UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                              --------------------


                                    FORM 10-Q

(Mark One)

/X/            QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                For the quarterly period ended September 30, 2001

                                       OR

/ /           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                For the transition period from _______ to _______


                         Commission file number 0-21874

                          London Pacific Group Limited

             (Exact name of registrant as specified in its charter)
                             ----------------------


       Jersey, Channel Islands                         Not applicable
   (State or other jurisdiction             (I.R.S. Employer Identification No.)
 of incorporation or organization)

                          Minden House, 6 Minden Place
                           St. Helier, Jersey JE2 4WQ
                                 Channel Islands
                    (Address of principal executive offices)
                                   (Zip Code)

                              011 44 (1534) 607700
              (Registrant's telephone number, including area code)



     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No ____


     As of November 5, 2001, the registrant had outstanding  64,439,073 Ordinary
Shares, par value $0.05 per share.



<PAGE>
                                TABLE OF CONTENTS


                                     PART I

                              FINANCIAL INFORMATION

<TABLE>
<CAPTION>
<S>                                                                                                          <C>
Item 1.    Financial Statements:                                                                             Page

           Condensed Consolidated Balance Sheets as of September 30, 2001 and
               December 31, 2000 ...........................................................................    3

           Condensed Consolidated Statements of Income for the three and nine months
               ended September 30, 2001 and 2000............................................................    4

           Condensed Consolidated Statements of Cash Flows for the nine months
               ended September 30, 2001 and 2000............................................................    5

           Consolidated Statements of Changes in Shareholders' Equity for the nine
               months ended September 30, 2001 and 2000.....................................................    6

           Consolidated Statements of Comprehensive Income for the three and nine months
               ended September 30, 2001 and 2000............................................................    7

           Notes to Interim Consolidated Financial Statements...............................................    8

Item 2.    Management's Discussion and Analysis of Financial Condition and
               Results of Operations .......................................................................   14

Item 3.    Quantitative and Qualitative Disclosures About Market Risk ......................................   25


                                     PART II

                                OTHER INFORMATION


Item 6.    Exhibits and Reports on Form 8-K ................................................................   26

Signature  .................................................................................................   27
</TABLE>

                                        2

<PAGE>
                         PART I - FINANCIAL INFORMATION

                          Item 1. FINANCIAL STATEMENTS

                  LONDON PACIFIC GROUP LIMITED AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)
                      (In thousands, except share amounts)
<TABLE>
<CAPTION>

                                                                                   September 30,  December 31,
                                                                                       2001           2000
                                                                                   -------------  -------------
                                     ASSETS
<S>                                                                                <C>            <C>
Cash and cash equivalents......................................................... $     104,350  $     114,285

Investments, principally of life insurance subsidiaries:
   Fixed maturities:
     Available-for-sale, at fair value (amortized cost: $1,623,249 and $1,352,313
       as of September 30, 2001 and December 31, 2000, respectively)..............     1,593,231      1,292,015
     Held-to-maturity, at amortized cost (fair value: $115,408 and $129,400
       as of September 30, 2001 and December 31, 2000, respectively)..............       111,589        127,514
   Equity securities:
     Trading, at fair value (cost: $84,264 and $99,747 as of September 30, 2001
       and December 31, 2000, respectively) ......................................        46,150        353,896
     Available-for-sale, at fair value (cost: $226,459 and $238,942 as of
       September 30, 2001 and December 31, 2000, respectively) ...................       218,418        229,403
   Policy loans ..................................................................        10,530         10,301
                                                                                   -------------  -------------
Total investments ................................................................     1,979,918      2,013,129

Accrued investment income ........................................................        34,877         28,629
Deferred policy acquisition costs ................................................       161,359        168,102
Assets held in separate accounts .................................................       228,229        206,325
Receivables.......................................................................        18,289         17,222
Other assets......................................................................        18,316         15,296
                                                                                   -------------  -------------
Total assets ..................................................................... $   2,545,338  $   2,562,988
                                                                                   -------------  -------------
                                                                                   -------------  -------------
                        LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Life insurance policy liabilities ................................................ $   1,984,737  $   1,691,601
Liabilities related to separate accounts .........................................       218,879        203,806
Notes payable.....................................................................        36,874         35,556
Deferred income tax liabilities ..................................................         2,593         41,587
Accounts payable, accruals and other liabilities .................................        35,777         22,696
                                                                                   -------------  -------------
Total liabilities ................................................................     2,278,860      1,995,246
                                                                                   -------------  -------------
Commitments and contingencies

Shareholders' equity:
Ordinary shares, $0.05 par value per share: authorized 86,400,000 shares;
   issued and outstanding 64,439,073 and 64,433,313 shares as of
   September 30, 2001 and December 31, 2000, respectively.........................         3,222          3,222
Additional paid-in capital .......................................................        68,274         67,591
Retained earnings ................................................................       273,086        580,176
Employee benefit trusts, at cost (shares: 13,698,181 and 12,811,381 as of
   September 30, 2001 and December 31, 2000, respectively) .......................       (63,599)       (58,003)
Accumulated other comprehensive income (loss) ....................................       (14,505)       (25,244)
                                                                                   -------------  -------------
Total shareholders' equity .......................................................       266,478        567,742
                                                                                   -------------  -------------
Total liabilities and shareholders' equity ....................................... $   2,545,338  $   2,562,988
                                                                                   -------------  -------------
                                                                                   -------------  -------------

<FN>
      See accompanying Notes to Interim Consolidated Financial Statements.
</FN>
</TABLE>

                                        3

<PAGE>
                  LONDON PACIFIC GROUP LIMITED AND SUBSIDIARIES

                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)
                (In thousands, except per share and ADS amounts)
<TABLE>
<CAPTION>
                                                                     Three Months Ended      Nine Months Ended
                                                                       September 30,           September 30,
                                                                    --------------------   ---------------------
                                                                       2001       2000        2001        2000
                                                                    ---------  ---------   ---------  ----------
<S>                                                                 <C>        <C>         <C>        <C>
Revenues:
Investment income..............................................     $  36,411  $  29,799   $ 107,002  $  83,131
Insurance policy charges.......................................         1,418      1,822       4,254      5,660
Financial advisory services, asset management and other
   fee income..................................................         5,926      7,329      19,118     24,325
Net realized investment gains (losses).........................       (42,490)    87,982     (21,624)    88,170
Change in net unrealized investment gains and losses
   on trading securities ......................................      (116,167)   (62,359)   (292,264)   291,834
                                                                    ---------  ---------   ---------  ---------
                                                                     (114,902)    64,573    (183,514)   493,120
Expenses:
Interest credited on insurance policyholder accounts...........        30,887     24,610      87,938     67,385
Amortization of deferred policy acquisition costs..............         6,205      4,769      17,756     16,011
Operating expenses.............................................        12,983     13,894      39,828     43,154
Goodwill amortization..........................................            57         58         172        173
Interest expense...............................................           467        128       1,803        142
                                                                    ---------  ---------   ---------  ---------
                                                                       50,599     43,459     147,497    126,865
                                                                    ---------  ---------   ---------  ---------

Income (loss) before income tax expense........................      (165,501)    21,114    (331,011)   366,255

Income tax expense (benefit)...................................       (21,056)    (7,947)    (35,723)    52,901
                                                                    ---------  ---------   ---------  ---------
Net income (loss)..............................................     $(144,445) $  29,061   $(295,288) $ 313,354
                                                                    ---------  ---------   ---------  ---------
                                                                    ---------  ---------   ---------  ---------
</TABLE>
<TABLE>
<S>                                                                                        <C>        <C>
Interim dividend declared
(2001 and 2000: 11.0 cents per share gross; 8.8 cents per ADS)                             $   4,504  $   4,608
                                                                                           ---------  ---------
                                                                                           ---------  ---------
</TABLE>
<TABLE>
<S>                                                                    <C>        <C>        <C>         <C>
Basic earnings (loss) per share and ADS........................        $(2.85)    $ 0.56     $ (5.78)    $ 6.21
Diluted earnings (loss) per share and ADS......................        $(2.85)    $ 0.47     $ (5.78)    $ 5.16

<FN>
      See accompanying Notes to Interim Consolidated Financial Statements.
</FN>
</TABLE>

                                        4

<PAGE>
                  LONDON PACIFIC GROUP LIMITED AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                 (In thousands)
<TABLE>
<CAPTION>
                                                                                               Nine Months
                                                                                           Ended September 30,
                                                                                       ----------------------------
                                                                                          2001              2000
                                                                                       ----------        ----------
<S>                                                                                    <C>               <C>
Net cash provided by operating activities ........................................     $   61,363        $   24,736

Cash flows from investing activities:
Purchases of held-to-maturity fixed maturity securities ..........................        (14,865)           (2,328)
Purchases of available-for-sale fixed maturity securities ........................       (657,937)         (239,332)
Purchases of available-for-sale equity securities ................................        (51,100)          (90,142)
Proceeds from redemption of held-to-maturity fixed maturity securities ...........         19,998            37,098
Proceeds from sale of available-for-sale fixed maturity securities ...............        389,241            52,416
Proceeds from sale of available-for-sale equity securities .......................         16,723             2,243
Capital expenditures .............................................................         (1,222)           (1,411)
Other cash flows from investing activities .......................................           (229)            3,039
                                                                                       ----------        ----------
Net cash provided by (used in) investing activities ..............................       (299,391)         (238,417)
                                                                                       ----------        ----------

Cash flows from financing activities:
Insurance policyholder contract deposits .........................................        378,663           377,016
Insurance policyholder benefits paid .............................................       (134,502)         (167,928)
Issue of Ordinary Shares .........................................................              3                 -
Purchases of Ordinary Shares by the employee benefit trusts.......................         (6,005)          (12,712)
Proceeds from disposal of shares by the employee benefit trusts...................            440             8,299
Dividends paid....................................................................        (11,802)          (11,625)
Notes payable.....................................................................          1,318            20,066
Bank overdrafts...................................................................              -              (593)
                                                                                       ----------        ----------
Net cash provided by financing activities ........................................        228,115           212,523
                                                                                       ----------        ----------

Net increase (decrease) in cash and cash equivalents .............................         (9,913)           (1,158)
Cash and cash equivalents at beginning of period .................................        114,285            49,703
Foreign currency translation adjustment ..........................................            (22)                -
                                                                                       ----------        ----------
Cash and cash equivalents at end of period .......................................     $  104,350        $   48,545
                                                                                       ----------        ----------
                                                                                       ----------        ----------

<FN>
      See accompanying Notes to Interim Consolidated Financial Statements.
</FN>
</TABLE>

                                        5

<PAGE>
                  LONDON PACIFIC GROUP LIMITED AND SUBSIDIARIES

           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                   (Unaudited)
                                 (In thousands)
<TABLE>
<CAPTION>
                                                                                              Accumulated
                                                                                                 Other
                                      Ordinary      Additional                    Employee      Compre-       Total
                                     Shares at       Paid-in       Retained        Benefit      hensive   Shareholders'
                                     Par Value       Capital       Earnings        Trusts    Income (Loss)   Equity
                                    -----------    -----------    -----------    -----------  -----------  -----------
<S>                                 <C>            <C>            <C>            <C>          <C>          <C>
Balance as of January 1, 2000 ..... $     3,222    $    62,307    $   559,344    $   (54,033) $   (18,365) $   552,475

Net income ........................           -              -        313,354              -            -      313,354
Change in net unrealized gains
   and losses on available-for-sale
   securities......................           -              -              -              -       (8,630)      (8,630)
Foreign currency translation
   adjustment......................           -              -              -              -           16           16
Exercise of employee share
   options, including income
   tax effect......................           -          2,508              -          8,640            -       11,148
Extension of employee
   share options...................           -          1,150              -              -            -        1,150
Net realized gains (losses) on
   disposal of shares held by the
   employee benefit trusts.........           -           (341)             -              -            -         (341)
Cash dividends declared ...........           -              -        (11,625)             -            -      (11,625)
Purchase of shares by the
   employee benefit trusts.........           -              -              -        (12,712)           -      (12,712)
                                    -----------    -----------    -----------    -----------  -----------  -----------
Balance as of September 30, 2000... $     3,222    $    65,624    $   861,073    $   (58,105) $   (26,979) $   844,835
                                    -----------    -----------    -----------    -----------  -----------  -----------
                                    -----------    -----------    -----------    -----------  -----------  -----------
</TABLE>
<TABLE>
<CAPTION>
                                                                                              Accumulated
                                                                                                 Other
                                      Ordinary      Additional                    Employee      Compre-       Total
                                     Shares at       Paid-in       Retained        Benefit      hensive   Shareholders'
                                     Par Value       Capital       Earnings        Trusts    Income (Loss)   Equity
                                    -----------    -----------    -----------    -----------  -----------  -----------
<S>                                 <C>            <C>            <C>            <C>          <C>          <C>
Balance as of January 1, 2001 ..... $     3,222    $    67,591    $   580,176    $   (58,003) $   (25,244) $   567,742

Net income (loss)..................           -              -       (295,288)             -            -     (295,288)
Change in net unrealized gains
   and losses on available-for-sale
   securities......................           -              -              -              -       10,737       10,737
Foreign currency translation
   adjustment......................           -              -              -              -            2            2
Exercise of employee share
   options, including income
   tax effect......................           -            122              -            409            -          531
Grant of employee share options
   below fair market value.........           -            530              -              -            -          530
Net realized gains on disposal
   of shares held by the
   employee benefit trusts.........           -             31              -              -            -           31
Cash dividends declared ...........           -              -        (11,802)             -            -      (11,802)
Purchase of shares by the
   employee benefit trusts.........           -              -              -         (6,005)           -       (6,005)
                                    -----------    -----------    -----------    -----------  -----------  -----------
Balance as of September 30, 2001... $     3,222    $    68,274    $   273,086    $   (63,599) $   (14,505) $   266,478
                                    -----------    -----------    -----------    -----------  -----------  -----------
                                    -----------    -----------    -----------    -----------  -----------  -----------

<FN>
      See accompanying Notes to Interim Consolidated Financial Statements.
</FN>
</TABLE>

                                        6

<PAGE>
                  LONDON PACIFIC GROUP LIMITED AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                   (Unaudited)
                                 (In thousands)
<TABLE>
<CAPTION>
                                                                      Three Months Ended       Nine Months Ended
                                                                        September 30,            September 30,
                                                                    ----------------------   ----------------------
                                                                       2001        2000         2001        2000
                                                                    ----------  ----------   ----------  ----------

<S>                                                                 <C>         <C>          <C>         <C>
Net income (loss).................................................  $ (144,445) $   29,061   $ (295,288) $  313,354

Other comprehensive income (loss), net of deferred
   income taxes:

Foreign currency translation adjustments, net of income
   taxes of $0....................................................          17          16            2          16

Change in net unrealized gains and losses on available-for-sale
   securities arising during the period, net of income taxes and
   deferred policy acquisition cost amortization adjustments
   totaling $(7,155), $(11,355), $(25,661) and $15,502,
   respectively...................................................         843       3,666       10,737      (8,630)
                                                                    ----------  ----------   ----------  -----------
Other comprehensive income (loss) ................................         860       3,682       10,739      (8,614)
                                                                    ----------  ----------   ----------  ----------
Comprehensive income (loss) ......................................  $ (143,585) $   32,743   $ (284,549) $  304,740
                                                                    ----------  ----------   ----------  ----------
                                                                    ----------  ----------   ----------  ----------

<FN>
      See accompanying Notes to Interim Consolidated Financial Statements.
</FN>
</TABLE>

                                        7

<PAGE>
                  LONDON PACIFIC GROUP LIMITED AND SUBSIDIARIES

Item 1. NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1. Basis of Presentation and Principles of Consolidation

     The accompanying  interim  consolidated  financial statements are unaudited
and have been  prepared by London  Pacific  Group  Limited  (the  "Company")  in
conformity with United States generally  accepted  accounting  principles ("U.S.
GAAP").  These  consolidated  financial  statements  include the accounts of the
Company, its subsidiaries, the Employee Share Option Trust and the Agent Loyalty
Opportunity Trust  (collectively,  the "Group").  All intercompany  transactions
have been eliminated in consolidation.  Certain information and note disclosures
normally included in the Group's annual consolidated  financial  statements have
been condensed or omitted. The interim consolidated financial statements, in the
opinion  of  management,  reflect  all  adjustments  (consisting  only of normal
recurring  accruals) which are necessary for a fair statement of the results for
the interim periods presented.

     While the Group  believes  that the  disclosures  presented are adequate to
make the  information  not  misleading,  these  interim  consolidated  financial
statements should be read in conjunction with the audited  financial  statements
and related notes for the year ended  December 31, 2000,  which are contained in
the Company's  Annual Report on Form 10-K,  filed with the U.S.  Securities  and
Exchange Commission on March 30, 2001. The year-end condensed balance sheet data
was  derived  from  audited  financial  statements  but  does  not  include  all
disclosures required by U.S. GAAP.

     The results for the three and nine month periods ended  September 30, 2001,
are not necessarily indicative of the results to be expected for the full fiscal
year.

     Certain reclassifications were made to prior period amounts to conform with
the current year's presentation.  These  reclassifications have no effect on the
net income or shareholders' equity for the prior period.


Note 2. Comprehensive Income

     Comprehensive income consists of net income; changes in unrealized gains or
losses on available-for-sale securities, net of income taxes and deferred policy
acquisition cost  amortization  adjustments;  and foreign  currency  translation
gains or losses  arising  on the  translation  of the  Group's  Jersey,  Channel
Islands insurance subsidiary.


Note 3. Earnings per Share and ADS

     The Group  calculates  earnings per share in accordance  with  Statement of
Financial Accounting Standards No. 128 ("SFAS 128"),  "Earnings per Share." This
statement  requires the  presentation  of basic and diluted  earnings per share.
Basic  earnings  per share is  calculated  by dividing net income or loss by the
weighted  average number of Ordinary  Shares  outstanding  during the applicable
period,  excluding  shares held by the Employee Share Option Trust and the Agent
Loyalty  Opportunity Trust which are regarded as treasury stock for the purposes
of this  calculation.  The Group has issued  employee share  options,  which are
considered  potential common stock under SFAS 128. Diluted earnings per share is
calculated  by dividing  net income by the weighted  average  number of Ordinary
Shares   outstanding   during  the  applicable  period  as  adjusted  for  these
potentially  dilutive  options which are determined based on the "Treasury Stock
Method." As the Group  recorded a net loss for the three and nine  months  ended
September  30, 2001,  the  calculation  of diluted  earnings per share for these
periods  does  not  include  these  potentially  dilutive  options  as they  are
anti-dilutive  and would  result in a  reduction  of net loss per share.  If the
Group had reported net income for the three and nine months ended  September 30,
2001,  there  would have been an  additional  2,057,944  and  3,914,920  shares,
respectively, included in the calculations of diluted earnings per share.

                                        8

<PAGE>
                  LONDON PACIFIC GROUP LIMITED AND SUBSIDIARIES

Item 1.  NOTES TO INTERIM  CONSOLIDATED  FINANCIAL  STATEMENTS  (UNAUDITED)
         (Continued)

     A  reconciliation  of the  numerators  and  denominators  for the basic and
diluted earnings per share calculations is as follows:
<TABLE>
<CAPTION>
                                                                      Three Months Ended         Nine Months Ended
                                                                        September 30,              September 30,
                                                                   ------------------------   ------------------------
                                                                      2001         2000           2001         2000
                                                                   -----------  -----------   -----------  -----------
                                                                              (In thousands, except share and
                                                                                per share and ADS amounts)
<S>                                                                <C>          <C>           <C>          <C>
Net income (loss)................................................. $  (144,445) $    29,061   $  (295,288) $   313,354

Basic earnings per share and ADS:
Weighted average number of Ordinary Shares outstanding,
  excluding shares held by the employee benefit trusts............  50,740,892   51,625,224    51,065,230   50,457,786
                                                                   -----------  -----------   -----------  -----------
Basic earnings (loss) per share and ADS .......................... $     (2.85) $      0.56   $     (5.78) $      6.21
                                                                   -----------  -----------   -----------  -----------
                                                                   -----------  -----------   -----------  -----------

Diluted earnings per share and ADS:
Weighted average number of Ordinary Shares outstanding,
  excluding shares held by the employee benefit trusts............  50,740,892   51,625,224    51,065,230   50,457,786
Effect of dilutive securities (employee share options)............           -    9,737,286             -   10,322,344
                                                                   -----------  -----------   -----------  -----------
Weighted average Ordinary Shares used in diluted earnings
  per share calculations..........................................  50,740,892   61,362,510    51,065,230   60,780,130
                                                                   -----------  -----------   -----------  -----------
Diluted earnings (loss) per share and ADS ........................ $     (2.85) $      0.47   $     (5.78) $      5.16
                                                                   -----------  -----------   -----------  -----------
                                                                   -----------  -----------   -----------  -----------
</TABLE>
Note 4. Investments

Equity Securities

     Equity   securities  are  comprised  of   available-for-sale   and  trading
securities. An analysis of equity securities is as follows:

<TABLE>
<CAPTION>

                                           September 30, 2001                                 December 31, 2000
                            -----------------------------------------------    ------------------------------------------------
                                           Gross       Gross     Estimated                    Gross       Gross     Estimated
                                         Unrealized  Unrealized    Fair                     Unrealized  Unrealized    Fair
                                Cost       Gains       Losses      Value          Cost        Gains       Losses      Value
                            -----------  ----------  ----------  ----------    -----------  ----------  ----------  -----------
                                                                       (In thousands)
<S>                         <C>          <C>         <C>         <C>           <C>          <C>         <C>         <C>
Private corporate equity
  securities............... $   215,533  $        -  $        -  $  215,533    $   226,799  $        -  $        -  $   226,799
Listed equity securities ..      10,926           -      (8,041)      2,885         12,143         124      (9,663)       2,604
                            -----------  ----------  ----------  ----------    -----------  ----------  ----------  -----------
Total available-for-sale
  equity securities........     226,459           -      (8,041)    218,418        238,942         124      (9,663)     229,403

Trading securities.........      84,264       3,006     (41,120)     46,150         99,747     264,433     (10,284)     353,896
                            -----------  ----------  ----------  ----------    -----------  ----------  ----------  -----------
Total equity securities.... $   310,723  $    3,006  $  (49,161) $  264,568    $   338,689  $  264,557  $  (19,947) $   583,299
                            -----------  ----------  ----------  ----------    -----------  ----------  ----------  -----------
                            -----------  ----------  ----------  ----------    -----------  ----------  ----------  -----------
</TABLE>

     Trading securities are carried at fair value with changes in net unrealized
gains and losses of $(116,167,000)  and  $(62,359,000)  included in earnings for
the three month periods ended September 30, 2001


                                        9

<PAGE>
                  LONDON PACIFIC GROUP LIMITED AND SUBSIDIARIES

Item 1.  NOTES TO INTERIM  CONSOLIDATED  FINANCIAL  STATEMENTS  (UNAUDITED)
         (Continued)

and 2000,  respectively,  and of  $(292,264,000)  and  $291,834,000  included in
earnings  for the  nine  month  periods  ended  September  30,  2001  and  2000,
respectively.

Realized Gains and Losses

     Information   about  gross   realized   gains  and  losses  on   securities
transactions is as follows:
<TABLE>
<CAPTION>
                                                                        Three Months Ended        Nine Months Ended
                                                                          September 30,             September 30,
                                                                      ----------------------    --------------------
                                                                        2001        2000          2001        2000
                                                                      ----------  ----------    ---------  ---------
                                                                                      (In thousands)
<S>                                                                   <C>         <C>           <C>        <C>
Gross realized gains (losses) on securities transactions:
Fixed maturities, available-for-sale:
    Gross gains...................................................    $    4,225  $      111    $  15,452  $     237
    Gross losses..................................................       (19,604)        (41)     (22,603)      (136)
Fixed maturities, held-to-maturity:
    Gross losses..................................................           (42)       (615)         (54)   (27,083)
Trading securities:
    Gross gains...................................................             -      88,478       43,665    120,674
    Gross losses..................................................             -           -       (1,646)         -
Equity securities, available-for-sale:
    Gross gains...................................................           730          49        1,140        179
    Gross losses..................................................       (27,799)          -      (57,578)    (5,701)
                                                                      ----------  ----------    ---------  ---------
Net realized investment gains (losses) on securities
    transactions..................................................    $  (42,490) $   87,982    $ (21,624) $  88,170
                                                                      ----------  ----------    ---------  ---------
                                                                      ----------  ----------    ---------  ---------
</TABLE>

Note 5. Recently Issued Accounting Pronouncements

     On January 1, 2001,  the Group  adopted  Statement of Financial  Accounting
Standard  No. 133 ("SFAS  133"),  "Accounting  for  Derivative  Instruments  and
Hedging  Activities."  This  standard,  as amended,  establishes  accounting and
reporting  standards  for  derivative  instruments  and hedging  activities.  It
requires  that all  derivative  instruments  be recorded on the balance sheet at
fair value unless the derivative  qualifies as a hedge. The adoption of SFAS 133
did not have a material impact on the Group's consolidated  financial statements
for the three and nine month periods ended September 30, 2001.

     On July 1,  2001,  the Group  adopted  Statement  of  Financial  Accounting
Standard  No.  141  ("SFAS  141"),  "Business  Combinations,"  which  supersedes
Accounting  Principles  Board ("APB") Opinion No. 16,  "Business  Combinations."
This standard  eliminates  the  pooling-of-interests  method of  accounting  for
business  combinations  and modifies the application of the purchase  accounting
method.  SFAS  141 also  specifies  criteria  intangible  assets  acquired  in a
business  combination  must meet to be recognized and reported  separately  from
goodwill. The elimination of the  pooling-of-interests  method was effective for
transactions initiated after June 30, 2001. The remaining provisions of SFAS 141
were  effective for  transactions  accounted  for using the purchase  method for
which the date of acquisition is July 1, 2001 or later. The adoption of SFAS 141
did not impact the Group's  consolidated  financial statements for the three and
nine month periods ended September 30, 2001.

     In June 2001, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting Standard No. 142 ("SFAS 142"),  "Goodwill and
Other  Intangible  Assets,"  which  supersedes  APB Opinion No. 17,  "Intangible
Assets." SFAS 142 eliminates the current requirement to amortize goodwill and


                                       10

<PAGE>
                  LONDON PACIFIC GROUP LIMITED AND SUBSIDIARIES

Item 1.  NOTES TO INTERIM  CONSOLIDATED  FINANCIAL  STATEMENTS  (UNAUDITED)
         (Continued)

indefinite-lived  intangible  assets,  addresses the  amortization of intangible
assets with a defined life and addresses the impairment  testing and recognition
for goodwill and intangible assets. The provisions of SFAS 142 are effective for
fiscal years beginning after December 15, 2001.  Impairment  losses, if any, due
to the initial  application  of SFAS 142 are to be reported as resulting  from a
change in accounting principle. The Group will apply the new rules on accounting
for goodwill and other intangible assets beginning in the first quarter of 2002.
The first of the  required  impairment  tests will be performed as of January 1,
2002 and the Group has not yet  determined  what effect these tests will have on
its results of operations.  However,  the Group does not expect adoption of this
statement to have a material  effect on its results of  operations  or financial
position.

     In June  2001,  the FASB also  issued  Statement  of  Financial  Accounting
Standard No. 143 ("SFAS 143"),  "Accounting for Asset  Retirement  Obligations."
SFAS 143  requires  that the fair value of a liability  for an asset  retirement
obligation  be  recognized in the period in which it is incurred if a reasonable
estimate of fair value can be made. The associated  asset  retirement  costs are
capitalized as part of the carrying amount of the long-lived asset and should be
allocated to expense using a systematic and rational  method.  The provisions of
SFAS 143 are effective for fiscal years beginning  after June 15, 2002,  however
earlier  application is encouraged.  The Group does not expect  adoption of this
statement to have a material  effect on its results of  operations  or financial
position.

     In August 2001, the FASB issued Statement of Financial  Accounting Standard
No. 144 ("SFAS 144"),  "Accounting  for the Impairment or Disposal of Long-Lived
Assets."  SFAS  144  addresses  financial   accounting  and  reporting  for  the
impairment or disposal of long-lived  assets and  supercedes,  with  exceptions,
Statement  of  Financial  Accounting  Standard  No.  121,  "Accounting  for  the
Impairment of Long-Lived  Assets to Be Disposed Of." The  provisions of SFAS 144
are effective for fiscal years  beginning  after  December 15, 2001, and interim
periods within those fiscal years, with early application encouraged.  The Group
does not expect  adoption  of this  statement  to have a material  effect on its
results of operations or financial position.


Note 6. Business Segment and Geographical Information

     The Group's reportable  operating segments are classified  according to its
principal  businesses,  which are the  following:  life insurance and annuities,
financial advisory services, asset management and venture capital management.

     During the three month  periods ended  September  30, 2001 and 2000,  there
were included in the asset management and venture capital  management  segments,
portfolio  management  fees from the life  insurance  and  annuities  segment of
$2,943,000  and  $2,801,000,  respectively.  During the nine month periods ended
September  30, 2001 and 2000,  there were included in the asset  management  and
venture capital  management  segments,  portfolio  management fees from the life
insurance and  annuities  segment of $8,709,000  and  $7,744,000,  respectively.
These management fees have been approved by the insurance regulatory body in the
life insurance  company's U.S. state of domicile.  Realized  investment gains in
the amount of $37,763,000  were recorded during the first nine months of 2001 by
the life insurance and annuities segment,  related to intersegmental  investment
sales to the venture capital management segment. These realized investment gains
were offset by a corresponding  decrease in unrealized  investment gains for the
same amount.

     Summary  revenue and  investment  gain  (loss)  information  by  geographic
segment,  based on the domicile of the Group company  generating those revenues,
is as follows:


                                       11
<PAGE>
                  LONDON PACIFIC GROUP LIMITED AND SUBSIDIARIES

Item 1.  NOTES TO INTERIM  CONSOLIDATED  FINANCIAL  STATEMENTS  (UNAUDITED)
         (Continued)

<TABLE>
<CAPTION>
                                                                       Three Months Ended         Nine Months Ended
                                                                         September 30,              September 30,
                                                                     ----------------------    ----------------------
                                                                        2001        2000          2001        2000
                                                                     ----------  ----------    ----------  ----------
                                                                                      (In thousands)
<S>                                                                  <C>         <C>           <C>         <C>
Jersey............................................................   $  (26,389) $   53,173    $ (143,371) $  204,656
Guernsey..........................................................      (76,929)     (3,282)      (73,509)     24,521
United States.....................................................      (11,584)     14,682        33,366     263,943
                                                                     ----------  ----------    ----------  ----------
Consolidated revenues and net investment gains (losses)...........   $ (114,902) $   64,573    $ (183,514) $  493,120
                                                                     ----------  ----------    ----------  ----------
                                                                     ----------  ----------    ----------  ----------
</TABLE>
     Total assets by geographic segment were as follows:
<TABLE>
<CAPTION>
                                                                                        September 30,    December 31,
                                                                                            2001             2000
                                                                                        ------------     ------------
                                                                                                (In thousands)
<S>                                                                                     <C>              <C>
Jersey...............................................................................   $     54,536     $    251,255
Guernsey.............................................................................        143,003          176,173
United States........................................................................      2,347,799        2,135,560
                                                                                        ------------     ------------
Consolidated total assets............................................................   $  2,545,338     $  2,562,988
                                                                                        ------------     ------------
                                                                                        ------------     ------------
</TABLE>

     Revenues and income before tax expense for the Group's reportable operating
segments, based on management's internal reporting structure, were as follows:
<TABLE>
<CAPTION>
                                                                        Three Months Ended          Nine Months Ended
                                                                          September 30,               September 30,
                                                                      ----------------------     -----------------------
                                                                         2001         2000          2001         2000
                                                                      ----------   ---------     ----------   ----------
                                                                                       (In thousands)
<S>                                                                   <C>          <C>           <C>         <C>
Revenues:
Life insurance and annuities (1) (2)..............................    $  (45,182)  $   52,911    $ (133,995) $  429,959
Financial advisory services.......................................         4,361        5,692        14,487      17,456
Asset management (1) .............................................         1,716        2,153         5,130       5,912
Venture capital management (2) ...................................       (76,342)       3,605       (70,824)     38,650
                                                                      ----------   ----------    ----------  ----------
                                                                        (115,447)      64,361      (185,202)    491,977
Reconciliation of segment amounts to consolidated amounts:
Interest income ..................................................           545          212         1,688       1,143
                                                                      ----------   ----------    ----------  ----------
Consolidated revenues and net investment gains (losses)...........    $ (114,902)  $   64,573    $ (183,514) $  493,120
                                                                      ----------   ----------    ----------  ----------
                                                                      ----------   ----------    ----------  ----------

<FN>
(1) Included in the revenues of the asset management segment are management fees
from the life  insurance and  annuities  segment of $481,000 and $953,000 in the
third quarters of 2001 and 2000, respectively,  and $1,470,000 and $2,150,000 in
the first nine months of 2001 and 2000, respectively.
</FN>

<FN>
(2)  Included  in the  revenues of the venture  capital  management  segment are
management fees from the life insurance and annuities  segment of $2,462,000 and
$1,848,000 in the third quarters of 2001 and 2000, respectively,  and $7,239,000
and $5,594,000 in the first nine months of 2001 and 2000, respectively.
</FN>
</TABLE>


                                       12
<PAGE>
                  LONDON PACIFIC GROUP LIMITED AND SUBSIDIARIES

Item 1.  NOTES TO INTERIM  CONSOLIDATED  FINANCIAL  STATEMENTS  (UNAUDITED)
         (Continued)

<TABLE>
<CAPTION>
                                                                        Three Months Ended          Nine Months Ended
                                                                          September 30,               September 30,
                                                                      ----------------------     -----------------------
                                                                         2001         2000          2001         2000
                                                                      ----------   ---------     ----------   ----------
                                                                                       (In thousands)
<S>                                                                   <C>          <C>           <C>         <C>
Income (loss) before income tax expense:
Life insurance and annuities (1) (2)..............................    $  (84,499)  $   21,480    $ (246,291) $  339,850
Financial advisory services ......................................        (1,071)      (1,323)       (2,878)     (3,129)
Asset management (1)..............................................           588          803         1,102       1,569
Venture capital management (2) ...................................       (79,225)       2,244       (78,211)     31,816
                                                                      ----------   ----------    ----------  ----------
                                                                        (164,207)      23,204      (326,278)    370,106
Reconciliation of segment amounts to consolidated amounts:
Interest income ..................................................           545          212         1,688       1,143
Corporate expenses ...............................................        (1,315)      (2,116)       (4,446)     (4,679)
Goodwill amortization ............................................           (57)         (58)         (172)       (173)
Interest expense .................................................          (467)        (128)       (1,803)       (142)
                                                                      ----------   ----------    ----------  ----------
Consolidated income (loss) before income tax expense .............    $ (165,501)  $   21,114    $ (331,011) $  366,255
                                                                      ----------   ----------    ----------  ----------
                                                                      ----------   ----------    ----------  ----------
<FN>
(1) Included in the revenues of the asset management segment are management fees
from the life  insurance and  annuities  segment of $481,000 and $953,000 in the
third quarters of 2001 and 2000, respectively,  and $1,470,000 and $2,150,000 in
the first nine months of 2001 and 2000, respectively.
</FN>

<FN>
(2)  Included  in the  revenues of the venture  capital  management  segment are
management fees from the life insurance and annuities  segment of $2,462,000 and
$1,848,000 in the third quarters of 2001 and 2000, respectively,  and $7,239,000
and $5,594,000 in the first nine months of 2001 and 2000, respectively.
</FN>
</TABLE>

     The only  material  change in segmental  assets during the third quarter of
2001 was in the venture capital  management  segment,  where assets decreased by
$79,026,000 from  $93,193,000 to $14,167,000,  primarily caused by the change in
net  unrealized  gains and losses on listed  equity  securities  in the  trading
account.  The only  material  change in segmental  assets  during the first nine
months of 2001 was in the  venture  capital  management  segment,  where  assets
decreased by $95,437,000 from  $109,604,000 to $14,167,000,  primarily caused by
the change in net unrealized gains and losses on listed equity securities in the
trading account.

                                       13

<PAGE>
Item 2.  MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF FINANCIAL  CONDITION AND
         RESULTS OF OPERATIONS

     This  Management's  Discussion  and  Analysis of  Financial  Condition  and
Results of Operations  should be read in conjunction with the unaudited  interim
consolidated financial statements, and the notes thereto, presented elsewhere in
this  report.  The interim  consolidated  financial  statements  are prepared in
accordance with generally accepted  accounting  principles in the United States.
This  item  should  also  be  read  in  conjunction  with  the  "Forward-Looking
Statements and Factors That May Affect Future Results" which are set forth below
and in the  Company's  other  filings  with the  U.S.  Securities  and  Exchange
Commission ("SEC").

Forward-Looking Statements and Factors That May Affect Future Results

     This  Management's  Discussion  and  Analysis of  Financial  Condition  and
Results of Operations and other sections of this report contain  forward-looking
statements  within  the  meaning  of  Section  21E of  the  Exchange  Act.  Such
forward-looking  statements  are  based  on  current  expectations,   estimates,
forecasts and  projections  about the  industries  in which the Group  operates,
management's  current beliefs and assumptions made by management.  Words such as
"expects,"  "anticipates," "intends," "plans," "believes," "seeks," "estimates,"
"goals,"  variations  of such words and  similar  expressions  are  intended  to
identify such forward-looking statements. These statements are not guarantees of
future performance and involve certain risks, uncertainties and assumptions that
are difficult to predict. Future outcomes and results may differ materially from
what is  expressed  or forecast in such  forward-looking  statements.  The Group
undertakes no obligation to update any forward-looking statements,  whether as a
result of new information, future developments or otherwise.

     Factors   that  could  cause  or   contribute   to   deviations   from  the
forward-looking statements include those discussed in this section, elsewhere in
this  report  and in the  Company's  other  filings  with the SEC.  The  factors
include, but are not limited to, (i) the risks described in Item 3 "Quantitative
and  Qualitative  Disclosures  About Market Risk," (ii) variations in demand for
the  Group's  products  and  services,  (iii) the  success of new  products  and
services provided by the Group, (iv) the credit ratings of the Group's insurance
subsidiaries, (v) significant changes in net cash flows in or out of the Group's
businesses,  (vi)  fluctuations  in the  performance  of debt and equity markets
worldwide,  (vii) the enactment of adverse state,  federal or foreign regulation
or changes in government policy or regulation  (including  accounting standards)
affecting the Group's  operations,  (viii) the effect of economic conditions and
interest rates in the U.S., the U.K. or internationally, (ix) the ability of the
Group's  subsidiaries  to compete in their  respective  businesses,  and (x) the
ability of the Group to attract and retain key personnel.


                                       14

<PAGE>
RESULTS OF OPERATIONS BY BUSINESS SEGMENT

Life Insurance and Annuities

     Certain  information  regarding the life insurance and annuities  segment's
results of operations is as follows:

<TABLE>
<CAPTION>
                                                                        Three Months Ended          Nine Months Ended
                                                                          September 30,               September 30,
                                                                      -----------------------     -----------------------
                                                                         2001         2000           2001         2000
                                                                      ----------   ----------     ----------   ----------
                                                                                       (In thousands)
<S>                                                                   <C>          <C>            <C>          <C>
Revenues:
Investment income.................................................    $   32,923   $   26,785     $   96,605   $   73,971
Insurance policy charges .........................................         1,418        1,822          4,254        5,660
Net realized investment gains (losses), including related
  amortization (1) (2)............................................       (47,553)      76,451          4,720       69,585
Change in net unrealized investment gains and losses on
  trading securities, including related amortization (1) (2)......       (36,919)     (55,698)      (251,509)     269,373
Other fee income .................................................           330          437            971        1,183
                                                                      ----------   ----------     ----------   ----------
Total revenues and investment gains (losses), including
  related amortization (1)........................................       (49,801)      49,797       (144,959)     419,772

Expenses:
Interest credited on insurance policyholder accounts .............        30,887       24,610         87,938       67,385
Amortization of deferred policy acquisition costs related to
  operations (1)..................................................         1,586        1,655          6,792        5,824
Mortality expenses (gains)........................................            21           66           (285)        (335)
General and administrative expenses ..............................         2,204        1,986          6,887        7,048
                                                                      ----------   ----------     ----------   ----------
Total expenses related to operations (1)..........................        34,698       28,317        101,332       79,922
                                                                      ----------   ----------     ----------   ----------
Income (loss) before income tax expense ..........................    $  (84,499)  $   21,480     $ (246,291)  $  339,850
                                                                      ----------   ----------     ----------   ----------
                                                                      ----------   ----------     ----------   ----------
<FN>
(1)  As  a  result  of  net  realized  investment  gains  on  available-for-sale
securities  and  the  change  in net  unrealized  investment  gains  on  trading
securities which back the life insurance and annuities segment's investment-type
products,  amortization  of deferred policy  acquisition  costs was increased by
$4,619,000 and $3,114,000 in the third quarters of 2001 and 2000,  respectively,
and by  $10,964,000  and  $10,187,000 in the first nine months of 2001 and 2000,
respectively.  For purposes of the above  business  segment  presentation,  this
additional  amortization  is not shown in operating  expenses in accordance with
the Group's accounting policy used to prepare the consolidated income statement,
but is netted against net realized  investment  gains (losses)  ($4,619,000  and
($160,000) in the third quarters of 2001 and 2000, respectively, and $10,964,000
and ($1,746,000) for the first nine months of 2001 and 2000,  respectively)  and
the change in net unrealized  investment  gains and losses ($0 and $3,274,000 in
the third quarters of 2001 and 2000,  respectively,  and $0 and  $11,933,000 for
the first nine months of 2001 and 2000, respectively).

(2) Realized  investment gains in the amount of $37,763,000 were recorded during
the first  nine  months of 2001 by the life  insurance  and  annuities  segment,
related to  intersegmental  investment  sales to the venture capital  management
segment. These realized investment gains were offset by a corresponding decrease
in unrealized  investment gains for the same amount.  These gains are eliminated
in the Group's consolidated financial statements.
</FN>
</TABLE>

Third quarter of 2001 compared to third quarter of 2000

     For the third quarter of 2001,  the life  insurance and annuities  segment,
which  consists of London  Pacific  Life & Annuity  Company  ("LPLA") and London
Pacific Assurance  Limited  ("LPAL"),  contributed a loss before income taxes of
$84.5 million to the Group's  overall loss before  taxes,  compared to income of
$21.5  million in the third  quarter of 2000.  Net realized  investment  losses,
including  related  amortization of deferred policy  acquisition costs ("DPAC"),
were $47.6 million,  compared to net realized  investment gains of $76.5 million
in

                                       15

<PAGE>
the third quarter of 2000. The loss from the change in net unrealized investment
gains and losses,  including  related DPAC  amortization,  decreased  from $55.7
million in the third  quarter of 2000 to $36.9  million in the third  quarter of
2001.   General  and   administrative   expenses   increased  by  $0.2  million;
amortization of DPAC,  excluding  amortization  related to investment  gains and
losses,  decreased by $0.1 million; and the spread between investment income and
interest credited to policyholder  accounts  decreased by $0.1 million,  each as
compared to the third quarter of 2000.  Policy  charges for the third quarter of
2001  decreased by $0.4 million and other fee income  decreased by $0.1 million,
each as compared to the third quarter of 2000.

     In accordance with U.S. GAAP,  premiums  collected on annuity and universal
life contracts are not reported as revenues, but rather as deposits to insurance
liabilities. Revenues for these products are recognized over time in the form of
investment  income  and  surrender  or other  charges.  LPLA  offers  both fixed
annuities  which  typically  have an interest rate  guaranteed  for one to seven
years,  after  which the  company  has the  discretionary  ability to change the
crediting rate to any rate not below a guaranteed  rate, and variable  annuities
which allow the contract  holders the ability to direct  premiums  into specific
investment portfolios with rates of return being based on the performance of the
portfolio.  LPAL began selling  guaranteed bond contracts,  which are similar to
LPLA's fixed annuity products, in the Jersey,  Channel Islands market during the
first quarter of 2000 and in the U.K. market during the second quarter of 2000.

     Premiums  received for all life,  annuity and guaranteed bond products were
$117.2  million  for the third  quarter of 2001,  a  decrease  of 22.0% over the
premiums  received for the same period in 2000.  LPAL generated $16.1 million of
the total  premiums  received  during the third quarter of 2001, the same amount
generated for the third quarter of 2000.  The flat premium volume in the quarter
for LPAL  reflected the decrease in crediting  rates as a result of falling U.K.
interest rates.  LPLA generated  premiums of $101.1 million in the third quarter
of 2001, a 24.7% decrease over the premiums received in the same period in 2000.
The  $33.1  million  decrease  in  LPLA's  premiums  reflected  the  impact of a
declining  U.S.  interest rate  environment.  As a result of lower  reinvestment
rates,  LPLA again reduced  annuity  crediting rates during the third quarter of
2001, which reduced the  competitiveness of its annuity product line. LPLA's mix
of business  continued to shift toward  traditional  annuities,  which typically
guarantee  crediting  rates  for one year,  but have  surrender  charge  periods
ranging  from seven to ten years.  Sales of  traditional  annuities in the third
quarter of 2001  increased to $71.3  million,  compared to $42.9  million in the
third quarter of 2000 as a result of production from new distributors  that have
been  attracted to LPLA because of its strong track record.  The declining  U.S.
interest rate environment had the most significant  impact on LPLA's  multi-year
guaranteed rate annuities, sales of which in the third quarter of 2001 decreased
to $23.9 million, compared to $79.9 million in the third quarter of 2000.

     Interest and dividend  income on investments was $32.9 million in the third
quarter of 2001 as compared with $26.8 million in the same period in 2000.  This
$6.1 million  increase  was  primarily  due to asset  growth from new  business,
offset by lower reinvestment  rates and by acquisitions of capital  appreciation
(zero yield)  securities.  The carrying value of the private equity portfolio as
of September 30, 2001 was $225.7  million,  compared  with $234.2  million as of
December 31, 2000 and $157.6 million as of September 30, 2000.

     Net investment  losses,  including  related DPAC  amortization,  were $84.5
million in the third quarter of 2001,  compared to net investment gains of $20.8
million in the third quarter of 2000. Net investment losses in the third quarter
of 2001 were comprised of net realized  investment  losses of $42.9  million,  a
$36.9  million  loss from the change in net  unrealized  gains and losses on the
listed  equity  securities  held in the  trading  portfolio,  and  related  DPAC
amortization  of  $4.6  million.  The  market  value  of the  trading  portfolio
decreased  from  $60.1  million  as of June  30,  2001 to  $23.2  million  as of
September 30, 2001. There were no additions to the trading  portfolio during the
third quarter of 2001.  The life insurance and annuities  segment  recorded $4.5
million in net  realized  losses  from the sale of certain  corporate  bonds and
other  investments  during the third  quarter of 2001.  In  addition,  permanent
impairment  writedowns  were made  during the  quarter of $38.4  million on four
private  placement  securities.  As of  September  30,  2001,  LPLA's and LPAL's
investment  portfolios  included eight former private preferred stocks that have
been converted to listed common equities and one  convertible  bond holding in a
publicly traded company.

     Total invested assets (defined as total assets excluding DPAC, other assets
and income tax related  accounts)  increased to $2.3 billion as of September 30,
2001,  compared  with $2.2  billion as of December 31,  2000.  On total  average
invested  assets  for the third  quarter of 2001,  the  average  annualized  net
return,

                                       16

<PAGE>
including both realized and unrealized  investment gains and losses, was -8.42%,
compared with 8.88% for the same period in 2000. This decrease in annualized net
return  resulted  primarily from the decrease in net investment  gains discussed
above.

     Policy  surrender and mortality  charge income decreased by $0.4 million in
the third  quarter of 2001 to $1.4  million,  compared with $1.8 million for the
same period in 2000. Full policy  surrenders  totaled $27.5 million in the third
quarter of 2001, a $10.4 million decrease over the same period in 2000. Internal
policy  conversions  accounted  for $7.9 million of the full  surrenders  in the
third  quarter of 2001,  compared to $12.5  million for the same period in 2000.
The decrease in policy  surrenders  reflects one of the effects of the declining
U.S. interest rate environment,  which has reduced yields on competing products.
Although  the current  U.S.  interest  rate  environment  favors  higher  policy
persistency, annuity surrenders may increase in future periods as the portion of
the  business  that  can be  withdrawn  by  policyholders  without  incurring  a
surrender charge penalty grows.

     Interest credited on policyholder accounts increased by $6.3 million in the
third quarter of 2001 to $30.9 million, compared with $24.6 million for the same
period in 2000. This increase was primarily due to new business  growth,  offset
by  favorable  renewal  rates on certain  blocks of  business.  The average rate
credited to policyholders was 5.91% in the third quarter of 2001,  compared with
5.89% for the same period in 2000.

     Amortization of DPAC,  excluding  amortization  related to investment gains
and losses,  was $1.6  million in the third  quarter of 2001, a decrease of $0.1
million from the same period in 2000.  This  decrease was  primarily  due to the
lower  level of policy  surrenders,  partially  offset by new  business  growth.
Realized and unrealized  investment  gains and losses were included in the gross
profits used to calculate the amortization of DPAC. This inclusion of investment
gains and losses  resulted in  additional  amortization  of $4.6 million for the
third quarter of 2001, compared to $3.1 million in the third quarter of 2000.

     General and administrative  expenses were $2.2 million in the third quarter
of 2001,  compared  with $2.0  million  for the same  period in 2000.  This $0.2
million increase was primarily due to increases in employee  compensation  costs
and professional services. The annualized expense ratio for the third quarter of
2001,  which is defined as general and  administrative  expenses  divided by the
average book value of total cash and investments, was 0.37%, compared with 0.31%
for the same period in 2000.

First nine months of 2001 compared to first nine months of 2000

     For the first nine months of 2001, the life insurance and annuities segment
contributed a loss before income taxes of $246.3 million to the Group's  overall
loss before taxes,  compared to income of $339.9  million for the same period in
2000. Net realized  investment gains,  including  related  amortization of DPAC,
decreased  by $64.9  million,  while the loss from the change in net  unrealized
investment gains and losses,  including  related DPAC  amortization,  was $251.5
million,  compared  to a net gain of $269.4  million in the first nine months of
2000. The spread between investment income and interest credited to policyholder
accounts  increased  by  $2.1  million;   general  and  administrative  expenses
decreased by $0.2 million;  and  amortization  of DPAC,  excluding  amortization
related to  investment  gains and losses,  increased  by $1.0  million,  each as
compared  to the first nine  months of 2000.  Policy  charges for the first nine
months of 2001 decreased by $1.4 million and other fee income  decreased by $0.2
million, each as compared to the same period in 2000.

     Premiums  received for all life,  annuity and guaranteed bond products were
$404.6  million for the first nine  months of 2001,  a decrease of 1.8% over the
premiums  received for the same period in 2000.  LPAL generated $66.5 million of
the total premiums  received  during the first nine months of 2001,  compared to
$28.8  million for the same period in 2000.  The increase in premiums  reflected
LPAL's continuing  success in increasing the number of financial  intermediaries
who sell LPAL's expanded product range,  which is ideally suited for risk averse
investors seeking income and capital preservation in volatile market conditions.
The twofold  increase in 2001 reflects a full nine months of  operations  during
the period, compared to the initial period of operations in 2000. LPAL continued
to make  substantial  inroads in its  sector of the  guaranteed  bond  market in
Jersey and the U.K.  The number of  financial  intermediaries  signed up to sell
LPAL's products has increased  dramatically since it began operations.  LPAL has
been  able to focus its  efforts  successfully  on  marketing  and  distribution
without the normal  problems  associated  with  startups,  as LPAL  utilizes the

                                       17

<PAGE>
administrative  capability  of  its  sister  company,  LPLA,  in the  U.S.  LPLA
generated  $338.1  million for the first nine months of 2001,  a 11.8%  decrease
over the  premiums  received  in the same  period  in 2000.  The  $45.3  million
decrease in LPLA's  premiums  reflected the impact of a declining U.S.  interest
rate  environment,  which led to reduced crediting rates and lower production in
the second and third quarters of 2001. In response to the changing interest rate
environment,  LPLA began to shift its business mix toward traditional annuities,
which typically  guarantee  crediting  rates for one year.  Sales of traditional
annuities  for the first  nine  months  of 2001  increased  to  $206.2  million,
compared  to  $131.8  million  for the  same  period  in  2000.  This  increased
production  resulted  from the  addition  of new  distributors  that  have  been
attracted to LPLA because of its strong track record. Multi-year guaranteed rate
annuities  were  adversely   affected  by  the  declining  U.S.   interest  rate
environment; sales of these products for the first nine months of 2001 decreased
to $111.9  million,  compared  to $223.6  million  for the same  period in 2000.
Actual premiums for all life, annuity and guaranteed bond products will be lower
for the full year of 2001 compared to 2000,  reflecting a reduced  interest rate
environment not experienced in nearly forty years.

     Interest and dividend income on investments was $96.6 million for the first
nine months of 2001 as compared  with $74.0  million in the same period in 2000.
This $22.6 million increase was primarily due to asset growth from new business,
offset by lower reinvestment rates.

     Net investment  losses,  including related DPAC  amortization,  were $246.8
million for the first nine months of 2001,  compared to net investment  gains of
$339.0 million for the same period in 2000. Net investment  losses for the first
nine months of 2001 were  comprised  of net realized  investment  gains of $15.7
million,  a $251.5  million  loss from the  change in net  unrealized  gains and
losses on the  listed  equity  securities  held in the  trading  portfolio,  and
related  DPAC  amortization  of $11.0  million.  The market value of the trading
portfolio  decreased  from $248.7  million as of  December  31,  2000,  to $23.2
million as of September 30, 2001.  Additions to the trading portfolio during the
first  nine  months of 2001 of $60.8  million  resulted  from the $55.8  million
purchase of certain listed equity securities from the venture capital management
segment and $5.0 million due to the conversion of a private  preferred  stock to
common stock of a publicly  traded  company.  LPLA and LPAL sold certain trading
positions  during the first nine months of 2001,  which resulted in net realized
gains of $42.0 million based on their aggregate  original cost of $20.6 million.
Disposals of certain listed equity securities to the venture capital  management
segment  resulted in realized  gains of $37.8 million  based on their  aggregate
cost of $14.2 million. These gains were partially offset by permanent impairment
writedowns  of  $70.3  million  on six  private  placement  securities  and  one
corporate  bond.  The life  insurance and  annuities  segment also recorded $6.2
million in net realized gains from the sale of certain corporate bonds and other
investments  during  the  first  nine  months of the  year.  All  intersegmental
investment  gains  have  been  eliminated  on the  Group's  consolidated  income
statement.

     Total invested  assets  increased to $2.3 billion as of September 30, 2001,
compared with $2.2 billion as of December 31, 2000.  On total  average  invested
assets for the first nine  months of 2001,  the average  annualized  net return,
including both realized and unrealized  investment gains and losses, was -8.41%,
compared  with 29.31% for the same period in 2000.  This  decrease in annualized
net  return  resulted  primarily  from  the  decrease  in net  investment  gains
discussed above.

     Policy  surrender and mortality charge income decreased by $1.4 million for
the first nine months of 2001 to $4.3  million,  compared  with $5.7 million for
the same period in 2000.  Full policy  surrenders  totaled $80.2 million for the
first nine  months of 2001,  a $29.9  million  decrease  compared  with the same
period in 2000.  The  majority of the  surrenders  occurred  in older  blocks of
business  that  were in the  later  stages of their  surrender  penalty  period.
Annuity  surrenders  may  increase  as the portion of the  business  that can be
withdrawn by policyholders  without  incurring a surrender charge penalty grows.
Internal policy  conversions  accounted for $26.0 million of the full surrenders
for the first nine months of 2001, compared to $34.8 million for the same period
in 2000.

     Interest  credited on policyholder  accounts  increased by $20.5 million in
the first nine months of 2001 to $87.9 million,  compared with $67.4 million for
the same period in 2000. This increase was primarily due to new business growth,
offset by lower  renewal rates on certain  blocks of business.  The average rate
credited to policyholders  was 6.02% in the first nine months of 2001,  compared
with 5.78% for the same period in 2000.

                                       18

<PAGE>
     Amortization of DPAC,  excluding  amortization  related to investment gains
and losses,  was $6.8 million for the first nine months of 2001,  an increase of
$1.0 million from the same period in 2000.  This  increase was  primarily due to
new business growth,  particularly in the traditional annuity business discussed
above,  partially  offset by a decrease in  surrenders.  Realized and unrealized
investment gains and losses were included in the gross profits used to calculate
the amortization of DPAC. This inclusion of investment gains and losses resulted
in additional  amortization  of $11.0 million for the first nine months of 2001,
compared to $10.2 million for the same period in 2000.

     General and  administrative  expenses  were $6.9 million for the first nine
months of 2001,  compared  with $7.0  million for the same period in 2000.  This
decrease  was  primarily  due to expense  reductions  at LPLA for  underwriting,
miscellaneous  taxes and fees, and legal expenses,  offset by increased expenses
at LPLA for technology consultants and state guaranty fund assessment costs, and
at LPAL for additional staffing. The annualized expense ratio for the first nine
months of 2001, which is defined as general and administrative  expenses divided
by the average  book value of total cash and  investments,  was 0.39%,  compared
with 0.45% for the same period in 2000.

     LPAL,  which began its  operations  in the first  quarter of 2000,  sells a
single  premium term life  insurance  bond designed to offer a yield higher than
bank  deposits.  LPAL offers a unique  range of capital  guaranteed  at maturity
bonds,  denominated in British pounds sterling,  U.S.  dollars and Euros.  These
capital  secure  products  appeal to a wide  variety of investors in the Channel
Islands, U.K. and other permitted jurisdictions.  The single premium investment,
the Guaranteed Return Bond, offers a guaranteed yield and a guaranteed return of
capital at maturity  for either  three or five years.  The yield can be taken as
either a regular payment or as capital  appreciation.  Premiums  totaling $119.3
million have been generated since inception  through  September 30, 2001.  Sales
have been made directly to the public and through  financial  intermediaries  in
the Channel Islands, the U.K. and the Isle of Man, with over 55% of the premiums
received from investors,  or through  financial  intermediaries,  in the Channel
Islands.

Financial Advisory Services

     Certain  information  regarding the financial  advisory services  segment's
results of operations is as follows:
<TABLE>
<CAPTION>
                                                                        Three Months Ended           Nine Months Ended
                                                                          September 30,                September 30,
                                                                      -----------------------     -----------------------
                                                                         2001         2000           2001         2000
                                                                      ----------   ----------     ----------   ----------
                                                                                       (In thousands)
<S>                                                                   <C>          <C>            <C>          <C>
Gross financial advisory services fees............................    $    4,361   $    5,692     $   14,487   $   17,456
Payouts due to independent advisors...............................        (2,822)      (4,174)        (9,511)     (12,579)
                                                                      ----------   ----------     ----------   ----------
Net financial advisory services fees..............................         1,539        1,518          4,976        4,877

Operating expenses................................................         2,610        2,841          7,854        8,006
                                                                      ----------   ----------     ----------   ----------
Income (loss) before income tax expense ..........................    $   (1,071)  $   (1,323)    $   (2,878)  $   (3,129)
                                                                      ----------   ----------     ----------   ----------
                                                                      ----------   ----------     ----------   ----------
</TABLE>

Third quarter of 2001 compared to third quarter of 2000

     The pre-tax loss from the financial  advisory  services  segment  decreased
from $1.3  million  in the third  quarter  of 2000 to $1.1  million in the third
quarter of 2001, primarily due to an increase in net revenues resulting from new
client contracts, as well as a decrease in operating expenses.

     Net asset  management and  consulting  fee income  increased from the prior
year period as a result of a shift toward higher margin  managed and  consulting
accounts, while income from brokerage and commission product sales decreased due
to a change in focus toward fee based (rather than commission based) services

                                       19

<PAGE>
and the difficult market conditions prevailing during the quarter.  Assets under
management,  consulting  or  administration  increased  from $1.9  billion as of
September  30, 2000 to $2.3  billion as of June 30, 2001 and then  decreased  to
$2.1  billion  as of  September  30,  2001,  a  result  of the  negative  market
conditions.

     Operating  expenses decreased to $2.6 million in the third quarter of 2001,
compared with $2.8 million in the third quarter of 2000.  This decline  resulted
from a reduction  in web  development  consulting  costs,  which were  partially
offset by increased staff costs as staffing  additions were made over the course
of the last year to support the  institutional  and Internet  based  initiatives
discussed below.

     In late  1999,  the  Group  decided  to make the  London  Pacific  Advisors
business the  foundation  for an Internet  based  initiative  that could then be
migrated  to other  vertical  markets  in which the Group  has  expertise.  This
initiative  aims to deliver a full  complement  of  consulting  and back  office
services  to  institutions  and  financial  advisors  through the  Internet.  An
overview of the project is available at www.lpadvisors.com.

     The total  investment  in the project  through  September 30, 2001 was $3.1
million,  including  $0.2 million in the third  quarter of 2001.  Of this total,
$2.5 million has been  capitalized  as software  development  costs and is being
amortized (as a component of operating expenses) over five years.

     The  Internet  based  initiative  has  opened  the  door for  marketing  of
financial  advisory  services to institutions  and large groups of advisors.  To
date,  service  contracts  have been signed with seven major  institutions,  and
additional  contracts  are  currently  under  negotiation.  The  impact of these
contracts  increased  during  the  third  quarter  of 2001 as  newly  contracted
business came on line.

First nine months of 2001 compared to first nine months of 2000

     The pre-tax loss from the financial  advisory  services  segment  decreased
from $3.1  million  for the first nine  months of 2000 to $2.9  million  for the
first  nine  months  of  2001,  primarily  due to an  increase  in net  revenues
resulting  from  new  client  contracts,  as well  as a  decrease  in  operating
expenses.

     Net asset  management and  consulting  fee income  increased from the prior
year period as a result of a shift toward higher margin  managed and  consulting
accounts, while income from brokerage and commission product sales decreased due
to a change in focus toward fee based (rather than  commission  based)  services
and the difficult market  conditions  prevailing during the first nine months of
2001. Assets under management,  consulting or administration increased from $1.5
billion as of December 31, 2000 to $2.1 billion as of  September  30, 2001.  The
addition of assets from new  institutional  clients more than offset the decline
in managed assets resulting from the negative market conditions.

     Operating  expenses  were $7.9  million  for the first nine months of 2001,
which was a decrease from $8.0 million in operating expenses for the same period
in 2000.  The mix of expenses  changed as staffing  additions were made over the
course  of the  last  year to  support  the  institutional  and  Internet  based
initiatives discussed above.

     The total  investment in the Internet based project  through  September 30,
2001 was $3.1 million,  including $0.4 million in the first nine months of 2001.
Of this total,  $2.5 million has been capitalized as software  development costs
and is being  amortized (as a component of operating  expenses) over five years;
amortization  of these costs began in May 2001 and the amount  amortized  during
the first nine months of 2001 was $0.2 million.

                                       20

<PAGE>
Asset Management

     Certain  information  regarding the asset management  segment's  results of
operations is as follows:
<TABLE>
<CAPTION>
                                                                        Three Months Ended           Nine Months Ended
                                                                          September 30,                September 30,
                                                                      -----------------------     -----------------------
                                                                         2001         2000           2001         2000
                                                                      ----------   ----------     ----------   ----------
                                                                                       (In thousands)
<S>                                                                   <C>          <C>            <C>          <C>
Revenues .........................................................    $    1,716   $    2,153     $    5,130   $    5,912
Operating expenses ...............................................         1,128        1,350          4,028        4,343
                                                                      ----------   ----------     ----------   ----------
Income before income tax expense .................................    $      588   $      803     $    1,102   $    1,569
                                                                      ----------   ----------     ----------   ----------
                                                                      ----------   ----------     ----------   ----------
</TABLE>

Third quarter of 2001 compared to third quarter of 2000

     Berkeley  Capital  Management  ("BCM"),  the Group's  U.S.  asset  manager,
generates most of this segment's revenues and expenses. BCM's revenues increased
by $0.1 million to $1.5 million,  which included $0.2 million of management fees
from the life  insurance  and  annuities  segment.  Expenses  decreased  by $0.2
million to $1.1 million  primarily due to an intensive  expense  control program
which was initiated  during the second  quarter of 2001,  with its full benefits
realized during the third quarter.

     Wrap accounts continued to be the source of the majority of BCM's revenues,
and the number of wrap  accounts  increased  by 28% from  September  30, 2000 to
September 30, 2001.  However,  the additional  assets under management from this
increase in the number of BCM wrap accounts were more than offset by lower asset
values due to the general  stock market  decline  during the period.  Total wrap
assets were $934 million as of September 30, 2001, compared to $1,014 million as
of June 30, 2001, and $940 million as of September 30, 2000.

     BCM's revenues  during the third quarter of 2001 were primarily  based upon
asset values as of the  beginning  of the quarter due to the billing  pattern of
wrap  program  sponsors.  Therefore,  the increase in market  values  during the
second quarter of 2001 helped to raise BCM's  revenues  during the third quarter
of 2001.

     Included  in the  revenues  of the asset  management  segment for the third
quarter  of 2001 were  portfolio  management  fees from the life  insurance  and
annuities  segment of $0.5  million,  compared  with $1.0  million for the third
quarter of 2000.  These  reduced  fees  resulted  from the decline in the market
value of the  listed  equity  securities  portfolio  held by the life  insurance
operation  which is managed  by  Berkeley  International  Limited  ("BIL"),  the
Group's asset management subsidiary in Jersey.

First nine months of 2001 compared to first nine months of 2000

     The asset  management  segment's  results for the first nine months of 2001
included  improved results at BCM.  Revenues at BCM increased by $0.3 million to
$4.3  million,  which  included  $0.6 million of  management  fees from the life
insurance  and  annuities  segment,  an increase of $0.2  million over the prior
period.  Expenses  decreased  by $0.3 million to $4.0 million for the first nine
months of 2001. The increased  revenues and lower expenses  combined to increase
BCM's  contribution  to segment income by $0.6 million for the first nine months
of 2001 compared to the same period in 2000.

     Total wrap assets were $934 million as of September  30, 2001,  compared to
$955 million as of December 31, 2000.  The  additional  assets under  management
from the 15% net  increase  in the number of wrap  accounts  over the first nine
months of 2001 were more than  offset by lower  asset  values due to the general
stock market decline.  Wrap assets under  management in BCM's Value Equity style
were 10% higher at September  30, 2001 than at the  beginning of the year as the
inflow of new account  assets  more than  offset  market  value  declines.  This
increase was offset by the decline in the value of assets managed in BCM's

                                       21

<PAGE>
Growth Equity style, as the market became more risk averse.  BCM's revenues from
its wrap accounts increased by $0.3 million during the first nine months of 2001
as  compared to the same  period in 2000,  despite  the decline in assets  under
management, primarily due to the billing pattern discussed above.

     BCM  implemented  an  aggressive  cost  cutting  program  during the second
quarter of 2001, and the benefits will continue into the fourth quarter of 2001.

     Other revenue in the asset management  segment decreased by $0.2 million in
the first nine months of 2001,  following the conclusion at the end of the third
quarter of 2000 of a development capital fund management contract handled by BIL
in Jersey.

     Included in the revenues of the asset management segment for the first nine
months of 2001  were  portfolio  management  fees  from the life  insurance  and
annuities segment of $1.4 million, compared with $2.2 million for the first nine
months of 2000. These reduced fees primarily account for the overall decrease in
income in the asset  management  segment.  The reduced  fees  resulted  from the
decline in the market value of the listed equity  securities  portfolio  held by
the life insurance operation which is managed by BIL.

Venture Capital Management

     Certain  information  regarding the venture  capital  management  segment's
results of operations is as follows:

<TABLE>
<CAPTION>
                                                                        Three Months Ended           Nine Months Ended
                                                                          September 30,                September 30,
                                                                      -----------------------     -----------------------
                                                                         2001         2000           2001         2000
                                                                      ----------   ----------     ----------   ----------
                                                                                       (In thousands)
<S>                                                                   <C>          <C>            <C>          <C>
Revenues:
Management fees...................................................    $    2,462   $    1,848     $    7,239   $    7,518
Investment income.................................................             -            1              -          273
Net realized investment gains (1).................................           444       11,691         37,724       20,331
Change in net unrealized investment gains and losses (1)..........       (79,248)      (9,935)      (115,787)      10,528
                                                                      ----------   ----------     ----------   ----------
Total revenues and net investment gains...........................       (76,342)       3,605        (70,824)      38,650
Operating expenses................................................         2,883        1,361          7,387        6,834
                                                                      ----------   ----------     ----------   ----------
Income (loss) before income tax expense...........................    $  (79,225)  $    2,244     $  (78,211)  $   31,816
                                                                      ----------   ----------     ----------   ----------
                                                                      ----------   ----------     ----------   ----------
<FN>
(1) Realized  investment gains in the amount of $37,269,000 were recorded during
the first nine months of 2001 by the venture capital management segment, related
to intersegmental  investment sales to the life insurance and annuities segment.
These  realized  investment  gains were  offset by a  corresponding  decrease in
unrealized investment gains for the same amount.
</FN>
</TABLE>

Third quarter of 2001 compared to third quarter of 2000

     Income  before  income taxes from the venture  capital  management  segment
decreased  from $2.2  million  in the third  quarter  of 2000 to a loss of $79.2
million in the third quarter of 2001.  This loss was primarily  attributable  to
the change in net  unrealized  gains and losses for the third quarter of 2001 on
the listed equity securities held in the trading  portfolio.  These positions in
listed  equity  securities  were the result of private  equity  transactions  in
technology companies.

     The change in net unrealized  gains and losses in the listed equity trading
portfolio  during  the third  quarter of 2001 was a loss of $79.2  million.  The
market value of the trading  portfolio  decreased from $102.1 million as of June
30,  2001,  to $22.9  million as of  September  30,  2001.  The decline in value
reflected the general downward trend in the market for technology  stocks during
the third quarter of 2001. Significant  fluctuations in net unrealized gains and
losses in the listed equity  trading  portfolio  are likely in future  quarters,
reflecting equity market volatility, especially in the technology sector.

                                       22

<PAGE>
     Net realized  investment  gains were $0.4  million in the third  quarter of
2001, compared to $11.7 million in the third quarter of 2000. The realized gains
in the third  quarter of 2000 were the result of  partial  sales of four  listed
equity holdings; no such sales occurred in the third quarter of 2001.

     Included in the revenues of the venture capital  management segment for the
third quarter of 2001 are portfolio  management fees from the life insurance and
annuities segment of $2.5 million, compared to $1.8 million in the third quarter
of  2000.  Berkeley  International  Capital  Corporation  ("BICC")  sources  and
monitors private investments for LPLA, for which LPLA pays BICC management fees.

     Operating expenses increased from $1.4 million in the third quarter of 2000
to $2.9 million in the third  quarter of 2001.  This $1.5  million  increase was
primarily attributable to higher employee compensation.

First nine months of 2001 compared to first nine months of 2000

     Income  before  income taxes from the venture  capital  management  segment
decreased from $31.8 million in the first nine months of 2000 to a loss of $78.2
million in the first nine months of 2001.  This loss was primarily  attributable
to the change in net  unrealized  gains and losses for the first nine  months of
2001 on the  listed  equity  securities  held in the  trading  portfolio.  These
positions  in  listed  equity  securities  were the  result  of  private  equity
transactions in technology companies.

     The change in net unrealized  gains and losses in the listed equity trading
portfolio during the first nine months of 2001 was a loss of $115.8 million. The
market  value of the  trading  portfolio  decreased  from  $105.2  million as of
December 31, 2000,  to $22.9  million as of September  30, 2001.  The decline in
value reflected the general  downward trend in the market for technology  stocks
during the first nine months of 2001.  Additions to the trading portfolio during
the first nine months of 2001 of $52.0  million  resulted  from the  purchase of
certain listed equity securities from the life insurance and annuities  segment.
Disposals  of  certain  listed  equity  securities  to the  life  insurance  and
annuities  segment  resulted in realized  gains of $37.3  million based on their
aggregate cost of $18.5 million.  All intersegmental  investment gains have been
eliminated in the Group's consolidated income statement.

     Included in the revenues of the venture capital  management segment for the
first nine months of 2001 are portfolio  management fees from the life insurance
and  annuities  segment of $7.2  million,  compared to $5.6 million in the first
nine months of 2000. BICC sources and monitors private investments for LPLA, for
which LPLA pays BICC management fees. Total financings completed by BICC for the
insurance subsidiaries and for Berkeley International Capital Limited during the
first nine months of 2001 were $51.1  million,  compared to $90.0 million during
the first nine  months of 2000.  This  decreased  level of  activity  in venture
capital  placements  reflects the general  trend in the industry as a whole,  as
venture  capitalists  adopt  a wait  and  see  policy  in  view  of the  current
difficulties  being  experienced  by the  market  and the  technology  sector in
particular.  Other non-recurring fees of $1.9 million were received in the first
nine months of 2000.

     Operating  expenses  in the first  nine  months of 2001 were $7.4  million,
compared  to $6.8  million in the first nine months of 2000.  This $0.6  million
increase was primarily attributable to higher employee compensation.

Corporate and Other

Third quarter of 2001 compared to third quarter of 2000

     Corporate  expenses  decreased by $0.8 million to $1.3 million in the third
quarter of 2001 as compared  with the third  quarter of 2000.  This decrease was
primarily due to the compensation expense, relating to the extension of employee
share  option  grants,  recorded  in the third  quarter  of 2000,  which was not
repeated in 2001.

     Interest  income  earned by the Group  (excluding  the life  insurance  and
annuities  segment)  increased  by $0.3  million  to $0.5  million  in the third
quarter of 2001 as compared with the third quarter of 2000,

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<PAGE>
primarily  due to the increase in cash and cash  equivalents  held by the Group.
Interest  expense  incurred  by the  Group  (excluding  the life  insurance  and
annuities  segment)  increased  by $0.3  million  to $0.5  million  in the third
quarter of 2001 as compared  with the third  quarter of 2000,  primarily  due to
higher bank borrowings during the third quarter of 2001.

First nine months of 2001 compared to first nine months of 2000

     Overall,  corporate  expenses  decreased by $0.2 million to $4.4 million in
the first nine  months of 2001 as  compared  with the first nine months of 2000.
There was an increase in corporate  expenses of $0.9  million,  primarily due to
additional  staffing at the corporate  level and to the grant of employee  share
options at an exercise  price below fair market  value on the date of the grant.
However, this was more than offset by an expense decrease of $1.1 million, which
was due to the compensation expense, relating to the extension of employee share
option grants, recorded in the first nine months of 2000, which was not repeated
in 2001.

     Interest  income  earned by the Group  (excluding  the life  insurance  and
annuities  segment)  increased by $0.5 million to $1.7 million in the first nine
months of 2001 as compared with the first nine months of 2000,  primarily due to
the increase in cash and cash  equivalents  held by the Group.  Interest expense
incurred by the Group  (excluding  the life  insurance  and  annuities  segment)
increased  by $1.7  million to $1.8  million in the first nine months of 2001 as
compared  with the first  nine  months  of 2000,  primarily  due to higher  bank
borrowings during the first nine months of 2001.

Consolidated Income (Loss) Before Income Taxes

Third quarter of 2001 compared to third quarter of 2000

     Consolidated  income before income taxes decreased by $186.6 million,  from
$21.1  million in the third  quarter of 2000 to a loss of $165.5  million in the
third quarter of 2001. This loss was primarily attributable to the change in net
unrealized  investment  gains and  losses,  as well as net  realized  investment
losses.

     Consolidated  income  before  income tax expense for the full year 2001 and
future  years may be  volatile  due to the  Group's  holdings  of listed  equity
securities  primarily in the technology sector,  which are marked to market with
changes  in their  market  value  recognized  in the income  statement  for each
period. For more information on the possible effects of volatility in the prices
of equity securities, see Item 3 "Quantitative and Qualitative Disclosures About
Market Risk" below.

First nine months of 2001 compared to first nine months of 2000

     The consolidated loss before income taxes for the first nine months of 2001
was $331.0  million,  compared  to income of $366.3  million  for the first nine
months of 2000. The loss for the 2001 period was primarily  attributable  to the
change in net unrealized  investment  gains and losses,  as well as net realized
investment losses.

Income Taxes

     The Group is subject to taxation on its income in all countries in which it
operates  based  upon the  taxable  income  arising  in each  country.  However,
realized  gains on certain  investments  are  exempt  from  Jersey and  Guernsey
taxation.  The Group is subject to income tax in Jersey at a rate of 20%. In the
United  States,  the Group is subject to both  federal and  California  taxes at
34-35% and 8.84%, respectively.

Third quarter of 2001 compared to third quarter of 2000

     The  effective  tax credit rate,  as a percentage of the loss before income
taxes for the third quarter of 2001, was 13%. This low effective tax credit rate
was primarily attributable to losses of $108.5 million contributed by the Jersey
and Guernsey  operations  during the first nine months of 2001,  which primarily
consisted of  unrealized  investment  losses for which no tax  benefits  will be
realized. Though income before tax

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<PAGE>
expense was $21.1 million in the third quarter of 2000, an income tax benefit of
$7.9 million  resulted for the quarter.  This was primarily  attributable to the
$25.6 million loss from the U.S. life and annuity company which generated a $9.0
million tax benefit.  Income of $46.7 million was  contributed by the Jersey and
Guernsey  operations during the third quarter of 2000, which primarily consisted
of untaxed investment gains.

First nine months of 2001 compared to first nine months of 2000

     The  effective  tax credit rate,  as a percentage of the loss before income
taxes for the first nine months of 2001,  was 11%. This low effective tax credit
rate was primarily  attributable to losses of $231.1 million  contributed by the
Jersey and  Guernsey  operations  during the first  nine  months of 2001,  which
primarily  consisted of unrealized  investment  losses for which no tax benefits
will be realized.  The  effective  tax rate,  as a percentage  of income  before
income taxes for the first nine months of 2000,  was 14%.  This  effective  rate
reflected the fact that only 40% of income for the first nine months of 2000 was
contributed  by the U.S.  life and annuity  company,  and that 61% of income for
that  period  represented  net  capital  gains  from  the  Jersey  and  Guernsey
operations (where capital gains are not taxed).


LIQUIDITY AND CAPITAL RESOURCES

     On a consolidated basis as of September 30, 2001, cash and cash equivalents
of the Group,  excluding the life insurance segment,  amounted to $60.1 million.
As of September 30, 2001, the Group,  excluding the life insurance and annuities
segment, also held $22.2 million of listed equity securities which could be sold
within a short period of time.  Management  believes  that the balances of cash,
liquid  resources  and  borrowings,  should be sufficient to satisfy the Group's
anticipated financing requirements during the next twelve months.

     Shareholders'  equity  decreased in the first nine months of 2001 by $301.3
million  to  $266.5  million,  primarily  due to the net loss for the  period of
$295.3 million.  The value of the Company's Ordinary Shares held by the employee
benefit  trusts,  valued  at cost of  $63.6  million,  has been  netted  against
shareholders'  equity.  Upon exercise of employee share  options,  shareholders'
equity will be increased by the cost of the shares  transferred to the employees
and the proceeds received will increase Group cash.


Item 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The nature of the  Group's  businesses  exposes  the Group to market  risk.
Market risk is the risk of loss that may occur when  changes in  interest  rates
and public equity prices adversely affect the value of invested assets.

Interest Rate Risk

     The Group's life  insurance and  annuities  segment is subject to risk from
interest  rate  fluctuations  when there is a  difference  between the amount of
interest earning assets and the amount of interest bearing  liabilities that are
prepaid,  mature or are repriced in specific  periods.  LPLA and LPAL attempt to
minimize  their  exposure  to  interest  rate   fluctuations   by  managing  the
characteristics  of their assets and  liabilities so that the effects of changes
are reasonably likely to be offset. LPLA's and LPAL's principal  asset/liability
management  goals are to achieve  sufficient  cash flows from invested assets to
fund contractual obligations, while maximizing investment returns. LPLA and LPAL
have not used derivative financial  instruments to achieve their asset/liability
management  goals.  Exposure to interest  rate risk is estimated  by  performing
sensitivity  tests based on duration  analysis of LPLA's  investment and product
portfolios.

     Duration  is an option  adjusted  measure of the  percentage  change in the
market  value of the assets or  liabilities  in  response  to a given  change in
interest  rates.  For  LPLA's  universal  life  products  and for all of  LPAL's
products,  given that policyholder liabilities are only $48.2 million and $122.4
million,  respectively,  interest  rate risk is  considered  to be  minimal.  To
demonstrate the sensitivity of LPLA's assets and liabilities, tests performed on
LPLA's  assets and  liabilities  indicated  that,  as of September  30, 2001, if
market

                                       25

<PAGE>
interest rates had suddenly increased by 100 basis points, the fair value of the
investment   portfolio  that  is  subject  to  interest  rate  risk,  which  was
approximately $1.9 billion, would have decreased by $82.0 million, compared with
a decrease of $84.4  million for the  calculated  market  value of  liabilities,
which was approximately $1.8 billion. Conversely, a sudden decrease of 100 basis
points  would have  increased  the  investment  portfolio's  fair value by $84.8
million, compared with an increase in the calculated market value of liabilities
of $125.9 million.  These results depend upon certain key assumptions  regarding
the behavior of interest  sensitive  cash flows.  Although LPLA has attempted to
ensure that the  assumptions  used are based on the best  available  data,  cash
flows cannot be forecasted with certainty,  and can deviate  materially from the
assumed results.

Equity Price Risk

     The Group,  including LPLA and LPAL, is exposed to equity price risk on the
listed equity securities held almost entirely in its trading portfolio.  Changes
in the level or  volatility  of equity  prices  affect  the value of the  listed
equity securities. These changes in turn directly affect the Group's net income,
because the Group's  holdings of listed equity  securities are marked to market,
with changes in their market value  recognized  in the income  statement for the
period in which the changes occur.  These listed equity securities are primarily
in companies in the high  technology  industry  sector,  many of which are small
capitalization stocks.

     If the market price of the Group's listed equity  portfolio as of September
30, 2001 and 2000, which totaled $49.0 million and $754.1 million, respectively,
had  abruptly  increased  or  decreased  by 50%,  the market value of the listed
equity  portfolio  would have increased or decreased by $24.5 million and $377.1
million, respectively.


                          PART II - OTHER INFORMATION


Item 6.   EXHIBITS AND REPORTS ON FORM 8-K

(a)  EXHIBITS

     None.


(b)  REPORTS ON FORM 8-K

     No reports on Form 8-K were filed by the Company  during the third  quarter
of 2001.

                                       26

<PAGE>
                                    SIGNATURE

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


                                      LONDON PACIFIC GROUP LIMITED
                                      (Registrant)

Date:  November 5, 2001               By:    /s/  Ian K. Whitehead

                                             Ian K. Whitehead
                                             Chief Financial Officer

                                             (Principal Financial and Accounting
                                              Officer and Duly Authorized
                                              Officer of the Registrant)



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