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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10 - Q



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Quarterly Report Under Section 13 or
15 (d) of

the Securities Exchange Act of 1934



For Quarter Ended March 31, 2004 Commission file Number 0-11538



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Overseas Partners Ltd.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|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)                          



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



N/A

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



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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)                      
|                                      
|118,769,846 Shares                    
|Outstanding at May 10, 2004           
|                                      



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PART I. FINANCIAL INFORMATION

OVERSEAS PARTNERS LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED
BALANCE SHEETS

(In thousands, except share and per share amounts)



|                                                                                                                                                        |  |               |           |   |                   |   |           |  
|------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | --------- | - | ----------------- | - | --------- | -
|                                                                                                                                                        |  | March 31,2004 |           |   | December 31, 2003 |  
|                                                                                                                                                        |  | (Unaudited)   |           |   |                   |  
|ASSETS:                                                                                                                                                 |  |               |           |   |                   |   |           |  
|Investments:                                                                                                                                            |  |               |           |   |                   |   |           |  
|Trading, at fair value                                                                                                                                 |  |               |           |   |                   |   |           |  
|Equity securities (cost: 2004  $357,759, 2003  $357,759)                                                                                              |  | $             | 479,505   |   |                   | $ | 472,298   |  
|Available-for-sale, at fair value                                                                                                                      |  |               |           |   |                   |   |           |  
|Debt securities (amortized cost: 2004  $399,539, 2003  $303,158)                                                                                      |  |               | 402,991   |   |                   |   | 303,291   |  
|Restricted debt securities (amortized cost: 2004  $307,244, 2003  $561,730)                                                                           |  |               | 311,741   |   |                   |   | 569,045   |  
|Equity securities (cost: 2004  $1,064, 2003  $1,064)                                                                                                  |  |               | 1,897     |   |                   |   | 2,447     |  
|                                                                                                                                                        |  |               |           |   |                   |   |           |  
|                                                                                                                                                        |  |               | 1,196,134 |   |                   |   | 1,347,081 |  
|Cash and cash equivalents                                                                                                                               |  |               | 121,457   |   |                   |   | 302,198   |  
|Restricted cash and cash equivalents                                                                                                                    |  |               | 119,152   |   |                   |   | 95,518    |  
|Reinsurance balances receivable                                                                                                                         |  |               | 23,506    |   |                   |   | 30,216    |  
|Funds withheld                                                                                                                                          |  |               | 39,331    |   |                   |   | 252,646   |  
|Paid losses recoverable from reinsurers                                                                                                                 |  |               | 29,965    |   |                   |   | 26,279    |  
|Unpaid losses and loss expenses recoverable from reinsurers                                                                                             |  |               | 60,411    |   |                   |   | 64,510    |  
|Deferred acquisition costs                                                                                                                              |  |               | 1,029     |   |                   |   | 3,091     |  
|Other assets                                                                                                                                            |  |               |           |   |                   |   |           |  
|Investment in private equity funds, at cost                                                                                                             |  |               | 23,137    |   |                   |   | 22,628    |  
|Investment in affiliate                                                                                                                                 |  |               | 5,000     |   |                   |   | 5,000     |  
|Other                                                                                                                                                   |  |               | 33,198    |   |                   |   | 38,960    |  
|                                                                                                                                                        |  |               |           |   |                   |   |           |  
|Total assets                                                                                                                                            |  | $             | 1,652,320 |   |                   | $ | 2,188,127 |  
|                                                                                                                                                        |  |               |           |   |                   |   |           |  
|LIABILITIES AND MEMBERS EQUITY:                                                                                                                        |  |               |           |   |                   |   |           |  
|Liabilities:                                                                                                                                            |  |               |           |   |                   |   |           |  
|Accrued losses and loss expenses                                                                                                                        |  | $             | 808,228   |   |                   | $ | 1,078,704 |  
|Unearned premiums                                                                                                                                       |  |               | 9,269     |   |                   |   | 21,745    |  
|Reinsurance balances payable                                                                                                                            |  |               | 87,271    |   |                   |   | 61,652    |  
|Accounts payable and other liabilities                                                                                                                  |  |               | 27,046    |   |                   |   | 27,965    |  
|Deferred income taxes                                                                                                                                   |  |               | 206       |   |                   |   | 174       |  
|Distribution payable                                                                                                                                    |  |               |          |   |                   |   | 296,924   |  
|                                                                                                                                                        |  |               |           |   |                   |   |           |  
|Total liabilities                                                                                                                                       |  | $             | 932,020   |   |                   | $ | 1,487,164 |  
|                                                                                                                                                        |  |               |           |   |                   |   |           |  
|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; outstanding 118,769,846 shares (2003:
118,769,846 shares) |  |               | 12,750    |   |                   |   | 12,750    |  
|Contributed surplus                                                                                                                                     |  |               | 37,650    |   |                   |   | 37,650    |  
|Retained earnings                                                                                                                                       |  |               | 820,079   |   |                   |   | 800,695   |  
|Treasury stock (2004  8,730,154 shares, 2003  8,730,154 shares), at cost                                                                              |  |               | (158,755  | ) |                   |   | (158,755  | )
|Deferred compensation                                                                                                                                   |  |               |          |   |                   |   | (34       | )
|Accumulated other comprehensive income                                                                                                                  |  |               | 8,576     |   |                   |   | 8,657     |  
|                                                                                                                                                        |  |               |           |   |                   |   |           |  
|Total members equity                                                                                                                                   |  |               | 720,300   |   |                   |   | 700,963   |  
|                                                                                                                                                        |  |               |           |   |                   |   |           |  
|Total liabilities and members equity                                                                                                                   |  | $             | 1,652,320 |   |                   | $ | 2,188,127 |  
|                                                                                                                                                        |  |               |           |   |                   |   |           |  
|Net book value per share                                                                                                                                |  | $             | 6.06      |   |                   | $ | 5.90      |  
|                                                                                                                                                        |  |               |           |   |                   |   |           |  



See condensed notes to
unaudited consolidated financial statements.





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OVERSEAS PARTNERS LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)



|                                                  |  |                             |         |   |      |   |         |  
|------------------------------------------------- |  | --------------------------- | ------- | - | ---- | - | ------- | -
|                                                  |  | Three Months EndedMarch 31, |        
|                                                  |  | 2004                        |         |   | 2003 |  
|REVENUES:                                         |  |                             |         |   |      |   |         |  
|Gross reinsurance premiums written                |  | $                           | 3,373   |   |      | $ | 70,199  |  
|Reinsurance premiums ceded                        |  |                             | (121    | ) |      |   | (1,965  | )
|                                                  |  |                             |         |   |      |   |         |  
|Reinsurance premiums written                      |  |                             | 3,252   |   |      |   | 68,234  |  
|Change in unearned premiums                       |  |                             | 12,020  |   |      |   | (30,470 | )
|                                                  |  |                             |         |   |      |   |         |  
|Reinsurance premiums earned                       |  |                             | 15,272  |   |      |   | 37,764  |  
|Commission and fee income                         |  |                             | (2      | ) |      |   | 238     |  
|Finance lease                                     |  |                             |        |   |      |   | 830     |  
|Interest                                          |  |                             | 8,876   |   |      |   | 10,318  |  
|Realized gain (loss) on securities                |  |                             | 2,918   |   |      |   | (8,877  | )
|Unrealized gain on trading securities             |  |                             | 7,206   |   |      |   | 9,718   |  
|Amortization of fixed income securities           |  |                             | (2,853  | ) |      |   | (576    | )
|Dividends                                         |  |                             | 159     |   |      |   | 899     |  
|                                                  |  |                             |         |   |      |   |         |  
|                                                  |  |                             | 31,576  |   |      |   | 50,314  |  
|                                                  |  |                             |         |   |      |   |         |  
|EXPENSES:                                         |  |                             |         |   |      |   |         |  
|Reinsurance losses and loss expenses              |  |                             | 2,588   |   |      |   | 26,417  |  
|Reinsurance commissions, taxes and other expenses |  |                             | 5,809   |   |      |   | 20,055  |  
|Real estate and leasing operating expenses        |  |                             |        |   |      |   | 135     |  
|Interest expense                                  |  |                             |        |   |      |   | 2,343   |  
|Investment expenses                               |  |                             | 585     |   |      |   | 951     |  
|Other operating expenses                          |  |                             | 3,119   |   |      |   | 3,011   |  
|                                                  |  |                             |         |   |      |   |         |  
|                                                  |  |                             | 12,101  |   |      |   | 52,912  |  
|                                                  |  |                             |         |   |      |   |         |  
|Income (loss) before income taxes                 |  |                             | 19,475  |   |      |   | (2,598  | )
|Income taxes                                      |  |                             | (91     | ) |      |   | (723    | )
|                                                  |  |                             |         |   |      |   |         |  
|Net income (loss)                                 |  | $                           | 19,384  |   |      | $ | (3,321  | )
|                                                  |  |                             |         |   |      |   |         |  
|Basic and diluted net income (loss) per share     |  | $                           | 0.16    |   |      | $ | (0.03   | )
|                                                  |  |                             |         |   |      |   |         |  
|Weighted average number of shares outstanding     |  |                             | 118,770 |   |      |   | 118,855 |  
|                                                  |  |                             |         |   |      |   |         |  



See condensed notes to
unaudited consolidated financial statements.



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OVERSEAS PARTNERS LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, except per share amounts)

(Unaudited)



|                                                                            |  |                              |        |   |      |   |         |  
|--------------------------------------------------------------------------- |  | ---------------------------- | ------ | - | ---- | - | ------- | -
|                                                                            |  | Three Months Ended March 31, |       
|                                                                            |  | 2004                         |        |   | 2003 |  
|Net income (loss)                                                           |  | $                            | 19,384 |   |      | $ | (3,321  | )
|Other comprehensive loss:                                                   |  |                              |        |   |      |   |         |  
|Net unrealized holding losses on available-for-sale securities              |  |                              | (2,966 | ) |      |   | (10,616 | )
|Less: reclassification adjustment for gains included in net income          |  |                              | 2,918  |   |      |   | 7,384   |  
|                                                                            |  |                              |        |   |      |   |         |  
|Other comprehensive loss before income tax                                  |  |                              | (48    | ) |      |   | (3,232  | )
|                                                                            |  |                             
|Income tax (payable) receivable related to other comprehensive income items |  |                              | (33    | ) |      |   | 221     |  
|                                                                            |  |                              |        |   |      |   |         |  
|Other comprehensive loss                                                    |  |                              | (81    | ) |      |   | (3,011  | )
|                                                                            |  |                              |        |   |      |   |         |  
|Comprehensive income (loss)                                                 |  | $                            | 19,303 |   |      | $ | (6,332  | )
|                                                                            |  |                              |        |   |      |   |         |  



See condensed notes to
unaudited consolidated financial statements.



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OVERSEAS PARTNERS LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF MEMBERS EQUITY

Three Months Ended March 31, 2004 and 2003

(In thousands)

(Unaudited)



|                                                                  |  |                 |   |              |         |                |   |        |                       |        |   |                     |   |                   |   |  |                                            |      |   |                       |   |        |  |   |           |   |  |   |        |   |  |   |           |  
|----------------------------------------------------------------- |  | --------------- | - | ------------ | ------- | -------------- | - | ------ | --------------------- | ------ | - | ------------------- | - | ----------------- | - |  | ------------------------------------------ | ---- | - | --------------------- | - | ------ |  | - | --------- | - |  | - | ------ | - |  | - | --------- | -
|                                                                  |  | PreferenceStock |   | Common Stock |         | Treasury Stock |   |        | Deferred Compensation |        |   | Contributed Surplus |   | Retained Earnings |   |  | AccumulatedOtherComprehensive(Loss) Income |      |   | Total Members Equity |  
|                                                                  |  | Shares          |   | Amount       |         | Shares         |   |        | Amount                |        |   |                     |   |                   |  
|Balance, January 1, 2003                                          |  | $               |  |              | 127,500 |                | $ | 12,750 |                       | (8,645 | ) |                     | $ | (158,047          | ) |  | $                                          | (310 | ) |                       | $ | 37,650 |  | $ | 1,289,475 |   |  | $ | 26,547 |   |  | $ | 1,208,065 |  
|Net loss                                                          |  |                 |  |              |        |                |   |       |                       |       |   |                     |   |                  |   |  |                                            |     |   |                       |   |       |  |   | (3,321    | ) |  |   |       |   |  |   | (3,321    | )
|Distribution declared ($2.00 per share)                           |  |                 |  |              |        |                |   |       |                       |       |   |                     |   |                  |   |  |                                            |     |   |                       |   |       |  |   | (237,711  | ) |  |   |       |   |  |   | (237,711  | )
|Amortization of restricted common stock compensation              |  |                 |  |              |        |                |   |       |                       |       |   |                     |   |                  |   |  |                                            | 157  |   |                       |   |       |  |   |          |   |  |   |       |   |  |   | 157       |  
|Net unrealized loss on available- for-sale securities, net of tax |  |                 |  |              |        |                |   |       |                       |       |   |                     |   |                  |   |  |                                            |     |   |                       |   |       |  |   |          |   |  |   | (3,011 | ) |  |   | (3,011    | )
|                                                                  |  |                 |   |              |         |                |   |        |                       |        |   |                     |   |                   |   |  |                                            |      |   |                       |   |        |  |   |           |   |  |   |        |   |  |   |           |  
|Balance, March 31, 2003                                           |  | $               |  |              | 127,500 |                | $ | 12,750 |                       | (8,645 | ) |                     | $ | (158,047          | ) |  | $                                          | (153 | ) |                       | $ | 37,650 |  | $ | 1,048,443 |   |  | $ | 23,536 |   |  | $ | 964,179   |  
|                                                                  |  |                 |   |              |         |                |   |        |                       |        |   |                     |   |                   |   |  |                                            |      |   |                       |   |        |  |   |           |   |  |   |        |   |  |   |           |  
|Balance, January 1, 2004                                          |  | $               |  |              | 127,500 |                | $ | 12,750 |                       | (8,730 | ) |                     | $ | (158,755          | ) |  | $                                          | (34  | ) |                       | $ | 37,650 |  | $ | 800,695   |   |  | $ | 8,657  |   |  | $ | 700,963   |  
|Net income                                                        |  |                 |  |              |        |                |   |       |                       |       |   |                     |   |                  |   |  |                                            |     |   |                       |   |       |  |   | 19,384    |   |  |   |       |   |  |   | 19,384    |  
|Amortization of restricted common stock compensation              |  |                 |  |              |        |                |   |       |                       |       |   |                     |   |                  |   |  |                                            | 34   |   |                       |   |       |  |   |          |   |  |   |       |   |  |   | 34        |  
|Net unrealized loss on available- for-sale securities, net of tax |  |                 |  |              |        |                |   |       |                       |       |   |                     |   |                  |   |  |                                            |     |   |                       |   |       |  |   |          |   |  |   | (81    | ) |  |   | (81       | )
|                                                                  |  |                 |   |              |         |                |   |        |                       |        |   |                     |   |                   |   |  |                                            |      |   |                       |   |        |  |   |           |   |  |   |        |   |  |   |           |  
|Balance, March 31, 2004                                           |  | $               |  |              | 127,500 |                | $ | 12,750 |                       | (8,730 | ) |                     | $ | (158,755          | ) |  | $                                          |     |   |                       | $ | 37,650 |  | $ | 820,079   |   |  | $ | 8,576  |   |  | $ | 720,300   |  
|                                                                  |  |                 |   |              |         |                |   |        |                       |        |   |                     |   |                   |   |  |                                            |      |   |                       |   |        |  |   |           |   |  |   |        |   |  |   |           |  



See condensed notes to
unaudited consolidated financial statements.



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OVERSEAS PARTNERS LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S.$ in thousands)

(Unaudited)



|                                                                                  |  |                              |          |   |      |   |          |  
|--------------------------------------------------------------------------------- |  | ---------------------------- | -------- | - | ---- | - | -------- | -
|                                                                                  |  | Three Months Ended March 31, |         
|                                                                                  |  | 2004                         |          |   | 2003 |  
|CASH FLOW FROM OPERATING ACTIVITIES:                                              |  |                              |          |   |      |   |          |  
|Net income (loss)                                                                 |  | $                            | 19,384   |   |      | $ | (3,321   | )
|Adjustments to reconcile net income to net cash expended by operating activities: |  |                              |          |   |      |   |          |  
|Deferred income taxes                                                             |  |                              |         |   |      |   | (738     | )
|Realized (gain) loss on securities                                                |  |                              | (2,918   | ) |      |   | 8,877    |  
|Unrealized gain on trading securities                                             |  |                              | (7,206   | ) |      |   | (9,718   | )
|Amortization of fixed income securities                                           |  |                              | 2,853    |   |      |   | 576      |  
|Amortization of restricted common stock compensation                              |  |                              | 34       |   |      |   | 157      |  
|Other                                                                             |  |                              |         |   |      |   | 232      |  
|Changes in assets and liabilities:                                                |  |                              |          |   |      |   |          |  
|Reinsurance balances receivable                                                   |  |                              | 6,710    |   |      |   | 24,546   |  
|Losses and loss expenses recoverable                                              |  |                              | 413      |   |      |   | (639     | )
|Funds withheld                                                                    |  |                              | 213,315  |   |      |   | 1,822    |  
|Deferred acquisition costs                                                        |  |                              | 2,062    |   |      |   | (4,807   | )
|Unearned premiums ceded                                                           |  |                              |         |   |      |   | (869     | )
|Other assets                                                                      |  |                              | 5,252    |   |      |   | (838     | )
|Accrued losses and loss expenses                                                  |  |                              | (270,476 | ) |      |   | (107,943 | )
|Unearned premiums                                                                 |  |                              | (12,476  | ) |      |   | 31,120   |  
|Reinsurance balances payable                                                      |  |                              | 25,619   |   |      |   | (49,628  | )
|Accounts payable and other liabilities                                            |  |                              | (919     | ) |      |   | 1,192    |  
|                                                                                  |  |                              |          |   |      |   |          |  
|Net cash flow expended by operating activities                                    |  |                              | (18,353  | ) |      |   | (109,979 | )
|                                                                                  |  |                              |          |   |      |   |          |  
|CASH FLOW FROM INVESTING ACTIVITIES:                                              |  |                              |          |   |      |   |          |  
|Proceeds from sales and maturities of available-for-sale investments              |  |                              | 446,007  |   |      |   | 170,365  |  
|Purchase of available-for-sale investments                                        |  |                              | (287,837 | ) |      |   | (128,819 | )
|Net movement in restricted cash and cash equivalents                              |  |                              | (23,634  | ) |      |   | 47,551   |  
|                                                                                  |  |                              |          |   |      |   |          |  
|Net cash flow generated by investing activities                                   |  |                              | 134,536  |   |      |   | 89,097   |  
|                                                                                  |  |                              |          |   |      |   |          |  
|CASH FLOW FROM FINANCING ACTIVITIES:                                              |  |                              |          |   |      |   |          |  
|Repayment of debt                                                                 |  |                              |         |   |      |   | (564     | )
|Liquidating distribution                                                          |  |                              | (296,924 | ) |      |   |         |  
|                                                                                  |  |                              |          |   |      |   |          |  
|Net cash flow expended by financing activities                                    |  |                              | (296,924 | ) |      |   | (564     | )
|                                                                                  |  |                              |          |   |      |   |          |  
|Net decrease in cash and cash equivalents                                         |  |                              | (180,741 | ) |      |   | (21,446  | )
|Cash and cash equivalents:                                                        |  |                              |          |   |      |   |          |  
|Beginning of period                                                               |  |                              | 302,198  |   |      |   | 492,158  |  
|                                                                                  |  |                              |          |   |      |   |          |  
|End of period                                                                     |  | $                            | 121,457  |   |      | $ | 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.



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OVERSEAS PARTNERS LTD. AND SUBSIDIARIES

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2004

(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 was 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 disposed of all its real estate assets such that the Company is no longer engaged in the real
estate and leasing business.



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



The results of operations for the three-month periods ended March 31, 2004 and 2003 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, 2003.



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.



In December 2003, the Financial Accounting Standards Board (FASB) revised Interpretation 46, Consolidation of Variable Interest Entities
(FIN 46R). FIN 46R requires the primary beneficiary of a variable interest entity (VIE) to include the assets, liabilities and results of the activities of the VIE in its consolidated financial statements, as well as
disclosure of information about the assets and liabilities, and the nature, purpose and activities of consolidated VIEs. In addition, FIN 46R requires disclosure of information about the nature, purpose and activities on unconsolidated VIEs in which
the Company holds a significant variable interest. For the purposes of FIN 46R OPL is a nonpublic entity and therefore FIN 46R is effective immediately for any interests in VIEs acquired after December 31, 2003 and effective January 1, 2005 for all
VIEs acquired before December 31, 2003. The Company is still evaluating the impact of FIN 46R on its financial statements related to VIEs acquired prior to December 31, 2003.



3. TAXES



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



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



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OVERSEAS PARTNERS LTD. AND SUBSIDIARIES

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2004

(Unaudited)



4. BUSINESS SEGMENTS



In the past, the Companys operations have been 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 were owned and managed through United States subsidiaries of Overseas Partners Capital Corp. (OPCC), a wholly-owned subsidiary
of OPL. On December 31, 2003 OPCC was liquidated and all remaining assets and liabilities distributed to OPL. The Company is no longer engaged in the real estate and leasing business. There were no inter-segment revenues earned for the three-month
period ended March 31, 2003. Corporate expenses were allocated to segments based on estimated utilization for the three-month periods ended March 31, 2004 and 2003.



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, 2003. 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. Summary financial information about the Companys segments is presented in the
following tables:



|                               |  |                              |           |   |                   |   |           |  
|------------------------------ |  | ---------------------------- | --------- | - | ----------------- | - | --------- | -
|                               |  | Three months ended March 31, |          
|(In thousands)                 |  | 2004                         |           |   | 2003              |  
|REVENUES                       |  |                              |           |   |                   |   |           |  
|Reinsurance:                   |  |                              |           |   |                   |   |           |  
|Premiums earned                |  | $                            | 15,272    |   |                   | $ | 37,764    |  
|Commission and fee income      |  |                              | (2        | ) |                   |   | 238       |  
|Investment income (loss)       |  |                              | 16,306    |   |                   |   | 9,821     |  
|                               |  |                              |           |   |                   |   |           |  
|                               |  |                              | 31,576    |   |                   |   | 47,823    |  
|                               |  |                              |           |   |                   |   |           |  
|Real estate and leasing:       |  |                              |           |   |                   |   |           |  
|Rentals                        |  |                              |          |   |                   |   | 830       |  
|Investment income              |  |                              |          |   |                   |   | 1,661     |  
|                               |  |                              |           |   |                   |   |           |  
|                               |  |                              |          |   |                   |   | 2,491     |  
|                               |  |                              |           |   |                   |   |           |  
|Consolidated                   |  |                              | 31,576    |   |                   |   | 50,314    |  
|                               |  |                              |           |   |                   |   |           |  
|NET INCOME (LOSS) BEFORE TAXES |  |                              |           |   |                   |   |           |  
|Reinsurance                    |  |                              | 22,594    |   |                   |   | 400       |  
|Real estate and leasing        |  |                              |          |   |                   |   | 13        |  
|Other operating expenses       |  |                              | (3,119    | ) |                   |   | (3,011    | )
|                               |  |                              |           |   |                   |   |           |  
|Consolidated                   |  | $                            | 19,475    |   |                   | $ | (2,598    | )
|                               |  |                              |           |   |                   |   |           |  
|(In thousands)                 |  | March 31,2004                |           |   | December 31, 2003 |  
|ASSETS                         |  |                              |           |   |                   |   |           |  
|Reinsurance                    |  |                              |           |   |                   |   |           |  
|Cash and investments           |  | $                            | 1,436,743 |   |                   | $ | 1,744,797 |  
|Other                          |  |                              | 215,577   |   |                   |   | 443,330   |  
|                               |  |                              |           |   |                   |   |           |  
|Consolidated                   |  | $                            | 1,652,320 |   |                   | $ | 2,188,127 |  
|                               |  |                              |           |   |                   |   |           |  



For the three-month periods ended
March 31, 2004 and 2003 reinsurance revenues were derived primarily from sources located in the United States. All of the Companys leasing and real estate revenues were generated in the United States.



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OVERSEAS PARTNERS LTD. AND SUBSIDIARIES

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2004

(Unaudited)



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, 2004 and the year ended December 31, 2003.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | The Act also requires each of OPL and its Bermuda based reinsurance subsidiaries to maintain a minimum liquidity ratio whereby the value of their relevant assets (consisting mainly
of cash, investments, receivables and other liquid assets) is not less than 75% of the amount of their relevant liabilities (consisting mainly of accrued losses and loss expenses, unearned premiums, reinsurance balances payable and other accounts
payable). Investments in and advances to subsidiaries are not included in the definition of relevant assets for purposes of this test. OPL, OPRe and OPAL met these requirements for the three months ended March 31, 2004 and the year ended December
31, 2003.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. | Dividend payments by OPLs United States based reinsurance subsidiary OPUS Re are limited by statutory regulations. The dividend restrictions are generally based on net
investment income, statutory net income and on certain levels of policyholders surplus as determined under statutory accounting practices. The maximum amount of dividends out of unassigned surplus that may be paid by OPUS Re without prior
approval of the Delaware Insurance Commissioner is limited to the greater of (i) 10% of OPUS Res surplus as regards policyholders as shown in the preceding years annual statement or (ii) net income, excluding realized capital gains, as
shown in the preceding years annual statement. As such, the maximum allowable dividend payable by OPUS Re in 2004 is $nil unless regulatory authority approval is obtained.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4. | OPUS Re is also subject to certain Risk-Based Capital (RBC) requirements as specified by the National Association of Insurance Commissioners. Under those requirements,
the amount of capital and surplus maintained by an insurance company is to be determined based on the various risk factors related to it. If a companys RBC is below a specified level, the company may be required to implement various corrective
actions, and if RBC is less than other, lower levels, the company is subject to regulatory action, including voluntary or mandatory control by the insurance regulators of its state of domicile. At March 31, 2004 and December 31, 2003, OPUS Res
RBC requirements exceeded the level at which any corrective action would be required.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 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, the risk of investment losses, ongoing operating expenses, and the availability of unrestricted liquid assets prior
to making such distributions. On November 25, 2003 OPL received approval from the Bermuda Monetary Authority to permit the payment of a distribution to shareowners of $2.50 per share. This $296.9 million distribution was paid to shareowners on
January 5, 2004.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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OVERSEAS PARTNERS LTD. AND SUBSIDIARIES

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2004

(Unaudited)



6. CONTINGENCIES



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



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



During October 2003 the parties reached a tentative settlement with respect to all claims brought by the various plaintiffs. The settlement
agreement was executed on December 31, 2003 and on January 16, 2004 the Court preliminarily approved the settlement. A settlement hearing will be held on May 21, 2004 at which time the Court will determine as a final matter whether the settlement
should be approved. Assuming that the Court gives final approval, the Company expects that it would incur additional costs of approximately $10 million in connection with the settlement, and this amount was accrued in the financial statements during
the year ended December 31, 2003. However, there can be no assurance that the Court will approve the agreement.



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



---

OVERSEAS PARTNERS LTD. AND SUBSIDIARIES

ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Transacted in U.S. Dollars)



The following is a discussion and analysis of our results of
operations, financial condition, liquidity, and capital resources as of and for the three-months ended March 31, 2004 and 2003. Our results of operations and cash flows for any interim period are not necessarily indicative of our results for the
full year. Due to the runoff status of the Company, our results are likely to vary significantly from period to period. This discussion and analysis should be read in conjunction with the accompanying unaudited condensed consolidated financial
statements and notes thereto and the Managements Discussion and Analysis of Financial Condition and Results of Operations and the audited consolidated financial statements of the Company for the year ended December 31, 2003 and
notes thereto included in the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2003.



RESULTS OF OPERATIONS



Three Months Ended March 31, 2004 and 2003



Net income (loss):



|                                              |  |                              |        |   |      |   |        |  
|--------------------------------------------- |  | ---------------------------- | ------ | - | ---- | - | ------ | -
|                                              |  | Three months ended March 31, |       
|(In thousands except for per share amounts)   |  | 2004                         |        |   | 2003 |  
|NET INCOME (LOSS) BEFORE TAXES                |  |                              |        |   |      |   |        |  
|Reinsurance                                   |  | $                            | 22,594 |   |      | $ | 400    |  
|Real estate and leasing                       |  |                              |       |   |      |   | 13     |  
|Other operating expenses                      |  |                              | (3,119 | ) |      |   | (3,011 | )
|                                              |  |                              |        |   |      |   |        |  
|Consolidated net income (loss) before taxes   |  |                              | 19,475 |   |      |   | (2,598 | )
|Income taxes                                  |  |                              | (91    | ) |      |   | (723   | )
|                                              |  |                              |        |   |      |   |        |  
|Net income (loss)                             |  | $                            | 19,384 |   |      | $ | (3,321 | )
|                                              |  |                              |        |   |      |   |        |  
|Basic and diluted net income (loss) per share |  | $                            | 0.16   |   |      | $ | (0.03  | )
|                                              |  |                              |        |   |      |   |        |  



During the three months ended March
31, 2004 we continued to make progress towards our runoff goals and objectives. We commuted or otherwise settled several reinsurance contracts, resulting in a reduction in reinsurance liabilities in excess of $250 million.



The net income for the three months ended March 31, 2004 was $19.4 million compared to net
loss of $3.3 million for the same period in 2003. The net income for the three months ended March 31, 2004 was primarily due to net savings of approximately $10 million generated through commutations and reinsurance investment income of $15.7
million, offset by the internal costs of runoff and other operating expenses. The reinsurance investment income was primarily due to positive returns on both our fixed income portfolio and our investments in multi-manager funds. Basic and diluted
net income per share was $0.16 for the three months ended March 31, 2004 compared to a net loss per share of $0.03 for the same period in 2003.



During the fourth quarter of 2003 we sold our final remaining leased asset and the Company is therefore no longer engaged in the real estate and leasing business.



---

A more detailed discussion of our operating results for the reinsurance segment for the three-month periods ended March
31, 2004 and 2003 is set out below.



Reinsurance Segment:



|                                      |  |                              |        |   |      |   |         |  
|------------------------------------- |  | ---------------------------- | ------ | - | ---- | - | ------- | -
|                                      |  | Three months ended March 31, |       
|(In thousands)                        |  | 2004                         |        |   | 2003 |  
|Gross premiums written                |  | $                            | 3,373  |   |      | $ | 70,199  |  
|Premiums ceded                        |  |                              | (121   | ) |      |   | (1,965  | )
|                                      |  |                              |        |   |      |   |         |  
|Net premiums written                  |  |                              | 3,252  |   |      |   | 68,234  |  
|Change in unearned premiums           |  |                              | 12,020 |   |      |   | (30,470 | )
|                                      |  |                              |        |   |      |   |         |  
|Premiums earned                       |  |                              | 15,272 |   |      |   | 37,764  |  
|Commission and fee income             |  |                              | (2     | ) |      |   | 238     |  
|                                      |  |                              |        |   |      |   |         |  
|                                      |  |                              | 15,270 |   |      |   | 38,002  |  
|                                      |  |                              |        |   |      |   |         |  
|Losses and loss expenses              |  |                              | (2,588 | ) |      |   | (26,417 | )
|Commissions, taxes and other expenses |  |                              | (5,809 | ) |      |   | (20,055 | )
|                                      |  |                              |        |   |      |   |         |  
|                                      |  |                              | (8,397 | ) |      |   | (46,472 | )
|                                      |  |                              |        |   |      |   |         |  
|Underwriting income (loss)            |  |                              | 6,873  |   |      |   | (8,470  | )
|                                      |  |                              |        |   |      |   |         |  
|Investment income, net of expenses    |  |                              | 15,721 |   |      |   | 8,870   |  
|                                      |  |                              |        |   |      |   |         |  
|Reinsurance income                    |  | $                            | 22,594 |   |      | $ | 400     |  
|                                      |  |                              |        |   |      |   |         |  



Underwriting



During the three months ended March 31, 2004 gross premiums written decreased to $3.4
million from $70.2 million for the three months ended March 31, 2003. Gross premiums written for the three months ended March 31, 2004 were due to increases in estimates of ultimate premiums. Gross premiums written for the three months ended March
31, 2003 of $70.2 million included $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.



Premiums earned for the three months ended March 31, 2004 decreased to $15.3 million compared
to $37.8 million for the three months ended March 31, 2003. This decrease is a result of the reinsurance operations of the Company being runoff. Premiums earned will continue to decrease significantly in future periods.



For the three months ended March 31, 2004, we generated net underwriting income of $6.9
million, which is primarily due to net savings of approximately $10 million generated by the commutation of two large reinsurance contracts, offset by loss adjustment expenses of $2.7 million, consisting largely of letter of credit fees and internal
costs of runoff.



For the three months ended March 31, 2003 we experienced a
net underwriting loss of $8.5 million. This underwriting loss was primarily due to:



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



| |  | Loss adjustment expenses, comprising largely legal fees and internal costs of runoff of approximately $5.5 million.
| | - | -------------------------------------------------------------------------------------------------------------------



The Company is engaged in several ongoing disputes with ceding companies, including
arbitration and litigation that have arisen in the ordinary course of business. The Company continues to reserve for losses and loss expenses on all disputed contracts without regard to any possibility of a favorable outcome. However, the
uncertainty surrounding such estimates is increased by the fact that the Company may not have received current loss information from the ceding company during the period of the dispute and may not have had the opportunity to audit or otherwise
review the reliability of such reported information. In particular the Company provided workers compensation 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 and accounts for in excess of 20% of the Companys current reserves for
accrued losses and loss expenses. 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.



---

Reinsurance Investment Income



|                   |  |                                   |        |   |                                   |   |      |             |  |   |               |   |  |                                 |        |   |             |   |        |   |  |   |         |  
|------------------ |  | --------------------------------- | ------ | - | --------------------------------- | - | ---- | ----------- |  | - | ------------- | - |  | ------------------------------- | ------ | - | ----------- | - | ------ | - |  | - | ------- | -
|                   |  | Three months ended March 31, 2004 |        |   | Three months ended March 31, 2003 |  
|(In thousands)     |  | Income(Loss)                      |        |   | OtherComprehensive(Loss) Income   |   |      | TotalReturn |  |   | (Loss) Income |   |  | OtherComprehensive(Loss) Income |        |   | TotalReturn |  
|Equities           |  |                                   |        |   |                                   |   |      |             |  |   |               |   |  |                                 |        |   |             |   |        |   |  |   |         |  
|Available-for-sale |  | $                                 |       |   |                                   | $ | (549 | )           |  | $ | (549          | ) |  | $                               | (7,387 | ) |             | $ | (3,720 | ) |  | $ | (11,107 | )
|Trading            |  |                                   | 8,255  |   |                                   |   |     |             |  |   | 8,255         |   |  |                                 | 10,825 |   |             |   |       |   |  |   | 10,825  |  
|Fixed income       |  |                                   | 7,764  |   |                                   |   | 468  |             |  |   | 8,232         |   |  |                                 | 5,034  |   |             |   | 831    |   |  |   | 5,865   |  
|Other              |  |                                   | 287    |   |                                   |   |     |             |  |   | 287           |   |  |                                 | 1,349  |   |             |   | (62    | ) |  |   | 1,287   |  
|Expenses           |  |                                   | (585   | ) |                                   |   |     |             |  |   | (585          | ) |  |                                 | (951   | ) |             |   |       |   |  |   | (951    | )
|                   |  |                                   |        |   |                                   |   |      |             |  |   |               |   |  |                                 |        |   |             |   |        |   |  |   |         |  
|                   |  | $                                 | 15,721 |   |                                   | $ | (81  | )           |  | $ | 15,640        |   |  | $                               | 8,870  |   |             | $ | (2,951 | ) |  | $ | 5,919   |  
|                   |  |                                   |        |   |                                   |   |      |             |  |   |               |   |  |                                 |        |   |             |   |        |   |  |   |         |  



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. Despite the different accounting treatment of the trading and available-for-sale portfolios, we manage the Companys cash and investments in total and do not place
significant importance on whether the return is recognized in net income or as other comprehensive income. Therefore, this discussion will focus on the total investment return.



Despite a reduction in the assets available for investment, our reinsurance portfolio generated a total return of $15.6 million for the
three months ended March 31, 2004 compared to a total return of $5.9 million for the three months ended March 31, 2003. The improved performance in 2004 was primarily due to the net effect of:



| |  | Our S&P 500 equity portfolio generating a loss of $8.1 million for the three months ended March 31, 2003 prior to the sale of our remaining portfolio later in 2003 and our
investment in a Bermuda based life reinsurer generating a negative return of $0.5 million for the three months ended March 31, 2004 compared to a negative return of $3.0 million for the three months ended March 31, 2003;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Our trading equities generating a return of $8.2 million for the three months ended March 31, 2004 compared to a return of $10.8 million for the three months ended March 31, 2003.
Our trading equities are investments in multi-manager funds that follow primarily a combination of fixed income strategies. The fund returned 1.5% for the three months ended March 31, 2004 compared with 2.0% for the three months ended March 31,
2003. The variance was primarily due to the funds high-yield bond portfolio component returning 2.3% during the three months ended March 31, 2004 compared to 5.0% for the same period in 2003;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | An upturn in the short duration U.S. fixed income markets such that our fixed income portfolio returned $8.2 million for the three months ended March 31, 2004 compared to a return
of $5.9 million for the three months ended March 31, 2003.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The
2003 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 the 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. No impairment charge was recognized
during the three months ended March 31, 2004.



Investment expenses for the
three months ended March 31, 2004 decreased to $0.6 million from $1.0 million for the three months ended March 31, 2003 primarily due to a reduction in assets invested.



---

Liquidity and Capital Resources



Sources of capital and liquidity



Liquidity is a measure of a companys ability to generate sufficient cash flows to meet the short-term and long-term cash requirements of its business operations.
Prior to going into runoff, our reinsurance operations had historically provided significant liquidity in that premiums were received in advance, generally substantially in advance, of the time claims were paid. However, since placing our
reinsurance operations into runoff, claim payments have significantly exceeded premium receipts and this is likely to continue in future periods. The Company will continue to accelerate loss payments through commutations and novations of the
remaining reinsurance contracts and this will result in continued negative cash flow. There is significant uncertainty regarding the timing of cash payments due to the uncertain number and timing of commutations and novations. Without the completion
of commutations and novations, loss payments are expected to continue for at least the next twenty years.



Following OPLs decision to cease writing new business and to runoff our reinsurance operations, the 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. At March 31, 2004 the Company had $310.2 million of cash and investments collateralizing our $277.0 million letter of credit facilities. In the normal course of reinsurance business, OPLs
bankers have issued letters of credit totaling $225.1 million as of March 31, 2004 to collateralize the Companys accrued losses and unearned premium obligations to certain reinsureds. In addition the Company had $120.7 million of cash and
investments held in trust accounts to collateralize obligations to certain reinsureds.



At March 31, 2004 the reinsurance segment had $1.4 billion of cash and highly liquid investments. We believe that our current cash holdings and future sales and maturities of investments are adequate sources of liquidity for the future
payment of claims and operating expenses. Further we expect that the amount of required collateral for our letter of credit facilities will decrease commensurate with the payment of our accrued loss and loss expense liabilities.



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 is seeking 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 to shareowners. 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. On November 25, 2003 OPL received approval from the Bermuda Monetary Authority to
permit the payment of a distribution to shareowners of $2.50 per share or $296.9 million. This distribution was paid to shareowners on January 5, 2004.



Cash and cash equivalents decreased due to the following:



|                                          |  |                              |          |   |      |   |          |  
|----------------------------------------- |  | ---------------------------- | -------- | - | ---- | - | -------- | -
|                                          |  | Three months ended March 31, |         
|(In thousands)                            |  | 2004                         |          |   | 2003 |  
|CASH FLOWS                                |  |                              |          |   |      |   |          |  
|Operating activities                      |  | $                            | (18,353  | ) |      | $ | (109,979 | )
|Investing activities                      |  |                              | 134,536  |   |      |   | 89,097   |  
|Financing activities                      |  |                              | (296,924 | ) |      |   | (564     | )
|                                          |  |                              |          |   |      |   |          |  
|Net decrease in cash and cash equivalents |  | $                            | (180,741 | ) |      | $ | (21,446  | )
|                                          |  |                              |          |   |      |   |          |  



Operating activities



Since OPLs reinsurance operations went into runoff in February 2002
no new reinsurance contracts have been written and there has therefore been a significant reduction in the cash generated from reinsurance operations. Claim payments have exceeded premium receipts and this is likely to continue in future periods.
The Company will continue to accelerate loss payments through commutations and novations of the remaining reinsurance contracts and this will further increase the negative cash flow.



Reinsurance underwriting operations used $24.0 million for the three months ended March 31, 2004 compared to using $112.7 million for the
three months ended March 31, 2003. This decrease in cash used is primarily due to the timing of commutation and novation payments.



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During the three months ended March 31, 2004, funds withheld, accrued losses and loss expenses and reinsurance balances
receivable decreased by $213.3 million, $270.5 and $6.7 million respectively. These decreases were primarily a result of the commutation and novation of several reinsurance contracts. We anticipate that these balances will continue to decrease as
the runoff of OPLs reinsurance operations progresses. The increase in reinsurance balances payable amounting to $25.6 million was due to accrued commutation payments as of March 31, 2004.



Real estate operations used $4.3 million for the three months ended March 31, 2003. The net
cash outflow was primarily due to payments of tax.



We received $8.7 million of
interest and dividends during the three months ended March 31, 2004 compared to $10.0 million for the three months ended March 31, 2003.



During the three months ended March 31, 2004 we used $3.1 million for the payment of other operating expenses compared to using $3.0 million for the three months ended
March 31, 2003.



Investing activities



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



During the three months ended March 31, 2004, we purchased $287.8 million and sold $446.0 million of available-for-sale investments compared
to $128.8 million and $170.4 million, respectively for the three months ended March 31, 2003. During the three months ended March 31, 2004, sales from our available-for-sale investment portfolios exceeded purchases by $158.2 million. This was in
order to fund the Companys distribution to shareowners and commutation and novation payments.



During the three months ended March 31, 2004 restricted cash and cash equivalents increased by $23.6 million compared to a decrease of $47.6 million for the three months ended March 31, 2003.



Financing activities



As a result of the decision to restructure OPL and cause its operations to begin an orderly runoff, we amended our dividend policy. 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, ongoing operating expenses, regulatory requirements and availability of unrestricted liquid assets. On November 25, 2003, OPL received
approval from the Bermuda Monetary Authority to permit the payment of a distribution to shareowners of $2.50 per share. This distribution was paid to shareowners on January 5, 2004 and resulted in a cash outflow of $296.9 million. The timing and
amount of any future distributions is dependent on OPLs ability to obtain specific approval from the Bermuda Monetary Authority.



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.



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



Inflation



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



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Item 3. Quantitative and Qualitative Disclosures About Market Risk



There has been no material change in the Companys market risks in 2004. 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, 2003.



Item 4. Controls and Procedures



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



Safe Harbor Disclosure



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



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



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



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



| | Future losses on unexpired policies, including launch and in-orbit satellite exposures through to 2009 and a residual value reinsurance program where the Company is exposed to
losses until 2013;
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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



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



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



| | Losses due to interest rate fluctuations;
|- | -----------------------------------------



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



| | Losses arising from the sale our investments in private equity funds;
|- | ---------------------------------------------------------------------



| | Losses arising from a further other-than-temporary impairment in our investment in affiliate;
|- | ---------------------------------------------------------------------------------------------



| | A failure to fully realize our deferred tax assets;
|- | ---------------------------------------------------



| | Volatility in U.S. financial markets which could affect our investment portfolio;
|- | ---------------------------------------------------------------------------------



| | Adverse outcomes from any current or pending state or federal tax audits; and
|- | -----------------------------------------------------------------------------



| | The resolution of other pending litigation.
|- | -------------------------------------------





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



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OVERSEAS PARTNERS LTD. AND SUBSIDIARIES

PART II. OTHER INFORMATION



Item 1. Legal Proceedings



See Note 6 to the Condensed Notes to the Unaudited Consolidated Financial Statements for discussions of legal proceedings to which OPL is a party.



Item 6. Exhibits and Reports on Form 8-K



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



| | 31(a) | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
| | ----- | ------------------------------------------------------------------------



| | 31(b) | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
| | ----- | ------------------------------------------------------------------------



| | 32 | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
| | -- | ------------------------------------------------------------------------



|b) | Reports on Form 8-K: No reports on Form 8-K were filed during the quarter ended March 31, 2004.
|-- | -----------------------------------------------------------------------------------------------



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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 10, 2004 |  | OVERSEAS PARTNERS LTD.
|                   |  |                       
|                   |  | By:                    |  | /s/ Mark R. Bridges                  
|                   |  |                        |  | Mark R. Bridges                      
|                   |  |                        |  | President and Chief Executive Officer
|                   |  |                       
|                   |  | By:                    |  | /s/ Chris Fleming                    
|                   |  |                        |  | Chris Fleming                        
|                   |  |                        |  | Chief Accounting Officer