================================================================================


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


                                    FORM 10-Q

                QUARTERLY REPORT PURSUANT TO SECTION 12 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  For the quarterly period ended September 30, 1999
                        Commission file number 000-23481
                                -----------------

                                 ESG RE LIMITED
             (Exact name of Registrant as specified in its charter)


         Bermuda                                              Not Applicable
(State or other jurisdiction of                             (I.R.S. Employer
incorporation of organization)                              Identification No.)

                                16 Church Street
                             Hamilton HM11, Bermuda
                    (Address of executive offices, zip code)

                            Telephone (441) 295-2185
              (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 {_}

The  number of the  Registrant's  common  shares  (par  value  $1.00 per  share)
outstanding as of November 15, 1999, was 13,228,399.



================================================================================



<PAGE>




                                 ESG RE LIMITED
          1.1 Index to the Condensed Consolidated Financial Statements



                                                                            PAGE
                                                                            ----

Condensed Consolidated Balance Sheets as of  September 30, 1999                1
     (unaudited) and December 31, 1998
Condensed Consolidated Statements of Operations for the three months
     and nine months ended September 30, 1999 and 1998 (unaudited)             2
Condensed Consolidated Statements of Cash Flows for the
     nine months ended  September 30, 1999 and 1998 (unaudited)                3
Condensed Consolidated Statements of Comprehensive Income
     for the three months and nine months ended
     September 30, 1999 and 1998 (unaudited)                                   4
Notes to the Condensed Consolidated Financial Statements (unaudited)           5
Independent Accountants' Review Report                                         8




<PAGE>


                         PART I - FINANCIAL INFORMATION
               ITEM 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
                                 ESG RE LIMITED
                      Condensed Consolidated Balance Sheets
           (U.S. dollars in thousands except share and per share data)

<TABLE>
<CAPTION>
                                                                                                      September 30,     December 31,
                                                                                                          1999              1998
                                                                                                       ---------         ---------
                                                                                                      (Unaudited)
<S>                                                                                                    <C>                <C>
ASSETS
      Fixed maturity investments - available for sale, at fair value
         (cost: $198,851 and $ 211,589)                                                                $ 195,180          $ 212,387
      Cash and cash equivalents                                                                           33,738             16,942
      Other Investments                                                                                   11,804              5,917
                                                                                                       ---------          ---------
            Total investments and cash                                                                   240,722            235,246

      Accrued investment income                                                                            3,617              3,629
      Management fees receivable                                                                           2,095              3,164
      Premiums receivable                                                                                277,513            162,015
      Reinsurance balances receivable                                                                     11,475              6,259
      Reinsurance recoverable on incurred losses                                                          11,370              2,761
      Funds retained by ceding companies                                                                   7,163              3,592
      Prepaid reinsurance premiums                                                                         6,726              2,276
      Deferred acquisition costs                                                                          52,975             37,625
      Receivable for securities sold                                                                       5,107               --
      Deferred tax asset                                                                                     768                843
      Other Assets                                                                                         5,347              2,222
      Cash and cash equivalents held in a fiduciary capacity                                               4,007              6,741
                                                                                                       ---------          ---------
TOTAL ASSETS                                                                                           $ 628,885          $ 466,373
                                                                                                       =========          =========
LIABILITIES
      Unpaid losses and loss expenses                                                                  $ 126,419          $  44,379
      Unearned premiums                                                                                  166,520            111,884
      Acquisition costs payable                                                                           74,385             45,487
      Reinsurance balances payable                                                                        28,154              7,114
      Payable for securities purchased                                                                     8,179               --
      Accrued expenses, accounts payable, and other liabilities ($131 and
          $204 due to related parties)                                                                     6,552              5,927
      Fiduciary liabilities                                                                                4,007              6,741
                                                                                                       ---------          ---------
            Total liabilities                                                                            414,216            221,532
                                                                                                       ---------          ---------


SHAREHOLDERS' EQUITY
      Preference shares, 50,000,000 shares authorized; no shares issued and
            outstanding for 1999 and 1998                                                                   --                 --
      Class B common shares, 100,000,000 shares authorized; no shares
            issued and outstanding for 1999 and 1998                                                        --                 --
      Common shares, par value $1 per share; 100,000,000 shares
            authorized; 13,324,099 shares issued and outstanding for 1999
            and 13,923,799 shares issued and outstanding for 1998                                         13,324             13,924
      Additional paid-in capital                                                                         220,985            226,216
      Accumulated other comprehensive income:
            Foreign currency translation adjustments, net of tax                                          (1,234)              (574)
            Unrealized gains/(losses) on securities,  net of reclassification
                adjustments and tax                                                                       (4,311)               634
                                                                                                       ---------          ---------
      Accumulated other comprehensive income                                                              (5,545)                60
                                                                                                       ---------          ---------
      Retained earnings                                                                                  (14,095)             4,641
                                                                                                       ---------          ---------
            Total shareholders' equity                                                                   214,669            244,841
                                                                                                       ---------          ---------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                                             $ 628,885          $ 466,373
                                                                                                       =========          =========
</TABLE>

The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.


<PAGE>



                                 ESG RE LIMITED
                 Condensed Consolidated Statements of Operations
           (U.S. dollars in thousands except share and per share data)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                        Three Months Ended                         Nine Months Ended
                                            September 30, 1999    September 30, 1998    September 30, 1999    September 30, 1998
                                            ------------------    ------------------    ------------------    ------------------
<S>                                         <C>                   <C>                   <C>                   <C>
REVENUES
      Net premiums written                  $           59,919    $           53,915    $          243,789    $          157,597
      Change in unearned premiums                        7,707               (27,781)              (50,517)              (90,154)
                                            ------------------    ------------------    ------------------    ------------------

      Net premiums earned                               67,626                26,134               193,272                67,443
      Management fee revenue                              (159)                  181                 1,781                 1,380
      Net investment income                              3,512                 3,359                10,534                 9,590
      Net realized investment loss                        (861)                  386                (1,136)                1,712
                                            ------------------    ------------------    ------------------    ------------------
                                                        70,118                30,060               204,451                80,125
                                            ------------------    ------------------    ------------------    ------------------
EXPENSES
      Losses and loss expenses                          57,012                15,940               140,672                42,922
      Acquisition costs                                 19,761                 7,324                52,679                17,028
      Administrative expenses                           16,505                 2,467                26,486                 8,771
                                            ------------------    ------------------    ------------------    ------------------
                                                        93,278                25,731               219,837                68,721
                                            ------------------    ------------------    ------------------    ------------------

NET INCOME BEFORE TAXES                                (23,160)                4,329               (15,386)               11,404
Income tax expense                                        --                     335                   311                   912
                                            ------------------    ------------------    ------------------    ------------------

NET INCOME                                  $          (23,160)   $            3,994    $          (15,697)   $           10,492
                                            ==================    ==================    ==================    ==================

PER SHARE DATA
      Basic net (loss)/income per share     $            (1.68)   $             0.29    $            (1.13)   $             0.75
                                            ==================    ==================    ==================    ==================

      Diluted net (loss)/income per share   $            (1.68)   $             0.29    $            (1.13)   $             0.74
                                            ==================    ==================    ==================    ==================

      Weighted average shares outstanding
           Basic                                    13,792,450            13,923,799            13,879,235            13,923,799
           Diluted                                  13,792,450            13,924,571            13,879,781            14,172,947
                                            ==================    ==================    ==================    ==================
      Dividends declared per share
                                            $             0.08    $            0.075    $             0.24    $            0.225
                                            ==================    ==================    ==================    ==================
</TABLE>


The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.



<PAGE>



                                 ESG RE LIMITED
                 Condensed Consolidated Statements of Cash Flows
                           (U.S. dollars in thousands)
                                   (Unaudited)



                                                           Nine Months Ended
                                                          Sept 30,    Sept 30,
                                                           1999         1998
                                                         ---------    ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash  provided by operating activities               $  26,311    $   1,417
                                                         ---------    ---------

CASH FLOWS FROM INVESTING ACTIVITIES
      Cost of fixed maturity investments acquired
      - available for sale                                (257,974)    (405,480)
      Proceeds from sale of fixed maturity investments
      - available for sale                                 269,586      413,824
      Net proceeds from sale of other investment assets          0       (1,116)
      Funding of other investments                          (8,760)        --
      Purchases of fixed assets                             (2,002)        (254)
      Purchases of intangible assets                        (1,076)         (90)
                                                         ---------    ---------
Net cash provided by investing activities                     (226)       6,884
                                                         ---------    ---------

CASH FLOWS FROM FINANCING ACTIVITIES
      Dividends paid                                        (3,342)      (3,133)
      Stock repurchase                                      (5,947)        --
      Additional offering costs                               --            (85)
                                                         ---------    ---------
Net cash used in financing activities                       (9,289)      (3,218)
                                                         ---------    ---------

                                                         ---------    ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH                                      15
                                                         ---------    ---------

Net increase in cash                                        16,796        5,083
Cash and cash equivalents at January 1                      16,942        6,196
                                                         ---------    ---------

Cash and cash equivalents at September 30                $  33,738    $  11,279
                                                         =========    =========


The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.



<PAGE>



                                 ESG RE LIMITED
            Condensed Consolidated Statements of Comprehensive Income
                           (U.S. dollars in thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                        Three Months Ended      Nine Months Ended
                                                                       Sept 30,    Sept 30,    Sept 30,    Sept 30,
                                                                         1999        1998        1999        1998
                                                                       --------    --------    --------    --------
<S>                                                                    <C>         <C>         <C>         <C>
Net income                                                             $(23,160)   $  3,994    $(15,697)   $ 10,492
                                                                       --------    --------    --------    --------
Other comprehensive income, net of tax:
  Foreign currency translation adjustments                                 (141)         82        (660)       (755)
  Unrealized gains on securities:
     Unrealized holding (losses)/gains arising during
           the period                                                      (789)      2,989      (5,220)      4,495
     Less reclassification adjustment for losses/(gains) included in
           net income                                                       861        (386)      1,136      (1,712)
                                                                       --------    --------    --------    --------
Other comprehensive income                                                  (69)      2,685      (4,744)      2,028

Comprehensive income                                                   $(23,229)   $  6,679    $(20,441)   $ 12,520
                                                                       ========    ========    ========    ========
</TABLE>


The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.



<PAGE>





NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.   BASIS OF PRESENTATION

The accompanying  unaudited  consolidated financial statements of ESG Re Limited
(together with its subsidiaries, the "Company") have been prepared in accordance
with generally  accepted  accounting  principles in the United States of America
("U.S. GAAP") except pursuant to the rules and regulations of the Securities and
Exchange  Commission  which do not include all of the  information and footnotes
required by generally  accepted  accounting  principles  for complete  financial
statements.  In the opinion of management,  these unaudited financial statements
reflect  all  adjustments  considered  necessary  for  a  fair  presentation  of
financial position, results of operations and comprehensive income as of and for
the periods presented.  The results of operations for any interim period are not
necessarily  indicative  of  the  results  for  a  full  year.  These  unaudited
consolidated financial statements should be read in conjunction with the audited
consolidated  financial statements,  and related notes thereto,  included in the
Company's 1998 Annual Report on Form 10-K.

The  preparation of financial  statements in accordance  with U.S. GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and contingent  assets and liabilities at the date of the
financial  statements and the reported  amounts of revenues and expenses  during
the reporting  period as well as the disclosure of such amounts.  Actual results
could materially differ from those estimates and assumptions.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company's condensed  consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America ("U.S GAAP"). The Company's significant  accounting policies include the
following:

(A)  PREMIUM REVENUES

Premiums   written  are  estimated  and  recognized  at  the  inception  of  the
reinsurance  contract,  based upon information  received from intermediaries and
ceding  companies.  The Company  compares  estimated  written premiums to actual
premiums as reported by ceding companies on a periodic basis. The timeliness and
frequency of ceding company reports vary considerably by ceding company, line of
business  and  geographic  area,  which means that the actual  ultimate  premium
written  may not be known with  certainty  for  prolonged  periods.  Differences
between such  estimates and actual  amounts as reported by ceding  companies are
recorded in the period in which the actual amounts are determined.

The  reinsurance  contacts  entered  into by the Company are  primarily of short
duration.  Premiums written are recognized as earned over the coverage period in
proportion to the amount of protection  provided.  Unearned premium reserves are
established to cover the unexpired contract period.

(B)  RESERVE FOR LOSSES AND LOSS EXPENSES

The reserve for unpaid losses and loss adjustment  expenses includes an estimate
of reported case reserves and an estimate for losses  incurred but not reported.
Case  reserves  are  estimated  based on ceding  company  reports and other data
considered relevant to the estimation process. The liability for losses incurred
but not  reported  is based to a large  extent  on the  expectations  of  ceding
companies  about  ultimate  loss  ratios  at the  inception  of  the  contracts,
supplemented  by  industry  experience  and the  Company's  specific  historical
experience  where  available.  As the Company has  limited  specific  historical
experience on a significant number of its programs on which to base its estimate
of losses incurred but not reported, its reliance on ceding company expectations
and  industry   experience  is  necessarily   increased,   which  increases  the
uncertainty involved in the loss estimation process

The  reserves as  established  by  management  are  reviewed  periodically,  and
adjustments  are  made in the  periods  in which  they  become  known.  Although
management  believes that an adequate  provision has been made for the liability
for losses and loss expenses,  based on all available information,  there can be
no assurance  that the ultimate  losses will not differ  significantly  from the
amounts provided.

<PAGE>


(C)  INVESTMENTS

Fixed maturity  securities are classified as available for sale and are reported
at estimated fair value. Investments that are available for sale are expected to
be held for an indefinite period but may be sold depending on interest rates and
other  considerations.   Short-term  investments  comprise  investments  with  a
maturity  greater  than 90 days but less  than one year and are  stated at cost,
which  approximates  fair  value.  Other  investments  over  which  the  Company
exercises  significant  influence  are  accounted  for under the equity method .
Other  investments are accounted for at cost.  Unrealized  investment  gains and
losses  on fixed  maturity  securities  available  for sale,  net of  applicable
deferred income tax, are reported as a separate  component of "accumulated other
comprehensive  income".  Realized  gains or  losses on sale of  investments  are
determined on the basis of average cost. The carrying values of fixed maturities
and other  investments are adjusted for impairments in value that are considered
to be other than temporary.

(D)  ESTIMATES

The  preparation  of financial  statements  in  accordance  with U.S.  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
contingent  assets and  liabilities at the date of the financial  statements and
the reported  amounts of revenues and expenses  during the  reporting  period as
well as the disclosure of such amounts.  Actual results could materially  differ
from those estimates and assumptions.


3.   COMMITMENTS AND CONTINGENCIES

(A)  EMPLOYMENT CONTRACTS

The Company has entered into  employment  contracts  with several  employees for
terms of one to five years which have total minimum  commitments of $7.8 million
excluding any performance  bonuses which are at the discretion of and determined
by the Board of Directors of the Company. The contracts remunerate the employees
for providing services to the Company. The contracts include various non-compete
clauses following termination of employment.

(B)  LEASE COMMITMENTS

The  Company and its  subsidiaries  have  various  obligations  under  operating
leases.

(C)  LOAN COMMITMENTS

The Company and its subsidiaries  have unfunded loan commitments  outstanding of
$11.3  million of which  $9.3  million  is to COMED,  the new German  healthcare
association which the Company helped to establish in December 1998. A further $2
million is to a third party which is a significant  ceding company to ESG. Under
the terms of the loan agreement with COMED,  the Company has the right to refuse
any  further  disbursements,  when the  ability of COMED to repay the loan is in
doubt.

(D)  LETTERS OF CREDIT

Letters of Credit in the amount of $52.0  million  have been  issued in favor of
ceding  companies  of which  $24.6  million is  secured  against  the  Company's
investment portfolio.

The future  minimum  commitments  under lease and  employment  agreements are as
follows:

                                 Employment         Lease
U.S. dollars in thousands        Commitments     Commitments         Total
--------------------------------------------------------------------------------
Years Ending December 31,
     1999                              $ 1,330            $ 140         $ 1,470
     2000                                3,296              546           3,842
     2001                                2,009              431           2,440
     2002                                  990              174           1,164
     2003                                  168               98             266
     Thereafter                                             808             808
                               -------------------------------------------------
Total                                  $ 7,793           $2,197         $ 9,990
                               =================================================


<PAGE>



4.   RELATED PARTIES

Included in net  investment  income for the three  months and nine months  ended
September  30,  1999 were  related  party  investment  expenses  of $73,000  and
$345,000 respectively.


<PAGE>


                     INDEPENDENT ACCOUNTANTS' REVIEW REPORT

To the Board of Directors and Shareholders of ESG Re Limited

We have reviewed the accompanying condensed consolidated balance sheet of ESG Re
Limited and  subsidiaries  as of  September  30, 1999 and the related  condensed
consolidated  statements of operations,  comprehensive income and cash flows for
the three month and nine month periods ended September 30, 1999 and 1998.  These
financial statements are the responsibility of the Company's management.

We conducted our review in accordance with standards established by the American
Institute  of  Certified  Public  Accountants.  A review  of  interim  financial
information consists principally of applying analytical  procedures to financial
data and of making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with  generally  accepted  auditing  standards,  the  objective  of which is the
expression of an opinion  regarding the financial  statements  taken as a whole.
Accordingly, we do not express such an opinion.

Based  upon our  review,  we are not aware of any  material  modifications  that
should be made to such condensed  consolidated  financial statements for them to
be in conformity with  accounting  principles  generally  accepted in the United
States.

We have  previously  audited,  in accordance with auditing  standards  generally
accepted in the United States, the consolidated  balance sheet of ESG Re Limited
and subsidiaries as of December 31, 1998 and the related consolidated statements
of operations,  comprehensive  income,  changes in shareholders' equity and cash
flows for the year then ended (not  presented  herein)  and in our report  dated
March 8,  1999,  we  expressed  an  unqualified  opinion  on those  consolidated
financial  statements.  In  our  opinion,  the  information  set  forth  in  the
accompanying  condensed  consolidated  balance  sheet as of December 31, 1998 is
fairly stated, in all material respects, in relation to the consolidated balance
sheet from which it has been derived.

Deloitte & Touche
Chartered Accountants
Hamilton, Bermuda
November 8, 1999


<PAGE>


ITEM 2.   MANAGEMENT DISCUSSION AND ANALYSIS OF  FINANCIAL CONDITION AND RESULTS
          OF OPERATIONS.

The  following is a discussion  and  analysis of the  financial  condition as of
September  30,  1999  and  the  results  of  operations  of ESG Re  Limited  and
subsidiaries (the "Company" or "ESG") for the three months and nine months ended
September  30,  1999 as  compared  to the three  months  and nine  months  ended
September 30, 1998.  This  discussion and analysis should be read in conjunction
with the attached unaudited  consolidated financial statements and notes thereto
and the audited  consolidated  financial statements of the Company as of and for
the year ended  December 31, 1998 and notes  thereto  included in the  Company's
Annual Report to  Shareholders  for the fiscal year ended December 31, 1998. The
unaudited  consolidated  financial statements as of and for the three months and
nine months  ended  September  30, 1999 and for the three months and nine months
ended  September 30, 1998 and notes  thereto have been  reviewed by  independent
accountants in accordance with standards  established by the American  Institute
of Certified Public Accountants.

The  results  of  operations  and cash  flows  for any  interim  period  are not
necessarily indicative of results for the full year. In addition, this quarterly
report  contains  forward-looking  statements  regarding  future profit  levels,
premium  growth,  cash  flows  and  other  matters,   which  involve  risks  and
uncertainties  that may affect the actual  results of operations of the Company.
The following  important  factors,  among others,  could cause actual results to
differ materially from those set forth in the forward-looking statements: claims
frequency,  claims  severity,  economic  activity,  competitive  pricing and the
regulatory environment in which the Company operates.


General

The Company is a specialty reinsurance  enterprise providing accident,  medical,
credit, life and special risk reinsurance to insurers and selected reinsurers on
a worldwide basis, and underwriting management services to co-reinsurers.

On December 12,  1997,  the Company  raised gross  proceeds of $257 million in a
private placement and an initial public offering (the "Offerings"). As a result,
the Company is now able to assume  reinsurance risks for its own account.  Prior
to the  Offerings,  the  Company  operated  solely as a  reinsurance  management
services company.

In June 1999,  the company  launched a new business  unit focused on the growing
health care  management  and technology  field.  The  "Intelligent  Health Care"
division  will be  aimed  at  developing  and  distributing  disease  management
programs,  cardiovascular and other telemedicine  applications  worldwide.  This
division will encompass the Company's on-going  relationship with COMED, the new
German healthcare  association which the Company helped to establish,  under the
loan facility of $12 million provided in December 1998.


RESULTS OF OPERATIONS

OVERVIEW

Certain important events occurred during the period including:

1.   Management  Changes -- Certain  changes were made to the  management of the
     Company,  including the  resignation  of Wolfgang  Wand and the  subsequent
     appointment  of  John C Head  as  Chief  Executive  Officer.  See  "Current
     Developments" included in this filing.

2.   Anticipated  Withdrawal from a Line of Business -- The Health Care division
     recognized $1.3 million in expenses associated with the unsuccessful launch
     of heart-monitoring  technology services.  The Company expects to exit this
     business in the fourth quarter.

3.   Negative impact upon  underwriting  results due to deterioration of several
     major North American and European Accounts:

     -    A medical  quota share  contract in Maine  covering both 1998 and 1999
          underwriting  years has  developed  into a 127%  loss and  acquisition
          ratio, resulting in a loss of $4.3 million on the account.

     -    A large quota share contract  covering 6 ceding  companies is expected
          to develop into a 98% loss and acquisition ratio,  resulting in a loss
          of $2.1 million.

     -    Unfavorable  development  on a  large  medical  group  health  account
          resulting in a loss of $2.1 million being added.

     -    Reserve  strengthening of $1.4 million relating to adverse development
          in several smaller accounts in North America.


<PAGE>


     -    Uncertainties regarding  collectability raised by slow payments on two
          accounts in Europe has resulted in the  establishment  of a reserve of
          $1.8 million.

4.   Rating  Decline --  Standard  and Poor's  reduced  the long term credit and
     insurer   financial   strength   ratings  of  the   Company's   reinsurance
     subsidiaries from single-A-minus  (strong) to triple-B (good). See "Current
     Developments"  included in this filing.  Although this rating reduction may
     negatively  impact the Company's  premium  production  in certain  markets,
     particularly  London and North America,  the Company  intends to focus upon
     the  profitability  of its  North  American  reinsurance  and  underwriting
     businesses and, consistent with its original business strategy,  build upon
     its operations in the Western Europe, Asian and Latin American regions.

5.   The Company  expects to divest  itself of its Health Care  Division in 2000
     through raising external  capital to fund the venture.  The Company expects
     to maintain a significant non-controlling equity investment in the venture.

CONSOLIDATED RESULTS

Consolidated  results of  operations  for the three months and nine months ended
September  30,  1999 and 1998  are  presented  below.  Consolidated  results  of
operation for the periods ended September 30, 1999 reflect the combined  results
of operation of the Company's reinsurance and health care divisions.

<TABLE>
<CAPTION>
                                                                            Three Months Ended                Nine Months Ended
                                                                               September 30,                    September 30,
U.S dollars in thousands except per share data                            1999            1998              1999             1998

<S>                                                                     <C>              <C>              <C>              <C>
Gross Managed Premium                                                     63,337           58,800          266,527          177,400
Net Premium Written                                                       59,919           53,915          243,789          157,597
                                                                        --------         --------         --------         --------
Net Premium Earned                                                        67,626           26,134          193,272           67,443
Less:
Losses & Loss Adjustment Expenses                                        (57,012)         (15,940)        (140,672)         (42,922)
Acquisition Costs                                                        (19,761)          (7,324)         (52,679)         (17,028)
                                                                        --------         --------         --------         --------
Total Underwriting Expenses                                              (76,773)         (23,264)        (193,351)         (59,950)
                                                                        --------         --------         --------         --------

(Loss)/Profit from Underwriting                                           (9,147)           2,870              (79)           7,493

Administrative Expenses                                                  (16,505)          (2,467)         (26,486)          (8,771)
Net Investment Income                                                      3,512            3,359           10,534            9,590
Net realized investment gains/(losses)                                      (861)             386           (1,136)           1,712
Management Fee Revenue                                                      (159)             181            1,781            1,380
                                                                        --------         --------         --------         --------
Net (loss)/income before taxes                                           (23,160)           4,329          (15,386)          11,404
Income Tax Expense                                                             0              335              311              912
                                                                        --------         --------         --------         --------
Net (Loss)/Income                                                        (23,160)           3,994          (15,697)          10,492

                                                                        --------         --------         --------         --------
(Loss)/Income excluding realized investment gains
(losses)                                                                 (22,299)           3,608          (14,561)           8,780
Basic net (loss)/income per common share                                $  (1.68)        $   0.29         $  (1.13)        $   0.74
Diluted net (loss)/income per common share                              $  (1.68)        $   0.29         $  (1.13)        $   0.74
</TABLE>

ESG's net income for the three months ended  September  30, 1999  decreased to a
loss of $23.16 million from a profit of $3.99 million for the comparable  period
in 1998  despite an  increase in Net  Premium  Earned to $67.63  million for the
third quarter of 1999 compared to $26.13  million for the  comparable  period in
1998. The decrease in net income is primarily  attributable  to $10.1 million in
additional losses due to a rapid  deterioration of certain accounts in the North
American and European  markets (see "Overview"  above) as well as an increase in
administrative  expenses,  primarily  relating  to  the  Company's  health  care
division.


<PAGE>




SEGMENT RESULTS

The  Company is  organized  into two  divisions;  reinsurance  and health  care.
Results of  operations  by division,  for the three months and nine months ended
September 30, 1999 and 1998, are presented below.

REINSURANCE DIVISION

<TABLE>
<CAPTION>
                                                                           Three Months Ended                 Nine Months Ended
                                                                              September 30,                     September 30,
U.S dollars in thousands except per share data                            1999             1998             1999             1998

<S>                                                                     <C>              <C>              <C>              <C>
Gross Managed Premium                                                     63,337           58,800          266,527          177,400
Co-Reinsurance                                                             2,383            3,457           17,806           16,539
                                                                        --------         --------         --------         --------
Gross Premium Written                                                     60,954           55,343          248,721          160,861
Retroceded                                                                 1,035            1,428            4,932            3,264
                                                                        --------         --------         --------         --------
Net Premium Written                                                       59,919           53,915          243,789          157,597

Net Premium Earned                                                        67,626           26,134          193,272           67,443
Less:
Losses & Loss Adjustment Expenses                                        (57,012)         (15,940)        (140,672)         (42,922)
Acquisition Costs                                                        (19,761)          (7,324)         (52,679)         (17,028)
                                                                        --------         --------         --------         --------
Total Underwriting Expenses                                              (76,773)         (23,264)        (193,351)         (59,950)
                                                                        --------         --------         --------         --------

(Loss)/Profit from Underwriting                                           (9,147)           2,870              (79)           7,493

Operating Expenses                                                        (7,338)          (2,002)         (16,513)          (6,161)
Net Investment Income                                                      3,478            3,359           10,483            9,590
Net realized investment gains/(losses)                                      (861)             386           (1,136)           1,712
Management Fee Revenue                                                      (159)             181            1,532            1,380
                                                                        --------         --------         --------         --------
Net (loss)/income before taxes                                           (14,027)           4,794           (5,713)          11,404
                                                                        --------         --------         --------         --------
</TABLE>

Premium

Gross managed premium  increased by $4.5 million and $89.1 million,  or 7.7% and
50.2%,  for the three and nine months  ended  September  30, 1999  respectively,
compared  to the  corresponding  prior year  periods.  During the  quarter,  the
Company's  representative  office  in  Toronto,  Canada,  recognized  additional
premium of $20 million on a medical  account for the  transition of group health
insurance coverage sold through affinity groups to alternative  providers.  This
increased  the  gross  managed  premium  on this  one  account  to $65  million.
Partially  offsetting  the  increases in the gross  managed  premium  during the
quarter  was a decrease  of $3.3  million  due to the  cancellation  of a credit
account in Latin America.  Also affecting the level of gross managed  premium in
the three  month  ended  September  30,  1999 was  non-renewal  in 1999 of an $8
million  credit  account in Latin  America that was  included in the  comparable
period of 1998.


<PAGE>


Geographical Distribution

The Company has experienced  significant growth in North America business in the
third quarter.  The  distribution of gross written premiums for the three months
ended  September 30, 1999 and 1998 and for the year ended  December 31, 1998, is
as follows:

<TABLE>
<CAPTION>
                                              Three months ended          Three months ended               Year ended
                                              September 30, 1999          September 30, 1998        December 31, 1998
------------------------------------- --------------------------- --------------------------- ------------------------
<S>                                                      <C>                        <C>                      <C>
Western Europe                                             8.7 %                      18.9 %                   30.9 %
North America                                             80.8 %                      49.6 %                   46.2 %
Latin America                                              0.8 %                      30.0 %                   14.9 %
Other                                                      9.7 %                       1.5 %                    8.0 %
------------------------------------- --------------------------- --------------------------- ------------------------
Total                                                    100.0 %                     100.0 %                  100.0 %
------------------------------------- --------------------------- --------------------------- ------------------------
</TABLE>


The  distribution of gross written  premiums for the nine months ended September
30, 1999 and 1998 and for the year ended December 31, 1998, is as follows:

<TABLE>
<CAPTION>
                                               Nine months ended           Nine months ended               Year ended
                                              September 30, 1999          September 30, 1998        December 31, 1998
------------------------------------- --------------------------- --------------------------- ------------------------
<S>                                                      <C>                         <C>                      <C>
Western Europe                                            26.7 %                      37.0 %                   30.9 %
North America                                             57.3 %                      36.5 %                   46.2 %
Latin America                                              8.6 %                      18.2 %                   14.9 %
Other                                                      7.4 %                       8.3 %                    8.0 %
------------------------------------- --------------------------- --------------------------- ------------------------
Total                                                    100.0 %                     100.0 %                  100.0 %
------------------------------------- --------------------------- --------------------------- ------------------------
</TABLE>

The growth in the  percentage  of gross  written  premiums  written in the North
American region over these periods reflects the relatively  greater  development
to date of the Company's  business  operations  in the region  compared to those
being  developed and  established  by the Company in other regions of the world.
The Company  anticipates that this  concentration of gross written premiums from
the North American region will continue through 1999 but will gradually decrease
as the  Company  grows  its  business  operations  in other  regions  and as its
business in North America is affected by the recent downgrading of the Company's
long term  counterparty  and insurer  financial  strength  ratings (see "Current
Developments"  included in this filing) and the Company's  intention to increase
its focus upon the profitabiltiy of its North American business.


<PAGE>



Product Mix

The  distribution  of gross  premiums  written by line of business for the three
months and nine months ended September 30, 1999 and 1998, and for the year ended
December 31, 1998 was as follows:

<TABLE>
<CAPTION>
                                           Three months ended         Three months ended             Year ended
                                           September 30, 1999         September 30, 1998          December 31, 1998
--------------------------------------- ------------------------ ----------------------------- ------------------------
<S>                                                    <C>                            <C>                   <C>
Medical                                                  95.6 %                         55.2%                 59.6 %
Personal Accident                                        12.7 %                        28.3 %                 26.1 %
Credit                                                 (14.1) %                        14.8 %                  6.2 %
Life                                                      1.9 %                         1.4 %                  5.5 %
Special Risk                                              2.7 %                         0.3 %                  2.6 %
Other                                                     1.2 %                          -- %                   -- %
--------------------------------------- ------------------------ ----------------------------- ----------------------
Total                                                   100.0 %                       100.0 %                100.0 %
--------------------------------------- ------------------------ ----------------------------- ----------------------

<CAPTION>

-------------------------------------- ------------------------- ------------------------- -----------------------------
                                           Nine months ended          Nine months ended               Year ended
                                          September 30, 1999          September 30, 1998          December 31, 1998
--------------------------------------- ------------------------ ----------------------------- -------------------------
<S>                                                     <C>                           <C>                    <C>
Medical                                                  75.3 %                        52.0 %                 59.6 %
Personal Accident                                        22.1 %                        29.4 %                 26.1 %
Credit                                                  (1.6) %                         7.6 %                  6.2 %
Life                                                      2.1 %                         7.5 %                  5.5 %
Special Risk                                              0.9 %                         3.5 %                  2.6 %
Other                                                     1.2 %                          -- %                   -- %
--------------------------------------- ------------------------ ----------------------------- ----------------------
Total                                                   100.0 %                       100.0 %                100.0 %
--------------------------------------- ------------------------ ----------------------------- ----------------------
</TABLE>


Underwriting Results

Underwriting  results for the three months ended  September 30, 1999, by line of
business and in total were as follows:

<TABLE>
<CAPTION>
                                                   Personal
U.S. dollars in thousands               Medical    Accident    Special     Credit      Life        Other       Total
------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>          <C>           <C>      <C>           <C>          <C>       <C>
Gross premiums written                $   58,251   $   7,753     $ 1,629  $ (8,623)     $ 1,183      $  761    $ 60,954
                                      ==================================================================================

Net premiums written                      57,554       7,485       1,562    (8,300)       1,141         477      59,919
                                      ==================================================================================

Net premiums earned                       51,141      11,942         815       (88)       2,821         995      67,626
Losses and loss expenses                  45,283       9,027       (300)         14       2,293         695      57,012
Acquisition costs                         15,798       2,920         316          7         487         233      19,761
Operating costs                            5,549       1,296          88        (9)         306         108       7,338
                                      ----------------------------------------------------------------------------------

Net underwriting income (loss)        $(15,489)    $ (1,301)     $   711  $   (100)     $ (265)      $ (41)    $(16,485)
                                      ==================================================================================
</TABLE>


Medical  results are  impacted by $10.1  million of  additional  losses and loss
expenses  due to the rapid  deterioration  of several  major  accounts  in North
America:

-    A  medical  quota  share  contract  in Maine  covering  both  1998 and 1999
     underwriting  years has developed into a 127% loss and  acquisition  ratio,
     resulting in a loss of $4.3 million on the account

-    A large quota share  contract  covering 6 ceding  companies  is expected to
     develop into a 98% loss and acquisition ratio,  resulting in a loss of $2.1
     million.

-    Unfavorable  development on a large medical group health account  resulting
     in a loss of $2.1 million  being  added.

-    Reserve  strengthening of $1.4 million  relating to adverse  development in
     several smaller accounts in North America.

Personal Accident  underwriting results reflect reserve strengthening on several
accounts  acquired  through our London office  emanating  from both the 1998 and
1999 underwriting  years. Credit results primarily relate to the cancellation of
a Latin American risk in Colombia.  Life results  reflect  additional  claims on
Norwegian Life business.


<PAGE>


Underwriting  results for the three months ended  September 30, 1998, by line of
business and in total were as follows:

<TABLE>
<CAPTION>
                                                  Personal
U.S. dollars in thousands              Medical    Accident    Special    Credit      Life      Other       Total
--------------------------------------------------------------------------------------------------------------------
<S>                                   <C>           <C>           <C>     <C>        <C>           <C>     <C>
Gross premiums written                $   30,516    $ 15,655      $ 190   $ 8,186    $   796       $ --    $ 55,343
                                      ==============================================================================

Net premiums written                      29,965      15,463        179     7,883        425         --      53,915
                                      ==============================================================================

Net premiums earned                       11,004      16,971        901     1,694     (4,436)        --      26,134
Losses and loss expenses                   6,310      11,550        (42)    1,268     (3,146)        --      15,940
Acquisition costs                          4,141       3,379        348       316       (860)        --       7,324
Operating costs                              843       1,300         69       130       (340)        --       2,002
                                      ------------------------------------------------------------------------------

Net underwriting income (loss)        $     (290)   $    742      $ 526   $  (20)    $   (90)      $ --    $    868
                                      ==============================================================================
</TABLE>



Underwriting  results for the nine months ended  September  30, 1999, by line of
business and in total were as follows:

<TABLE>
<CAPTION>
                                                  Personal
U.S. dollars in thousands               Medical    Accident   Special    Credit      Life       Other        Total
----------------------------------------------------------------------------------------------------------------------
<S>                                   <C>           <C>        <C>       <C>         <C>          <C>       <C>
Gross premiums written                $  187,358    $ 55,029   $ 2,294   $(4,125)    $ 5,110      $ 3,055   $ 248,721
                                      ================================================================================

Net premiums written                     184,466      53,440     2,214    (3,982)      4,954        2,697     243,789
                                      ================================================================================

Net premiums earned                      151,721      28,633     2,170      1,679      7,015        2,054     193,272
Losses and loss expenses                 113,585      19,553       374        764      5,206        1,190     140,672
Acquisition costs                         42,999       6,796       833        405        975          671      52,679
Operating costs                           12,716       2,618       190        139        642          208      16,513
                                      --------------------------------------------------------------------------------

Net underwriting income (loss)        $  (17,579)   $   (334)  $   773   $    371    $   192      $   (15)  $ (16,592)
                                      ================================================================================
</TABLE>

Underwriting  results for the nine months ended  September  30, 1998, by line of
business and in total were as follows:

<TABLE>
<CAPTION>
                                                  Personal
U.S. dollars in thousands              Medical    Accident    Special    Credit      Life      Other       Total
--------------------------------------------------------------------------------------------------------------------
<S>                                   <C>           <C>         <C>      <C>        <C>            <C>    <C>
Gross premiums written                $   83,707    $ 47,329    $ 5,613  $ 12,177   $ 12,035       $ --   $ 160,861
                                      ==============================================================================

Net premiums written                      82,487      46,360      5,433    11,752     11,565         --     157,597
                                      ==============================================================================

Net premiums earned                       24,790      34,505      2,050     3,166      2,932         --      67,443
Losses and loss expenses                  14,971      22,885        445     2,316      2,305         --      42,922
Acquisition costs                          8,540       6,875        751       501        361         --      17,028
Operating costs                            2,231       3,066        184       278        402         --       6,161
                                      ------------------------------------------------------------------------------

Net underwriting income (loss)        $     (952)   $  1,679    $   670  $     71  $    (136)      $ --   $   1,332
                                      ==============================================================================
</TABLE>



<PAGE>



Operating Expenses

Total  reinsurance  operating  expenses for the three months ended September 30,
1999 were $7.3  million,  compared to $2.0  million for the three  months  ended
September 30, 1998.  Operating  expenses for the nine months ended September 30,
1999  increased  to $16.5  million  from  $6.2  million  for nine  months  ended
September 30, 1998.

Total operating expenses for the three months ended September 30, 1999 represent
12.2% of net premiums written and 10.9% of net premiums earned, compared to 3.7%
and 7.7%, respectively,  for the prior year. For the nine months ended September
30, 1999 operating  expenses  represent 6.8% of net premiums written and 8.5% of
net premiums earned, compared to 3.9% and 9.1%, respectively, for the comparable
period of the prior year.

The Company  incurred  $0.6  million in  operating  expenses in its new business
units in Thailand,  Indonesia and Georgia.  Excluding  these offices,  operating
expenses increased by $1.7 million over the three months ended June 30, 1999.

Personnel  expenses  increased  by $0.5 million over the three months ended June
30, 1999 due to the continued investment in key personnel at the holding company
and various representative offices.  Professional service fees increased by $0.7
million for the three months ended  September  30, 1999 from $1.6 million in the
three months ended June 30, 1999. The increase was due to  accounting,  taxation
and legal costs  associated with loss reserve reviews and the acquisition of new
entities in Indonesia and Thailand. Travel expenses increased by $0.3 million to
$0.8 million for the three months ended  September 30, 1999 from $0.5 million in
the three months ended June 30, 1999.  These travel expenses relate primarily to
the Company's  continuing  identification  and investigation of new business and
underwriting opportunities and corporate governance.  Foreign exchange losses of
$0.3 million were  reported for the three months ended  September  30, 1999,  as
compared to profits of $0.2 million for the three months ended June 30, 1999.



Operating Ratios

The operating  ratios for the three months ended  September 30, 1999, by line of
business and in total were as follows:

<TABLE>
<CAPTION>
                                                Personal    Special
                                    Medical     Accident      Risk       Credit       Life       Other       Total
---------------------------------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S>                                   <C>         <C>       <C>        <C>            <C>         <C>         <C>
Loss ratio                             88.5 %      75.6 %    (36.9) %   (15.9) %       81.3 %      69.8 %      84.3 %
Acquisition expense ratio              30.9 %      24.4 %      38.8 %     (8.0) %      17.2 %      23.4 %      29.2 %
---------------------------------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Loss and acquisition expense
     Ratio                            119.4 %     100.0 %       1.9 %    (23.9) %      98.5 %      93.2 %     113.5 %
---------------------------------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Operating expense ratio                                                                                        10.9 %
                                                                                                           ===========

Combined ratio                                                                                                124.4 %
                                                                                                           ===========
</TABLE>


The operating  ratios for the three months ended  September 30, 1998, by line of
business and in total were as follows:

<TABLE>
<CAPTION>
                                                Personal    Special
                                    Medical     Accident      Risk       Credit       Life       Other       Total
---------------------------------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S>                                    <C>         <C>        <C>          <C>         <C>                     <C>
Loss ratio                             57.3 %      68.1 %     (4.7) %      74.9 %      70.9 %          --      61.0 %
Acquisition expense ratio              37.6 %      19.9 %      38.6 %      18.7 %      19.4 %          --      28.0 %
---------------------------------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Loss and acquisition expense
     Ratio                             94.9 %      88.0 %      33.9 %      93.6 %      90.3 %          --      89.0 %
---------------------------------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Operating expense ratio                                                                                         7.7 %
                                                                                                           ===========

Combined ratio                                                                                                 96.7 %
                                                                                                           ===========
</TABLE>

<PAGE>

The  operating  ratios for the nine months ended  September 30, 1999, by line of
business and in total were as follows:

<TABLE>
<CAPTION>
                                                Personal    Special
                                    Medical     Accident      Risk       Credit       Life       Other       Total
---------------------------------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S>                                   <C>          <C>         <C>        <C>          <C>         <C>        <C>
Loss ratio                             74.9 %      68.3 %      17.2 %     45.5 %       74.2 %      57.9 %      72.8 %
Acquisition expense ratio              28.3 %      23.7 %      38.4 %     24.1 %       13.9 %      32.7 %      27.2 %
---------------------------------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Loss and acquisition expense
     Ratio                            103.2 %      92.0 %      55.6 %     69.6 %       88.1 %      90.6 %     100.0 %
---------------------------------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Operating expense ratio                                                                                         8.5 %
                                                                                                           ===========

Combined ratio                                                                                                108.5 %
                                                                                                           ===========
</TABLE>


The  operating  ratios for the nine months ended  September 30, 1998, by line of
business and in total were as follows:

<TABLE>
<CAPTION>
                                                Personal    Special
                                    Medical     Accident      Risk       Credit       Life       Other       Total
---------------------------------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S>                                    <C>         <C>         <C>         <C>         <C>             <C>     <C>
Loss ratio                             60.4 %      66.3 %      21.7 %      73.2 %      78.6 %          --      63.7 %
Acquisition expense ratio              34.4 %      19.9 %      36.6 %      15.8 %      12.3 %          --      25.2 %
---------------------------------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Loss and acquisition expense
     Ratio                             94.8 %      86.2 %      58.3 %      89.0 %      90.9 %          --      88.9 %
---------------------------------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Operating expense ratio                                                                                         9.1 %
                                                                                                           ===========

Combined ratio                                                                                                 98.0 %
                                                                                                           ===========
</TABLE>

The  operating  expense  ratios  for the  three  months  and nine  months  ended
September 30, 1999 and 1998,  respectively,  were calculated by expressing total
administrative  expenses  net of  corporate  office  expenses  and  health  care
division expenses,  as a percentage of net premiums earned. For the three months
and nine months ended September 30, 1998, management fee revenue of $181,000 and
$1.4 million  respectively,  was  deducted  from  operating  expenses due to the
expense of administering the pool business of 1997 and prior underwriting years,
which the  Company  previously  managed  as a  reinsurance  management  services
company.


Exposure Management

The  Company  manages  its  underwriting  risk  exposures   through   geographic
distribution,  an excess of loss reinsurance  program,  and co-reinsurance.  The
Company's  excess liability  insurance policy generally  provides limits up to a
maximum of $30 million per occurrence, with a minimum attachment point generally
of $100,000.

The  Company's  non-North  American  business  is  co-reinsured  with two  other
reinsurance  companies that have  participation with underwriting lines totaling
12.5%; the North American business is co-reinsured with two companies,  having a
total participation of 15.0%.


Management Fee Revenue

Management  fee revenue for the quarter was $211,000,  less a write-down of 1995
and 1996 profit commissions of $370,000, following an evaluation of those years'
pool results.



<PAGE>




HEALTH CARE DIVISION

Through its newly formed health care  division,  ESG Health,  the Company offers
medical referral,  second opinion and disease management  services to the German
market.  The  new  division  includes  COMED,  a  non-profit  German  healthcare
association  which  the  Company  helped to  establish  and IPT  (Institut  fuer
Praeventivmedizin  &  Technologie  GmbH),  a provider of doctor's  referral  and
second opinion services.

Results

<TABLE>
<CAPTION>
     U.S dollars in thousands except per share data        Three Months ended             Nine Months Ended
                                                           September 30, 1999            September 30, 1999
<S>                                                                  <C>                           <C>
     Management Fee Income                                                ---                           249
     Investment Income                                                     34                            51
                                                                --------------                --------------
     Total Income                                                          34                           300
                                                                --------------                --------------
     Less:

     Personnel Expenses                                                 (411)                         (578)
     Professional Service Fees                                          (679)                         (796)
     Heart Monitoring Technology services                             (1,295)                       (1,295)
     Expenses Associated with COMED                                   (5,879)                       (5,450)
     Other expenses                                                     (482)                         (627)
                                                                --------------                --------------
     Total Expenses                                                   (8,746)                       (8,746)
                                                                --------------                --------------

     Net (Loss)                                                      $(8,712)                      $(8,446)
                                                                --------------                --------------
</TABLE>

Expenses of $8.7 million were incurred  primarily in establishing ESG Health and
in  repositioning  the health care  products.  A provision  of $5.5  million was
established for an outstanding loan to and receivables from COMED incurred since
its  formation,  of which $1 million  related to  additional  loans in the three
months ended September 30, 1999 under the $12 million loan facility  provided by
ESG in December  1998.  COMED's  ability to repay is dependent on its ability to
generate  sufficient  revenues from members.  As of October 31, 1999,  COMED had
recruited 583 members.

The Company, through its German subsidiary,  "IPT" had $1.3 million in loans and
prepaid   expenses   under  a  service   contract   with  a  company  to  supply
heart-monitoring  technology for resale to COMED and other healthcare providers.
These  prepaid  expenses  will not be recovered as  following  the  unsuccessful
launch of this  heart-monitoring  technology service, the Company has decided to
exit this business in the fourth quarter of 1999.

The Company expects to divest itself of its Health Care Division in 2000 through
raising external capital to fund the venture.  The Company expects to maintain a
significant non-controlling equity investment in the venture.

INVESTMENT RESULTS

For the three months ended  September 30, 1999,  net  investment  income totaled
$3.5 million and net realized  investment  losses totaled $0.9 million.  For the
three months ended  September 30, 1998, net  investment  income and net realized
investment  gains  totaled $3.4 million and $0.4 million  respectively.  For the
nine months ended  September  30, 1999,  net  investment  income  totaled  $10.5
million and net realized  investment  losses totaled $1.1 million.  For the nine
months  ended  September  30,  1998,  net  investment  income  and net  realized
investment  gains  totaled  $9.6 million and $1.7  million  respectively.  As of
September 30, 1999, total  investments and cash were $240.7 million,  a decrease
of $10.6 million from June 30, 1999.


<PAGE>



The following  table reflects the investment  results for the three months ended
September 30, 1999:

<TABLE>
<CAPTION>
                                                                 Net          Annualized     Net Realized
                                               Average       Investment        Effective      Investment
U.S dollars in thousands                     Investments      Income(1)          Yield          Losses
------------------------------------------- -------------- ---------------- ---------------- --------------
<S>                                             <C>                <C>                <C>         <C>
Fixed maturity investments                      $ 197,352          $ 2,957            6.0 %       $  (861)
Other investments (2)                              12,999              116            3.6 %            --
Cash and cash equivalents                          35,698              439            4.9 %            --
------------------------------------------- -------------- ---------------- ---------------- --------------
Total                                           $ 246,049          $ 3,512            5.7 %       $  (861)
------------------------------------------- -------------- ---------------- ---------------- --------------
</TABLE>

(1)  Net investment income is net of  investment-related  expenses and income on
     premium receivable and funds held by ceding companies.

(2)  Loans of $2.7  million  were  provided to COMED under its $12 million  loan
     facility, which were fully provided for.


The following  table reflects the investment  results for the three months ended
September 30, 1998:

<TABLE>
<CAPTION>
                                                                 Net          Annualized     Net Realized
                                               Average       Investment       Effective       Investment
U.S dollars in thousands                     Investments      Income(1)         Yield            Gains
------------------------------------------- -------------- ---------------- --------------- ----------------
<S>                                             <C>                <C>               <C>         <C>
Fixed maturity investments                      $ 218,624          $ 3,085           5.6 %       $ 386
Other investments                                      --               --            -- %        --
Cash and cash equivalents                          27,146              274           4.0 %        --
------------------------------------------- -------------- ---------------- --------------- ----------------
Total                                           $ 245,770          $ 3,359           5.5 %       $ 386
------------------------------------------- -------------- ---------------- --------------- ----------------
</TABLE>

(1)  Net investment income is net of investment related expenses.

The following  table reflects the  investment  results for the nine months ended
September 30, 1999:

<TABLE>
<CAPTION>
                                                                 Net          Annualized     Net Realized
                                               Average       Investment        Effective      Investment
U.S dollars in thousands                     Investments      Income(1)          Yield          Losses
------------------------------------------- -------------- ---------------- ---------------- --------------
<S>                                             <C>                <C>                <C>        <C>
Fixed maturity investments                      $ 201,937          $ 9,194            6.1 %      $ (1,136)
Other investments (2)                              10,635              325            4.1 %            --
Cash and cash equivalents                          26,542            1,015            5.1 %            --
------------------------------------------- -------------- ---------------- ---------------- --------------
Total                                           $ 239,114         $ 10,534            5.9 %      $ (1,136)
------------------------------------------- -------------- ---------------- ---------------- --------------
</TABLE>


(1)  Net investment income is net of  investment-related  expenses and income on
     premium receivable and funds held by ceding companies.

(2)  In addition to the $2.7  million of loans  provided to COMED,  a further $7
     million of equity  investment  and loans has been provided to two companies
     that are  expected  to  generate  or  secure  profitable  business  for the
     Company.



<PAGE>


The following  table reflects the  investment  results for the nine months ended
September 30, 1998:

<TABLE>
<CAPTION>
                                                                 Net          Annualized     Net Realized
                                               Average       Investment       Effective       Investment
U.S dollars in thousands                     Investments      Income(1)         Yield            Gains
------------------------------------------- -------------- ---------------- --------------- ----------------
<S>                                             <C>                <C>               <C>        <C>
Fixed maturity investments                      $ 218,654          $ 9,079           5.5 %      $ 1,712
Other investments                                      --               --            -- %           --
Cash and cash equivalents                          21,209              511           3.2 %           --
------------------------------------------- -------------- ---------------- --------------- ----------------
Total                                           $ 239,863          $ 9,590           5.3 %      $ 1,712
------------------------------------------- -------------- ---------------- --------------- ----------------
</TABLE>

(1)  Net investment income is net of investment related expenses.

Liquidity and Capital Resources

As of  September  30,  1999,  total  investments  and cash were  $240.7  million
compared  to $235.2  million at  December  31,  1998.  Cash flow from  operating
activities  for the nine months ended  September 30, 1999 was $26.3 million with
two significant  accounts  contributing $15.4 million of positive cash flow. All
fixed maturity securities in the Company's  investment  portfolio are classified
as  available  for sale and are  carried  at fair  value.  The  following  table
summarizes the fixed maturity investment portfolio as of September 30, 1999.

<TABLE>
<CAPTION>
                                                                                                 Average
U.S. dollars in thousands                            Fair          Duration        Market        Credit
                                                     Value         (Years)           Yield       Rating
------------------------------------------------ -------------- --------------- -------------- ------------
<S>                                                  <C>             <C>               <C>        <C>
Corporate securities                                 $ 123,864       3.0               6.9 %       A+
U.S. treasury securities and obligations of
     U.S. government corporations and agencies
                                                        22,476       1.9               5.2 %      AAA
Mortgage & Asset backed securities                      16,392       3.2               7.3 %      AAA
Obligations of states and political
     subdivisions                                       17,984       2.3               6.6 %      AAA
Foreign currency debt securities                        14,464       3.9               4.7 %      AAA
------------------------------------------------ -------------- --------------- ------------- -------------
Total                                                $ 195,180       2.9               6.5 %       AA
------------------------------------------------ -------------- --------------- ------------- -------------
</TABLE>

By comparison,  at December 31, 1998, the fixed  maturity  investment  portfolio
analysis was as follows:

<TABLE>
<CAPTION>
                                                                                                 Average
U.S. dollars in thousands                            Fair          Duration        Market        Credit
                                                     Value         (Years)           Yield       Rating
------------------------------------------------ -------------- --------------- -------------- ------------
<S>                                                   <C>            <C>               <C>        <C>
Corporate securities                                  $138,727       3.1               5.7 %       AA
U.S. treasury securities and obligations of
     U.S. government corporations and agencies
                                                        31,698       1.5               4.4 %      AAA
Mortgage & Asset backed securities                       9,232       0.8               5.8 %      AAA
Obligations of states and political
     subdivisions                                       24,647       2.3               5.9 %       AA
Foreign currency debt securities                         8,083       3.4               3.5 %       AA
------------------------------------------------ -------------- --------------- ------------- -------------

Total                                                 $212,387       2.6               5.2 %       AA
------------------------------------------------ -------------- --------------- ------------- -------------
</TABLE>

The Company's  investment policy objective is to maximize  long-term  investment
returns while  maintaining a liquid,  high-quality  portfolio.  To this end, the
investment  policy  requires that the portfolio  have an average  credit quality
rating of AA, no more than 3% of the portfolio  invested in the  securities of a
single issuer (other than issues of sovereign governments with a rating of AA or
better), and a target duration of 2.75 years. The Company's investment portfolio
reflects its investment policy and guidelines.

The Company expects that its financial and operational needs for the foreseeable
future will be met by funds  generated from  operations  and from  liquidating a
small  percentage of its  investment  portfolio.  The Company  expects to remain
highly capitalized after any near-term investment portfolio liquidation.

<PAGE>


Shareholders'  equity as of September  30, 1999 was $214.7  million  compared to
$244.8  million at December  31, 1998.  The major  factors  contributing  to the
decrease in  shareholders'  equity  included  $15.7  million of net losses,  the
Company's  repurchase  of $5.8  million of its  common  shares,  net  unrealized
investment losses of approximately $4.9 million and the Company's declaration of
cumulative  dividends  of $0.24 per common  share.  Book value per common  share
decreased  to $16.11 as of  September  30, 1999 from  $17.58 as of December  31,
1998.


Current Developments

A quarterly cash dividend of $0.08 per share was declared on November 8, 1999 by
the  Company's  Board of  Directors,  payable  on  December  8,  1999 to  common
shareholders of record on November 22, 1999.

In March 1999,  Odyssey Re  instituted  an action in New York  against a broker,
Stirling Cooke Brown, alleging fraud and violation of U.S. racketeering statutes
on the  reinsurance  placement  of 1997 and 1998  Personal  Accident and Workers
Compensation "carve out" business with Odyssey Re. On or about July 1, 1998, ESG
accepted a 25% quota share  reinsurance  treaty with Odyssey Re (UK) retroactive
to  January  1,  1998.   This  treaty  covers  various   reinsurance   contracts
underwritten  by Odyssey Re (UK) and  retroceded to ESG. Among these cedants are
various insurance  companies involved in the litigation Odyssey Re instituted in
New York over 1997 and 1998 business.  This treaty terminated as of December 31,
1998  but ESG  renewed  its  participation  for  1999  directly  to one of those
cedents.  The Company continues to investigate its position  regarding  possible
misrepresentation  and failure to disclose  material facts and is unable at this
time to determine  the amount of its  exposure and the possible  effect upon the
Company's business, financial condition or results of operation.

During the quarter the Company  extended  further loans to COMED, the new German
healthcare  association  which the Company  helped to establish,  under the loan
facility of $12 million  provided in December 1998. At September 30, 1999,  $2.7
million is  outstanding  under this  facility  and is fully  provided  for.  The
ability  of COMED to repay the loan is  dependent  on its  ability  to  generate
sufficient  revenues from members.  Under the terms of the loan  agreement,  the
Company has the right to refuse any further  disbursements  where the ability of
COMED to repay the loan is in doubt.

The Company has repurchased 695,400 shares of its common stock, equivalent to 5%
of the  outstanding  shares of ESG Re Limited under its Common Stock  Repurchase
Program as of October 31, 1999. The average purchase price was $9.79. On October
6, 1999, the Company authorized the repurchase of an additional 1,000,000 common
shares.

On September 10, 1999, John C Head was appointed Chief Executive  Officer of the
Company,  effective October 1, 1999,  following the resignation of Wolfgang Wand
effective September 30, 1999; Edward Tilly, formerly a non-executive director of
the Company was appointed  Deputy  Chairman;  and Steven Debrovner was appointed
Chief Executive  Officer of the  Reinsurance  division,  having  previously been
Chief Marketing and Underwriting  Officer of the Company. Dr. Gerald Moeller was
appointed Chief  Executive  Officer of the Health Care Division on July 1, 1999.
The Company  announced the departure of Renate Nellich,  President and CEO of ES
North America,  ESG's  marketing and  underwriting  manager in Toronto,  Canada,
effective  November 5, 1999. Marty Hatfield,  Senior Vice President,  Marketing,
Underwriting  and Claims,  will assume the role of Regional  Executive for North
America.

On November 11, 1999,  the Company was notified that  Standard & Poor's  lowered
the long term counterparty  credit and insurer financial strength ratings of the
Company's  reinsurance  subsidiaries  from  single-A-minus  (strong) to triple-B
(good).  Standard  & Poor's  cited (i) weak  earnings  performance  in the North
American market,  (ii) concerns over internal control  mechanisms and wide-scale
changes in its management team, and (iii) a departure from its original business
development strategy as the motivating factors behind its decision. However, the
rating agency listed the Company's extremely strong current  capitalization as a
mitigating factor in its decision. The Company expects to return to its original
business  development strategy by refocusing its underwriting efforts on certain
markets other than the North American market in the future.


MARKET RISK

The Company is subject to market risk arising from the potential change in value
of its various financial  instruments.  These changes may be due to fluctuations
in  interest  rates or foreign  exchange  rates,  or both in the case of foreign
currency  investments.  The Company  monitors its exposure to interest  rate and
currency rate risk on a continuous basis and currently does not believe that the
use of  derivatives  to manage such risk is  necessary.  The Company  intends to
reevaluate the need for a formal hedging  strategy on a periodic basis,  and may
determine that such a strategy,  including the use of derivative instruments, is
appropriate in the future.



<PAGE>



INTEREST RATE RISK

The largest  source of market risk for the Company is interest  rate risk on its
portfolio of fixed maturity investments,  especially fixed rate instruments.  In
addition,  the credit  worthiness of the issuer,  relative values of alternative
investments,  liquidity and general market  conditions may affect fair values of
interest rate sensitive instruments.

The Company's  general strategy with respect to fixed maturity  securities is to
invest in high quality securities while maintaining diversification and to avoid
significant   concentrations   in  individual   issuers'  industry  segments  or
countries.

FOREIGN CURRENCY RISK

The  Company's  functional  currency is the U.S.  dollar.  However,  the Company
writes  reinsurance  business in  numerous  geographic  regions and  currencies,
giving rise to the risk that the ultimate settlement of receivables and payables
on reinsurance  transactions will differ from the amounts currently  recorded as
assets and liabilities in the financial statements.  The Company intends to hold
investments in currencies in which it will collect premiums and pay claims, thus
creating a partial natural hedge against exchange rate fluctuations.

INFLATION

Inflation  has not had a material  impact on the  Company's  operations  for the
periods  presented.  The Company has commenced writing  reinsurance  business in
Latin America,  particularly in Brazil,  which has  experienced  periods of high
inflation.  It is  possible  that  future  inflationary  conditions  may  impact
subsequent accounting periods.

THE EURO

On January 1, 1999,  a single  currency,  the "euro" was adopted as the national
currency of the 11  participating  countries  in the  European  Monetary  Union,
including  Germany  and  Ireland,  two of the  countries  in which  the  Company
operates  and in  which  the  Company  maintains  a  significant  presence.  The
Company's German and Irish subsidiaries will not be required to use the euro for
accounting  purposes prior to January 1, 2002. Due to  uncertainties  related to
the euro  conversion,  the impact of the  conversion is not known.  To date, the
impact of the conversion has had no material impact on the Company's operations,
accounting systems or financial reporting.  The Company's general ledger systems
have been upgraded to a euro compliant platform.

YEAR 2000 ISSUE

The Year 2000 Issue  relates  to the  ability of  computer  systems to  properly
interpret date  information  for the year 2000 and beyond.  In January 1998, the
Company  initiated an  enterprise-wide  project to address Year 2000 issues with
respect to the Company's computer software and information  technology  systems.
The  initiative  had as its focus two  distinct  areas  that  include  Year 2000
compliance of the Company's software,  systems and technology  platforms and the
evaluation of the Year 2000  preparedness of significant third parties with whom
the Company conducts business, including vendors and customers.

The Company has completed this initiative.

The  Company's  systems  do  not  interface  electronically  with  those  of its
customers or clients.  As such,  the  Company's  exposure to the Year 2000 issue
with  respect to  customers  and  clients is  limited  to the  possibility  that
information  supplied by these companies  could not be of sufficient  quality or
timeliness and therefore  could  indirectly  affect the quality or timeliness of
the  Company's  own data.  The Company  has  communicated  with its  significant
clients and service  providers to assess their  vulnerability  and  readiness to
comply with Year 2000  issues and will  address  compliance  risks with each new
significant vendor.







<PAGE>



PART II   OTHER INFORMATION

                            ITEM 1. LEGAL PROCEEDINGS

There are no lawsuits pending, or to the knowledge of the Company threatened, to
which the  Company or any of its  subsidiaries  or  affiliates  is a party or of
which any of their  properties  is  subject  other than the  routine  litigation
incidental to the business.

                          ITEM 2. CHANGES IN SECURITIES

Not applicable.

                     ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

          ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

No matters were submitted to a vote of stockholders  during the third quarter of
this fiscal year.


                           ITEM 5. OTHER TRANSACTIONS

Not applicable.

                                ITEM 6. EXHIBITS

(a)  Exhibits

         Exhibit 11.1      Computation of Earnings Per Share

         Exhibit 15.1      Consent of Deloitte & Touche

         Exhibit 27.1      Financial Data Schedule

(b)  Report on Form 8-K

The  Company  filed  one  report  on Form 8-K  during  the  reporting  period on
September  10, 1999 to announce the  resignation  of Mr.  Wolfgang Wand as Chief
Executive  Officer and  Director and the  appointment  of Mr. John C Head as his
replacement as Chief Executive Officer.  The Company also announced the election
of Edward A. Tilly as Deputy Chairman and the appointment of Steven Debrovner as
Chief  Executive  of the  Company's  reinsurance  operation.  The  Company  also
announced that it has decided to expense currently all costs associated with its
health care initiatives in a charge of up to $7 million.

<PAGE>



                                   SIGNATURES

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


November 15, 1999

                                      ESG RE LIMITED

                                      By:  /s/ Joan H. Dillard
                                           -------------------------------
                                      Name: Joan H. Dillard
                                      Title: Chief Financial Officer