---

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 March 31, 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 of incorporation or organization) |  | (I.R.S. Employer Identification No.)



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

(Address of principal executive
offices) (Zip Code)



(441) 295-0788

(Registrants telephone number, including area code)



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)



118,832,342 Shares

Outstanding at May 6, 2003



---



---



PART I.
FINANCIAL INFORMATION

OVERSEAS PARTNERS LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)



|                                                                                                                                    |  | March 31, 2003 |            |   | December 31, 2002 |  
|----------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ---------- | - | ----------------- | -
|                                                                                                                                    |  |                | (Unaudited | ) |                   |  
|ASSETS:                                                                                                                             |  |                |            |   |                   |  
|Investments:                                                                                                                        |  |                |            |   |                   |  
|Trading, at fair value                                                                                                             |  |                |            |   |                   |  
|Equity securities (cost: 2003  $450,193, 2002  $450,193)                                                                          |  | $              | 534,469    |   |                   | $
|Available-for-sale, at fair value                                                                                                  |  |                |            |   |                   |  
|Debt securities (amortized cost: 2003  $102,863, 2002 
$153,096)                                                                  |  |                | 103,166    |   |                   |  
|Restricted debt securities (amortized cost: 2003  $606,708, 2002 
$599,749)                                                       |  |                | 643,260    |   |                   |  
|Equity securities (cost: 2003  $272,468, 2002  $280,191)                                                                          |  |                | 283,459    |   |                   |  
|                                                                                                                                   
|                                                                                                                                    |  |                | 1,564,354  |   |                   |  
|Cash and cash equivalents                                                                                                           |  |                | 470,712    |   |                   |  
|Restricted cash and cash equivalents                                                                                                |  |                | 307,837    |   |                   |  
|Reinsurance balances receivable                                                                                                     |  |                | 336,203    |   |                   |  
|Funds withheld                                                                                                                      |  |                | 268,696    |   |                   |  
|Losses and loss expenses recoverable                                                                                                |  |                | 115,259    |   |                   |  
|Deferred acquisition costs                                                                                                          |  |                | 25,488     |   |                   |  
|Unearned premiums ceded                                                                                                             |  |                | 2,934      |   |                   |  
|Real estate and leasing:                                                                                                            |  |                |            |   |                   |  
|Finance lease                                                                                                                       |  |                | 41,007     |   |                   |  
|Other assets                                                                                                                        |  |                |            |   |                   |  
|Investment in and advances to affiliate                                                                                             |  |                | 22,111     |   |                   |  
|Investment in private equity funds, at cost                                                                                         |  |                | 18,869     |   |                   |  
|Goodwill                                                                                                                            |  |                | 3,333      |   |                   |  
|Insurance licenses                                                                                                                  |  |                | 5,813      |   |                   |  
|Other                                                                                                                               |  |                | 24,834     |   |                   |  
|                                                                                                                                   
|Total assets                                                                                                                        |  | $              | 3,207,450  |   |                   | $
|                                                                                                                                   
|                                                                                                                                   
|LIABILITIES AND MEMBERS EQUITY:                                                                                                    |  |                |            |   |                   |  
|Liabilities:                                                                                                                        |  |                |            |   |                   |  
|Accrued losses and loss expenses                                                                                                    |  | $              | 1,402,627  |   |                   | $
|Unearned premiums                                                                                                                   |  |                | 213,971    |   |                   |  
|Reinsurance balances payable                                                                                                        |  |                | 248,758    |   |                   |  
|Accounts payable and other liabilities                                                                                              |  |                | 40,106     |   |                   |  
|Deferred income taxes                                                                                                               |  |                | 340        |   |                   |  
|Long-term debt                                                                                                                      |  |                | 99,758     |   |                   |  
|Distributions payable                                                                                                               |  |                | 237,711    |   |                   |  
|                                                                                                                                   
|Total liabilities                                                                                                                   |  | $              | 2,243,271  |   |                   | $
|                                                                                                                                   
|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 118,855,342 shares |  |                | 12,750     |   |                   |  
|Contributed surplus                                                                                                                 |  |                | 37,650     |   |                   |  
|Retained earnings                                                                                                                   |  |                | 1,048,443  |   |                   |  
|Treasury stock (2003  8,644,658 shares, 2002  8,644,658 shares), at
cost                                                          |  |                | (158,047   | ) |                   |  
|Deferred compensation                                                                                                               |  |                | (153       | ) |                   |  
|Accumulated other comprehensive gain                                                                                                |  |                | 23,536     |   |                   |  
|                                                                                                                                   
|Total members equity                                                                                                               |  |                | 964,179    |   |                   |  
|                                                                                                                                   
|Total liabilities and members equity                                                                                               |  | $              | 3,207,450  |   |                   | $
|                                                                                                                                   
|Net book value per share                                                                                                            |  | $              | 8.11       |   |                   | $
|                                                                                                                                   



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 Ended March 31, |        
|---------------------------------------------------------- |  | ---------------------------- | -------
|                                                           |  | 2003                         |        
|REVENUES:                                                  |  |                              |        
|Gross reinsurance premiums written                         |  | $                            | 70,199 
|Reinsurance premiums ceded                                 |  |                              | (1,965 
|                                                          
|Reinsurance premiums written                               |  |                              | 68,234 
|Change in unearned premiums                                |  |                              | (30,470
|                                                          
|Reinsurance premiums earned                                |  |                              | 37,764 
|Commission and fee income                                  |  |                              | 238    
|Operating lease with UPS                                   |  |                              |       
|Finance lease                                              |  |                              | 830    
|Hotel                                                      |  |                              |       
|Office building                                            |  |                              |       
|Gain on sales of real estate assets                        |  |                              |       
|Interest                                                   |  |                              | 10,318 
|Realized loss on trading and available-for-sale securities |  |                              | (8,877 
|Unrealized gain on trading securities                      |  |                              | 9,718  
|Amortization of fixed income securities                    |  |                              | (576   
|Dividends                                                  |  |                              | 899    
|                                                          
|                                                           |  |                              | 50,314 
|                                                          
|EXPENSES:                                                  |  |                              |        
|Reinsurance losses and loss expenses                       |  |                              | 26,417 
|Reinsurance commissions, taxes and other expenses          |  |                              | 20,055 
|Depreciation expense                                       |  |                              |       
|Real estate and leasing operating expenses                 |  |                              | 135    
|Interest expense                                           |  |                              | 2,343  
|Minority interest in earnings                              |  |                              |       
|Investment expenses                                        |  |                              | 951    
|Other operating expenses                                   |  |                              | 3,011  
|                                                          
|                                                           |  |                              | 52,912 
|                                                          
|(Loss) income before income taxes                          |  |                              | (2,598 
|Income taxes                                               |  |                              | (723   
|                                                          
|Net (loss) income                                          |  | $                            | (3,321 
|                                                          
|Basic and diluted net (loss) income per share              |  | $                            | (0.03  
|                                                          
|Weighted average number of shares outstanding              |  |                              | 118,855
|                                                          



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 Ended March 31, |        
|-------------------------------------------------------------------------- |  | ---------------------------- | -------
|                                                                           |  | 2003                         |        
|Net (loss) income                                                          |  | $                            | (3,321 
|Other comprehensive loss:                                                  |  |                              |        
|Net unrealized holding losses on available-for-sale securities             |  |                              | (10,616
|Less: reclassification adjustment for losses included in net (loss)
income |  |                              | 7,384  
|                                                                          
|Other comprehensive loss before income tax                                 |  |                              | (3,232 
|Income tax recovery related to other comprehensive loss items              |  |                              | 221    
|                                                                          
|Other comprehensive loss                                                   |  |                              | (3,011 
|                                                                          
|Comprehensive loss                                                         |  | $                            | (6,332 
|                                                                          



See
condensed notes to unaudited consolidated financial statements.







---



OVERSEAS
PARTNERS LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF MEMBERS EQUITY

Three Months Ended March 31, 2003 and 2002

(In thousands)

(Unaudited)

Deferred

Compensation



|                                                                  |  | Preference Stock |        | Common Stock |         | Treasury Stock |        |        | Deferred Compensation |        |   | Contributed Surplus |   | Retained Earnings |   |  | Accumulated Other Comprehensive Income (Loss) |        |   | Total Members Equity |  
|----------------------------------------------------------------- |  | ---------------- | ------ | ------------ | ------- | -------------- | ------ | ------ | --------------------- | ------ | - | ------------------- | - | ----------------- | - |  | --------------------------------------------- | ------ | - | --------------------- | -
|                                                                  |  |                  | Shares |              | Amount  |                | Shares |        |                       | Amount |   |                     |   |                   |   | 
|Balance, January 1, 2002                                          |  | $                |       |              | 127,500 |                | $      | 12,750 |                       | (8,406 | ) |                     | $ | (155,406          | ) |  | $                                             | (3,115 | ) |                       | $
|                                                                 
|Net income                                                        |  |                  |       |              |        |                |        |       |                       |       |   |                     |   |                  |   |  |                                               |       |   |                       |  
|                                                                 
|Restricted shares forfeited                                       |  |                  |       |              |        |                |        |       |                       | (1     | ) |                     |   | (19               | ) |  |                                               | 19     |   |                       |  
|                                                                 
|Amortization of restricted common stock compensation              |  |                  |       |              |        |                |        |       |                       |       |   |                     |   |                  |   |  |                                               | 1,843  |   |                       |  
|                                                                 
|Net unrealized loss on available- for-sale securities, net of tax |  |                  |       |              |        |                |        |       |                       |       |   |                     |   |                  |   |  |                                               |       |   |                       |  
|                                                                 
|                                                                 
|Balance, March 31, 2002                                           |  | $                |       |              | 127,500 |                | $      | 12,750 |                       | (8,407 | ) |                     | $ | (155,425          | ) |  | $                                             | (1,253 | ) |                       | $
|                                                                 
|                                                                 
|Balance, January 1, 2003                                          |  | $                |       |              | 127,500 |                | $      | 12,750 |                       | (8,645 | ) |                     | $ | (158,047          | ) |  | $                                             | (310   | ) |                       | $
|                                                                 
|Net loss                                                          |  |                  |       |              |        |                |        |       |                       |       |   |                     |   |                  |   |  |                                               |       |   |                       |  
|                                                                 
|Distribution declared ($2.00 per share)                           |  |                  |       |              |        |                |        |       |                       |       |   |                     |   |                  |   |  |                                               |       |   |                       |  
|                                                                 
|Amortization of restricted common stock compensation              |  |                  |       |              |        |                |        |       |                       |       |   |                     |   |                  |   |  |                                               | 157    |   |                       |  
|                                                                 
|Net unrealized loss on available- for-sale securities, net of tax |  |                  |       |              |        |                |        |       |                       |       |   |                     |   |                  |   |  |                                               |       |   |                       |  
|                                                                 
|                                                                 
|Balance, March 31, 2003                                           |  | $                |       |              | 127,500 |                | $      | 12,750 |                       | (8,645 | ) |                     | $ | (158,047          | ) |  | $                                             | (153   | ) |                       | $
|                                                                 



See
condensed notes to unaudited consolidated financial statements.







---



OVERSEAS PARTNERS LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS

(U.S.$ in thousands)

(Unaudited)



|                                                                                                    |  | Three Months Ended March 31, |         
|--------------------------------------------------------------------------------------------------- |  | ---------------------------- | --------
|                                                                                                    |  | 2003                         |         
|CASH FLOW FROM OPERATING ACTIVITIES:                                                                |  |                              |         
|Net (loss) income                                                                                   |  | $                            | (3,321  
|Adjustments to reconcile net (loss) income to net cash (expended) provided by operating
activities: |  |                              |         
|Deferred income taxes                                                                               |  |                              | (738    
|Depreciation expense                                                                                |  |                              |        
|Minority interest in earnings                                                                       |  |                              |        
|Realized loss on securities                                                                         |  |                              | 8,877   
|Unrealized gain on trading securities                                                               |  |                              | (9,718  
|Amortization of fixed income securities                                                             |  |                              | 576     
|Amortization of restricted common stock compensation                                                |  |                              | 157     
|Gain on sales of real estate assets                                                                 |  |                              |        
|Other                                                                                               |  |                              | 232     
|Changes in assets and liabilities:                                                                  |  |                              |         
|Reinsurance balances receivable                                                                     |  |                              | 24,546  
|Losses and loss expenses recoverable                                                                |  |                              | (639    
|Funds withheld                                                                                      |  |                              | 1,822   
|Deferred acquisition costs                                                                          |  |                              | (4,807  
|Unearned premiums ceded                                                                             |  |                              | (869    
|Other assets                                                                                        |  |                              | (838    
|Accrued losses and loss expenses                                                                    |  |                              | (107,943
|Unearned premiums                                                                                   |  |                              | 31,120  
|Reinsurance balances payable                                                                        |  |                              | (49,628 
|Accounts payable and other liabilities                                                              |  |                              | 1,192   
|Proceeds from sale of trading investments                                                           |  |                              |        
|Purchase of trading investments                                                                     |  |                              |        
|                                                                                                   
|Net cash flow (expended) provided by operating activities                                           |  |                              | (109,979
|                                                                                                   
|                                                                                                   
|CASH FLOW FROM INVESTING ACTIVITIES:                                                                |  |                              |         
|Proceeds from sales and maturities of available-for-sale investments                                |  |                              | 170,365 
|Purchase of available-for-sale investments                                                          |  |                              | (128,819
|Purchase of held-to-maturity investments                                                            |  |                              |        
|Sale of restricted cash and cash equivalents, net                                                   |  |                              | 47,551  
|Net proceeds from sales of real estate assets                                                       |  |                              |        
|Additions to real estate and leasing assets                                                         |  |                              |        
|                                                                                                   
|Net cash flow generated by investing activities                                                     |  |                              | 89,097  
|                                                                                                   
|                                                                                                   
|CASH FLOW FROM FINANCING ACTIVITIES:                                                                |  |                              |         
|Repayment of debt                                                                                   |  |                              | (564    
|Distributions to minority interest                                                                  |  |                              |        
|                                                                                                   
|Net cash flow expended by financing activities                                                      |  |                              | (564    
|                                                                                                   
|Net (decrease) increase in cash and cash equivalents                                                |  |                              | (21,446 
|Cash and cash equivalents:                                                                          |  |                              |         
|Beginning of period                                                                                 |  |                              | 492,158 
|                                                                                                   
|End of period                                                                                       |  | $                            | 470,712 
|                                                                                                   
|Supplemental disclosures of cash flow information:                                                  |  |                              |         
|Cash paid during the period:                                                                        |  |                              |         
|U.S. income taxes                                                                                   |  | $                            | 4,415   
|Interest                                                                                            |  | $                            | 491     
|                                                                                                   



See
condensed notes to unaudited consolidated financial statements.





---



OVERSEAS
PARTNERS LTD. AND SUBSIDIARIES

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 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 March 31, 2003 OPL has only one remaining leased asset.



The decision to put the reinsurance operations into runoff will significantly
change the future results of OPLs operations and the associated cash flows. There will be no new business written; therefore the cash received from premiums will significantly decrease. The Company has become cash flow negative in its
reinsurance operations and expects this to continue over the next few years. 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-month periods ended March 31, 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
are reviewed periodically to determine if they have sustained an impairment of 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.





---



OVERSEAS
PARTNERS LTD. AND SUBSIDIARIES

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 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 carries 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.



On December 22, 1998, the United States Internal Revenue Service
(IRS) issued a Notice of Deficiency with respect to OPLs 1988 through 1990 taxable years in which it asserted that OPL is subject to United States taxation in the aggregate amount of approximately $170 million, plus additions to
tax and interest, for those years. On March 19, 1999, OPL filed a petition in the United States Tax Court contesting the asserted deficiencies in tax and additions to tax in the Notice of Deficiency. On May 18, 1999, the IRS filed its Answer to
OPLs Petition. The IRS has also asserted that OPL is subject to United States taxation for its 1991 through 1994 taxable years and has proposed an aggregate assessment of $319 million of tax, plus additions to tax and interest, for those
years. OPL has filed a Protest against the proposed assessment with the Appellate Division of the IRS with respect to the years 1991 through 1994. The IRS based its challenges for all years 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.
The IRS has not proposed an assessment for years subsequent to 1994, although a Notice of Proposed Adjustment, reflecting similar positions, has been issued recently by the IRS in connection with the audit of the years 1995 through 1998. The IRS
also could take similar positions for the 1999 year.



On January
22, 2003, OPL and the IRS jointly filed a Stipulation of Settled Issues and entered into a Closing Agreement on Final Determination Covering Specific Matters that substantially reduced the liabilities asserted against OPL described above. 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 for the years 1984 through 1999. However, income associated with
the workers compensation program (including underwriting and investment income) remains subject to dispute for the years 1988 through 1999. At this time, OPL does not have sufficient information to determine how much remains in dispute,
although the amounts involved are presumed to be material.



OPL
believes that it has no tax liability, that it is not subject to United States taxation, and that there is substantial authority for its position. It is vigorously contesting the remaining issue in the Notice of Deficiency for 1988 through 1990 and
will vigorously contest the remaining proposed assessments for 1991 through 1994 and any future assessments.



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

MARCH 31, 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 March 31, 2003 and 2002.
Inter-segment expenses, such as corporate overhead, were allocated based on estimated utilization for the three-month periods ended March 31, 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 March 31, 2003 the portfolio included $834.9 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 are primarily 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 ended March 31, |          
|------------------------------ |  | ---------------------------- | ---------
|                              
|(In thousands)                 |  | 2003                         |          
|                              
|REVENUES                       |  |                              |          
|Reinsurance:                   |  |                              |          
|Premiums earned                |  | $                            | 37,764   
|Commission and fee income      |  |                              | 238      
|Investment income (loss)       |  |                              | 9,821    
|                              
|                               |  |                              | 47,823   
|                              
|Real estate and leasing:       |  |                              |          
|Rentals                        |  |                              | 830      
|Gain on sale of assets         |  |                              |         
|Investment income              |  |                              | 1,661    
|                              
|                               |  |                              | 2,491    
|                              
|Consolidated                   |  |                              | 50,314   
|                              
|                              
|NET INCOME (LOSS) BEFORE TAXES |  |                              |          
|Reinsurance                    |  |                              | 400      
|Real estate and leasing        |  |                              | 13       
|Other operating expenses       |  |                              | (3,011   
|                              
|Consolidated                   |  | $                            | (2,598   
|                              
|                               |  |                              |          
|                              
|(In thousands)                 |  | March 31, 2003               |          
|                              
|ASSETS                         |  |                              |          
|Reinsurance                    |  |                              |          
|Cash and investments           |  | $                            | 2,219,081
|Other                          |  |                              | 817,865  
|                              
|                               |  |                              | 3,036,946
|                              
|Real estate and leasing        |  |                              |          
|Cash and investments           |  |                              | 123,822  
|Other                          |  |                              | 46,682   
|                              
|                               |  |                              | 170,504  
|                              
|Consolidated                   |  | $                            | 3,207,450
|                              



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. The Companys long-lived assets also include $5.8 million relating to the capitalized cost of insurance
licenses owned by OPUS Re and goodwill of $3.3 million relating to the Companys 22% ownership of a Florida based workers compensation insurance company.





---



OVERSEAS
PARTNERS LTD. AND SUBSIDIARIES

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2003

(Unaudited)



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



For the three-month periods ended March 31, 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 2003 and 2002, all of the Companys long-lived assets were located in the United States.



Until January 31, 2002 OPLs real estate and leasing segment included a data processing facility leased to a UPS
subsidiary. 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 their election to terminate the data processing facility lease and their election to exercise their option to purchase the building. On January 31, 2002 UPS purchased the building for $127.9 million, equivalent 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. Total rent from the facility lease was $3.6 million for the three months ended March 31,
2002.



|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 three months ended March 31, 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) are 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. OPRe and OPAL met these requirements for the three months ended March 31, 2003 and 2002. OPL
did not meet the minimum liquidity ratio requirement at December 31, 2001 as significantly all of its assets were invested in subsidiaries. In February 2002 OPL received a distribution of cash from OPCC and has subsequently been in compliance with
the minimum liquidity ratio requirement.
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 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 the Company
without prior approval of the Delaware Insurance Commissioner is limited to the greater of (i) 10% of the Company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 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. At March 31, 2003 and December 31, 2002, OPUS Re met the RBC requirements.
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





---



OVERSEAS
PARTNERS LTD. AND SUBSIDIARIES

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 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 and the contingencies described in Notes 3 and 6 to the Unaudited Consolidated Financial
Statements 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 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. The Company believes that it has meritorious defenses to all
claims asserted against it and intends to defend them 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-months ended March 31, 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 Results of Operations and Financial Condition and the audited consolidated financial statements of the Company at and 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 March 31, 2003 and 2002



Reinsurance:



|(In thousands)                               |  | 2003 |         |   | 2002 |  
|-------------------------------------------- |  | ---- | ------- | - | ---- | -
|                                            
|Gross premiums written                       |  | $    | 70,199  |   |      | $
|Premiums ceded                               |  |      | (1,965  | ) |      |  
|                                            
|Net premiums written                         |  |      | 68,234  |   |      |  
|Change in unearned premiums                  |  |      | (30,470 | ) |      |  
|                                            
|Premiums earned                              |  |      | 37,764  |   |      |  
|Commission and fee income                    |  |      | 238     |   |      |  
|                                            
|                                             |  |      | 38,002  |   |      |  
|                                            
|Losses and loss expenses                     |  |      | (26,417 | ) |      |  
|Commissions, taxes and underwriting expenses |  |      | (20,055 | ) |      |  
|                                            
|                                             |  |      | (46,472 | ) |      |  
|                                            
|Underwriting loss                            |  |      | (8,470  | ) |      |  
|                                            
|Investment income (loss)                     |  |      | 8,870   |   |      |  
|                                            
|Reinsurance income (loss)                    |  | $    | 400     |   |      | $
|                                            



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.



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.



Gross premiums written for the three months ended March 31, 2003 of $70.2
million include $80.4 million of premiums written by OPUS Re relating to multi-year accident & health and agricultural reinsurance treaties that OPUS Re had committed to write prior to the decision to place OPUS Re into runoff. During the three
months ended March 31, 2003 there was also a reduction in premiums written of $10.2 million due to a decrease in estimates of ultimate premiums relating to our Bermuda reinsurance operations.





---



Reinsurance:
(continued)



Premiums ceded for the three months ended March 31,
2003 decreased to $2.0 million compared to $131.4 million for the three months ended March 31, 2002. Premium ceded for the three months ended March 31, 2003 primarily related to stop loss reinsurance purchased for OPUS Res agricultural
reinsurance book of business. Premium ceded for the three months ended March 31, 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.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | $46.8 million of premiums ceded relating to one of our finite risk contracts where we had ceded 48% of our assumed risks to another reinsurer. This contract was
subsequently novated to another reinsurer in the second quarter of 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. Each layer of this excess of loss protection can be reinstated a maximum of either one or two times.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Premiums earned for the three months ended March
31, 2003 decreased to $37.8 million compared to $205.0 million for the three months ended March 31, 2002. This decrease was due to the decision to put our reinsurance operations into runoff. Premiums earned will continue to decrease in future
periods.



Commission and fee income decreased to $0.2 million for
the three months ended March 31, 2003 compared with $1.3 million for the corresponding period in 2002. This decrease is due to a decrease in fees earned on our finite risk contracts due to the effects of commutations and novations following the
decision to put our reinsurance operations into runoff.



Commissions, taxes and underwriting expenses for the three months ended March 31, 2003 decreased by $48.0 million to $20.1 million from $68.0 million for the three months ended March 31, 2002. This decrease was due to the reduction
in premiums earned in the three months ended March 31, 2003 and the change in mix of business written.



Our combined ratio, which is the ratio of the sum of losses, loss expenses, commissions, taxes and other underwriting expenses to earned premiums, was 123.1% for the three months ended March 31, 2003
and we experienced a net underwriting loss of $8.5 million. The underwriting loss was primarily due to:



| |  |  | OPUS Re casualty business, and other long tail programs, where we expect to generate profits through future investment income;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------



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



The combined ratio for the three months ended March 31, 2002 was 107.4% and we experienced a net underwriting loss of $13.8
million.



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.



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
(Loss) Income



|(In thousands)     |  | (Loss) Income 2003 |        |   | Other Comprehensive (Loss) Income 2003 |   |        | Total Return 2003 |  |   | (Loss) Income 2002 |   |  | Other Comprehensive Income (Loss) 2002 |         |   | Total Return 2002 |  
|------------------ |  | ------------------ | ------ | - | -------------------------------------- | - | ------ | ----------------- |  | - | ------------------ | - |  | -------------------------------------- | ------- | - | ----------------- | -
|                  
|Equities           |  |                    |        |   |                                        |   |        |                   |  |   |                    |   |  |                                        |         |   |                   |  
|Available-for-sale |  | $                  | (7,387 | ) |                                        | $ | (3,720 | )                 |  | $ | (11,107            | ) |  | $                                      | (18,156 | ) |                   | $
|Trading            |  |                    | 10,825 |   |                                        |   |       |                   |  |   | 10,825             |   |  |                                        | 6,270   |   |                   |  
|Fixed income       |  |                    | 5,034  |   |                                        |   | 831    |                   |  |   | 5,865              |   |  |                                        | 9,065   |   |                   |  
|Other              |  |                    | 1,349  |   |                                        |   | (62    | )                 |  |   | 1,287              |   |  |                                        | 565     |   |                   |  
|Expenses           |  |                    | (951   | ) |                                        |   |       |                   |  |   | (951               | ) |  |                                        | (2,307  | ) |                   |  
|                  
|                   |  | $                  | 8,870  |   |                                        | $ | (2,951 | )                 |  | $ | 5,919              |   |  | $                                      | (4,563  | ) |                   | $
|                  



As discussed below in
the Liquidity and Capital Resources section, the asset allocation of our reinsurance investment portfolio changed significantly during the year ended December 31, 2002, as a result of the change in the Companys business and the decision to put
the reinsurance operations into runoff. The revised asset allocation reflects our lower risk tolerance and provides more short-term liquidity. 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 $5.9 million for the three months ended March 31, 2003. This consisted of net income of $8.9 million recorded in income and a change in net unrealized
losses of $3.0 million that was recorded in other comprehensive income compared to a total negative return of $9.2 million consisting of a net loss of $4.6 million that was recorded in income and net unrealized losses of $4.7 million for the three
months ended March 31, 2002.



For the three months ended March
31, 2003 our available-for-sale equity portfolio has generated a loss of 3.6%, or $11.1 million, consisting of a loss of $7.4 million that was recorded in income and a change in net unrealized losses of $3.7 million that was 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 and our investment in a Bermuda based life reinsurer, 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 March 31, 2003 the amount of the write-down was $7.5 million including $6.4 million relating to our investment in the Bermuda based life reinsurer.This
investment has generated a total negative return of $3.0 million for the three months ended March 31, 2003 compared to a total negative return of $10.9 million for the same period in 2002. The rest of our available-for-sale equity portfolio closely
tracks the S&P 500 index. During the three months ended March 31, 2003, our S&P 500 equity portfolio generated a loss of 2.7% or $8.1 million, consisting of a loss of $1.0 million and net unrealized losses of $7.1 million that were recorded
in other comprehensive income. During the three months ended March 31, 2002, our available-for-sale equity portfolio generated a loss of 0.9% or $5.7 million, consisting of a loss of $18.2 million and net unrealized gains of $12.5 million that were
recorded in other comprehensive income.



Our trading equities are
multi-manager funds, which are primarily a combination of fixed income strategies, and have generated a gain of 2.0%, or $10.8 million for the three months ended March 31, 2003 compared to a gain of 1.2%, or $6.3 million for the three months ended
March 31, 2002. We record unrealized gains and losses on our multi-manager funds in income.



For the three months ended March 31, 2003 our fixed income portfolios generated a gain of 1.0%, or $5.9 million, consisting of $5.0 million that was recorded in income and net unrealized gains of $0.8
million recorded in other comprehensive income. For the three months ended March 31, 2002 our fixed income portfolios generated a loss of 0.5%, or $7.9 million, consisting of $9.1 million that was recorded in income and net unrealized losses of
$17.0 million recorded in other comprehensive income.



Cash and
cash equivalents earn short-term money market rates which equated to an annualized return of 1.8% for the three months ended March 31, 2003 compared to 1.9% for the same period in 2002.





---



Real Estate and
Leasing:



|(In thousands)                    |  | 2003 |        |   | 2002 |  
|--------------------------------- |  | ---- | ------ | - | ---- | -
|                                 
|REVENUE:                          |  |      |        |   |      |  
|Office building                   |  | $    |       |   |      | $
|Hotel                             |  |      |       |   |      |  
|Leasing                           |  |      | 830    |   |      |  
|Gain on sale of assets            |  |      |       |   |      |  
|                                 
|                                  |  |      | 830    |   |      |  
|                                 
|EXPENSES:                         |  |      |        |   |      |  
|Operating expenses                |  |      | (135   | ) |      |  
|Interest expense                  |  |      | (2,343 | ) |      |  
|Depreciation expense              |  |      |       |   |      |  
|Minority interest in earnings     |  |      |       |   |      |  
|                                 
|                                  |  |      | (2,478 | ) |      |  
|                                 
|                                  |  |      |        |   |      |  
|                                 
|Operating (loss) income           |  |      | (1,648 | ) |      |  
|                                 
|Investment income:                |  |      |        |   |      |  
|Amortization of zero-coupon notes |  |      | 1,548  |   |      |  
|Other                             |  |      | 113    |   |      |  
|                                 
|Investment income                 |  |      | 1,661  |   |      |  
|                                 
|Real estate and leasing income    |  | $    | 13     |   |      | $
|                                 



Office building revenue
for the three months ended March 31, 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.



Hotel revenue for the three months ended March 31, 2003 was $nil due to the
sale of the Marriott Copley Hotel on June 13, 2002.



Leasing
revenue of $0.8 million for the three months ended March 31, 2003 related to a finance lease with the Kmart Corporation of a regional distribution facility in Manteno, Illinois. The reduction in leasing revenue from $4.5 million for the three months
ended March 31, 2002 was due to the sale to UPS of the data processing facility leased to UPS and the termination of the lease on January 31, 2002.



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.



For the three months ended March 31, 2003 operating expenses, interest expense
and depreciation expense decreased to $0.1 million, $2.3 million and $nil, respectively, compared to $26.6 million, $11.9 million and $4.3 million, respectively, for the three months ended March 31, 2002. These decreases were primarily due to the
sales of the data processing facility in January 2002, the Marriott Copley Hotel in June 2002 and Copley Place in July 2002 and the repurchase of $170 million of debt in June 2002.





---



Net (loss) income:



|(In thousands)                              |  | 2003 |        |   | 2002 |  
|------------------------------------------- |  | ---- | ------ | - | ---- | -
|                                           
|NET (LOSS) INCOME BEFORE TAXES              |  |      |        |   |      |  
|Reinsurance                                 |  | $    | 400    |   |      | $
|Real estate and leasing                     |  |      | 13     |   |      |  
|Other operating expenses                    |  |      | (3,011 | ) |      |  
|                                           
|Consolidated net (loss) income before taxes |  |      | (2,598 | ) |      |  
|Income taxes                                |  |      | (723   | ) |      |  
|                                           
|Net (loss) income                           |  | $    | (3,321 | ) |      | $
|                                           



The net loss for the
three months ended March 31, 2003 was $3.3 million compared to net income of $4.5 million for the same period in 2002. The loss was primarily due to the write down in the cost basis of $7.5 million of investments in our equity portfolio, where the
decline in value was considered other than temporary. For the three months ended March 31, 2003 there was a tax charge of $0.7 million compared to a charge of $19.2 million for the same period in 2002. The decrease was primarily due to the tax due
on the gain on sale of the data processing facility in the three months ended March 31, 2002. Basic and diluted net loss per share was $0.03 for the three months ended March 31, 2003 compared to net income per share of $0.04 for the same period in
2002.



Liquidity and Capital Resources



|(In thousands)                                       |  | 2003 |          |   | 2002 |  
|---------------------------------------------------- |  | ---- | -------- | - | ---- | -
|                                                    
|CASH FLOWS                                           |  |      |          |   |      |  
|Operating activities                                 |  | $    | (109,979 | ) |      | $
|Investing activities                                 |  |      | 89,097   |   |      |  
|Financing activities                                 |  |      | (564     | ) |      |  
|                                                    
|Net (decrease) increase in cash and cash equivalents |  | $    | (21,446  | ) |      | $
|                                                    



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. This means that no new reinsurance contracts will be written and there will therefore be a significant reduction in the cash generated
from reinsurance operations. Claim payments are likely to exceed premium receipts in future periods.



Reinsurance operations used $112.7 million for the three months ended March 31, 2003 compared to generating $18.4 million for the three months ended March 31, 2002. This significant increase in cash
used is due to the effect of commutations and novations of reinsurance contracts, the timing of premium receipts and the payment of claims.



Real estate operations used $4.3 million for the three months ended March 31, 2003 compared to using $4.7 million for the three months ended March 31,
2002. The net cash outflow was due to payments of tax and reduced cashflows due to the sale of the Copley Marriott Hotel and the sale of Copley Place.



We received $10.0 million of interest and dividends during the three months ended March 31, 2003 compared to $15.8 million for the three months ended
March 31, 2002.



During the three months ended March 31, 2003 we
used $3.0 million for the payment of other operating expenses compared to using $8.6 million for the three months ended March 31, 2002. The reduced outflow was primarily as a result of the reduction in expenses following the runoff decision.



Investing activities



Our risk tolerance has decreased over recent years as a result of the
cancellation of the profitable shippers risk reinsurance program in October 1999, the increase in accrued losses and loss expenses due to be paid in the next five years and the reduction in our capital base. 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 cash and 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.





---



Investing activities
 (continued)



During the three months ended March 31, 2003,
we purchased $128.8 million and sold $170.4 million of available-for-sale investments compared to $159.0 million and $315.0 million, respectively for the three months ended March 31, 2002. During the first quarter of 2002, sales from our
available-for-sale investment portfolios exceeded purchases by $156.0 million. This was primarily due to the sale of one of our S&P 500 portfolios (to reduce equity price risk), with the proceeds being held in cash and cash equivalents.



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 March 31, 2003 the Company had $834.9 million of assets collateralizing obligations to our cedants, of which $307.8 million was restricted cash and cash equivalents. The collateral
includes $202.1 million held in trust accounts.



During the three
months ending March 31, 2002 our real estate investing activities produced net cash inflow of $141.5 million, which primarily related to the sale of the data processing facility and the land on which it is located. The purchase of the data
processing facility by the Company was originally financed, in 1989, by issuing $73.4 million of 9.875% non-callable bonds, (Series B Bonds), due 2019. 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.



Financing activities



During the
three months ended March 31, 2003 the Company repaid $0.6 million of debt relating to the finance lease with Kmart Corporation. During the same period in 2002 there was a repayment of debt of $1.8 million.



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.



As a result of the decision to restructure OPL and cause
most of 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.



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. Our reinsurance operations have historically provided significant
liquidity in that premiums are received in advance, generally substantially in advance, of the time claims are paid. However, more recently, our current 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 on current business. We expect this trend to continue as a result of our decision to stop writing new business.



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 runoff 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 March 31, 2003 the Company had $834.9 million of cash and investments collateralizing obligations to
our cedants, including $202.1 million held in trust accounts.



At
March 31, 2003 the reinsurance segment had $2.2 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, including those related to the events of September 11, 2001, 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.





---



Sources of capital and
liquidity  (continued)



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 about 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 two financial guarantee contracts that expose the Company to underwriting loss in the
event of credit defaults. These policies are due to expire by the end of 2005. 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 each
reinsurance contract.



The Company is also exposed to credit risk
on losses recoverable from reinsurers and premiums receivable from cedants. The Company mitigates 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 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



There has been no material change in the Companys market risks in 2003. 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.



Item
4.    Controls and Procedures



|(a) |  | Within the 90 days prior to the date of this report, the Company carried out an evaluation, under the supervision and with the participation of the Companys
management, including the Companys President & Chief Executive Officer and Chief Accounting Officer, of the effectiveness of the design and operation of the Companys disclosure controls and procedures as defined in Rule 13a-14(c) and
Rule 15d-14(c) under the Securities Exchange Act of 1934 (the Exchange Act). Based upon that evaluation, the President & Chief Executive Officer and Chief Accounting Officer concluded that the Companys disclosure controls and
procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities
and Exchange Commission rules and forms.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(b) |  | There have been no significant changes in the Companys internal controls or in other factors that could significantly affect internal controls subsequent to
the date of their evaluation.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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, financial guaranty programs that expire in 2005 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
|- |  | ----------------------------------------

|· |  | volatility in global financial markets which could affect our investment portfolio
|- |  | ----------------------------------------------------------------------------------

|· |  | the resolution of any pending or future tax assessments by the IRS against us, and
|- |  | ----------------------------------------------------------------------------------

|· |  | the resolution of other pending litigation.
|- |  | -------------------------------------------



We do not undertake 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 current
legal proceedings to which OPL is a party.



Item
6.    Exhibits and Reports on Form 8-K



|a) |  | Exhibits: None
|-- |  | --------------



|b) |  | Reports on Form 8-K:
|-- |  | --------------------



- On January 28, 2003 OPL filed a report on Form 8-K containing the following information:

Item 5  Other Events. OPL announced that it and the IRS jointly filed a Stipulation of Settled Issues and entered into a Closing
Agreement on Final Determination Covering Specific Matters that substantially reduced the tax liabilities asserted against OPL.

- On January 28, 2003 OPL filed a report on Form 8-K containing the following information:

Item 5 
Other Events. OPL announced that, at the Companys request, A.M. Best Company has withdrawn the Companys financial strength rating and will no longer formally evaluate OPL for the purposes of assigning a rating opinion.

- On February 28, 2003 OPL filed a report on Form 8-K containing the following information:

Item 5  Other Events. OPL issued an announcement updating shareowners of decisions taken at the Companys recent Board of
Directors meeting.

Item 7 Financial Statements, Pro forma Financial Information And Exhibits.

- On April 7, 2003 OPL filed a report on Form 8-K containing the following information:

Item 5  Other Events. On or about April 7, 2003 Overseas Partners Ltd. issued its Annual Report including a letter to shareowners
representing a summary of the Companys 2002 results and news.

Item 7 Financial Statements, Pro forma Financial
Information And Exhibits.





---



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: May 6, 2003 |  |  |  | OVERSEAS PARTNERS LTD.
|----------------- |  |  |  | ----------------------
|                 
|                  |  |  |  | By:                   
|                  |  |  |  |                       



| |  |  |  |    
| |  |  |  | ---
|
| |  |  |  | By:
| |  |  |  |    





---



CERTIFICATIONS



I, Mark R. Bridges,
certify that:



| | 1. |  | I have reviewed this quarterly report on Form 10-Q of Overseas Partners Ltd.;
| | -- |  | -----------------------------------------------------------------------------

| | 2. |  | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4. |  | The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a. |  | Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b. |  | Evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within ninety days prior to the filing date of this quarterly
report (the Evaluation Date); and
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c. |  | Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation
Date;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5. |  | The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee
of the registrants board of directors (or persons performing the equivalent function):
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a. |  | All significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize
and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b. |  | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------

| | 6. |  | The registrants other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Date: May 6, 2003 |  | By:     /s/    MARK R.
BRIDGESMark R. Bridges President and Chief Executive Officer
|----------------- |  | -----------------------------------------------------------------------------------





---



CERTIFICATIONS



I, Chris Fleming,
certify that:



| | 1. |  | I have reviewed this quarterly report on Form 10-Q of Overseas Partners Ltd.;
| | -- |  | -----------------------------------------------------------------------------

| | 2. |  | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4. |  | The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a. |  | Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b. |  | Evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within ninety days prior to the filing date of this quarterly
report (the Evaluation Date); and
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c. |  | Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation
Date;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5. |  | The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee
of the registrants board of directors (or persons performing the equivalent function):
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a. |  | All significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize
and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b. |  | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------

| | 6. |  | The registrants other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Date: May 6, 2003 |  | By:     /s/    CHRIS
FLEMINGChris Fleming Chief Accounting Officer
|----------------- |  | ------------------------------------------------------------------