<PAGE>

                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

|X|       Quarterly report under section 13 or 15(d) of the Securities Exchange
 -        Act of 1934. For the period ended September 30, 1996.

                                       or

| |      Transition report pursuant to section 13 or 15(d) of the Securities
 -       Exchange Act of 1934. For the transition period from ______ to______.

Commission File Number 1-10760

                           MUTUAL RISK MANAGEMENT LTD.
--------------------------------------------------------------------------------
  (Exact name of registrant as specified in its charter)

                   BERMUDA                            NOT APPLICABLE
--------------------------------------------------------------------------------
  (State or other jurisdiction of                    (I.R.S. Employer
  incorporation or organization)                    Identification No.)
                                44 Church Street,
                             Hamilton HM 12, Bermuda
--------------------------------------------------------------------------------
  (Address of principal executive offices)   (Zip code)

                                 (441) 295-5688
--------------------------------------------------------------------------------
  (Registrant's telephone number, including area code)

                                 Not applicable
--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)

  Indicate  by check  mark  whether  the  registrant  (1) has filed all  reports
  required to be filed by Section 13 or 15(d) of the Securities  Exchange Act of
  1934  during the  preceding  12 months (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 outstanding  shares of the registrant's  Common Stock, $0.01 par
  value, as of September 30, 1996 was 18,739,734.

<PAGE>

                           MUTUAL RISK MANAGEMENT LTD.

                                    I N D E X

Part I. Financial Information:

    Item 1. Financial Statements:

        Unaudited Consolidated Statements of Income for the nine month
        periods ended September 30, 1996 and 1995                          3

        Unaudited Consolidated Balance Sheets at September 30, 1996
        and December 31, 1995                                              4

        Unaudited Consolidated Statements of Cash Flows for the
        nine month periods ended September 30, 1996 and 1995               5

        Unaudited Consolidated Statements of Shareholders' Equity at
        September 30, 1996 and December 31, 1995                           6

        Notes to Unaudited Consolidated Financial Statements at
        September 30, 1996                                                 7

    Item 2. Management's Discussion and Analysis of Financial              8-12
                 Condition and Results of Operations



PART II.Other Information:

    Item 5. Other Information                                              13

    Item 6. Exhibits and Reports on Form 8-K                               13


Signatures                                                                 14

Exhibits

        Exhibit 11 - Computation of Net Earnings per Common
            Share and Common Share Equivalents
        Exhibit 27 - Financial Data Schedule


                  MUTUAL RISK MANAGEMENT LTD. AND SUBSIDIARIES

<PAGE>

<TABLE>
<CAPTION>

                   UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

                                               Quarter Ended September 30          Nine Months Ended September 30
                                                1996                1995               1996                1995
<S>                                         <C>                 <C>                 <C>                 <C>        
REVENUES
     Fee income                             $20,395,469         $16,717,469         $59,862,326         $47,692,674
     Premiums earned                          7,288,523          15,336,543          35,007,072          40,647,894
     Net investment income                    5,662,929           3,556,412          16,255,582          11,072,079
     Realized capital losses                   (559,873)             (6,056)         (1,171,806)           (266,498)
     Other (losses) income                       (7,526)             15,249             127,863              70,336
                                             ----------          ----------         -----------          ----------

     Total Revenues                          32,779,522          35,619,617         110,081,037          99,216,485
                                             ----------          ----------         -----------          ----------

EXPENSES
     Losses and loss expenses incurred        2,570,997           5,887,889          18,680,020          19,318,450
     Acquisition costs                        4,685,780           9,683,831          16,384,832          22,112,320
     Operating expenses                      12,449,908           9,429,686          35,571,969          26,712,851
     Interest expense                         1,560,224             270,850           4,631,871             617,091
     Other expenses                             177,234              53,081             462,422             155,245
                                             ----------          ----------         -----------          ----------

     Total Expenses                          21,444,143          25,325,337          75,731,114          68,915,957
                                             ----------          ----------          ----------          ----------

INCOME FROM CONTINUING
 OPERATIONS BEFORE
 INCOME TAXES                                11,335,379          10,294,280          34,349,923          30,300,528

     Income taxes                             1,852,945           2,414,352           6,412,841           7,014,442
                                             ----------          ----------          ----------          ----------

INCOME FROM CONTINUING
 OPERATIONS                                   9,482,434           7,879,928          27,937,082          23,286,086

     Minority interest                           (7,034)           (139,783)           (248,088)           (382,482)
                                             ----------          ----------         -----------          ----------

NET INCOME                                    9,475,400           7,740,145          27,688,994          22,903,604

     Preferred share dividends                   42,432              43,816             123,608             146,208
                                             ----------          ----------         -----------          ----------

NET INCOME AVAILABLE TO
 COMMON SHAREHOLDERS                         $9,432,968          $7,696,329         $27,565,386         $22,757,396
                                             ==========          ==========         ===========         ===========


EARNINGS PER COMMON SHARE (1)

     Primary EPS                                 $0.49               $0.41              $1.44               $1.23
                                                 =====               =====              =====               =====

     Fully diluted EPS                           $0.49               $0.41              $1.42               $1.23
                                                 =====               =====              =====               =====

     Dividends per share                         $0.08               $0.06              $0.23               $0.18
                                                 =====               =====              =====               =====

     Weighted average number of Common
     Shares outstanding                      19,120,043          18,687,410          19,102,653          18,502,561
                                             ==========          ==========          ==========          ==========
</TABLE>

(1) Prior periods per share calculations have been restated to reflect the
    four-for-three stock split to holders of record at May 31, 1996.

      See Accompanying Notes to Unaudited Consolidated Financial Statements


                                       3

<PAGE>

                  MUTUAL RISK MANAGEMENT LTD. AND SUBSIDIARIES
                      UNAUDITED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                SEPTEMBER 30,         DECEMBER 31,
                                                                                    1996                  1995
<S>                                                                            <C>                   <C>           
ASSETS
   Cash and cash equivalents                                                      $72,198,254           $79,669,981
   Investments :  Held in available for sale account at fair value
      (Amortized cost $386,251,075; 1995 - $350,540,285)                          383,593,396           351,917,852
                                                                               --------------        --------------
   Total marketable investments                                                   455,791,650           431,587,833

   Investments in affiliates                                                          771,361               202,457
   Other investments                                                                2,459,500             2,282,833
   Investment income due and accrued                                                5,117,906             4,487,430
   Accounts receivable                                                             86,916,621            82,394,552
   Reinsurance receivables                                                        278,995,706           256,678,476
   Deferred expenses                                                               22,157,799            19,118,668
   Prepaid reinsurance premiums                                                    55,748,439            39,221,053
   Fixed assets                                                                     8,047,746             5,480,686
   Deferred tax benefit                                                             6,002,405             6,182,842
   Goodwill                                                                        14,887,321             4,874,634
   Other assets                                                                     3,042,034             1,920,030
   Assets held in separate accounts                                               594,938,900           525,176,516
                                                                               --------------        --------------
   Total Assets                                                                $1,534,877,388        $1,379,608,010
                                                                               ==============        ==============
LIABILITIES, REDEEMABLE PREFERRED & COMMON SHARES & SHAREHOLDERS' EQUITY
LIABILITIES
   Reserve for losses and loss expenses                                          $331,093,877          $314,927,486
   Reserve for unearned premiums                                                   74,965,112            59,775,181
   Claims deposit liabilities                                                      70,976,215            71,788,775
   Accounts payable                                                               109,241,811            93,259,762
   Accrued expenses                                                                 5,248,275             4,870,979
   Taxes payable                                                                    8,931,012             4,811,592
   Loans payable                                                                      480,286               574,022
   Prepaid fees                                                                    13,419,343            13,125,653
   Debentures                                                                     120,634,443           116,038,987
   Other liabilities                                                                7,177,133             5,729,685
   Liabilities related to separate accounts                                       594,938,900           525,176,516
                                                                               --------------        --------------
   Total Liabilities                                                            1,337,106,407         1,210,078,638
                                                                               --------------        --------------
REDEEMABLE PREFERRED & COMMON SHARES
   Preferred Shares - Series B non-voting Redeemable - authorized
       and issued 2,951,835 (par value and redemption value $1.00)                  2,951,835             2,951,835
   Common Shares subject to redemption - 468,584 Common Shares (par value $0.01,
       redemption value $3.50 less subscription loans
       receivable - $767,522,  plus interest received)                              1,500,439             1,074,389
                                                                               --------------        --------------

   Total Redeemable Preferred & Common Shares                                       4,452,274             4,026,224
                                                                               --------------        --------------
SHAREHOLDERS' EQUITY
   Common Shares - Authorized 60,000,000 (par value $0.01)
                   Issued 18,271,150 (1995 - 17,805,138)                              182,712               178,051
   Additional paid-in capital                                                      75,356,332            65,396,652
   Unrealized (loss) gain on investments - net of tax                              (2,228,040)            1,154,823
   Retained earnings                                                              120,007,703            98,773,622
                                                                               --------------        --------------
   Total Shareholders' Equity                                                     193,318,707           165,503,148
                                                                               --------------        --------------
   Total Liabilities, Redeemable Preferred & Common Shares
     & Shareholders' Equity                                                    $1,534,877,388        $1,379,608,010
                                                                               ==============        ==============
</TABLE>

      See Accompanying Notes to Unaudited Consolidated Financial Statements


                                       4

<PAGE>

                  MUTUAL RISK MANAGEMENT LTD. AND SUBSIDIARIES
                 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                                  Nine Months Ended September 30,
                                                                                     1996                1995
<S>                                                                              <C>                   <C>
NET CASH FLOW FROM OPERATING ACTIVITIES
Net income                                                                        $27,688,994           $22,903,604
Items not affecting cash:                                                                           
      Depreciation                                                                  2,051,202             1,432,895
      Amortization of investments and net gain on sales                               (92,194)           (2,476,817)
      Amortization of Convertible Debentures                                        4,595,456                     0
      Deferred tax benefit                                                            832,822              (788,596)
      Other items                                                                     302,447               115,617
Net changes in non-cash balances relating to operations:                                            
      Accounts receivable                                                          (4,522,069)          (24,220,363)
      Reinsurance receivables                                                     (22,317,230)          (45,652,430)
      Investment income due and accrued                                              (630,476)              414,624
      Deferred expenses                                                            (1,087,430)           (5,422,899)
      Prepaid reinsurance premiums                                                (16,527,386)          (22,890,669)
      Other assets                                                                 (1,122,004)              413,451
      Reserve for losses and loss expenses                                         16,166,391            43,612,235
      Claims deposit liabilities                                                     (812,560)            1,742,203
      Prepaid fees                                                                    293,690               887,894
      Reserve for unearned premium                                                 15,189,931            30,926,910
      Accounts payable                                                             15,982,049            18,643,815
      Taxes payable                                                                 4,119,420             1,293,573
      Accrued expenses                                                                377,296             1,852,997
      Other liabilities                                                             1,447,448               639,827
                                                                                  -----------           -----------
NET CASH FLOW FROM OPERATING ACTIVITIES                                            41,935,797            23,427,871
                                                                                  -----------           -----------
CASH FLOWS FROM INVESTING ACTIVITIES                                                                
      Proceeds from sale of investments - Available for sale                       87,431,657            48,103,683
      Proceeds from maturity of investments - Available for sale                   29,154,549            20,094,558
      Fixed assets purchased                                                       (4,656,497)           (1,186,939)
      Investments purchased - Available for sale                                 (152,204,802)          (82,013,901)
      Investment in affiliates and other investments                                 (676,049)             (105,879)
      Goodwill purchased                                                           (4,853,555)             (200,000)
      Swap expense                                                                 (1,951,701)           (4,480,803)
      Other items                                                                      68,686                11,982
                                                                                  -----------           -----------
NET CASH APPLIED TO INVESTING ACTIVITIES                                          (47,687,712)          (19,777,299)
                                                                                  -----------           -----------
CASH FLOWS FROM FINANCING ACTIVITIES                                                                
      Loans received                                                                        0            11,203,274
      Loan repaid                                                                     (93,736)                    0
      Loan interest received                                                           42,290                61,882
      Loan repayment received                                                         383,760               383,760
      Proceeds from shares issued                                                   4,402,787               903,714
      Dividends paid                                                               (6,454,913)           (4,032,206)

                                                                                  -----------           -----------
NET CASH FLOW (APPLIED TO) FROM FINANCING ACTIVITIES                               (1,719,812)            8,520,424
                                                                                  -----------           -----------
      Net (decrease) increase in cash and cash equivalents                         (7,471,727)           12,170,996
      Cash and cash equivalents at beginning of period                             79,669,981            44,872,994
                                                                                  -----------           -----------
Cash and cash equivalents at end of period                                        $72,198,254           $57,043,990
                                                                                  ===========           ===========
Supplemental cash flow information:                                                                 
      Interest paid                                                                   $36,415              $346,241
                                                                                   ==========            ==========
      Income taxes paid, net                                                       $2,160,284            $4,182,002
                                                                                   ==========            ==========
</TABLE>

      See Accompanying Notes to Unaudited Consolidated Financial Statements


                                       5

<PAGE>

                  MUTUAL RISK MANAGEMENT LTD. AND SUBSIDIARIES

            UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
                                                                                          Series B
                                                                                          Preferred      Common
                                                                Change in                   Share         Share
                                        Opening     Shares     Unrealized        Net      Dividends     Dividends      Closing
                                        Balance     Issued     Gain (Loss)     Income   Declared (1)  Declared (2)     Balance
                        
<S>                                <C>            <C>          <C>          <C>          <C>          <C>           <C>         
Nine Months Ended September 30, 1996
------------------------------------
Common Shares                      $    178,051   $    4,661  $          -  $         -  $       -    $         -   $    182,712
Additional paid-in capital           65,396,652    9,959,680             -            -          -              -     75,356,332
Unrealized gain (loss)
   on investments                     1,154,823            -    (3,382,863)           -          -              -     (2,228,040)
Retained earnings                    98,773,622            -             -   27,688,994   (123,608)    (6,331,305)   120,007,703
                                   ------------   ----------   -----------  -----------  ----------   ------------  ------------
Total Shareholders' Equity
at September 30, 1996              $165,503,148   $9,964,341  $ (3,382,863)  27,688,994  $(123,608)    (6,331,305)  $193,318,707
                                   ============   ==========   ===========  ===========  ==========   ============  ============
Year Ended December 31, 1995 (3)
--------------------------------
Common Shares                      $    176,560   $    1,491   $         -  $         -  $       -    $         -   $    178,051
Additional paid-in capital           63,779,856    1,616,796             -            -          -              -     65,396,652
Unrealized (loss) gain
   on investments                   (12,913,950)           -    14,068,773            -          -              -      1,154,823
Retained earnings                    73,950,774            -             -   30,354,371   (190,024)    (5,341,499)    98,773,622
                                   ------------   ----------   -----------  -----------  ----------   ------------  ------------
Total Shareholders' Equity
at December 31, 1995               $124,993,240   $1,618,287   $14,068,773  $30,354,371  $(190,024)   $(5,341,499)  $165,503,148
                                   ============   ==========   ===========  ===========  ==========   ============  ============

</TABLE>

(1) Dividend per share amounts were $.04 for the nine months ended September 30,
    1996 and $.06 for the year ended December 31, 1995.

(2) Dividend per share amounts were $.32 for the nine months ended September 30,
    1996 and $.26 for the year ended December 31, 1995.

(3) Effective May 31, 1996 the Company effected a four-for-three stock split
    recorded  in the form of a stock  dividend.  4,438,974  Common  Shares  were
    issued in respect of this split. Prior periods have been restated.


      See Accompanying Notes to Unaudited Consolidated Financial Statements


                                       6

<PAGE>

                  MUTUAL RISK MANAGEMENT LTD. AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

                               September 30, 1996


  1.  INTERIM ACCOUNTING POLICY

     In the opinion of management  of the Company,  the  accompanying  unaudited
consolidated  financial  statements include all adjustments,  consisting only of
normal recurring adjustments, necessary to present fairly the financial position
of the Company and the results of operations  and cash flows for the nine months
ended  September  30,  1996 and 1995.  Although  the Company  believes  that the
disclosure in these  financial  statements  is adequate to make the  information
presented not misleading certain information and footnote  information  normally
included in financial  statements prepared in accordance with generally accepted
accounting  principles has been  condensed or omitted  pursuant to the rules and
regulations of the Securities and Exchange Commission. Results of operations for
the nine months ended September 30, 1996 are not necessarily  indicative of what
operating results may be for the full year.

2.    FOUR-FOR-THREE STOCK SPLIT

     In May 1996 the  Company  announced  a  four-for-three  stock  split of its
Common  Shares.  The  record  date for the stock  split  was May 31,  1996 and a
dividend of additional Common Shares was distributed to shareholders on June 19,
1996. The  consolidated  financial  statements have been adjusted to reflect the
effects  of the  Common  Stock  split on  earnings  per  share  for all  periods
presented.


                                       7

<PAGE>

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

Results of Operations for the Quarter and Nine months ended September 30, 1996
and 1995

     The results of operations  for the quarter and nine months ended  September
30, 1996,  reflect a continuation  of growth in Fee income and Net income due to
the addition of new accounts,  increased  investment income and the inclusion of
Professional  Underwriters Corp. ("PUC") for the first time in 1996. The results
for  all  periods  reflect  the  acquisition  of The  Hemisphere  Group  Limited
("Hemisphere")  in a pooling of interests  transaction.  Net income available to
common  shareholders  amounted to $9.4 million or $0.48 per Common Share for the
third  quarter and $27.6  million or $1.42 per Common  Share for the nine months
ended September 30, 1996 on a fully diluted basis representing  increases of 23%
and 21% over the corresponding periods as shown in the tables below.


<TABLE>
<CAPTION>
                                                             Third Quarter to September 30,
                                                          1996                                1995
                                             ------------------------------       -----------------------------
                                                           ($ thousands except per share data)
                                                               PER                                   PER
                                                           COMMON SHARE                          COMMON SHARE
                                                        -------------------                   -----------------
                                                                    Fully                                 Fully
                                                        Primary     Diluted                   Primary    Diluted
<S>                                         <C>          <C>         <C>            <C>        <C>        <C>  
Net income excluding
  realized capital losses (a)               $9,813       $0.51       $0.50          $7,762     $0.41      $0.41
Realized capital losses (b)                   (380)      (0.02)      (0.02)            (66)    (0.00)     (0.00)
                                              -----      ------      -----         -------     -----      -----

Net income available to
  Common Shareholders                       $9,433       $0.49       $0.48          $7,696     $0.41      $0.41
                                            ======       =====       =====          ======     =====      =====

Average number of
  shares outstanding (000's)                            19,120      22,609                    18,687     18,687
                                                        ------      ------                    ------     ------

                                                             Nine Months Ending September 30,
                                                          1996                                1995
                                             ------------------------------       -----------------------------
                                                           ($ thousands except per share data)
                                                               PER                                   PER
                                                           COMMON SHARE                          COMMON SHARE
                                                        -------------------                   -----------------
                                                                    Fully                                 Fully
                                                       Primary     Diluted                   Primary     Diluted
Net income excluding
  realized capital losses (a)              $28,442       $1.49       $1.46         $23,001     $1.24      $1.24
Realized capital losses (b)                   (877)      (0.05)      (0.04)           (244)    (0.01)     (0.01)
                                              -----      -----       -----       ---------     -----      -----

Net income available to
  Common Shareholders                      $27,565       $1.44       $1.42         $22,757     $1.23      $1.23
                                           =======       =====       =====         =======     =====      =====

Average number of
  shares outstanding (000's)                            19,103      22,592                    18,503     18,503
                                                        ------      ------                    ------     ------
</TABLE>

(a)  1995 results have been restated to reflect a pooling of interests following
     the acquisition of The Hemisphere Group Limited.
(b)  Net of tax.
(c)  All per share amounts have  been  adjusted  to  reflect  the four-for-three
     stock split which was effected May 31, 1996.



                                       8

<PAGE>

     Total revenues amounted to $32.8 million and $110.1 million for the quarter
and nine months ended  September 30, 1996  representing  a decrease of 8% and an
increase of 11% over the corresponding  1995 periods.  The following table shows
the major components of Revenues for these periods.

(In thousands)
<TABLE>
<CAPTION>
                                                                     TOTAL REVENUES
                                                                Periods to September 30,
                                          Third Quarter                                Nine Months
                                      1996          1995       Increase           1996         1995     Increase
                                      ----          ----       --------           ----         ----     --------
<S>                                <C>           <C>               <C>        <C>           <C>             <C>
Fee income                         $20,395       $16,717            22%        $59,862      $47,693          26%
Premiums earned                      7,289        15,337           (52%)        35,007       40,648         (14%)
Net investment income                5,663         3,556            59%         16,256       11,072          47%
Realized capital losses               (560)           (6)          N/M          (1,172)        (267)         N/M
Other (losses) income                   (7)           15           N/M             128           70          82%
                                 ----------  -----------                      --------   ----------

                                   $32,780       $35,619            (8%)      $110,081      $99,216          11%
                                   =======       =======                      ========      =======
</TABLE>

     Fee income  increased  22% and 26% for the quarter  and nine  months  ended
September  30,  1996 to $20.4  million  and $59.9  million as  compared to $16.7
million and $47.7 million in the corresponding  1995 periods.  The components of
Fee income are  illustrated by company and by business  segment in the following
tables:

(In thousands)
<TABLE>
<CAPTION>
                                                                FEE INCOME BY COMPANY
                                                              Periods to September 30,
                                          Third Quarter                             Nine Months
                                    1996            1995         Increase        1996           1995           Increase
                                    ----            ----         --------        ----           ----           --------
<S>                            <C>     <C>    <C>      <C>         <C>     <C>     <C>     <C>      <C>           <C>
Legion policy-issuing fees      $7,590  37%    $7,115   43%         7%     $22,325  37%    $20,386   43%          10%
IPC Program fees                 4,324  21%     3,635   22%        19%      12,462  21%     10,652   22%          17%
CRS fees                         2,842  14%     2,524   15%        13%       8,143  14%      7,020   15%          16%
Underwriting management fees     1,239   6%         -    -%        N/M       4,098   7%          -    -%           N/M
Captive management fees          1,053   5%       878    5%        20%       3,145   5%      2,650    6%          19%
Financial services fees          1,554   8%       986    6%        58%       4,477   7%      3,035    6%          48%
Other fees                       1,793   9%     1,579    9%        14%       5,212   9%      3,950    8%          32%
                               ------- ----   -------  ----                ------- ----    -------- ----


Total                          $20,395 100%   $16,717  100%        22%     $59,862 100%    $47,693  100%          26%
                               ======= ====   =======  ====                ======= ====    =======  ====

(In thousands)
<CAPTION>
                                                           FEE INCOME BY BUSINESS SEGMENT
                                                              Periods to September 30,
                                  Third Quarter                                        Nine Months
                                    1996            1995         Increase        1996           1995           Increase
                                    ----            ----         --------        ----           ----           --------

<S>                            <C>     <C>    <C>      <C>         <C>     <C>     <C>     <C>      <C>           <C>
Corporate risk
  management fees              $12,417  61%   $11,645   70%         7%     $38,082  64%    $35,373   74%           8%
Program business fees           $4,920  24%    $2,807   17%        75%     $12,870  21%     $5,954   12%         116%
Specialty brokerage fees        $1,504   7%    $1,279    8%        18%      $4,433   7%     $3,331    7%          33%
Financial services fees         $1,554   8%      $986    6%        58%      $4,477   7%     $3,035    6%          48%
                               ------- ----   -------  ----                ------- ----    -------- ----
Total                          $20,395 100%   $16,717  100%        22%     $59,862 100%    $47,693  100%          26%
                               ======= ====   =======  ====                ======= ====    =======  ====
</TABLE>


                                       9

<PAGE>

     Corporate  risk  management,   the  Company's  original  business  segment,
involves providing  services to businesses and associations  seeking to insure a
portion of their risk in a loss sensitive  Alternative  Market  structure.  This
business segment, which accounted for 64% of total Fee income for the first nine
months of 1996 compared to 74% in the  corresponding  1995 period,  has been the
most affected by the extremely soft insurance market cycle for commercial risks.
Corporate risk  management  fees increased by 7% in the quarter to $12.4 million
and 8% in the  first  nine  months  of 1996 to  $38.1  million  compared  to the
corresponding  1995  periods.  Profit  margins  remained  steady  at 41% for the
quarter and 44% for the nine months compared to 41% and 43% in the corresponding
1995 periods.

     Program  Business,  the fastest growing segment of the Company's  business,
involves  replacing  traditional  insurers as the conduit  between  producers of
specialty  books of  business  and  reinsurers  wishing to write that  business.
Program Business accounted for 21% of total Fee income for the first nine months
of 1996 compared to 12% in the corresponding 1995 period.  Program Business fees
increased  by 75% in the third  quarter to $4.9  million  and 116% for the first
nine months of 1996 to $12.9 million.  Program  Business fee growth was assisted
by the acquisition of PUC in 1996 since its results are not included in the 1995
comparatives.  Adjusting for this,  Program  Business fee growth would have been
37% in the quarter and 35% for the nine months.  Profit  margins  excluding  the
underwriting management business of PUC were 51% for the quarter and 49% for the
nine months.  Including PUC's  underwriting  management  business profit margins
were 41% for the quarter and 39% for the first nine months of 1996.


     The Company's  Specialty  Brokerage  business  segment  provides  access to
Alternative  Risk  Transfer  insurers  and  reinsurers  in Bermuda  and  Europe.
Specialty  Brokerage  accounted  for 7% of total  Fee  income  in both the third
quarter and nine months at $1.5 million and $4.4 million respectively. Specialty
Brokerage  fees grew by 18% in the  quarter  and 33% in the nine months over the
corresponding  1995 periods.  The lower third  quarter  growth rate reflects the
seasonal  nature of this  business  segment  and the fact that the first half of
1995 does not  include the results of HJF  International  which was  acquired on
July 1, 1995.  Renewal rates  remained high in this segment at 90% for the first
nine months of 1996. Profit margins decreased to 35% for the quarter and 39% for
the nine  months  as  opposed  to 41% and 43% for the  same  periods  last  year
primarily as a result of the Company's  acquisition of substantially  all of the
minority interest in one of these businesses.  Although immediately accretive to
earnings per share,  this  acquisition  lowered the business's  profit margin by
replacing a charge for minority interest, which is not part of the profit margin
calculation, with a bonus expense which is part of the calculation.

     Financial  Services is the Company's  newest  business  segment and will be
built on the recent  acquisition of The Hemisphere  Group Limited which provides
administrative services to offshore mutual funds and other companies.  Financial
Services  fees  accounted  for 8% of total Fee income for the quarter and 7% for
the nine  months as  opposed  to 6% in both 1995  periods.  Fees from  Financial
Services  increased  in the quarter by 58% to $1.6  million and 48% for the nine
months to $4.5 million over the 1995 corresponding periods primarily as a result
of an  increase  in the  number  of mutual  funds  under  management  from 52 at
September 30, 1995 to 83 a year later.  Renewal rates remained very high in this
business  segment at 97% for the  quarter  and 93% for the first nine  months of
1996.  Profit margins improved somewhat in 1996 to 21% in the quarter and 18% in
the  first  nine  months  as  opposed  to 2% and 16% in the  corresponding  1995
periods.

     Legion Insurance Company and Legion Indemnity, the Company's policy-issuing
subsidiaries,  added 26 new  accounts in the third  quarter as compared to 21 in
1995 bringing the total of new accounts  added for the first nine months of 1996
to 81 as compared  to 61 in 1995.  Legion's  renewal  rate was 75% for the third
quarter  and 72% for the nine  months of 1996 as  compared to 83% and 82% in the
corresponding 1995 periods.  In California the Legion companies have added 6 new
accounts in 1996 as compared to 5 in 1995 and their renewal rate is unchanged at
74% for the nine months of 1996 and 1995.  The Legion  companies  had 267 active
accounts at September 30, 1996  including 25 in California as compared to 228 at
September 30, 1995 of which 25 were in California.


                                       10

<PAGE>

     Gross premiums written decreased 27% to $61.1 million for the third quarter
and 0.2% to $218.6  million  for the first nine  months of 1996 as  compared  to
$84.1 million and $219.1 million in 1995.  Premiums earned decreased 52% to $7.3
million in the third quarter and 14% to $35.0 million for the first nine months,
as compared to $15.3  million and $40.6  million in 1995.  These  decreases  are
primarily due to a reversal of an  overaccrual  of gross written  premium booked
earlier in the year and a significant  drop in premium from assigned risk pools.

The Company  passes on the financial  result of premium from these assigned risk
pools to its  clients  so this drop has no direct  effect on the  Company's  net
income and is offset by a corresponding  53% and 15% decrease in Total insurance
costs.

     Gross investment income increased by $2.3 million and $5.9 million or 50.5%
and 42.1% to $6.9  million  and $20.0  million in the quarter and nine months of
1996 over the corresponding  1995 periods as a result of an increase of 42.2% in
gross invested assets to $458.4 million.  Net investment income, after adjusting
for  investment  income  which is not  included in the  earnings of the Company,
increased  by 59% and 47% in the  quarter  and nine  months  as a  result  of an
increase of 56.8% in net invested  assets to $373.4 million offset by a decrease
in the yield on these assets to 5.9% from 6.6% in the first nine months of 1995.

     The effective tax rate in the quarter was 16.4% and 18.7% in the first nine
months  compared  to 23.5% and 23.2% in the  corresponding  1995  periods.  This
decline  was due  primarily  to the tax  benefit  derived  from the  exercise of
employee stock options and an increase in earnings outside of the United States.

(In thousands)
                                                                TOTAL EXPENSES
<TABLE>
<CAPTION>
                                                           Periods to September 30,
                                   Third Quarter                                Nine Months
                              1996         1995         Increase           1996           1995         Increase
                              ----         ----         --------           ----           ----         --------
<S>                         <C>           <C>              <C>           <C>           <C>                <C>
Operating expenses          $12,450       $9,430            32%          $35,572       $26,713             33%
Total insurance costs         7,257       15,571           (53%)          35,065        41,431            (15%)
Interest expense              1,560          271           476%            4,632           617            651%
Other expenses                  177           53           234%              462           155            198%
                         ----------   ----------                       ---------     ---------

Total                       $21,444      $25,325            15%          $75,731       $68,916             10%
                            =======      =======                         =======       =======
</TABLE>

     Total expenses increased 15% and 10% to $21.4 million and $75.7 million for
the quarter and nine  months as compared to $25.3  million and $68.9  million in
1995.  Operating  expenses  increased by 32% and 33% to $12.4  million and $35.6
million for the quarter and nine months from $9.4  million and $26.7  million in
the  corresponding  1995 periods as a result of the inclusion of PUC which added
$1.1 million or 12% to operating  expenses in the third quarter and $3.3 million
or 12% for the nine  months  together  with the  growth in  personnel  and other
expenses stemming from the increased number of client accounts. The decreases in
Total  insurance  costs were the  result of 52% and 14%  decreases  in  Premiums
earned in the third quarter and first nine months of 1996 over the corresponding
1995  periods.  The  increase  in  Interest  expense  was  attributable  to  the
Convertible Debentures issued October 30, 1995.

     Income from continuing  operations before income taxes increased by 10% and
13% in the quarter and nine months of 1996 to $11.3 million and $34.3 million as
compared to $10.3 million and $30.3 million in the corresponding 1995 periods as

shown in the following table.

(In thousands)


                                       11


<PAGE>

<TABLE>
<CAPTION>
                                            INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
                                                          Periods to September 30,
                                            Third Quarter                                  Nine Months
                                        1996                1995                   1996                    1995
                                        ----                ----                   ----                    ----

<S>                              <C>       <C>       <C>       <C>           <C>       <C>           <C>       <C>
Risk management income            $8,857     71%      $8,278    73%          $27,206    72%          $23,817    72%
Investment income *                3,543     29%       3,279    29%           10,452    28%           10,188    31%
Underwriting loss                     31      -%        (235)   (2%)             (58)    -%             (782)   (3%)
                                 -------    ----     -------   ----          -------   ---           -------   ----

Sub-total                        $12,431    100%     $11,322   100%          $37,600   100%          $33,223   100%
                                            ====               ====                    ====                    ====

General corporate expenses        (1,096)             (1,028)                 (3,250)                 (2,922)
                                 -------             -------                 -------                 -------

Total                            $11,335             $10,294                 $34,350                 $30,301
                                 =======             =======                 =======                 =======
</TABLE>

*    Includes Realized capital gains and losses and Interest expense.

     The pre-tax profit margin on Risk management fee income,  including General
corporate  expenses  was 39% and 41% for the  quarter  and nine  months of 1996.
Excluding the results of PUC and Hemisphere  pretax profit margins  continued to
be strong at 43% for the third quarter and 45% for the first nine months of 1996
compared to 46% for both corresponding periods of 1995.

Financial Condition and Liquidity

     Total assets  increased to $1,535 million at September 30, 1996 as compared
to $1,380 million at December 31, 1995.  Assets held in separate  accounts which
are principally managed assets attributable to participants in the Company's IPC
Programs  accounted for  approximately  39% and 38% of Total assets at September
30,  1996  and  December  31,  1995  respectively.  Total  Shareholders'  equity
increased to $193  million at  September  30, 1996 from $166 million at December
31,  1995  primarily  as a result of Net income in the nine  months  offset by a
decrease in the unrealized  gain on investments  net of tax from $1.2 million at
December  31, 1995 to a loss of $2.2 million at  September  30, 1996.  Return on
equity was 20% for the third  quarter and first nine months of 1996  compared to

20% and 22% in the corresponding 1995 periods.

                                       12
<PAGE>

MUTUAL RISK MANAGEMENT LTD.

PART II - OTHER INFORMATION

Item 5. Other Information

     The United  States  Internal  Revenue  Service (the "IRS") has commenced an
examination of the Company's  calculation of "Related  Party  Insurance  Income"
("RPII") for 1993 and 1994. The Company  calculates RPII on behalf of certain of
its clients  participating  in its Insurance  Profit Center  Program in order to
provide those  clients with  information  used in preparing  their United States
income tax  returns.  The  Company  believes  that its  calculation  of RPII was
materially  correct in both years.  In addition,  any adjustment made by the IRS
would affect the Company's clients and not the Company directly.

     The Company believes, however, that as a part of this examination the IRS
may question  whether  certain  clients of the Insurance  Profit Center  Program
properly  deducted all or a portion of the premium paid in connection with their
program.  In general,  the IRS has challenged the deductibility of premiums paid
to captive  insurance  companies in a series of rulings and cases since 1977. It
is not  presently  possible  to  determine  whether the IRS will  challenge  any
deductions taken by the Company's  clients or the outcome of any such challenge.
The  Company  believes  that  the  particular  fact  situations  of  each of its
Insurance  Profit Center clients are  sufficiently  diverse such that no general
determination  can be made with respect to the  appropriate tax treatment of the
premium paid by participants in the Company's programs.

Item 6. Exhibits and Reports on Form 8-K

          A.   Exhibit 11 -  Computation  of Net  Earnings  Per Common Share and
               Common Share Equivalents.

               Exhibit 27 - Financial Data Schedule

          B.   Reports on Form 8-K. No reports on Form 8-K were filed during the
               three month period ended September 30, 1996.


                                       13

<PAGE>

SIGNATURES

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


                                                     MUTUAL RISK MANAGEMENT LTD.


                                                     /s/ James C. Kelly
                                                     ------------------
                                                     James C. Kelly


  Date:  November, 13, 1996


                                       14