |                                 | 1,608   |   |                                |  
|                               |  |                                 |         |   |                                |  
|                               |  |                                 | 2,429   |   |                                |  
|                               |  |                                 |         |   |                                |  
|Consolidated                   |  |                                 | 48,638  |   |                                |  
|                               |  |                                 |         |   |                                |  
|NET (LOSS) INCOME BEFORE TAXES |  |                                 |         |   |                                |  
|Reinsurance                    |  |                                 | (6,447  | ) |                                |  
|Real estate and leasing        |  |                                 | (77     | ) |                                |  
|Other operating expenses       |  |                                 | (12,312 | ) |                                |  
|                               |  |                                 |         |   |                                |  
|Consolidated                   |  | $                               | (18,836 | ) |                                | $
|                               |  |                                 |         |   |                                |  



|(In thousands)          |  | September 30,2003 |           | December 31,2002
|----------------------- |  | ----------------- | --------- | ----------------
|ASSETS                  |  |                   |           |                 
|Reinsurance             |  |                   |           |                 
|Cash and investments    |  | $                 | 1,855,685 |                 
|Other                   |  |                   | 401,335   |                 
|                        |  |                   |           |                 
|                        |  |                   | 2,257,020 |                 
|                        |  |                   |           |                 
|Real estate and leasing |  |                   |           |                 
|Cash and investments    |  |                   | 120,645   |                 
|Other                   |  |                   | 47,751    |                 
|                        |  |                   |           |                 
|                        |  |                   | 168,396   |                 
|                        |  |                   |           |                 
|Consolidated            |  | $                 | 2,425,416 |                 
|                        |  |                   |           |                 





---

OVERSEAS PARTNERS LTD. AND SUBSIDIARIES

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2003

(Unaudited)



|4. | BUSINESS SEGMENTS (continued)
|-- | -----------------------------



Substantially all of the Companys long-lived assets, interest expense and income tax expense relate to the
Companys real estate and leasing operations. During the nine months ended September 30, 2003, the Company recorded an asset impairment provision of $5.8 million against the capitalized cost of insurance licenses owned by OPUS Re following an
interim review in accordance with Statement of Financial Accounting Standards No. 142. Goodwill of $3.3 million relating to the Companys 22% ownership of a Florida based workers compensation insurance company is the only remaining
intangible asset.



For the three- and nine-month periods ended September 30,
2003 and 2002 reinsurance revenues were derived primarily from sources located in the United States. All of the Companys leasing and real estate revenues are generated in the United States. For the three- and nine-month periods ended September
30, 2003 and 2002, all of the Companys long-lived assets were located in the United States.



|5. | STATUTORY FINANCIAL INFORMATION
|-- | -------------------------------



OPLs ability to repurchase shares, pay dividends, or make other distributions to shareowners is subject to certain regulatory restrictions including the following:



| | 1. | In Bermuda, the Bermuda Insurance Act of 1978, amendments thereto and related Regulations (the Act) requires each of OPL and its Bermuda based reinsurance subsidiaries
to maintain a minimum solvency margin determined as the greater of 15% of accrued losses and loss expenses (net of reinsurance recoverables) or a given fraction of net premiums written. OPL, Overseas Partners Re Ltd. (OPRe) and Overseas Partners
Assurance Ltd. (OPAL) were all in compliance with these requirements for the nine months ended September 30, 2003 and 2002.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | The Act also requires each of OPL and its Bermuda based reinsurance subsidiaries to maintain a minimum liquidity ratio whereby the value of their relevant assets (consisting mainly
of cash, investments, receivables and other liquid assets) is not less than 75% of the amount of their relevant liabilities (consisting mainly of accrued losses and loss expenses, unearned premiums, reinsurance balances payable and other accounts
payable). Investments in and advances to subsidiaries are not included in the definition of relevant assets for purposes of this test. OPL, OPRe and OPAL met these requirements for the nine months ended September 30, 2003.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. | Dividend payments by OPLs United States based reinsurance subsidiary OPUS Re are limited by statutory regulations. The dividend restrictions are generally based on net
investment income, statutory net income and on certain levels of policyholders surplus as determined under statutory accounting practices. The maximum amount of dividends out of unassigned surplus that may be paid by OPUS Re without prior
approval of the Delaware Insurance Commissioner is limited to the greater of (i) 10% of OPUS Res surplus as regards policyholders as shown in the preceding years annual statement or (ii) net income, excluding realized capital gains, as
shown in the preceding years annual statement. As such, the maximum allowable dividend payable by OPUS Re in 2003 is $nil unless regulatory authority approval is obtained.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4. | OPUS Re is also subject to certain Risk-Based Capital (RBC) requirements as specified by the National Association of Insurance Commissioners. Under those requirements,
the amount of capital and surplus maintained by an insurance company is to be determined based on the various risk factors related to it. If a companys RBC is below a specified level, the company may be required to implement corrective action,
and if RBC is less than other, lower levels, the Company is subject to regulatory action, including voluntary or mandatory control by the insurance regulator of its state of domicile. At September 30, 2003 and December 31, 2002, OPUS Res RBC
exceeded the level at which any corrective action would be required.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





---

OVERSEAS PARTNERS LTD. AND SUBSIDIARIES

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2003

(Unaudited)



|5. | STATUTORY FINANCIAL INFORMATION (continued)
|-- | -------------------------------------------



| | 5. | As a holding company, a significant proportion of OPLs assets relate to its investments in subsidiaries. As such, OPLs ability to make future distributions is heavily
dependent upon it receiving distributions from its subsidiaries. The Act prohibits OPL, OPRe and OPAL from distributing more than 15% of the prior years statutory capital unless specific approval is obtained from the Bermuda Monetary
Authority. In addition to the requirements of the Act, the Bermuda Monetary Authority has requested that all distributions from OPL, OPRe and OPAL be pre-approved by the Bermuda Monetary Authority. In addition to the regulatory restrictions, each
subsidiary needs to consider, inter alia, the potential for future adverse development in the settlement of reinsurance liabilities prior to making such distributions. On March 26, 2003 OPL received approval from the Bermuda Monetary Authority to
permit the payment of a distribution to shareowners of $2 per share. This $237.7 million distribution was paid to shareowners on April 9, 2003.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|6. | CONTINGENCIES
|-- | -------------



On November 19, 1999 and January 27, 2000 OPL was named as a defendant in two class action lawsuits, filed on behalf of customers of UPS, in Montgomery County, Ohio Court and Butler County, Ohio Court, respectively.
The lawsuits allege, among other things, that UPS told its customers that they were purchasing insurance for coverage of loss or damage to goods shipped by UPS. The lawsuits further allege that UPS wrongfully enriched itself with the monies paid by
its customers to purchase such insurance. The November 19, 1999 and January 27, 2000 actions were removed to federal court and thereafter transferred to the United States District Court for the Southern District of New York (the Court)
and consolidated in a multi-district litigation for pretrial discovery purposes with other actions asserting claims against UPS. Plaintiffs subsequently amended those claims against all defendants to join a Racketeer Influenced and Corrupt
Organizations (RICO) claim as well. On August 7, 2000, the Company and its wholly owned subsidiary, OPCC, were added as defendants in a third class action lawsuit, also consolidated in the multi-district litigation, which alleges
violations of United States antitrust laws and state unfair trade practice and consumer protection laws. The allegations in the lawsuits are drawn from an opinion by the United States Tax Court that found that the insurance program, as offered
through UPS by domestic insurance companies, and ultimately reinsured by OPL, should not be recognized for federal income tax purposes. In June 2001, the Tax Court opinion was reversed by the United States Court of Appeals for the Eleventh Circuit.



The Company filed or joined in motions to dismiss all of the consolidated
actions on a number of grounds, including that the antitrust claim fails to state a claim upon which relief can be granted, and that the remaining claims are preempted by federal law. In orders dated July 30, 2002, the Court granted in part and
denied in part the motions to dismiss. Pursuant to the Courts orders, the claims remaining against the Company are RICO, antitrust, and common law interference with contract claims. On November 8, 2002, the parties presented to the Court a
stipulation and proposed order certifying a nationwide class with respect to certain of the claims brought by the plaintiffs, including the RICO and interference with contract claims against the Company. The Court approved the stipulation and
proposed order. The stipulation does not certify the antitrust claims brought against the Company. Discovery has commenced.



During October 2003 the parties reached a tentative settlement with respect to all claims brought by the various plaintiffs. The agreement is in the process of being
documented and will be subject to Court approval. Assuming that the parties are able to agree on the documentation of the settlement, and that it is subsequently approved by the Court, the Company expects that it would incur additional costs of $10
million in connection with the settlement, and this amount has been accrued in the financial statements for the period ended September 30, 2003. However, there can be no assurance that the agreement will be finalized or that the Court will approve
the agreement.



The Company believes that it has meritorious defenses to all
claims asserted against it and in the event that the settlement is not finalized and approved by the Court the Company intends to defend all claims vigorously. There can be no assurance, however, that an adverse determination of the lawsuits would
not have a material effect on the Company.





---

OVERSEAS PARTNERS LTD. AND SUBSIDIARIES

ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

(Transacted in U.S. Dollars)



The following is a discussion and analysis of our results of operations, financial condition, liquidity, and capital resources as of and for
the three and nine-months ended September 30, 2003 and 2002. Our results of operations and cash flows for any interim period are not necessarily indicative of our results for the full year. This discussion and analysis should be read in conjunction
with the accompanying unaudited condensed consolidated financial statements and notes thereto and the Managements Discussion and Analysis of Financial Condition and Results of Operations and the audited consolidated financial
statements of the Company for the year ended December 31, 2002 and notes thereto included in the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2002.



RESULTS OF OPERATIONS



Three Months Ended September 30, 2003 and 2002



Reinsurance:



|                                             |  | Three months endedSeptember 30, |        
|-------------------------------------------- |  | ------------------------------- | -------
|(In thousands)                               |  | 2003                            |        
|Gross premiums written                       |  | $                               | (66,493
|Premiums ceded                               |  |                                 | (22    
|                                             |  |                                 |        
|Net premiums written                         |  |                                 | (66,515
|Change in unearned premiums                  |  |                                 | 99,640 
|                                             |  |                                 |        
|Premiums earned                              |  |                                 | 33,125 
|Commission and fee income                    |  |                                 | (410   
|                                             |  |                                 |        
|                                             |  |                                 | 32,715 
|                                             |  |                                 |        
|Losses and loss expenses                     |  |                                 | (45,888
|Commissions, taxes and underwriting expenses |  |                                 | (5,717 
|                                             |  |                                 |        
|                                             |  |                                 | (51,605
|                                             |  |                                 |        
|Underwriting loss                            |  |                                 | (18,890
|                                             |  |                                 |        
|Investment income (loss), net of expenses    |  |                                 | 12,443 
|                                             |  |                                 |        
|Reinsurance loss                             |  | $                               | (6,447 
|                                             |  |                                 |        



Underwriting



On February 13, 2002 the Board of Directors of OPL announced its decision to restructure OPL
and cause its Bermuda based reinsurance operations to begin an orderly runoff. During the second quarter of 2002 we made the decision to place our United States subsidiary, OPUS Re, into runoff and to cease writing any further reinsurance business
in that subsidiary. These decisions mean that OPL will not write any new reinsurance business. Premiums will continue to be earned on business written prior to the runoff decisions including some treaties written on a multi-year basis.



Prior to the runoff decision the Company focused on a small number of specialized products
including finite risk, accident & health and property catastrophe in Bermuda and working layer casualty in the United States through OPUS Re.



Following the decision to place the Company into runoff, we have completed the early commutation (i.e. negotiated settlement and cancellation) and novation (i.e. transfer
of our rights and obligations to another reinsurer) of several reinsurance programs, which had significant exposure to future loss and / or cash flow needs. Loss reserve settlements that are structured as commutations are recorded as an increase or
decrease in incurred claims whereas the commutation of unexpired risks and novations are recorded as a return of the original premium income and attendant claims and expenses.



During the three months ended September 30, 2003 there was negative gross written premium of $66.5 million. This was primarily due to the
cancellation of one of the Companys finite reinsurance agreements where $74.5 million of written and unearned premiums were returned, partially offset by increased premium estimates on other contracts. Premiums written for the three months
ended September 30, 2002 of negative $175.3 million reflected the effect of commutations and novations including the novation to other reinsurers of two finite risk contracts that had original gross written premium estimates of $144.3 million.





---

Reinsurance: (continued)



Premiums earned for the three months ended September 30, 2003 decreased to $33.1 million compared to $67.7 million
for the three months ended September 30, 2002. This decrease was due to the runoff of our reinsurance operations. Premiums earned will continue to decrease in future periods.



Commission and fee income decreased to negative $0.4 million for the three months ended September 30, 2003 compared with $2.7 million for
the corresponding period in 2002. This decrease is due to a decrease in fees earned on our finite risk contracts that were not accounted for as reinsurance as they do not satisfy the risk transfer criteria of Statement of Financial Accounting
Standards No. 113. These fees decreased due to the effects of commutations and novations following the decision to put our reinsurance operations into runoff. It is expected that commission and fee income will be negligible in future periods.



Commissions, taxes and underwriting expenses for the three months ended
September 30, 2003 decreased by $9.6 million to $5.7 million from $15.4 million for the three months ended September 30, 2002. This decrease was partially due to the reduction in premiums earned in the three months ended September 30, 2003 and also
due to a decrease in the estimate of commissions for one of our workers compensation programs.



For the three months ended September 30, 2003, we experienced a net underwriting loss of $18.9 million, which is primarily due to:



| |  | An increase in estimated ultimate losses of approximately $15 million on two workers compensation programs. The change in estimates follows an independent actuarial evaluation
completed in the third quarter of 2003 and reflects adverse trending of medical expenses associated with workers compensation claims in California;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Loss adjustment expenses, comprising largely legal fees and internal costs of runoff.
| | - | -------------------------------------------------------------------------------------



For the three months ended September 30, 2002, we experienced a net underwriting loss of $55.3 million. This underwriting loss was primarily
due to:



| |  | Incurred losses of $29.9 million as a result of credit default events on a multi-year financial lines program;
| | - | --------------------------------------------------------------------------------------------------------------



| |  | Incurred losses of $10.8 million reflecting the cost of commutations of three of our satellite programs;
| | - | --------------------------------------------------------------------------------------------------------



| |  | Internal runoff costs of $5.5 million;
| | - | --------------------------------------



| |  | OPUS Re casualty business, and other long tail programs, where losses and expenses are projected to exceed premiums written, but we expect to generate profits through future
investment income.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The Company provided retrocessional
reinsurance to a reinsurer that has commenced an arbitration to rescind its own reinsurance contract with the primary carrier, principally on the grounds that the primary carrier did not fully disclose the risks to be covered by the reinsurance
contract. That contract is expected to be unprofitable. Thus, if the reinsurer succeeds in the arbitration it will be relieved of any obligation to pay losses under its contract and therefore would not cede to the Company any share of those losses.
The arbitration is at an early stage and is not scheduled for completion until December 2004 at the earliest. As such, it is too early to determine whether the arbitration decision is likely to be in the reinsurers favor and therefore benefit
OPL as its retrocessionaire. The Company continues to reserve for losses and loss expenses without regard to any possibility that the reinsurers contract will be rescinded. However, such reserves are necessarily estimates and may vary
significantly as claims are settled.



The Company is engaged in several other
ongoing disputes, including arbitration and litigation that have arisen in the ordinary course of business. The Company continues to reserve for losses and loss expenses based on the terms of contractual arrangements currently in force.





---

Reinsurance Investment Income (Loss)



|                   |  | Three months endedSeptember 30, 2003 |        |   | Three months endedSeptember 30, 2002 |  
|------------------ |  | ------------------------------------ | ------ | - | ------------------------------------ | -
|(In thousands)     |  | Income(Loss)                         |        |   | OtherComprehensiveIncome (Loss)      |  
|Equities           |  |                                      |        |   |                                      |  
|Available-for-sale |  | $                                    | 336    |   |                                      | $
|Trading            |  |                                      | 7,607  |   |                                      |  
|Fixed income       |  |                                      | 6,585  |   |                                      |  
|Other              |  |                                      | (1,034 | ) |                                      |  
|Expenses           |  |                                      | (1,051 | ) |                                      |  
|                   |  |                                      |        |   |                                      |  
|                   |  | $                                    | 12,443 |   |                                      | $
|                   |  |                                      |        |   |                                      |  



As discussed below in the Liquidity
and Capital Resources section, the asset allocation of our reinsurance investment portfolio changed significantly since the decision to put the reinsurance operations into runoff in February 2002. The revised asset allocation reflects our lower risk
tolerance and provides more short-term liquidity to cover loss payments, commutations, novations and potential shareowner distributions. However, there may still be periods in which the Company records an investment loss as a result of the continued
volatility in worldwide equity and bond markets.



The Companys
reinsurance investments are classified as either trading or available-for-sale. The trading portfolio is recorded at fair value with unrealized gains and losses recorded in net income. The available-for-sale portfolio is recorded at fair value with
unrealized gains and losses recorded in members equity as other comprehensive income.



Our reinsurance portfolio generated income of $12.7 million for the three months ended September 30, 2003. This consisted of net income of $12.4 million recorded in income and a change in net unrealized gains of $0.2
million that was recorded in other comprehensive income. For the three months ended September 30, 2002 our reinsurance portfolio generated a total negative return of $56.4 million consisting of net loss of $171.6 million and a change in net
unrealized gains of $115.2 million that was recorded in other comprehensive income.



For the three months ended September 30, 2003 our available-for-sale equity portfolio generated a gain of 2.2%, or $2.5 million, consisting of income of $0.3 million and a change in net unrealized gains of $2.2 million that was recorded in
other comprehensive income. During the three months ended September 30, 2002, our available-for-sale equity portfolio generated a loss of $79.9 million, consisting of a loss of $185.2 million and a change in net unrealized gains of $105.3 million
that were recorded in other comprehensive income. These results included the effects of the write down in the cost basis of equity investments in certain stocks in our S&P 500 portfolio where the decline in value was considered other than
temporary. In accordance with Statement of Financial Accounting Standards No. 115, Accounting for Certain Investments in Debt and Equity Securities, such a write-down is recognized as a realized loss in the income statement, even though
there were no sales of the securities. For the three months ended September 30, 2003 and the three months ended September 30, 2002 the amount of the write-down was $0.1 million and $177.5 million, respectively. Apart from our investment in a
Bermuda-based life reinsurer, our available-for-sale equity portfolio tracks the S&P 500 index. During the three months ended September 30, 2003, our S&P 500 equity portfolio generated a gain of 2.5% or $2.7 million, consisting of income of
$0.3 million and a change in net unrealized gains of $2.3 million that was recorded in other comprehensive income.



Our trading equities are investments in multi-manager funds, which follow primarily a combination of fixed income strategies, and generated a gain of 1.2%, or $7.6
million for the three months ended September 30, 2003 compared to a loss of $0.9 million for the three months ended September 30, 2002. The gains were primarily due to increases in the value of the strategic income funds high-yield bond
portfolio and convertible bond portfolio. We record unrealized gains and losses on our multi-manager funds in income.



For the three months ended September 30, 2003 our fixed income portfolios generated a gain of 1.0%, or $4.6 million, consisting of $6.6 million that was recorded in
income and net unrealized losses of $2.0 million recorded in other comprehensive income. For the three months ended September 30, 2002 our fixed income portfolios generated a gain of 2.6%, or $21.4 million, consisting of $11.7 million that was
recorded in income and net unrealized gains of $9.7 million recorded in other comprehensive income.



Cash and cash equivalents earn short-term money market rates, which equated to an annualized return of 1.1% for the three months ended September 30, 2003 compared to 1.8% for the comparable period in 2002. Other
investment income reflects interest expense of $1.4 million on unpaid balances relating to one of our finite risk contracts. This contract was commuted and all obligations settled in full during the third quarter of 2003.





---

Reinsurance: (continued)



Investment expenses for the three months ended September 30, 2003 were $1.1 million compared to $0.7 million for the
three months ended September 30, 2002. The increase was primarily due to management fees relating to our investment in private equity funds. During the three months ended September 30, 2002 these fees were capitalized but have subsequently been
expensed as we no longer believe that they are recoverable.



Real Estate
and Leasing:



|                                  |  | Three months endedSeptember 30, |       
|--------------------------------- |  | ------------------------------- | ------
|(In thousands)                    |  | 2003                            |       
|REVENUE:                          |  |                                 |       
|Office building                   |  | $                               |      
|Leasing                           |  |                                 | 821   
|Gain on sale of assets            |  |                                 |      
|                                  |  |                                 |       
|                                  |  |                                 | 821   
|                                  |  |                                 |       
|EXPENSES:                         |  |                                 |       
|Operating expenses                |  |                                 | (185  
|Interest expense                  |  |                                 | (2,321
|Depreciation expense              |  |                                 |      
|Minority interest in earnings     |  |                                 |      
|                                  |  |                                 |       
|                                  |  |                                 | (2,506
|                                  |  |                                 |       
|                                  |  |                                 |       
|                                  |  |                                 |       
|Operating (loss) income           |  |                                 | (1,685
|                                  |  |                                 |       
|Investment income:                |  |                                 |       
|Amortization of zero-coupon notes |  |                                 | 1,462 
|Other                             |  |                                 | 146   
|                                  |  |                                 |       
|Investment income                 |  |                                 | 1,608 
|                                  |  |                                 |       
|                                  |  |                                 |       
|                                  |  |                                 |       
|Real estate and leasing loss      |  | $                               | (77   
|                                  |  |                                 |       



Office building revenue for the three
months ended September 30, 2003 was $nil due to the sale of our two-thirds partnership interest in the Copley Place retail center and office complex, located in Boston, on July 19, 2002.



Leasing revenue of $0.8 million for the three months ended September 30, 2003 related to a finance lease with the Kmart Corporation of a
regional distribution facility in Manteno, Illinois.



On January 22, 2002 the
Kmart Corporation and 37 of its United States subsidiaries filed voluntary petitions for reorganization under chapter 11 of the United States Bankruptcy Code. On April 22, 2003 a judge approved Kmart Corporations bankruptcy exit plan with an
effective date of May 5, 2003. As part of the exit plan Kmart Corporation assumed the lease on the Manteno distribution facility with the original lease terms intact. To date the Kmart Corporation has not defaulted on any of its lease payments.
However, there can be no assurance that it will not default on its future payments. We are currently having discussions with an interested party regarding the sale of the facility and expect to complete the sale by the end of 2003. Given the
uncertainties associated with Kmart Corporations financial position we expect to realize a pre-tax loss of approximately $10.4 million on the sale of the facility which will be recognized in the period in which the asset is sold.



For the three months ended September 30, 2003 operating expenses, interest expense and
depreciation expense decreased to $0.2 million, $2.3 million and $nil, respectively, compared to $2.6 million, $3.0 million and $0.5 million, respectively, for the three months ended September 30, 2002. These decreases were primarily due to the sale
of Copley Place in July 2002. Interest expense includes $1.9 million in interest on long-term debt due for repayment in 2012 and 2019. Investment income includes $1.5 million earned on assets collateralizing our obligations under such long-term
debt. On October 6, 2003 100% of this long-term debt was repurchased for a total premium to par of $35.9 million. The corresponding release of security resulted in the sale of zero-coupon notes with an amortized cost of $91.5 million generating a
$20.9 million gain on sale. This debt repurchase and corresponding sale of collateral will be recorded in the Companys results in the fourth quarter of 2003.





---

Net (loss) income:



|                                   |  | Three months endedSeptember 30, |        
|---------------------------------- |  | ------------------------------- | -------
|(In thousands)                     |  | 2003                            |        
|NET LOSS BEFORE TAXES              |  |                                 |        
|Reinsurance                        |  | $                               | (6,447 
|Real estate and leasing            |  |                                 | (77    
|Other operating expenses           |  |                                 | (12,312
|                                   |  |                                 |        
|Consolidated net loss before taxes |  |                                 | (18,836
|Income taxes                       |  |                                 | 3,520  
|                                   |  |                                 |        
|Net loss                           |  | $                               | (15,316
|                                   |  |                                 |        



The net loss for the three months
ended September 30, 2003 was $15.3 million compared to net loss of $210.9 million for the same period in 2002. The decrease in net loss was primarily due to an increase in reinsurance investment income of $184.0 million and a reduction in
underwriting losses compared to the three months ended September 30, 2002. The increase in reinsurance investment income was primarily due to an other-than-temporary impairment charge of $177.5 million recorded in our equity portfolio during the
three months ended September 30, 2002. This was partially offset by a reduction in real estate and leasing income of $34.4 million compared to the three months ended September 30, 2002, as a result of the gain on sale of Copley Place. For the three
months ended September 30, 2003 operating expenses include settlement costs of $10 million to settle the class action lawsuit as discussed in note 6 to the Unaudited Consolidated Financial Statements. For the three months ended September 30, 2003
there was a tax credit of $3.5 million compared to a tax charge of $14.3 million for the same period in 2002. The tax credit for the three months ended September 30, 2003 reflects a decrease in estimated state taxes due on the sales of assets in
2002. The tax charge for the three months ended September 30, 2002 was primarily due to the gain on sale of Copley Place. Basic and diluted net loss per share was $0.13 for the three months ended September 30, 2003 compared to a net loss per share
of $1.77 for the same period in 2002.



Nine Months Ended September 30,
2003 and 2002



Reinsurance:



|                                             |  | Nine months endedSeptember 30, |         
|-------------------------------------------- |  | ------------------------------ | --------
|(In thousands)                               |  | 2003                           |         
|Gross premiums written                       |  | $                              | (39,672 
|Premiums ceded                               |  |                                | (394    
|                                             |  |                                |         
|Net premiums written                         |  |                                | (40,066 
|Change in unearned premiums                  |  |                                | 141,460 
|                                             |  |                                |         
|Premiums earned                              |  |                                | 101,394 
|Commission and fee income                    |  |                                | (165    
|                                             |  |                                |         
|                                             |  |                                | 101,229 
|                                             |  |                                |         
|Losses and loss expenses                     |  |                                | (100,760
|Commissions, taxes and underwriting expenses |  |                                | (35,946 
|                                             |  |                                |         
|                                             |  |                                | (136,706
|                                             |  |                                |         
|Underwriting loss                            |  |                                | (35,477 
|                                             |  |                                |         
|Investment income (loss), net of expenses    |  |                                | 75,729  
|                                             |  |                                |         
|Reinsurance income (loss)                    |  | $                              | 40,252  
|                                             |  |                                |         



Underwriting



Gross premiums written for the nine months ended September 30, 2003 of negative $39.7
million was primarily due to the cancellation of one of the Companys finite reinsurance agreements where $74.5 million of written and unearned premiums were returned. This was partially offset by $33.9 million of premiums written by OPUS Re
primarily relating to multi-year accident & health treaties that OPUS Re had committed to write prior to the decision to place OPUS Re into runoff.





---

Reinsurance: (continued)



For the nine months ended September 30, 2003 premiums ceded decreased to $0.4 million compared to $83.9 million for
the nine months ended September 30, 2002. Premium ceded for the nine months ended September 30, 2002 primarily related to:



| |  | $77.4 million of property catastrophe premiums ceded to Renaissance Reinsurance Ltd. including $50.9 million as a result of a 100% quota share of the in-force property catastrophe
business that became effective on February 15, 2002;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | $3.4 million of premiums ceded relating to our purchase of several layers of excess of loss protection for our aviation book of business. The reinsurance protection provides
coverage of $12.0 million in excess of $3.0 million for a single loss event for losses occurring up until August 2003.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Premiums earned for the nine months ended September 30, 2003 decreased to $101.4 million compared to $393.7 million for the nine months ended September 30, 2002. This
decrease is a result of the reinsurance operations of the Company being runoff.



Commission and fee income decreased to negative $0.2 million for the nine months ended September 30, 2003 compared with $6.2 million for the corresponding period in 2002. This decrease is due to a decrease in the fees earned on our finite
risk contracts that were not accounted for as reinsurance as they do not satisfy the risk transfer criteria of Statement of Financial Accounting Standards No. 113. The fees decreased as a result of commutations and novations following the decision
to put our reinsurance operations into runoff. It is expected that commissions and fee income will be negligible in future periods.



Commissions, taxes and underwriting expenses for the nine months ended September 30, 2003 decreased by $88.2 million from $124.1 million for the nine months ended
September 30, 2002. The decrease was primarily related to the decrease in premiums earned and changes in the mix of premiums earned. In addition $9.7 million of the decrease was due to a reduction in internal expenses, primarily as a result of the
decision to put our reinsurance operations into runoff.



For the nine months
ended September 30, 2003 we experienced a net underwriting loss of $35.5 million. The underwriting loss is primarily due to:



| |  | An increase in estimated ultimate losses of approximately $15 million on two workers compensation programs. The change in estimates follows an independent actuarial evaluation
completed in the third quarter of 2003 and reflects adverse trending of medical expenses associated with workers compensation claims in California;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Loss adjustment expenses of $12.8 million, comprising largely legal fees and internal costs of runoff;
| | - | ------------------------------------------------------------------------------------------------------



| |  | OPUS Re casualty business, where losses and expenses are projected to exceed premiums written, but we expect to generate profits through future investment income.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



For the nine months ended September 30, 2002 we experienced a
net underwriting loss of $83.2 million. This underwriting loss was primarily due to:



| |  | Incurred losses of $29.9 million as a result of credit default events on a multi-year financial lines program.
| | - | --------------------------------------------------------------------------------------------------------------



| |  | Incurred losses of $10.8 million reflecting the cost of commutations of three of our satellite programs.
| | - | --------------------------------------------------------------------------------------------------------



| |  | Internal underwriting expenses and runoff costs of $22.5 million.
| | - | -----------------------------------------------------------------



| |  | OPUS Re casualty business, and other long tail programs, where losses and expenses are projected to exceed premiums written, but we expect to generate profits through future
investment income.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





---

Reinsurance Investment Income (Loss)



|                   |  | Nine months endedSeptember 30, 2003 |        |   | Nine months endedSeptember 30, 2002 |  
|------------------ |  | ----------------------------------- | ------ | - | ----------------------------------- | -
|(In thousands)     |  | Income (Loss)                       |        |   | OtherComprehensiveIncome (Loss)     |  
|Equities           |  |                                     |        |   |                                     |  
|Available-for-sale |  | $                                   | 20,360 |   |                                     | $
|Trading            |  |                                     | 42,505 |   |                                     |  
|Fixed income       |  |                                     | 17,394 |   |                                     |  
|Other              |  |                                     | 126    |   |                                     |  
|Expenses           |  |                                     | (4,656 | ) |                                     |  
|                   |  |                                     |        |   |                                     |  
|                   |  | $                                   | 75,729 |   |                                     | $
|                   |  |                                     |        |   |                                     |  



Our reinsurance portfolio generated
income of $82.2 million for the nine months ended September 30, 2003. This consisted of net income of $75.7 million and a change in net unrealized gains of $6.4 million that was recorded in other comprehensive income compared to a net loss of $175.5
million and a change in net unrealized gains of $89.3 million for the nine months ended September 30, 2002. These results included the effects of the write down in the cost basis of equity investments in certain stocks in our S&P 500 portfolio
where the decline in value was considered other than temporary. In accordance with Statement of Financial Accounting Standards No. 115, Accounting for Certain Investments in Debt and Equity Securities, such a write-down is recognized as
a realized loss in the income statement, even though there were no sales of the securities. For the nine months ended September 30, 2003 and the nine months ended September 30, 2002 the amount of the write-down was $8.0 million and $177.5 million,
respectively.



For the nine months ended September 30, 2003 our
available-for-sale equity portfolio generated a gain of 13.5%, or $25.7 million, consisting of income of $20.4 million and a change in net unrealized gains of $5.3 million that was recorded in other comprehensive income. Our available-for-sale
equity portfolio includes an investment in a Bermuda based life reinsurer, which generated a negative total return of $2.1 million for the nine months ended September 30, 2003 compared to a negative total return of $38.3 million for the
corresponding period in 2002. The rest of our available-for-sale equity portfolio closely tracks the S&P 500 index. During the nine months ended September 30, 2002, our equity portfolio generated a negative return of 34.6% or $137.1 million,
consisting of a loss of $204.8 million that was recorded in income and a change in net unrealized gains of $67.7 million that was recorded in other comprehensive income.



Our trading equities are investments in multi-manager funds, which follow primarily a combination of fixed income strategies, and gained
$42.5 million for the nine months ended September 30, 2003 compared to a gain of $0.6 million for the nine months ended September 30, 2002. The gains were primarily due to increases in the value of the strategic income funds high-yield bond
portfolio and convertible bond portfolio. We record unrealized gains and losses on our multi-manager funds in income.



For the nine months ended September 30, 2003 our fixed income portfolios generated a gain of 2.8%, or $18.6 million, consisting of income of $17.4 million and a change in
net unrealized gains of $1.2 million recorded in other comprehensive income. For the nine months ended September 30, 2002 our fixed income portfolios generated a gain of 5.4%, or $45.3 million, consisting of income of $23.7 million and a change in
net unrealized gains of $21.6 million recorded in other comprehensive income.



Cash and cash equivalents earn short-term money market rates, which equated to an annualized return of 1.3% for the nine months ended September 30, 2003 compared to 1.8% for the comparable period in 2002.



Investment expenses for the nine months ended September 30, 2003 were $4.7 million compared
to $3.6 million for the nine months ended September 30, 2002. The increase was due to the write-off of previously capitalized management fees relating to our investment in private equity funds reflecting an impairment in the carrying value of the
funds.





---

Real Estate and Leasing:



|                                      |  | Nine months endedSeptember 30, |       
|------------------------------------- |  | ------------------------------ | ------
|(In thousands)                        |  | 2003                           |       
|REVENUE:                              |  |                                |       
|Office buildings                      |  | $                              |      
|Hotel                                 |  |                                |      
|Leasing                               |  |                                | 2,476 
|Gain on sale of assets                |  |                                |      
|                                      |  |                                |       
|                                      |  |                                | 2,476 
|                                      |  |                                |       
|EXPENSES:                             |  |                                |       
|Operating expenses                    |  |                                | (666  
|Interest expense                      |  |                                | (6,996
|Premium on debt repurchase            |  |                                |      
|Depreciation                          |  |                                |      
|Minority interest in earnings         |  |                                |      
|                                      |  |                                |       
|                                      |  |                                | (7,662
|                                      |  |                                |       
|                                      |  |                                |       
|                                      |  |                                |       
|Operating (loss) income               |  |                                | (5,186
|                                      |  |                                |       
|Investment income:                    |  |                                |       
|Amortization of zero-coupon notes     |  |                                | 4,469 
|Gain on sale of zero-coupon notes     |  |                                |      
|Other                                 |  |                                | 278   
|                                      |  |                                |       
|Investment income                     |  |                                | 4,747 
|                                      |  |                                |       
|                                      |  |                                |       
|                                      |  |                                |       
|Real estate and leasing (loss) income |  | $                              | (439  
|                                      |  |                                |       



For the nine months ended September
30, 2003 office building revenue was $nil due to the sale of our two-thirds partnership interest in the Copley Place retail center and office complex, located in Boston, on July 19, 2002.



For the nine months ended September 30, 2003 hotel revenue was $nil due to the sale of the Marriott Copley Hotel on June 13, 2002. The
Marriott Copley Hotel generated hotel revenues of $37.2 million for the nine months ended September 30, 2002. The hotel was sold for net cash proceeds of $111.6 million resulting in a pre-tax gain on sale of $58.9 million. The purchaser of the
property assumed the associated existing debt of $96.9 million.



Leasing
revenue decreased by $3.7 million in the nine months ended September 30, 2003 compared to the nine months ended September 30, 2002. The decrease was mainly attributable to the sale of a data processing facility to UPS and the termination of the
lease by UPS in January 2002. UPS had an option to purchase the building in which the data processing facility is located at the higher of fair market value or a settlement value, as defined in the lease agreement, prevailing at that time. On
September 21, 2001 UPS notified the Company of its election to terminate the data processing facility lease and its election to exercise its option to purchase the building. On January 31, 2002 UPS purchased the building for $127.9 million, equal to
the settlement value, and also purchased the land on which the building is located for $13.6 million, resulting in a total pre-tax gain on sale of $47.1 million.



The $2.5 million of leasing revenue for the nine months ended September 30, 2003 relates to a finance lease with the Kmart Corporation. As
noted above upon its exit from bankruptcy proceedings on May 5, 2003, Kmart Corporation assumed the lease on the Manteno distribution facility with the original lease terms intact. To date the Kmart Corporation has not defaulted on any of its lease
payments. However, there can be no assurance that it will not default on its future payments.



For the nine months ended September 30, 2003 operating expenses, interest expense and depreciation expense decreased to $0.7 million, $7.0 million and $nil, respectively, compared to $51.9 million, $26.3 million and
$9.0 million, respectively, for the nine months ended September 30, 2002. These decreases were primarily due to the sales of the Marriott Copley Hotel in June 2002 and Copley Place in July 2002 and the repurchase of $170 million of debt in June
2002.



In 1989 a subsidiary of OPCC acquired five 757 aircraft and a data
processing facility. The acquisition of the aircraft and the facility were financed by two series of privately placed, fixed rate, non-callable bonds issued by OPL Funding Corp. (OPL Funding), incorporated in Delaware as a special
purpose subsidiary of Overseas Capital Co. One series (Series A Bonds), in the principal amount of $171.6 million, was due in 2012; the other (Series B Bonds), in the principal amount of $73.4 million, was due in 2019.
Overseas Partners Credit, Inc., a special purpose subsidiary of OPL incorporated in the Cayman Islands, guaranteed the principal of these bonds and pledged zero-coupon treasury notes as security for the guarantee.





---

Real Estate and Leasing: (continued)



During June 2002 we approached and obtained the consent of all the bondholders to amend the Trust Indenture for the
Series A Bonds and Series B Bonds to permit the repurchase and cancellation of the bonds. The terms of the repurchase and cancellation required the Company to pay an amount equivalent to the fair value of the collateral securities (relating to both
principal and interest) to the bondholders along with a corresponding release of security. On June 27, 2002 OPL Funding completed the repurchase and cancellation of $111.6 million of our Series A Bonds and $58.4 million of our Series B Bonds for a
total premium of $76.9 million over par. The corresponding release of security resulted in the sale of zero-coupon notes with an amortized cost of $211.5 million generating a $34.8 million gain on sale.



On October 6, 2003 OPL Funding completed the repurchase and cancellation of $60.0 million of
Series A Bonds and $15.0 million of Series B Bonds for a total premium of $35.9 million. The corresponding release of security resulted in the sale of zero-coupon notes with an amortized cost of $91.5 million generating a $20.9 million gain on sale.
The debt repurchase and corresponding sale of collateral will be recorded in the Companys results in the fourth quarter of 2003.



Net income:



|                                     |  | Nine months endedSeptember 30, |        
|------------------------------------ |  | ------------------------------ | -------
|(In thousands)                       |  | 2003                           |        
|NET INCOME BEFORE TAXES              |  |                                |        
|Reinsurance                          |  | $                              | 40,252 
|Real estate and leasing              |  |                                | (439   
|Other operating expenses             |  |                                | (25,961
|                                     |  |                                |        
|Consolidated net income before taxes |  |                                | 13,852 
|Income taxes                         |  |                                | 3,504  
|                                     |  |                                |        
|Net income (loss)                    |  | $                              | 17,356 
|                                     |  |                                |        



Net income for the nine months ended
September 30, 2003 was $17.4 million compared to net loss of $210.8 million for the corresponding period in 2002. This increase in net income was due primarily to the swing in reinsurance investment income from a loss of $175.5 million in the nine
months ended September 30, 2002 to a gain of $75.7 million in the nine months ended September 30, 2003. The increase in reinsurance investment income was due to $27.7 million of net realized gains on sales of our S&P 500 portfolio and income of
$42.5 million from our multi-manager funds during the nine months ended September 30, 2003 and the other-than-temporary impairment charge of $177.5 million recorded in our equity portfolio during the nine months ended September 30, 2002. This was
partially offset by a decrease in real estate and leasing income of $103.1 million primarily due to the gains on sales of real estate assets during the nine months ended September 30, 2002. Other operating expenses increased by $2.4 million due to
the net effect of the class action lawsuit settlement costs of $10 million and an asset impairment charge of $5.8 million to write-down the capitalized cost of insurance licenses owned by OPUS Re during the nine months ended September 30, 2003 and
severance payments and a goodwill write-off of $2.5 million during the nine months ended September 30, 2002. The tax credit for the nine months ended September 30, 2003 was $3.5 million compared to a charge of $31.3 million for the same period in
2002. The tax credit for the nine months ended September 30, 2003 reflects a decrease in estimated state taxes due on the sales of assets in 2002. The tax charge of $31.3 million for the nine months ended September 30, 2002 was primarily due to the
tax on the gains on sales of real estate assets. Net income per share was $0.15 for the nine months ended September 30, 2003 compared to net loss per share of $1.77 for the corresponding period in 2002.





---

Liquidity and Capital Resources



|                                          |  | Nine months endedSeptember 30, |         
|----------------------------------------- |  | ------------------------------ | --------
|(In thousands)                            |  | 2003                           |         
|CASH FLOWS                                |  |                                |         
|Operating activities                      |  | $                              | (300,573
|Investing activities                      |  |                                | 227,804 
|Financing activities                      |  |                                | (239,751
|                                          |  |                                |         
|Net decrease in cash and cash equivalents |  | $                              | (312,520
|                                          |  |                                |         



Cash and cash equivalents decreased
due to the following:



Operating activities



On February 13, 2002 the Board of Directors of OPL announced its decision to restructure OPL
and cause its reinsurance operations to begin an orderly runoff. Since this announcement no new reinsurance contracts have been written and there has therefore been a significant reduction in the cash generated from reinsurance operations. Claim
payments have exceeded premium receipts and this is likely to continue in future periods.



Reinsurance operations used $310.4 million for the nine months ended September 30, 2003 compared to using $130.2 million for the nine months ended September 30, 2002. This significant increase in cash used is
primarily due to the effect of increased loss payments, particularly due to the commutation and novation of several reinsurance contracts, and a reduction in premium receipts as a result of the runoff of OPLs reinsurance operations.



During the nine months ended September 30, 2003 reinsurance balances
receivable, funds withheld, accrued losses and loss expenses and reinsurance balances payable decreased by $289.6 million, $90.6 million, $377.3 million and $189.0 million, respectively. These decreases were primarily a result of the commutation and
novation of several reinsurance contracts. We anticipate that these balances will continue to decrease as the runoff of OPLs reinsurance operations progresses.



Real estate operations used $5.7 million for the nine months ended September 30, 2003 compared to using $41.6 million for the nine months
ended September 30, 2002. The net cash outflow was primarily due to payments of tax, interest payments on the remaining debt and reduced cashflows following the sale of the Copley Marriott Hotel and the sale of Copley Place.



We received $23.7 million of interest and dividends during the nine months ended September
30, 2003 compared to $49.0 million for the nine months ended September 30, 2002.



During the nine months ended September 30, 2003 we used $8.3 million for the payment of other operating expenses compared to using $21.1 million for the nine months ended September 30, 2002. The reduced outflow was primarily a result of the
reduction in expenses following the runoff decision and severance payments made during the nine months ended September 30, 2002.



Investing activities



Following our February 13, 2002 announcement to go into runoff, our investment objective has been and will continue to be more focused on capital preservation and short- to medium-term liquidity, as opposed to
long-term return. Consequently, we have been reducing the duration of our investment portfolio and increasing our short-term investment positions to ensure that we will have sufficient cash available to meet claims obligations as they fall due and
to mitigate our exposure to investment losses in the event of interest rate increases. We will continue to review our asset allocation as our runoff progresses. Despite these actions there may still be periods in which the Company records an
investment loss as a result of the continued volatility in worldwide bond and equity markets.



During the nine months ended September 30, 2003, we purchased $786.6 million and sold $829.0 million of available-for-sale investments compared to $1,194.3 million and $1,620.5 million, respectively for the nine
months ended September 30, 2002. During the nine months ended September 30, 2003, sales from our available-for-sale investment portfolios exceeded purchases primarily due to the sale of part of the Companys S&P 500 portfolios in order to
reduce the Companys exposure to equity price risk. During the nine months ended September 30, 2002, sales from our available-for-sale investment portfolios exceeded purchases by $426.2 million. This was primarily due to the sale of our global
bond portfolios and the sale of one of our S&P 500 portfolios.





---

Investing activities: (continued)



Following our decision to runoff our reinsurance operations, our banks required that our letter of credit facilities
be fully secured by a portion of the Companys investment portfolio of at least equivalent value. The letters of credit have been used to collateralize the unearned premium and accrued loss and loss expense obligations of the Company to our
cedants. At September 30, 2003 the Company had $798.1 million of assets collateralizing obligations to our cedants, of which $170.1 million was restricted cash and cash equivalents. The collateral includes $197.5 million held in trust accounts.



During the nine months ending September 30, 2002 our real estate investing
activities produced net cash inflow of $361.1 million, which primarily related to the sale of the data processing facility and the land on which it is located, the Marriott Copley Hotel and Copley Place. The purchase of the data processing facility
by the Company was originally financed, in 1989, by issuing Series B Bonds. From the sale proceeds of the data processing facility we purchased $84.2 million of restricted investments to collateralize our interest obligations on the Series B Bonds.
During the nine months ended September 30, 2002 we also completed the repurchase and cancellation of $170 million of Series A Bonds and Series B Bonds. This resulted in the release and sale of zero-coupon notes previously held as collateral to
guarantee the repayment of these bonds.



On October 6, 2003 we completed the
repurchase and cancellation of the remaining $60.0 million of our Series A Bonds and $15.0 million of our Series B Bonds for a total premium of $35.9 million. The corresponding release of security resulted in the sale of zero-coupon notes with an
amortized cost of $91.5 million generating a $20.9 million gain on sale. The debt repurchase and corresponding sale of collateral will be recorded in the Companys results in the fourth quarter of 2003.



Financing activities



During the nine months ended September 30, 2003 the Company repaid $1.7 million of debt relating to the finance lease with Kmart
Corporation. During the corresponding period in 2002 the company paid $251.9 million to repay and repurchase debt, primarily due to the repurchase and cancellation of Series A Bonds and Series B Bonds.



On August 8, 2001 the Company announced the suspension of the repurchase of shares of the
Companys Common Stock, effective immediately. This was necessitated by the need to demonstrate to the Companys customers, insurance regulators and rating agencies that it is able to maintain a strong and stable capital base. During the
nine months ended September 30, 2003 and September 30, 2002 the Company repurchased $0.3 million and $2.6 million of shares, respectively. These shares were purchased from employees who had exercised a put-option to sell their shares upon
termination of their employment with the Company, following our February 13, 2002 announcement to go into runoff.



As a result of the decision to restructure OPL and cause its operations to begin an orderly runoff, we amended our dividend policy. Our historical dividend policy relied
on the highly profitable and predictable cash flow characteristics of the shippers risk program. It is unlikely that the Company will pay ordinary dividends in the future.



We expect that all future returns of capital to our shareowners will be in the form of liquidating distributions, giving due consideration
to the Companys required capital levels to support the runoff of our accrued loss and loss expense liabilities, our contingent liabilities, regulatory requirements and availability of unrestricted liquid assets. On March 26, 2003 OPL received
approval from the Bermuda Monetary Authority to permit the payment of a distribution to shareowners of $2 per share. This distribution was paid to shareowners on April 9, 2003 and resulted in a cash outflow of $237.7 million. The timing and amount
of any future distributions is dependent on OPLs ability to obtain specific approval from the Bermuda Monetary Authority.



Sources of capital and liquidity



Liquidity is a measure of a companys ability to generate sufficient cash flows to meet the short-term and long-term cash requirements of its business operations.
Prior to going into runoff, our reinsurance operations had historically provided significant liquidity in that premiums were received in advance, generally substantially in advance, of the time claims are paid. However, since placing our reinsurance
operations into runoff, our premium receipts have been less than our loss and loss expense payments as claims on business written in prior years have accelerated faster than premiums due. We expect this trend to continue as the runoff of our
reinsurance operations progresses.





---

Sources of capital and liquidity (continued)



The Company has historically obtained unsecured letter of credit facilities from banks to conduct its reinsurance
business. The letters of credit have been used to collateralize the unearned premium and accrued loss and loss expense obligations of the Company to our cedants. Following our decision to cease writing new business and to run off our reinsurance
operations, the banks required that these facilities be fully secured by a portion of the Companys investment portfolio of at least equivalent value. At September 30, 2003 the Company had $798.1 million of cash and investments collateralizing
obligations to our cedants, including $197.5 million held in trust accounts.



At September 30, 2003 the reinsurance segment had $1.9 billion of cash and highly liquid investments. We believe that our current cash holdings and future sales and maturities of investments are adequate sources of liquidity for the future
payment of claims and operating expenses. Further we expect that the amount of required collateral for our letter of credit facilities will decrease commensurate with the payment of our accrued loss and loss expense liabilities.



As a holding company, a substantial proportion of OPLs assets relate to its investments
in subsidiaries. As such, OPLs ability to make future distributions to shareowners is largely dependent upon it receiving distributions from its subsidiaries. Insurance regulation in Bermuda requires that OPL, OPRe and OPAL each maintain
minimum capital and liquidity requirements and also prohibits such entities from distributing more than 15% of their prior years statutory capital unless specific approval is obtained from the Bermuda Monetary Authority. In addition to
existing regulatory requirements, the Bermuda Monetary Authority has requested that it pre-approve all distributions from OPAL, OPRe and OPL. Dividend payments by OPLs United States based reinsurance subsidiary OPUS Re are also limited by
applicable law and OPUS Re requires regulatory approval to pay a dividend. See Note 5 to the Unaudited Consolidated Financial Statements for further information on the restrictions on distributions.



Following the Board of Directors February 13, 2002 announcement of its decision to
restructure OPL and cause its operations to begin an orderly runoff, the Company will seek to provide shareowners with both near term and longer-term liquidity. However, due to the regulated nature of the reinsurance business and other business
reasons, it could take many years to complete the runoff of OPLs businesses and fully return share capital. On March 26, 2003 OPL received approval from the Bermuda Monetary Authority to permit the payment of a distribution to shareowners of
$2 per share. This distribution was paid to shareowners on April 9, 2003.



Credit Risk



Credit risk represents the
loss that would occur if a counterparty or issuer failed to perform its contractual obligations. Certain policies and procedures have been established to protect the Company against such losses from its investments or receivables. Controlling
duration of the investment portfolio by limiting tracking error to known benchmarks, placing limits on exposure to any one counterparty and mandating minimum credit ratings all serve to control the credit exposure associated with the Companys
financial instruments.



In addition, the Companys finite reinsurance
business includes a financial guarantee contract that exposes the Company to underwriting loss in the event of credit defaults. This policy is due to expire by the end of 2003. The Company controls this exposure to credit risk by establishing limits
on the amount of risk to any one underlying credit and through aggregate limits in the reinsurance contract.



The Company is also exposed to credit risk on losses recoverable from reinsurers and premiums receivable from cedants. The Company mitigated this risk by diversifying its assumed and ceded business with a number of
different counterparties and mandating minimum credit ratings for each reinsurer at the time of placement and contractual features that permit the right of offset.



Inflation



Inflation, including inflation in damage awards and costs, can substantially increase the ultimate cost of claims in certain types of insurance. This is because the
actual payment of claims may take place a number of years after the provisions for losses are reflected in the financial statements. We will, however, earn income on the funds retained for a period of time until eventual payment of a claim. Our
investments are not significantly affected by inflation as the liquidity of our portfolio permits us to respond quickly to changing market conditions.





---

|Item 3. |  | Quantitative and Qualitative Disclosures About Market Risk
|------- |  | ----------------------------------------------------------



The Companys exposures to market risks are disclosed in detail in the Overseas Partners Ltd. Annual Report on Form 10-K for the fiscal year ended December 31, 2002.
During the nine months ended September 30, 2003 the Company has reduced the exposure to equity price risk through the sale of part of our S&P 500 portfolios. There may still be periods in which the Company records an investment loss as a result
of the continued volatility in worldwide bond and equity markets.



|Item 4. |  | Controls and Procedures
|------- |  | -----------------------



As of the end of the period covered by this Quarterly Report on Form 10-Q, the Company carried out an evaluation, under the supervision and with the participation of the
Companys management, including the President & Chief Executive Officer and the Chief Accounting Officer, of the effectiveness of the design and operation of the Companys disclosure controls and procedures pursuant to Exchange Act
Rules 13a-15(e) and 15d-15(e). Based upon that evaluation, the Chief Executive Officer and the Chief Accounting Officer concluded that the Companys disclosure controls and procedures are effective in timely alerting them to material
information relating to the Company (including its consolidated subsidiaries) required to be included in the Companys periodic SEC filings. No change in the Companys internal control over financial reporting occurred during the
Companys most recent fiscal quarter that materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.



Safe Harbor Disclosure



The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. Some of the
statements contained in this Securities and Exchange Commission filing contain forward-looking information. Forward-looking statements are statements other than historical information or statements of current condition. Some forward looking
statements can be identified by the use of such words as expect, believe, goal, plan, intend, estimate, may and will or similar words. These
forward-looking statements relate to our plans and objectives for future operations including our growth and operating strategy, our implementation of new products and new reinsurance programs, trends in our industry and our policy on future
dividends.



You should be aware that these statements are subject to risks,
uncertainties and other factors, that could cause the actual results to differ materially from those suggested by the forward-looking statements. Accordingly, there can be no assurance that those indicated results will be realized. Among the
important factors that could cause actual results to differ materially from those indicated by our forward-looking statements are:



| |  | the uncertainties of the reserving process
| | - | ------------------------------------------



| |  | the uncertainties surrounding the estimates of losses incurred as a result of the terrorist attacks on the World Trade Center and the related events of September 11, 2001
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | future losses on unexpired policies, including launch and in-orbit satellite exposures through to 2007, a financial guaranty program that expires in 2003 and a residual value
reinsurance program where the Company is exposed to losses until 2013
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | our ability to collect reinsurance recoverables, particularly given the increased credit risk following the terrorist attacks on the World Trade Center and the related events of
September 11, 2001
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | the occurrence of catastrophic events with a frequency or severity exceeding our estimates
| | - | ------------------------------------------------------------------------------------------



| |  | loss of the services of any of the Companys remaining executive officers
| | - | -------------------------------------------------------------------------



| |  | uncertainties relating to government and regulatory policies (such as subjecting us to taxation in certain jurisdictions)
| | - | -------------------------------------------------------------------------------------------------------------------------



| |  | losses due to interest rate fluctuations
| | - | ----------------------------------------



| |  | losses arising from the sale of any of our reinsurance subsidiaries
| | - | -------------------------------------------------------------------



| |  | volatility in U.S. financial markets which could affect our investment portfolio, and
| | - | -------------------------------------------------------------------------------------



| |  | the resolution of pending litigation.
| | - | -------------------------------------



We do not undertake any duty to update these forward-looking statements in any manner.





---

OVERSEAS PARTNERS LTD. AND SUBSIDIARIES

PART II. OTHER INFORMATION



|Item 1. |  | Legal Proceedings
|------- |  | -----------------



See Notes 3 and 6 to the Financial Statements for discussions of legal proceedings to which OPL is a party.



|Item 6. |  | Exhibits and Reports on Form 8-K
|------- |  | --------------------------------



|a) | Exhibits:
|-- | ---------



31
(a)

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31
(b)

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32


Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.




|b) | Reports on Form 8-K: No reports on Form 8-K were filed during the quarter ended September 30, 2003.
|-- | ---------------------------------------------------------------------------------------------------





---

SIGNATURES



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



|Date: November 10, 2003 |  |  |  | OVERSEAS PARTNERS LTD.
|----------------------- |  |  |  | ----------------------
|                        |  |  | 
|                        |  |  |  | By:                   
|                        |  |  |  |                       
|                        |  |  | 
|                        |  |  |  | By:                   
|                        |  |  |  |