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 June 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 August 9, 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 June 30, 2001 and
               December 31, 2000 ...........................................................................    3

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

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

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

           Consolidated Statements of Comprehensive Income for the three and six months
               ended June 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 .......................................................................   13

Item 3.    Quantitative and Qualitative Disclosures About Market Risk ......................................   24


                                     PART II

                                OTHER INFORMATION


Item 4.    Submission of Matters to a Vote of Security Holders..............................................   25

Item 6.    Exhibits and Reports on Form 8-K ................................................................   25

Signature  .................................................................................................   26
</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>

                                                                                      June 30,     December 31,
                                                                                       2001           2000
                                                                                   -------------  -------------
                                     ASSETS
<S>                                                                                <C>            <C>
Cash and cash equivalents......................................................... $      97,737  $     114,285

Investments, principally of life insurance subsidiaries:
   Fixed maturities:
     Available-for-sale, at fair value (amortized cost: $1,562,677 and
       $1,352,313 as of June 30, 2001 and December 31, 2000, respectively)........     1,524,789      1,292,015
     Held-to-maturity, at amortized cost (fair value: $108,137 and $129,400
       as of June 30, 2001 and December 31, 2000, respectively)...................       105,476        127,514
   Equity securities:
     Trading, at fair value (cost: $84,128 and $99,747 as of June 30, 2001
       and December 31, 2000, respectively) ......................................       162,181        353,896
     Available-for-sale, at fair value (cost: $265,712 and $238,942 as of
       June 30, 2001 and December 31, 2000, respectively) ........................       259,126        229,403
   Policy loans ..................................................................        10,559         10,301
                                                                                   -------------  -------------
Total investments ................................................................     2,062,131      2,013,129

Accrued investment income ........................................................        33,032         28,629
Deferred policy acquisition costs ................................................       164,665        168,102
Assets held in separate accounts .................................................       230,891        206,325
Receivables.......................................................................        29,629         17,222
Other assets......................................................................        19,003         15,296
                                                                                   -------------  -------------
Total assets ..................................................................... $   2,637,088  $   2,562,988
                                                                                   -------------  -------------
                                                                                   -------------  -------------
                        LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Life insurance policy liabilities ................................................ $   1,893,297  $   1,691,601
Liabilities related to separate accounts .........................................       224,173        203,806
Notes payable.....................................................................        36,874         35,556
Income taxes payable .............................................................        23,304          2,674
Deferred income tax liabilities ..................................................         4,046         41,587
Accounts payable, accruals and other liabilities .................................        40,866         20,022
                                                                                   -------------  -------------
Total liabilities ................................................................     2,222,560      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
   June 30, 2001 and December 31, 2000, respectively..............................         3,222          3,222
Additional paid-in capital .......................................................        68,274         67,591
Retained earnings ................................................................       421,996        580,176
Employee benefit trusts, at cost (shares: 13,698,181 and 12,811,381 as of
   June 30, 2001 and December 31, 2000, respectively) ............................       (63,599)       (58,003)
Accumulated other comprehensive income (loss) ....................................       (15,365)       (25,244)
                                                                                   -------------  -------------
Total shareholders' equity .......................................................       414,528        567,742
                                                                                   -------------  -------------
Total liabilities and shareholders' equity ....................................... $   2,637,088  $   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      Six Months Ended
                                                                          June 30,               June 30,
                                                                    --------------------   ---------------------
                                                                       2001       2000        2001        2000
                                                                    ---------  ---------   ---------  ----------
<S>                                                                 <C>        <C>         <C>        <C>
Revenues:
Investment income..............................................     $  35,603  $  27,547   $  70,591  $  53,332
Insurance policy charges.......................................         1,455      2,011       2,836      3,838
Financial advisory services, asset management and other
   fee income..................................................         6,588      7,231      13,192     16,996
Net realized investment gains (losses).........................       (10,235)    (8,596)     20,866        188
Change in net unrealized investment gains and losses
   on trading securities ......................................        42,548    426,338    (176,097)   354,193
                                                                    ---------  ---------   ---------  ---------
                                                                       75,959    454,531     (68,612)   428,547
Expenses:
Interest credited on insurance policyholder accounts...........        29,601     22,330      57,051     42,775
Amortization of deferred policy acquisition costs..............         5,869      5,947      11,551     11,242
Operating expenses.............................................        13,665     16,039      26,845     29,260
Goodwill amortization..........................................            58         57         115        115
Interest expense...............................................           658          2       1,336         14
                                                                    ---------  ---------   ---------  ---------
                                                                       49,851     44,375      96,898     83,406
                                                                    ---------  ---------   ---------  ---------

Income (loss) before income tax expense........................        26,108    410,156    (165,510)   345,141

Income tax expense (benefit)...................................        (3,275)    70,325     (14,667)    60,848
                                                                    ---------  ---------   ---------  ---------
Net income (loss)..............................................     $  29,383  $ 339,831   $(150,843) $ 284,293
                                                                    ---------  ---------   ---------  ---------
                                                                    ---------  ---------   ---------  ---------
</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........................        $ 0.58     $ 6.57     $ (2.94)    $ 5.59
Diluted earnings (loss) per share and ADS......................        $ 0.54     $ 5.62     $ (2.94)    $ 4.72

<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>
                                                                                             Six Months Ended
                                                                                                 June 30,
                                                                                       ----------------------------
                                                                                          2001              2000
                                                                                       ----------        ----------
<S>                                                                                    <C>               <C>
Net cash provided by operating activities ........................................     $   55,290        $    7,793

Cash flows from investing activities:
Purchases of held-to-maturity fixed maturity securities ..........................         (3,554)           (2,541)
Purchases of available-for-sale fixed maturity securities ........................       (395,834)         (171,237)
Purchases of available-for-sale equity securities ................................        (51,100)          (54,603)
Proceeds from redemption of held-to-maturity fixed maturity securities ...........         13,596            32,752
Proceeds from sale of available-for-sale fixed maturity securities ...............        198,336            41,475
Proceeds from sale of available-for-sale equity securities .......................          5,010             1,653
Capital expenditures .............................................................           (706)           (1,099)
Other cash flows from investing activities .......................................           (258)              (73)
                                                                                       ----------        ----------
Net cash provided by (used in) investing activities ..............................       (234,510)         (153,673)
                                                                                       ----------        ----------

Cash flows from financing activities:
Insurance policyholder contract deposits .........................................        269,342           244,721
Insurance policyholder benefits paid .............................................        (95,015)         (117,304)
Issue of Ordinary Shares .........................................................              3                 -
Purchases of Ordinary Shares by the employee benefit trusts.......................         (6,005)           (2,660)
Proceeds from disposal of shares by the employee benefit trusts...................            440             6,947
Dividends paid....................................................................         (7,337)           (7,093)
Notes payable.....................................................................          1,318                 -
Bank overdrafts...................................................................              -              (593)
                                                                                       ----------        ----------
Net cash provided by financing activities ........................................        162,746           124,018
                                                                                       ----------        ----------

Net increase (decrease) in cash and cash equivalents .............................        (16,474)          (21,862)
Cash and cash equivalents at beginning of period .................................        114,285            49,703
Foreign currency translation adjustment ..........................................            (74)                -
                                                                                       ----------        ----------
Cash and cash equivalents at end of period .......................................     $   97,737        $   27,841
                                                                                       ----------        ----------
                                                                                       ----------        ----------

<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 ........................           -              -        284,293              -            -      284,293
Change in net unrealized gains
   and losses on available-for-sale
   securities......................           -              -              -              -      (12,296)     (12,296)
Exercise of employee share
   options, including income
   tax effect......................           -          1,548              -          7,292            -        8,840
Net realized gains (losses) on
   disposal of shares held by the
   employee benefit trusts.........           -           (345)             -              -            -         (345)
Cash dividends declared ...........           -              -         (7,093)             -            -       (7,093)
Purchase of shares by the
   employee benefit trusts.........           -              -              -         (2,660)           -       (2,660)
                                    -----------    -----------    -----------    -----------  -----------  -----------
Balance as of June 30, 2000........ $     3,222    $    63,510    $   836,544    $   (49,401) $   (30,661) $   823,214
                                    -----------    -----------    -----------    -----------  -----------  -----------
                                    -----------    -----------    -----------    -----------  -----------  -----------
</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)..................           -              -       (150,843)             -            -     (150,843)
Change in net unrealized gains
   and losses on available-for-sale
   securities......................           -              -              -              -        9,894        9,894
Foreign currency translation
   adjustment......................           -              -              -              -          (15)         (15)
Exercise of employee share
   options, including income
   tax effect......................           -            652              -            409            -        1,061
Net realized gains on disposal
   of shares held by the
   employee benefit trusts.........           -             31              -              -            -           31
Cash dividends declared ...........           -              -         (7,337)             -            -       (7,337)
Purchase of shares by the
   employee benefit trusts.........           -              -              -         (6,005)           -       (6,005)
                                    -----------    -----------    -----------    -----------  -----------  -----------
Balance as of June 30, 2001........ $     3,222    $    68,274    $   421,996    $   (63,599) $   (15,365) $   414,528
                                    -----------    -----------    -----------    -----------  -----------  -----------
                                    -----------    -----------    -----------    -----------  -----------  -----------

<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       Six Months Ended
                                                                           June 30,                 June 30,
                                                                    ----------------------   ----------------------
                                                                       2001        2000         2001        2000
                                                                    ----------  ----------   ----------  ----------

<S>                                                                 <C>         <C>          <C>         <C>
Net income (loss).................................................  $   29,383  $  339,831   $ (150,843) $  284,293

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

Foreign currency translation adjustments, net of income
   taxes of $0....................................................          (7)          -          (15)          -

Change in net unrealized gains and losses on available-for-sale
   securities arising during the quarter, net of income taxes and
   deferred policy acquisition cost amortization adjustments
   totaling $5,186, $19,273, $(18,506) and $26,857, respectively .      (2,308)     (8,613)       9,894     (12,296)
                                                                    ----------  ----------   ----------  -----------
Other comprehensive income (loss) ................................      (2,315)     (8,613)       9,879     (12,296)
                                                                    ----------  ----------   ----------  ----------
Comprehensive income (loss) ......................................  $   27,068  $  331,218   $ (140,964) $  271,997
                                                                    ----------  ----------   ----------  ----------
                                                                    ----------  ----------   ----------  ----------

<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  six  month  period  ended  June  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
prior period's net income or shareholders' equity.


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."

     A  reconciliation  of the  numerators  and  denominators  for the basic and
diluted earnings per share calculations is as follows:

                                       8

<PAGE>
                  LONDON PACIFIC GROUP LIMITED AND SUBSIDIARIES

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

<TABLE>
<CAPTION>
                                                                      Three Months Ended          Six Months Ended
                                                                          June 30,                    June 30,
                                                                   ------------------------   ------------------------
                                                                      2001         2000           2001         2000
                                                                   -----------  -----------   -----------  -----------
                                                                              (In thousands, except share and
                                                                                per share and ADS amounts)
<S>                                                                <C>          <C>           <C>          <C>
Net income (loss)................................................. $    29,383  $   339,831   $  (150,843) $   284,293

Basic earnings per share and ADS:
Weighted average number of Ordinary Shares outstanding,
  excluding shares held by the employee benefit trusts............  50,896,799   51,704,724    51,227,399   50,894,327
                                                                   -----------  -----------   -----------  -----------
Basic earnings (loss) per share and ADS .......................... $      0.58  $      6.57   $     (2.94) $      5.59
                                                                   -----------  -----------   -----------  -----------
                                                                   -----------  -----------   -----------  -----------

Diluted earnings per share and ADS:
Weighted average number of Ordinary Shares outstanding,
  excluding shares held by the employee benefit trusts............  50,896,799   51,704,724    51,227,399   50,894,327
Effect of dilutive securities (employee share options)............   3,534,991    8,735,872             -    9,399,571
                                                                   -----------  -----------   -----------  -----------
Weighted average Ordinary Shares used in diluted earnings
  per share calculations..........................................  54,431,790   60,440,596    51,227,399   60,293,898
                                                                   -----------  -----------   -----------  -----------
Diluted earnings (loss) per share and ADS ........................ $      0.54  $      5.62   $     (2.94) $      4.72
                                                                   -----------  -----------   -----------  -----------
                                                                   -----------  -----------   -----------  -----------
</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>

                                            June 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............... $   253,569  $        -  $        -  $  253,569    $   226,799  $        -  $        -  $   226,799
Listed equity securities ..      12,143           -      (6,586)      5,557         12,143         124      (9,663)       2,604
                            -----------  ----------  ----------  ----------    -----------  ----------  ----------  -----------
Total available-for-sale
  equity securities........     265,712           -      (6,586)    259,126        238,942         124      (9,663)     229,403

Trading securities.........      84,128      98,111     (20,058)    162,181         99,747     264,433     (10,284)     353,896
                            -----------  ----------  ----------  ----------    -----------  ----------  ----------  -----------
Total equity securities.... $   349,840  $   98,111  $  (26,644) $  421,307    $   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 $42,548,000  and  $426,338,000  included in earnings for the
three  month  periods  ended  June  30,  2001  and  2000,  respectively,  and of
$(176,097,000)  and $354,193,000  included in earnings for the six month periods
ended June 30, 2001 and 2000, respectively.

                                       9

<PAGE>
                  LONDON PACIFIC GROUP LIMITED AND SUBSIDIARIES

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

Realized Gains and Losses

     Information   about  gross   realized   gains  and  losses  on   securities
transactions is as follows:
<TABLE>
<CAPTION>
                                                                        Three Months Ended        Six Months Ended
                                                                            June 30,                  June 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...................................................    $    7,627  $       95    $  11,227  $     126
    Gross losses..................................................        (2,643)        (82)      (2,999)       (95)
Fixed maturities, held-to-maturity:
    Gross losses..................................................             -     (26,334)         (12)   (26,468)
Trading securities:
    Gross gains...................................................             -      23,412       43,665     32,196
    Gross losses..................................................             -           -       (1,646)         -
Equity securities, available-for-sale:
    Gross gains...................................................            10          14          410        130
    Gross losses..................................................       (15,229)     (5,701)     (29,779)    (5,701)
                                                                      ----------  ----------    ---------  ---------
Net realized investment gains (losses) on securities
    transactions..................................................    $  (10,235) $   (8,596)   $  20,866  $     188
                                                                      ----------  ----------    ---------  ---------
                                                                      ----------  ----------    ---------  ---------
</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 six month periods ended June 30, 2001.

     In June 2001, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement  of Financial  Accounting  Standard  No. 141 ("SFAS  141"),  "Business
Combinations," which supersedes  Accounting Principles Board ("APB") Opinion No.
16, "Business Combinations." SFAS 141 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 is
effective  for  transactions  initiated  after  June  30,  2001.  The  remaining
provisions of SFAS 141 are effective  for  transactions  accounted for using the
purchase  method  for  which the date of  acquisition  is July 1, 2001 or later.
Management  does  not  anticipate  the  adoption  of  this  statement  to have a
significant effect on the Group's results of operations or financial position.

     In June  2001,  the FASB also  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 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

                                       10

<PAGE>

                  LONDON PACIFIC GROUP LIMITED AND SUBSIDIARIES

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

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.


Note 6. Business Segment and Geographical Information

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

     During the three month  periods  ended June 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
$3,042,000 and $2,526,000, respectively. During the six month periods ended June
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  $5,766,000  and  $4,943,000,   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 six 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:

<TABLE>
<CAPTION>
                                                                       Three Months Ended         Six Months Ended
                                                                            June 30,                  June 30,
                                                                     ----------------------    ----------------------
                                                                        2001        2000          2001        2000
                                                                     ----------  ----------    ----------  ----------
                                                                                      (In thousands)
<S>                                                                  <C>         <C>           <C>         <C>
Jersey............................................................   $  (17,523) $  147,099    $ (116,982) $  151,483
Guernsey..........................................................       58,980      66,175         3,420      27,803
United States.....................................................       34,502     241,257        44,950     249,261
                                                                     ----------  ----------    ----------  ----------
Consolidated revenues and net investment gains (losses)...........   $   75,959  $  454,531    $  (68,612) $  428,547
                                                                     ----------  ----------    ----------  ----------
                                                                     ----------  ----------    ----------  ----------
</TABLE>
     Total assets by geographic segment were as follows:
<TABLE>
<CAPTION>
                                                                                    June 30,       December 31,
                                                                                      2001             2000
                                                                                  ------------     ------------
                                                                                          (In thousands)
<S>                                                                               <C>              <C>
Jersey.........................................................................   $     85,185     $    251,255
Guernsey.......................................................................        204,742          176,173
United States..................................................................      2,347,161        2,135,560
                                                                                  ------------     ------------
Consolidated total assets .....................................................   $  2,637,088     $  2,562,988
                                                                                  ------------     ------------
                                                                                  ------------     ------------
</TABLE>

                                       11

<PAGE>
                  LONDON PACIFIC GROUP LIMITED AND SUBSIDIARIES

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

     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          Six Months Ended
                                                                             June 30,                   June 30,
                                                                      ----------------------     -----------------------
                                                                         2001         2000          2001         2000
                                                                      ----------   ---------     ----------   ----------
                                                                                       (In thousands)
<S>                                                                   <C>          <C>           <C>         <C>
Revenues:
Life insurance and annuities (1) (2)..............................    $    8,577   $  378,752    $  (88,813) $  377,048
Financial advisory services.......................................         5,061        5,720        10,126      11,764
Asset management (1) .............................................         1,629        1,857         3,414       3,759
Venture capital management (2) ...................................        59,997       67,830         5,518      35,045
                                                                      ----------   ----------    ----------  ----------
                                                                          75,264      454,159       (69,755)    427,616
Reconciliation of segment amounts to consolidated amounts:
Interest income ..................................................           695          372         1,143         931
                                                                      ----------   ----------    ----------  ----------
Consolidated revenues and net investment gains (losses)...........    $   75,959   $  454,531    $  (68,612) $  428,547
                                                                      ----------   ----------    ----------  ----------
                                                                      ----------   ----------    ----------  ----------

Income (loss) before income tax expense:
Life insurance and annuities (1) (2)..............................    $  (28,769)  $  347,811    $ (161,792) $  318,370
Financial advisory services ......................................          (352)      (1,167)       (1,807)     (1,806)
Asset management (1)..............................................           227          119           514         766
Venture capital management (2) ...................................        56,331       64,214         1,014      29,572
                                                                      ----------   ----------    ----------  ----------
                                                                          27,437      410,977      (162,071)    346,902
Reconciliation of segment amounts to consolidated amounts:
Interest income ..................................................           695          372         1,143         931
Corporate expenses ...............................................        (1,308)      (1,134)       (3,131)     (2,563)
Goodwill amortization ............................................           (58)         (57)         (115)       (115)
Interest expense .................................................          (658)          (2)       (1,336)        (14)
                                                                      ----------   ----------    ----------  ----------
Consolidated income (loss) before income tax expense .............    $   26,108   $  410,156    $ (165,510) $  345,141
                                                                      ----------   ----------    ----------  ----------
                                                                      ----------   ----------    ----------  ----------
<FN>
(1)  Included in the  revenues of the asset  management  segment are  management
     fees from the life insurance and annuities segment of $460,000 and $662,000
     in the second  quarters of 2001 and 2000,  respectively,  and  $989,000 and
     $1,197,000 in the first six 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 $2,582,000
     and $1,864,000 in the second quarters of 2001 and 2000,  respectively,  and
     $4,777,000  and  $3,746,000  in the  first  six  months  of 2001 and  2000,
     respectively.
</FN>
</TABLE>

     The only material  change in segmental  assets during the second quarter of
2001 was in the venture capital  management  segment,  where assets increased by
$21,292,000 from  $71,901,000 to $93,193,000,  primarily caused by the change in
net unrealized  gains on listed equity  securities in the trading  account.  The
only material change in segmental assets during the first six months of 2001 was
in the venture capital management segment, where assets decreased by $16,411,000
from  $109,604,000  to  $93,193,000,  primarily  caused  by  the  change  in net
unrealized gains on listed equity securities in the trading account.

                                       12

<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.

                                       13

<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           Six Months Ended
                                                                             June 30,                    June 30,
                                                                      -----------------------     -----------------------
                                                                         2001         2000           2001         2000
                                                                      ----------   ----------     ----------   ----------
                                                                                       (In thousands)
<S>                                                                   <C>          <C>            <C>          <C>
Revenues:
Investment income.................................................    $   31,865   $   24,522     $   63,682   $   47,186
Insurance policy charges .........................................         1,455        2,011          2,836        3,838
Net realized investment gains (losses), including related
  amortization (1) (2)............................................       (14,471)     (15,631)        52,273       (6,866)
Change in net unrealized investment gains and losses on
  trading securities, including related amortization (1) (2)......       (14,856)     363,674       (214,590)     325,071
Other fee income .................................................           359          316            641          746
                                                                      ----------   ----------     ----------   ----------
Total revenues and investment gains (losses), including
  related amortization (1)........................................         4,352      374,892        (95,158)     369,975

Expenses:
Interest credited on insurance policyholder accounts .............        29,601       22,330         57,051       42,775
Amortization of deferred policy acquisition costs related to
  operations (1)..................................................         1,644        2,087          5,206        4,169
Mortality expenses (gains)........................................          (356)        (434)          (306)        (401)
General and administrative expenses ..............................         2,232        3,098          4,683        5,062
                                                                      ----------   ----------     ----------   ----------
Total expenses related to operations (1)..........................        33,121       27,081         66,634       51,605
                                                                      ----------   ----------     ----------   ----------
Income (loss) before income tax expense ..........................    $  (28,769)  $  347,811     $ (161,792)  $  318,370
                                                                      ----------   ----------     ----------   ----------
                                                                      ----------   ----------     ----------   ----------
<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 $4,225,000 and  $3,860,000 in the second  quarters of 2001
     and 2000,  respectively,  and by $6,345,000 and $7,073,000 in the first six
     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)  ($4,225,000  and  ($1,521,000) in the
     second  quarters  of 2001 and  2000,  respectively)  and the  change in net
     unrealized  investment  gains and losses ($0 and  $5,381,000  in the second
     quarters of 2001 and 2000,  respectively),  and netted against net realized
     investment  gains (losses)  ($6,345,000 and  ($1,586,000) for the first six
     months of 2001 and 2000,  respectively)  and the  change in net  unrealized
     investment  gains and losses ($0 and $8,659,000 for the first six months of
     2001 and 2000, respectively).

(2)  Realized investment gains in the amount of $37,763,000 were recorded during
     the first six 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>

Second quarter of 2001 compared to second quarter of 2000

     For the second 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
$28.8 million to the Group's overall income before taxes,  compared to income of
$347.8 million in the second quarter of 2000.  Net realized  investment  losses,
including  related  amortization of deferred policy  acquisition costs ("DPAC"),
decreased  by $1.2  million,  while the loss from the  change in net  unrealized

                                       14

<PAGE>
investment  gains and losses,  including  related DPAC  amortization,  was $14.9
million, compared to a net gain of $363.7 million in the second quarter of 2000.
General and administrative  expenses decreased by $0.9 million;  amortization of
DPAC, excluding  amortization related to investment gains and losses,  decreased
by $0.4 million;  and the spread between investment income and interest credited
to  policyholder  accounts  increased by $0.1  million,  each as compared to the
second quarter of 2000.  Policy charges for the second quarter of 2001 decreased
by $0.5  million and other fee income  remained  level,  each as compared to the
second 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
$133.8  million  for the second  quarter of 2001,  a decrease  of 14.6% over the
premiums  received for the same period in 2000.  LPAL generated $22.6 million of
the total premiums received during the second quarter of 2001, compared to $12.7
million for the same period in 2000.  The higher  premium  volume in the quarter
for LPAL reflects the maturing of the  distribution  network via the increase in
the number of financial  intermediaries  with which LPAL transacts  business and
the  strengthening  of  its  product  range  from  the  original  launch  of the
Guaranteed  Return Bond in February 2000.  The $32.7 million  decrease in LPLA's
premiums reflects the impact of a declining U.S. interest rate environment. As a
result of lower reinvestment  rates, LPLA reduced annuity crediting rates during
the second  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 second quarter of 2001 increased to $73.0 million,  compared to
$46.7 million in the second  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
second quarter of 2001 decreased to $30.3 million,  compared to $88.8 million in
the second quarter of 2000.

     Interest and dividend income on investments was $31.9 million in the second
quarter of 2001 as compared with $24.5 million in the same period in 2000.  This
$7.4 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 June 30, 2001 was $263.6 million, compared with $234.2 million as of December
31, 2000 and $152.7 million as of June 30, 2000.

     Net investment  losses,  including  related DPAC  amortization,  were $29.3
million  in the second  quarter of 2001,  compared  to net  investment  gains of
$348.0  million in the  second  quarter of 2000.  Net  investment  losses in the
second quarter of 2001 were comprised of net realized investment losses of $10.2
million, a $14.9 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  $4.2  million.  The  market  value  of the  trading  portfolio
decreased  from $69.9  million as of March 31, 2001 to $60.1  million as of June
30, 2001.  Additions to the trading  portfolio during the second quarter of 2001
of $5.0 million  resulted from the  conversion of a private  preferred  stock to
publicly traded common stock. The life insurance and annuities  segment recorded
$7.1 million in realized gains from the sale of certain  corporate  bonds during
the second quarter of 2001. These bond gains were offset by permanent impairment
writedowns  of $2.1  million  on one  corporate  bond and $15.2  million  on two
private  placement  equity  securities.  As of June 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.

                                       15

<PAGE>
     Total invested assets (defined as total assets excluding DPAC, other assets
and income tax related accounts)  increased to $2.3 billion as of June 30, 2001,
compared  with $2.2 billion as of December 31, 2000 and as of June 30, 2000.  On
total  average  invested  assets for the second  quarter  of 2001,  the  average
annualized net return,  including both realized and unrealized  investment gains
and losses,  was 1.24%,  compared with 78.66% 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 $0.5 million in
the second  quarter of 2001 to $1.5 million,  compared with $2.0 million for the
same period in 2000. Full policy surrenders  totaled $25.5 million in the second
quarter of 2001, a $15.1 million decrease over the same period in 2000. Internal
policy  conversions  accounted  for $8.2 million of the full  surrenders  in the
second  quarter of 2001,  compared to $13.5 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 $7.3 million in the
second  quarter of 2001 to $29.6  million,  compared  with $22.3 million for the
same period in 2000.  This increase was primarily due to new business growth and
favorable renewal rates on certain blocks of business. The average rate credited
to  policyholders  was 5.97% in the second quarter of 2001,  compared with 5.68%
for the same period in 2000.

     Amortization of DPAC,  excluding  amortization  related to investment gains
and losses,  was $1.6 million in the second  quarter of 2001, a decrease of $0.4
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 $4.2 million for the
second quarter of 2001, compared to $3.9 million in the second quarter of 2000.

     General and administrative expenses were $2.2 million in the second quarter
of 2001,  compared  with $3.1  million  for the same  period in 2000.  This $0.9
million decrease was primarily due to reductions in employee compensation costs,
legal expenses and state guaranty fund assessment costs. The annualized  expense
ratio  for the  second  quarter  of  2001,  which  is  defined  as  general  and
administrative  expenses  divided  by the  average  book value of total cash and
investments, was 0.40%, compared with 0.64% for the same period in 2000.

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

     For the first six months of 2001, the life insurance and annuities  segment
contributed a loss before income taxes of $161.8 million to the Group's  overall
loss before taxes,  compared to income of $318.4  million for the same period in
2000. Net realized  investment gains,  including  related  amortization of DPAC,
increased  by $59.1  million,  while the loss from the change in net  unrealized
investment gains and losses,  including  related DPAC  amortization,  was $214.6
million,  compared  to a net gain of $325.1  million  in the first six months of
2000. The spread between investment income and interest credited to policyholder
accounts  increased  by  $2.2  million;   general  and  administrative  expenses
decreased by $0.4 million;  and  amortization  of DPAC,  excluding  amortization
related to  investment  gains and losses,  increased  by $1.0  million,  each as
compared  to the first  six  months of 2000.  Policy  charges  for the first six
months of 2001 decreased by $1.0 million and other fee income  decreased by $0.1
million, each as compared to the same period in 2000.

     Premiums  received for all life,  annuity and guaranteed bond products were
$287.4  million  for the first six months of 2001,  an increase of 9.7% over the
premiums  received for the same period in 2000.  LPAL generated $50.4 million of
the total  premiums  received  during the first six months of 2001,  compared to
$12.7  million for the same period in 2000.  The  increase in premiums  reflects
LPAL's continuing  success in increasing the number of financial  intermediaries
who sell LPAL's expanded  product range which is ideally suited for risk adverse
investors seeking income and capital preservation in volatile market conditions.
The fourfold  increase in 2001 reflects a full six months of  operations  during
the period, compared to the initial period of operations in

                                       16

<PAGE>
2000. LPAL continues to make substantial inroads in its sector of the guaranteed
annuity  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 administrative  capability of its sister company, LPLA, in the U.S.
The $12.2 million decrease in LPLA's premiums reflects the impact of a declining
U.S. interest rate  environment,  which led to reduced crediting rates and lower
production in the second  quarter 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 six  months  of 2001  increased  to $134.9
million,  compared to $88.9 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 six months of 2001 decreased
to $88.0 million, compared to $143.7 million for the same period in 2000.

     Interest and dividend income on investments was $63.7 million for the first
six months of 2001 as  compared  with $47.2  million in the same period in 2000.
This $16.5 million increase was primarily due to asset growth from new business,
offset by lower reinvestment rates.

     Net investment  losses,  including related DPAC  amortization,  were $162.3
million for the first six months of 2001,  compared to net  investment  gains of
$318.2 million for the same period in 2000. Net investment  losses for the first
six months of 2001 were  comprised  of net  realized  investment  gains of $58.6
million,  a $214.6  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 $6.3  million.  The market  value of the trading
portfolio  decreased  from $248.7  million as of  December  31,  2000,  to $60.1
million as of June 30, 2001. Additions to the trading portfolio during the first
six 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 six 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 $31.9 million on three private placement equity securities and one
corporate  bond.  The life  insurance and annuities  segment also recorded $10.8
million in  realized  gains from the sale of certain  corporate  bonds and other
investments  during  the  first  six  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 June 30,  2001,
compared  with $2.2 billion as of December 31, 2000 and as of June 30, 2000.  On
total  average  invested  assets for the first six months of 2001,  the  average
annualized net return,  including both realized and unrealized  investment gains
and losses, was - 8.40%,  compared with 41.66% 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 $1.0 million for
the first six months of 2001 to $2.8 million, compared with $3.8 million for the
same period in 2000. Full policy surrenders  totaled $52.7 million for the first
six months of 2001, a $19.5  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 $18.1 million of the full  surrenders for the
first six months of 2001, compared to $22.3 million for the same period in 2000.

     Interest  credited on policyholder  accounts  increased by $14.3 million in
the first six months of 2001 to $57.1  million,  compared with $42.8 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 5.98% in the first six months of 2001,  compared
with 5.63% for the same period in 2000.

                                       17

<PAGE>
     Amortization of DPAC,  excluding  amortization  related to investment gains
and losses,  was $5.2  million for the first six 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 $6.3  million for the first six months of 2001,
compared to $7.1 million for the same period in 2000.

     General and  administrative  expenses  were $4.7  million for the first six
months of 2001,  compared  with $5.1  million for the same period in 2000.  This
decrease was primarily due to reductions at LPLA in employee compensation costs,
legal expenses and state  guaranty fund  assessment  costs,  offset by increased
expenses at LPLA for technology consultants and at LPAL for additional staffing.
The annualized  expense ratio for the first six months of 2001, which is defined
as general and  administrative  expenses  divided by the  average  book value of
total cash and investments,  was 0.40%,  compared with 0.56% 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. 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 $103.2 million have been generated since
inception through June 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 57% of the  premiums  received  from  investors,  or  through
financial intermediaries, in the Channel Islands.

     The emphasis in the second half of 2001 will be continued  expansion of the
LPAL  operations via the promotion of the Guaranteed  Return Bond in the Channel
Islands,  the Isle of Man and the U.K. by way of targeted trade  advertising and
presentations.

Financial Advisory Services

     Certain  information  regarding the financial  advisory services  segment's
results of operations is as follows:
<TABLE>
<CAPTION>
                                                                        Three Months Ended           Six Months Ended
                                                                             June 30,                    June 30,
                                                                      -----------------------     -----------------------
                                                                         2001         2000           2001         2000
                                                                      ----------   ----------     ----------   ----------
                                                                                       (In thousands)
<S>                                                                   <C>          <C>            <C>          <C>
Gross financial advisory services fees............................    $    5,061   $    5,720     $   10,126   $   11,764
Payouts due to independent advisors...............................        (3,093)      (4,032)        (6,689)      (8,405)
                                                                      ----------   ----------     ----------   ----------
Net financial advisory services fees..............................         1,968        1,688          3,437        3,359

Operating expenses................................................         2,320        2,855          5,244        5,165
                                                                      ----------   ----------     ----------   ----------
Income (loss) before income tax expense ..........................    $     (352)  $   (1,167)    $   (1,807)  $   (1,806)
                                                                      ----------   ----------     ----------   ----------
                                                                      ----------   ----------     ----------   ----------
</TABLE>

Second quarter of 2001 compared to second quarter of 2000

     The pre-tax loss from the financial  advisory  services  segment  decreased
from $1.2  million in the second  quarter of 2000 to $0.4  million in the second
quarter of 2001, primarily due to an increase in net revenues resulting from new
client contracts, as well as a decrease in operating expenses.

     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 generally  difficult market  conditions  prevailing  during the quarter.
Assets under management,

                                       18

<PAGE>
consulting or administration  increased from $1.8 billion as of June 30, 2000 to
$2.3 billion as of June 30, 2001. The addition of assets from new  institutional
clients  more than  offset  the  decline in managed  assets  resulting  from the
general decline in markets.

     Operating expenses decreased to $2.3 million in the second quarter of 2001,
compared with $2.9 million in the second quarter of 2000. This decline  resulted
from the Group's  capitalization  policies for software  development costs and a
reduction in web development  consulting  costs,  which were partially offset by
increased staff costs as staffing additions were made over the course of 2000 to
support the institutional and Internet based initiatives discussed below.

     In late 1999, the Group decided to make the LPA 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 June 30, 2001 was $3.0 million,
including $0.2 million in the second quarter of 2001. $2.3 million of this total
has been capitalized as software  development costs and is being amortized (as a
component of operating expenses) over 5 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 7  major  institutions,  and
additional  contracts  are  currently  under  negotiation.  The  impact of these
contracts began in the second quarter of 2001 and will increase during the third
quarter of 2001 as newly contracted business begins to come on line.

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

     The pre-tax loss from the financial advisory services segment for the first
six  months of 2001 was $1.8  million,  which was equal to the loss for the same
period in 2000.

     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 generally  difficult market  conditions  prevailing during the first six
months of 2001. Assets under management,  consulting or administration increased
from $1.8 billion as of June 30, 2000 to $2.3  billion as of June 30, 2001.  The
addition of assets from new  institutional  clients more than offset the decline
in managed assets resulting from the general decline in markets.

     Operating  expenses  were $5.2  million  for the first six  months of 2001,
which was level with operating  expenses for the same period in 2000. The mix of
expenses  changed  as  staffing  additions  were made over the course of 2000 to
support the institutional and Internet based initiatives discussed below.

     In late 1999, the Group decided to make the LPA 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 June 30, 2001 was $3.0 million,
including  $0.3  million in the first six months of 2001.  $2.3  million of this
total has been capitalized as software  development costs and is being amortized
(as a component of operating expenses) over 5 years; amortization of these costs
began in May 2001 and the amount  amortized  during the first six months of 2001
was $0.1 million.

                                       19

<PAGE>
Asset Management

     Certain  information  regarding the asset management  segment's  results of
operations is as follows:
<TABLE>
<CAPTION>
                                                                        Three Months Ended           Six Months Ended
                                                                             June 30,                    June 30,
                                                                      -----------------------     -----------------------
                                                                         2001         2000           2001         2000
                                                                      ----------   ----------     ----------   ----------
                                                                                       (In thousands)
<S>                                                                   <C>          <C>            <C>          <C>
Revenues .........................................................    $    1,629   $    1,857     $    3,414   $    3,759
Operating expenses ...............................................         1,402        1,738          2,900        2,993
                                                                      ----------   ----------     ----------   ----------
Income before income tax expense .................................    $      227   $      119     $      514   $      766
                                                                      ----------   ----------     ----------   ----------
                                                                      ----------   ----------     ----------   ----------
</TABLE>

Second quarter of 2001 compared to second 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 $1.4 million,  which included $0.2 million of management fees
from the life  insurance  and  annuities  segment.  Expenses  decreased  by $0.3
million to $1.4  million  primarily  due to lower  employee  compensation  which
resulted from the decline in unrealized  appreciation on employees'  investments
in the Group's deferred  compensation plan. An intensive expense control program
was  implemented  during the second  quarter of 2001,  with the  benefits  to be
realized more strongly in future quarters.

     Total wrap accounts  increased during the period to more than 5,000 for the
first time. In addition,  revenues  benefitted  from the rise of the U.S.  stock
market  during the quarter.  BCM continued to attract net new wrap assets in its
primary product, large capitalization value equity management. Total wrap assets
were $1,014  million as of June 30,  2001,  compared to $906 million as of March
31, 2001 and $890 million as of June 30, 2000.

     Included  in the  revenues of the asset  management  segment for the second
quarter  of 2001 were  portfolio  management  fees from the life  insurance  and
annuities  segment of $0.5  million,  compared  with $0.7 million for the second
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 six months of 2001 compared to first six months of 2000

     The asset  management  segment's  results  for the first six months of 2001
include improved  performance by BCM.  Revenues at BCM increased by $0.1 million
to $2.9 million,  which  included $0.4 million of management  fees from the life
insurance  and  annuities  segment.  Expenses  decreased by $0.1 million to $2.9
million for the first six months of 2001.

     BCM's revenues  increased slightly despite lower U.S. equity prices at June
30, 2001 relative to the beginning of the year.  BCM was able to attract net new
wrap  assets in both its Value  Equity and  Growth  Equity  investment  products
during the first six months of 2001. Total wrap assets grew from $955 million as
of December  31, 2000 to $1,014  million as of June 30, 2001,  primarily  due to
sales of BCM's core product, Value Equity, which continued to outperform the S&P
500 during the first six months of 2001.  Sales of this product more than offset
the decline in the market  value of the accounts  during the period.  Total wrap
fee accounts  rose 14.3% over the period to more than 5,000  accounts as of June
30, 2001.

     BCM implemented an aggressive cost cutting program during the first half of
2001,  with the benefits to be felt more  strongly in the next six months of the
year.

                                       20

<PAGE>
     Other revenue in the asset management  segment decreased by $0.1 million in
the first six 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 six
months of 2001  were  portfolio  management  fees  from the life  insurance  and
annuities segment of $1.0 million,  compared with $1.2 million for the first six
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           Six Months Ended
                                                                             June 30,                    June 30,
                                                                      -----------------------     -----------------------
                                                                         2001         2000           2001         2000
                                                                      ----------   ----------     ----------   ----------
                                                                                       (In thousands)
<S>                                                                   <C>          <C>            <C>          <C>
Revenues:
Management fees...................................................    $    2,582   $    1,864     $    4,777   $    5,670
Investment income.................................................             -          127              -          272
Net realized investment gains (1).................................            11        8,556         37,280        8,640
Change in net unrealized investment gains and losses (1)..........        57,404       57,283        (36,539)      20,463
                                                                      ----------   ----------     ----------   ----------
Total revenues and net investment gains...........................        59,997       67,830          5,518       35,045
Operating expenses................................................         3,666        3,616          4,504        5,473
                                                                      ----------   ----------     ----------   ----------
Income before income tax expense..................................    $   56,331   $   64,214     $    1,014   $   29,572
                                                                      ----------   ----------     ----------   ----------
                                                                      ----------   ----------     ----------   ----------
<FN>
(1)  Realized investment gains in the amount of $37,269,000 were recorded during
     the first six 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>

Second quarter of 2001 compared to second quarter of 2000

     Income  before  income taxes from the venture  capital  management  segment
decreased  from $64.2 million in the second  quarter of 2000 to $56.3 million in
the second  quarter of 2001.  This  decrease was primarily  attributable  to the
absence of realized investment gains during the second quarter of 2001.

     The change in net unrealized  gains and losses in the listed equity trading
portfolio during the second quarter of 2001 was $57.4 million.  The market value
of the trading  portfolio  increased from $44.7 million as of March 31, 2001, to
$102.1 million as of June 30, 2001. These positions in listed equity  securities
were the result of private  equity  transactions  in technology  companies.  The
gains  reflected the general  upward trend in the market for  technology  stocks
during the second quarter of 2001.

     Significant  fluctuations  in net  unrealized  gains in the  listed  equity
trading  portfolio  are  likely in future  quarters,  reflecting  equity  market
volatility, especially in the technology sector.

     Included in the revenues of the venture capital  management segment for the
second quarter of 2001 are portfolio management fees from the life insurance and
annuities  segment  of $2.6  million,  compared  to $1.9  million  in the second
quarter of 2000. Berkeley International Capital Corporation ("BICC") sources and
monitors private investments for LPLA, for which LPLA pays BICC management fees.

     Operating  expenses remained level at $3.6 million in the second quarter of
2001 as compared to the same period in 2000.

                                       21

<PAGE>
First six months of 2001 compared to first six months of 2000

     Income  before  income taxes from the venture  capital  management  segment
decreased  from $29.6 million in the first six months of 2000 to $1.0 million in
the first six months of 2001.  This decrease was  attributable  to the change in
net  unrealized  gains and losses for the first six 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 losses  reflected the general  downward  trend in the market for
technology stocks during the first six months of 2001.

     The change in net unrealized  gains and losses in the listed equity trading
portfolio  during the first six months of 2001 was a loss of $36.5 million.  The
market  value of the  trading  portfolio  decreased  from  $105.2  million as of
December  31,  2000,  to $102.1  million as of June 30,  2001.  Additions to the
trading  portfolio during the first six months of 2001 of $51.9 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.

     Significant  fluctuations  in net  unrealized  gains in the  listed  equity
trading  portfolio  are  likely in future  quarters,  reflecting  equity  market
volatility, especially in the technology sector.

     Included in the revenues of the venture capital  management segment for the
first six months of 2001 are portfolio  management  fees from the life insurance
and annuities segment of $4.8 million, compared to $3.7 million in the first six
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 six months of 2001 were $51.1  million,  compared to $55.0 million  during
the first six months of 2000.  Other  non-recurring  fees of $1.9  million  were
received in the first six months of 2000.

     Operating  expenses  in the  first six  months  of 2001 were $4.5  million,
compared  to $5.5  million  in the first six months of 2000.  This $1.0  million
decrease  was  primarily  attributable  to  lower  employee  compensation  which
resulted from the decline in unrealized  appreciation on employees'  investments
in the Group's deferred compensation plan.

Corporate and Other

Second quarter of 2001 compared to second quarter of 2000

     Corporate  expenses increased by $0.2 million to $1.3 million in the second
quarter of 2001 as compared  with the second  quarter of 2000,  primarily due to
additional staffing at the corporate level.

     Interest  income  earned by the Group  (excluding  the life  insurance  and
annuities  segment)  increased  by $0.3  million  to $0.7  million in the second
quarter of 2001 as compared  with the second  quarter 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 $0.7  million to $0.7  million  in the  second  quarter of 2001 as
compared  with the second  quarter  of 2000,  primarily  due to bank  borrowings
outstanding during the second quarter of 2001.

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

     Corporate  expenses  increased by $0.5 million to $3.1 million in the first
six months of 2001 as compared with the first six months of 2000,  primarily due
to a grant of  employee  share  options at an  exercise  price below fair market
value on the date of the grant.  Under U.S.  GAAP,  the  difference  between the
exercise  price  and the fair  market  value on the date of grant is  considered
compensation expense.

     Interest  income  earned by the Group  (excluding  the life  insurance  and
annuities  segment)  increased  by $0.2 million to $1.1 million in the first six
months of 2001 as compared  with the first six months of 2000,

                                       22

<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 $1.3 million to $1.3 million in the first six
months of 2001 as compared  with the first six months of 2000,  primarily due to
bank borrowings outstanding during the first six months of 2001.

Consolidated Income (Loss) Before Income Tax Expense (Benefit)

Second quarter of 2001 compared to second quarter of 2000

     Consolidated  income before income taxes decreased by $384.1 million,  from
$410.2  million  in the second  quarter  of 2000 to $26.1  million in the second
quarter of 2001. This large decrease in income was primarily attributable to the
change in net unrealized investment gains and 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 six months of 2001 compared to first six months of 2000

     The consolidated  loss before income taxes for the first six months of 2001
was  $165.5  million,  compared  to income of $345.1  million  for the first six
months of 2000. This dramatic  decrease in income was primarily  attributable to
the change in net unrealized  investment  gains and losses,  partially offset by
net realized investment gains.

     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.

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.

Second quarter of 2001 compared to second quarter of 2000

     Though income before tax expense was $26.1 million in the second quarter of
2001, an income tax benefit of $3.3 million  resulted for the quarter.  This was
primarily  attributable to the $10.7 million loss from the U.S. life and annuity
company which  generated a federal tax benefit of  approximately  35%. Income of
$36.8 million was contributed by the Jersey and Guernsey  operations  during the
second quarter of 2001, which primarily  consisted of untaxed  investment gains.
The  effective  tax rate,  as a percentage of income before income taxes for the
second  quarter of 2000,  was 17%. This  effective  rate reflected the fact that
only 49% of income for the second  quarter of 2000 was  contributed  by the U.S.
life and annuity company, and that 51% of income for that period represented net
capital gains from the Jersey and Guernsey  operations  (where capital gains are
not taxed).

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

     The  effective  tax credit rate,  as a percentage of the loss before income
taxes for the first six months of 2001,  was 9%. This low  effective  tax credit
rate was primarily  attributable to losses of $122.4 million  contributed by the
Jersey  and  Guernsey  operations  during  the first six  months of 2001,  which
primarily

                                       23

<PAGE>
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 six months of 2000,  was 18%. This  effective  rate  reflected the
fact that only 50% of income for the first six months of 2000 was contributed by
the U.S.  life and  annuity  company,  and that 50% 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 June 30, 2001, cash and cash  equivalents of
the Group,  excluding the life insurance segment,  amounted to $64.3 million. As
of June 30, 2001, the Group, excluding the life insurance and annuities segment,
also held $101.8 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 six months of 2001 by $153.2
million  to  $414.5  million,  primarily  due to the net loss for the  period of
$150.8 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 $48.9 million and $101.5
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 June 30, 2001, if market
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 $1.8 billion, would have decreased by $83.3 million, compared with
a decrease of $63.8  million for the  calculated  market  value of  liabilities,
which was approximately $1.7 billion. Conversely, a sudden decrease of 100 basis
points  would have  increased  the  investment  portfolio's  fair value by $86.1
million, compared with an increase in the calculated market value of liabilities
of $80.9 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.

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<PAGE>
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 June 30,
2001 and 2000,  which totaled $167.7 million and $807.2  million,  respectively,
had  abruptly  increased  or  decreased  by 50%,  the market value of the listed
equity  portfolio  would have increased or decreased by $83.9 million and $403.6
million, respectively.


                          PART II - OTHER INFORMATION


Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     On May 31, 2001, the annual general  meeting of the  shareholders of London
Pacific  Group  Limited  was held and the  matters  submitted  to a vote were as
follows:

     (1)  To receive the report of the directors  and the  financial  statements
          for the year ended December 31, 2000,  together with the report of the
          independent auditors thereon; votes received for: 46,812,259, against:
          27,764, abstentions: 35,829.

     (2)  To declare a final 2000  dividend of 18.0 cents per share gross on the
          Ordinary  Shares;  votes received for:  46,827,184,  against:  19,725,
          abstentions: 28,943.

     (3)  For the  re-election  of one  director,  Mr.  Victor A. Hebert;  votes
          received  for:  46,690,554,  against:  103,610,  abstentions:  81,688.
          Directors  whose  term of  office  continued,  and who were not up for
          re-election at this annual meeting, include Mr. Arthur I. Trueger, Mr.
          John Clennett,  Mr. Harold E. Hughes,  The Viscount  Trenchard and Mr.
          Gary L. Wilcox.

     (4)  To re-appoint  PricewaterhouseCoopers  as independent  auditors of the
          Company and to  authorize  the  directors  to fix their  remuneration;
          votes received for: 46,769,680, against: 63,573, abstentions: 42,599.


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 second quarter
of 2001.

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                                    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:  August 9, 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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