UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10 - Q

Quarterly Report Under Section 13 or 15 15(d)

of the Securities Exchange Act of 1934

For Quarter Ended ~~June 30~~March 31, ~~2005~~2006 ~~Commission file Number 0-11538~~

~~Overseas~~Commission ~~Partners~~File ~~Ltd.~~Number 0-11538

Overseas Partners Ltd. – in Liquidation

(Exact name of registrant as specified in its charter)

Islands of Bermuda

N/A

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

~~Cumberland~~PricewaterhouseCoopers, Dorchester House, ~~One~~ ~~Victoria~~7 Church Street, Hamilton HM 11, Bermuda

(Address of principal executive offices) (Zip Code)

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

~~N/A~~Cumberland House, One Victoria Street, Hamilton HM 11, Bermuda

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, and (2) has been subject to such filing requirements for the past 90 days. YES x NO ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, ~~(as~~or a non-accelerated ~~defined~~filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act). ~~YES x NO ¨~~

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer x

Indicate by check mark whether the registrant is a shell company filer (as defined in Rule 12b-2 of the Exchange Act). YES ¨ NO x

Common Stock, par value $.10 per share

(Title of Class)

118,~~758~~749,~~470~~504 Shares

Outstanding at ~~August 8~~31st January, ~~2005~~ 2006

PART I. FINANCIAL INFORMATION

OVERSEAS PARTNERS LTD. ~~AND SUBSIDIARIES~~

CONDENSED ~~CONSOLIDATED~~ BALANCE SHEETS

(In thousands, except share and per share amounts)

	June 30, 2005				December 31, 2004
	March 31,2006			January 31,2006			March 31,2005
	(Unaudited)			(Unaudited)
ASSETS:
Investments:
Investments, available-for-sale, at fair value – Debt securities (amortized cost: 2006 – $—, 2005 – $14,836)	$	—		$	—		$	14,847
Available-for-sale, at fair value –
Cash and cash equivalents		58,332			57,620			212,787
Debt securities (amortized cost: 2005 – $242,592, 2004 – $285,708)	$	242,124			$	285,162
Interest receivable		—			—			314
Equity securities (cost: 2005 – $709, 2004 – $709)		1,330				807
Federal and state taxes receivable		—			—			1,128
		243,454				285,969
Prepayments		—			—			4,940
Cash and cash equivalents		133,455				383,216
Other assets		233			1,012			127
Reinsurance balances receivable		230				3,776
Total assets	$	58,565		$	58,632		$	234,143
Funds withheld		5,700				17,978
LIABILITIES AND MEMBERS’ EQUITY:
Paid losses recoverable from reinsurers		33,393				21,383
Liabilities:
Unpaid losses and loss expenses recoverable from reinsurers		1,762				24,621
Accounts payable and other liabilities	$	647		$	939		$	5,858
Deferred acquisition costs		2				4
Distribution payable		—			—			166,262
Other assets		10,548				17,090
Total liabilities	$	647		$	939		$	172,120
Total assets	$	428,544			$	754,037
Commitments and contingencies		—			—			—
LIABILITIES AND MEMBERS’ EQUITY:
Preference Stock, par value $0.10 per share; authorized 200 million shares; none issued		—			—			—
Liabilities:
Members’ equity:
Accrued losses and loss expenses	$	140,646			$	188,155
Common Stock, par value $0.10 per share; authorized 900 million shares; issued and outstanding 118,749,504 shares (2005: 118,758,470 shares)	$	11,875		$	11,875		$	11,876
Unearned premiums		165				1,349
Retained earnings		46,043			45,818			50,136
Reinsurance balances payable		23,176				28,060
Accumulated other comprehensive income		—			—			11
Accounts payable and other liabilities		8,443				21,083
Total members’ equity		57,918			57,693			62,023
Total liabilities	$	172,430			$	238,647
Total liabilities and members’ equity	$	58,565		$	58,632		$	234,143
Commitments and contingencies		—				—
Net book value per share	$	0.49		$	0.49		$	0.52
Preference Stock, par value $0.10 per share; authorized 200 million shares; none issued		—				—
Members’ equity:
Common Stock, par value $0.10 per share; authorized 900 million shares; issued 127,488,624 shares (2004: 127,500,000 shares); outstanding 118,758,470 shares (2004: 118,769,846 shares)		12,749				12,750
Contributed surplus		37,625				37,650
Retained earnings		364,342				624,193
Treasury stock (2005 – 8,730,154 shares, 2004 – 8,730,154 shares), at cost		(158,755	)			(158,755	)
Accumulated other comprehensive income (loss)		153				(448	)
Total members’ equity		256,114				515,390
Total liabilities and members’ equity	$	428,544			$	754,037
Net book value per share	$	2.16			$	4.34

~~See~~Note:- ~~condensed notes to unaudited consolidated financial statements.~~

1)	The above figures at 31^st January and 31^st March, 2006 are unaudited

2)	The Company was placed into Members’ Voluntary Liquidation on 31^st January, 2006

3)	The Company’s tax position has not been finalized

4)	The eventual amount to be returned to shareowners by way of a Final Liquidation Distribution is not yet known

See also condensed notes to unaudited consolidated financial statements.

OVERSEAS PARTNERS LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)

	Three Months EndedJune 30,								Six Months Ended June 30,
	Two Months Ended 31st March2006			One MonthEnded 31st January2006				Three Months Ended 31st March 2005
	2005				2004				2005			2004
REVENUES:
REVENUES:
Interest	$	405		$	159			$	622
Gross reinsurance premiums written	$	79			$	(116	)		$	(140	)	$	3,297
Realized gain on available-for-sale securities		—			42				—
Reinsurance premiums ceded		—				(4,200	)			—			(4,321	)
Amortization of fixed income securities		—			—				(3	)
Reinsurance premiums written		79				(4,316	)			(140	)		(1,024	)
		405			201				619
Change in unearned premiums		5				1,505				10			4,903
EXPENSES:
Reinsurance premiums earned		84				(2,811	)			(130	)		3,879
Investment expenses		—			—				28
Commission and fee income		710				—				1,174			(2	)
Other operating expenses		180			4,515				1,006
Interest		3,615				6,244				7,553			13,785
		180			4,515				1,034
Realized (loss) gain on available-for-sale securities		693				(143	)			(788	)		2,775
Profit/(Loss) from continuing operations before income taxes		225			(4,314	)			(415	)
Net holding (loss) gain on trading securities		—				(3,409	)			—			3,797
Income taxes		—			—				1,348
Amortization of fixed income securities		143				(1,830	)			326			(4,171	)
Net Profit/(Loss) income from continuing operations		225			(4,314	)			933
Dividends		—				27				—			185
Discontinued operations:
		5,245				(1,922	)			8,135			20,248
Net income/(loss) from subsidiary held for sale		—			(11	)			154
EXPENSES:
Net Income/(Loss)	$	225		$	(4,325	)		$	1,087
Reinsurance losses and loss expenses		24,049				(38,296	)			23,315			(43,404	)
EARNINGS PER SHARE
Reinsurance commissions, taxes and other expenses		2,080				1,933				3,921			6,498
Profit/(Loss) income from continuing operations	$	0.00		$	(0.04	)		$	0.01
Investment expenses		352				438				836			1,046
Income from discontinued operations		—			—				—
Other operating expenses		1,762				2,348				3,322			5,588
Basic and diluted net Profit/(Loss) income per share	$	0,00		$	(0.04	)		$	0.01
		28,243				(33,577	)			31,394			(30,272	)
Weighted average number of shares outstanding		118,752			118,752				118,770
(Loss) income from continuing operations before income taxes		(22,998	)			31,655				(23,259	)		50,520
Income taxes		(400	)			107				948			184
Net (loss) income from continuing operations		(23,398	)			31,762				(22,311	)		50,704
Discontinued operations:
Net loss from subsidiary held for sale, net of taxes		—				(24,514	)			—			(24,072	)
Net (loss) income	$	(23,398	)		$	7,248			$	(22,311	)	$	26,632
EARNINGS PER SHARE
(Loss) income from continuing operations	$	(0.20	)		$	0.27			$	(0.19	)	$	0.42
Loss from discontinued operations		—				(0.21	)			—			(0.20	)
Basic and diluted net (loss) income per share	$	(0.20	)		$	0.06			$	(0.19	)	$	0.22
Weighted average number of shares outstanding		118,768				118,770				118,769			118,770

~~See~~Note:- ~~condensed notes to unaudited consolidated financial statements.~~

1)	The above figures at 31^st January and 31^st March, 2006 are unaudited

2)	The Company was placed into Members’ Voluntary Liquidation on 31^st January, 2006

3)	The Company’s tax position has not been finalized

4)	The eventual amount to be returned to shareowners by way of a Final Liquidation Distribution is not yet known

See also condensed notes to unaudited consolidated financial statements.

OVERSEAS PARTNERS LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended June 30,								Six Months EndedJune 30,
	Two MonthsEnded 31st March2006		One MonthEnded 31st January2006				Three MonthsEnded 31st March2005
	2005				2004				2005			2004
Net (loss) income	225		$	(4,314	)		$	1,087
Net (loss) income	$	(23,398	)		$	7,248			$	(22,311	)	$	26,632
Other comprehensive (loss) income:
Other comprehensive income (loss):
Net unrealized holding gains on available-for-sale securities	—			32				865
Net unrealized holding gains (losses) on available-for-sale securities		1,002				(9,027	)			(187	)		(6,359	)
Less: reclassification adjustment for gains included in net income	—			(43	)			—
Less: reclassification adjustment for (gains) losses included in net (loss) income		(693	)			143				788			(2,775	)
Other comprehensive (loss) / income of continuing operations	—			(11	)			865
Other comprehensive income (loss) of continuing operations		309				(8,884	)			601			(9,134	)
Net unrealized holding losses on available-for-sale securities of subsidiary held for sale, net of tax	—			—				(573	)
Net unrealized holding losses on available-for-sale securities of subsidiary held for sale, net of tax		—				(671	)			—			(502	)
Other comprehensive (loss) / income	—			(11	)			292
Other comprehensive income (loss)		309				(9,555	)			601			(9,636	)
Comprehensive (loss) / income	225		$	(4,325	)		$	1,379
Comprehensive (loss) income	$	(23,089	)		$	(2,307	)		$	(21,710	)	$	16,996

~~See~~Note:- ~~condensed notes to unaudited consolidated financial statements.~~

1)	The above figures at 31^st January and 31^st March, 2006 are unaudited

2)	The Company was placed into Members’ Voluntary Liquidation on 31^st January, 2006

3)	The Company’s tax position has not been finalized

4)	The eventual amount to be returned to shareowners by way of a Final Liquidation Distribution is not yet known

See also condensed notes to unaudited consolidated financial statements.

OVERSEAS PARTNERS LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF MEMBERS’ EQUITY

~~Six~~Three Months Ended ~~June 30~~March 31, ~~2005~~2006 and ~~2004~~2005

(In thousands)

(Unaudited)

	Preference Stock		Common Stock					Treasury Stock					~~Deferred~~Contributed ~~Compensation~~Surplus			Retained Earnings	~~Contributed Surplus~~			Accumulated OtherComprehensive(Loss) Income	~~Retained Earnings~~			Total Members’ Equity	~~Accumulated OtherComprehensiveIncome (Loss)~~			~~Total Members’ Equity~~
			Shares		Amount			Shares		Amount
Balance, January 1, 2004	$	—	127,500		$	12,750		(8,730	)	$	(158,755	)	$	(34	)		$	37,650			$	800,695			$	8,657		$	700,963
Balance, January 1, 2005	$	—	127,500		$	12,750		(8,730	)	$	(158,755	)	$	37,650		$	624,193			$	(448	)		$	515,390
Net income		—	—			—		—			—			—			1,087	—			—	~~26,632~~			1,087	—			~~26,632~~
Amortization of restricted common stock compensation		—	—			—		—			—			34				—				—				—			34
Net unrealized gain on available- for-sale securities, net of tax		—	—			—		—			—			—			—				292				292
Net unrealized loss on available- for-sale securities, net of tax		—	—			—		—			—			—				—				—				(9,636	)		(9,636	)
Balance, March 31, 2005		—	127,500		$	12,750		(8,730	)	$	(158,755	)	$	37,650		$	625,280			$	(156	)		$	516,769
Balance, June 30, 2004	$	—	127,500		$	12,750		(8,730	)	$	(158,755	)	$	—			$	37,650			$	827,327			$	(979	)	$	717,993
Balance, January 1, 2006		—	118,758		$	11,876		—			—			—		$	50,136			$	11			$	62,023
Balance, January 1, 2005	$	—	127,500		$	12,750		(8,730	)	$	(158,755	)	$	—			$	37,650			$	624,193			$	(448	)	$	515,390
Net Loss (1 month) to January 31, 2006		—	—			—		—			—			—		$	(4,313	)			—			$	(4,313	)
Net loss		—	—			—		—			—			—				—				(22,311	)			—			(22,311	)
Net unrealized loss on available- for-sale securities, net of tax		—	—			—		—			—			—			—				(11	)			(11	)
Net unrealized gain on available-for-sale securities, net of tax		—	—			—		—			—			—				—				—				601			601
Repurchase and cancellation of shares		—	(8	)		(1	)	—			—			—			(4	)			—				(5	)
Distribution paid ($2.00 per share)		—	—			—		—			—			—				—				(237,540	)			—			(237,540	)
Balance, January 31, 2006		—	118,750		$	11,875		—			—			—		$	45,819				—			$	57,694
Repurchase and cancellation of shares		—	(11	)		(1	)	—			—			—				(25	)			—				—			(26	)
Net Profit (2 months) to March 31, 2006		—	—			—		—			—			—		$	224				—			$	224
Balance, June 30, 2005	$	—	127,489		$	12,749		(8,730	)	$	(158,755	)	$	—			$	37,625			$	364,342			$	153		$	256,114
Balance, March 31, 2006	$	—	118,750		$	11,875		—		$	—		$	—		$	46,043			$	—			$	57,918

See condensed notes to unaudited consolidated financial statements.

OVERSEAS PARTNERS LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S.$ in thousands)

(Unaudited)

	Six Months Ended June 30,
	Two Months Ended March 31 2006			One Month Ended January, 312006			Three MonthsEnded March, 31 2005
	2005			2004
CASH FLOW FROM OPERATING ACTIVITIES:
CASH FLOW FROM OPERATING ACTIVITIES:
Net (loss) income		225		$	(4,313	)	$	1,087
Net (loss) income	$	(22,311	)	$	26,632
Adjustments to reconcile net income to net cash expended by operating activities:
Adjustments to reconcile net income to net cash expended by operating activities:
Income from subsidiary held for sale					—			(154	)
Loss from subsidiary held for sale		—			242
Realized gain on available-for-sale securities					(43	)		—
Loss on sale of subsidiary		—			23,830
Amortization of fixed income securities					—			3
Realized loss (gain) on available-for-sale securities		788			(2,775	)
Changes in assets and liabilities:
Net holding gain on trading securities		—			(3,797	)
Interest receivable					—			3
Amortization of fixed income securities		(326	)		2,509
Other assets		779			20,375			(287	)
Amortization of restricted common stock compensation		—			34
Accounts payable and other liabilities		(292	)		(4,919	)		(543	)
Other		—			(374	)
Net cash flow provided by operating activities		712			11,100			109
Changes in assets and liabilities:
CASH FLOW FROM INVESTING ACTIVITIES:
Reinsurance balances receivable		3,546			8,113
Proceeds from sales and maturities of available-for-sale investments		—			—			2,874
Losses and loss expenses recoverable		10,849			27,912
Net cash flow generated by investing activities		—			—			2,874
Funds withheld		12,278			233,701
CASH FLOW FROM FINANCING ACTIVITIES:
Deferred acquisition costs		2			101
Repurchase of shares		—			(5	)		—
Other assets		6,542			28,413
Liquidating distribution		—			(166,262	)		—
Accrued losses and loss expenses		(47,509	)		(537,059	)
Net cash flow used by financing activities		—			(166,267	)		—
Unearned premiums		(1,184	)		(5,360	)
Net (decrease) increase in cash and cash equivalents		712			(155,167	)		2,983
Reinsurance balances payable		(4,884	)		1,175
Cash and cash equivalents:
Accounts payable and other liabilities		(12,640	)		1,575
Beginning of period	$	57,620			212,787			63,604
Net cash flow expended by operating activities		(54,849	)		(195,128	)
End of period	$	58,332		$	57,620		$	66,587
CASH FLOW FROM INVESTING ACTIVITIES:
Supplemental disclosures of cash flow information:
Proceeds from sales and maturities of available-for-sale investments		233,914			694,230
Cash paid during the period:
Purchase of available-for-sale investments		(191,260	)		(368,011	)
U.S. income taxes	$	—		$	—		$	—
Net movement in restricted cash and cash equivalents		—			33,426
Interest	$	—		$	—		$	—
Net cash flow generated by investing activities		42,654			359,645
CASH FLOW FROM FINANCING ACTIVITIES:
Liquidating distribution		(237,540	)		(296,924	)
Repurchase of shares		(26	)		—
Net cash flow expended by financing activities		(237,566	)		(296,924	)
CASH FLOW FROM DISCONTINUED OPERATIONS
Distribution from subsidiary held for sale		—			6,971
Net decrease in cash and cash equivalents		(249,761	)		(125,436	)
Cash and cash equivalents:
Beginning of period		383,216			264,764
End of period	$	133,455		$	139,328
Supplemental disclosures of cash flow information:
Cash paid during the period:
U.S. income taxes	$	—		$	—
Interest	$	—		$	—

See condensed notes to unaudited consolidated financial statements.

OVERSEAS PARTNERS LTD. AND SUBSIDIARIES

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

~~JUNE~~MARCH 3031, ~~2005~~2006

(Unaudited)

1. GENERAL

~~The accompanying unaudited interim condensed consolidated financial statements include the accounts of~~ Overseas Partners Ltd. ~~and its subsidiaries~~ (~~collectively~~ “OPL” or the “Company”). ~~OPL~~through its subsidiaries was engaged in the property and casualty reinsurance business and in the real estate and leasing business. On February 13, 2002 the Board of Directors of OPL announced its decision to restructure OPL and cause its operations to begin an orderly runoff. ~~OPL~~The ~~and~~Board ~~its~~of ~~reinsurance~~Directors ~~subsidiaries~~had ~~have~~concluded ~~discontinued~~that ~~writing~~the ~~new~~Company’s ~~business.~~then ~~OPL~~existing ~~has~~capital ~~disposed~~structure ofwould ~~all~~not ~~its~~allow ~~real~~it ~~estate~~to ~~assets~~continue ~~such~~to ~~that~~grow and compete effectively in the ~~Company~~reinsurance ismarket nowhile ~~longer~~at the ~~engaged~~same intime satisfying the ~~real~~desire ~~estate~~of ~~and leasing~~many ~~business~~of the 98,000 shareowners to have greater liquidity for their investment in the Company.

~~The~~Since ~~decision~~entering ~~to put the reinsurance operations~~ into ~~runoff~~ ~~has~~runoff, ~~significantly changed~~ the ~~ongoing results of OPL~~Company’s ~~operations~~operational ~~and~~focus ~~the~~has ~~associated~~been ~~cash~~to ~~flows~~(i) preserve ~~and~~its ~~will~~capital ~~continue~~base tothrough dovarious ~~so.~~risk ~~There~~management ~~has~~initiatives ~~been~~and nocost ~~new~~control; ~~business~~(ii) actively ~~written,~~manage ~~therefore~~and ~~the~~negotiate ~~cash~~early ~~received~~settlement ~~from~~of ~~premiums~~its ~~has~~reinsurance ~~significantly~~liabilities ~~decreased~~ and ~~will~~ bereal ~~negligible~~estate indebt; ~~the~~(iii) seek ~~future.~~opportunistic ~~The~~sales ~~commutation and novation~~ of ~~reinsurance~~its ~~programs~~real ~~has~~estate ~~significantly~~assets ~~accelerated~~and ~~loss~~reinsurance ~~payments~~subsidiaries; ~~and~~(iv) prudently ~~will~~return ~~continue~~capital to ~~result~~its inshareowners ~~negative~~over ~~cash~~time; ~~flows~~and in(v) position the ~~future. Nevertheless, OPL management believes that the~~ Company’s ~~current cash holdings and future sales and maturities of investments are adequate sources of liquidity~~ for ~~the~~ultimate ~~future payment of claims and operating expenses~~liquidation.

Prior to the runoff decision, the Company had operated in two business segments: (i) reinsurance and (ii) real estate and leasing. The ~~results~~reinsurance activities were conducted through OPL and a number of ~~operations~~its ~~for~~Bermuda and United States subsidiaries, all of which have now been sold. Most recently, the ~~three~~Company ~~and~~completed ~~six-month~~the ~~periods~~sale ~~ended~~of ~~June~~its 30principal operating subsidiary, Overseas Partners Re Ltd. (“OPRe”), on September 22, 2005. ~~and~~Previously the reinsurance segment also included the operations of Overseas Partners US Reinsurance Company, which was sold on November 15, 2004. ~~are~~OPL ~~not~~has ~~necessarily~~commuted, ~~indicative~~novated or otherwise settled all of its reinsurance obligations at this time. The Company’s real estate and leasing activities were owned and managed through United States subsidiaries of Overseas Partners Capital Corp. (“OPCC”), a wholly-owned subsidiary of OPL. OPCC and its subsidiaries sold the ~~results~~Company’s tolast remaining real estate holdings during the fourth quarter of 2003, and OPCC and all real estate subsidiaries have now been either sold or dissolved. The Company no longer conducts any active bebusiness ~~expected~~operations ~~for~~and the ~~full~~Company’s ~~year~~activities at this time are restricted solely to those that are required to further its own winding up and dissolution.

A Special General Meeting of shareowners of OPL was held on January 31, 2006 to approve the winding up of the Company, including the appointment and remuneration of joint liquidators and the distribution of the surplus assets of the Company. Under Bermuda law, upon the adoption of the resolutions in favor of the winding up and the appointment of a liquidator, the Board of Directors loses all power and authority, and the liquidator assumes responsibility for the winding up, including the identification and settlement of all remaining liabilities, the distribution of remaining capital to shareowners and the ultimate dissolution of the Company. The employment of all OPL’s remaining officers and employees terminated on February 10, 2006. It is too early to accurately determine the date of final dissolution at this time, but the Company believes that the winding-up process will be substantially completed, if not completed, by the end of 2006 if events unfold according to plan. The Company believes that it will have sufficient assets to pay all of its known liabilities and contingencies.

The results of operations for the three-month periods ended March 31, 2006 and 2005 are not necessarily indicative of the results to be expected for the full year.

2. SIGNIFICANT ACCOUNTING POLICIES

The interim financial statements have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and footnotes required by generally accepted accounting principles for complete financial statements are not included herein. The interim financial statements should be read in conjunction with the Overseas Partners Ltd. Annual Report on Form 10-K for the fiscal year ended December 31, ~~2004~~2005.

Interim financial statements are subject to possible adjustments in connection with the annual audit of the Company’s financial statements for the full year; in the Company’s opinion, all adjustments necessary for a fair presentation of these interim statements have been included and are of a normal and recurring nature.

Except as described above, the financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. All activity is recorded in U.S. dollars. ~~Inter-company balances and transactions have been eliminated in consolidation.~~

In7 the past, the Company’s operations have been conducted through two segments-reinsurance and real estate and leasing. The reinsurance segment is managed from the Bermuda office and includes the runoff of accident & health, aviation, property and workers’ compensation business. Previously the reinsurance segment also included the operations of OPUS Re, which was sold on November 15, 2004. Real estate and leasing activities were owned and managed through United States subsidiaries of Overseas Partners Capital Corp. (“OPCC”), a wholly-owned subsidiary of OPL. During the fourth quarter of 2003 the Company sold its final remaining leased asset and the Company is therefore no longer engaged in the real estate and leasing business. As such, the Company now conducts its operations through one segment, reinsurance.

OVERSEAS PARTNERS LTD. AND SUBSIDIARIES

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

~~JUNE~~MARCH 3031, ~~2005~~2006

(Unaudited)

3. ~~SALE~~DISCONTINUED OFOPERATIONS ~~OVERSEAS PARTNERS US REINSURANCE COMPANY~~

During the three months ended ~~June~~ September 30, ~~2004,~~2005 OPL classified the operations of ~~Overseas Partners~~its USwholly ~~Reinsurance~~owned ~~Company~~subsidiary, ~~(“OPUS~~OPRe, ~~Re”)~~ as held for sale in contemplation of ~~its~~the ~~proposed~~ sale to ~~Odyssey~~Catalina Re Holdings ~~Corp~~Ltd. (“~~OdysseyRe~~Catalina”). The sale was completed on ~~November 15~~September 22, ~~2004~~2005. ~~for a~~ The purchase price of $43170.05 million has been paid in cash. Catalina is a Bermuda company which was established by Chris Fagan and Marwyn Capital with the acquisition funding provided by Nikko Principal Investments Limited and RBS Equity Finance and senior debt facilities provided by Barclays Bank.

In accordance with ~~SFAS~~Statement of Financial Accounting Standards No. 144, the net operating results of ~~OPUS~~OPRe Rehave ~~are~~been recorded as discontinued operations in the ~~Consolidated~~statement ~~Statements~~ of ~~Income~~income. ~~For~~The ~~the~~financial ~~three~~statements ~~months~~for ~~ended~~prior ~~June~~periods ~~30,~~presented ~~2004~~have ~~OPUS~~been Rerestated ~~generated a net loss of $24.5 million including operating income of $0.3 million, the estimated loss~~ on ~~sale of $23.8 million and~~ a ~~tax~~ ~~charge~~consistent ~~of $1~~basis.0 ~~million primarily due to a valuation allowance against deferred tax assets. Summary financial information about the Company’s discontinued operations is presented in the following table:~~

(In thousands)	Three months endedJune 30, 2004			Six months endedJune 30, 2004
REVENUES
Premiums earned	$	4,012		$	12,066
Investment income		641			1,463
	$	4,653		$	13,529
NET INCOME
Income from subsidiary held for sale	$	317		$	927
Loss on sale of subsidiary		(23,830	)		(23,830	)
Income taxes relating to subsidiary held for sale		(1,001	)		(1,169	)
Net loss from subsidiary held for sale	$	(24,514	)	$	(24,072	)

4. STATUTORY FINANCIAL INFORMATION

OPL’s ability to repurchase shares, pay dividends, or make other distributions to shareowners is subject to certain regulatory restrictions including the following:

1. In Bermuda, the Bermuda Insurance Act of 1978, amendments thereto and related Regulations (the “Act”) requires each of OPL and its Bermuda based reinsurance subsidiaries to maintain a minimum solvency margin determined as the greater of 15% of accrued losses and loss expenses (net of reinsurance recoverables) or a given fraction of net premiums written. OPL, Overseas Partners Re Ltd. (OPRe) and Overseas Partners Assurance Ltd. (OPAL) were all in compliance with these requirements for the six months ended June 30, 2005 and the year ended December 31, 2004.

2. The Act also requires each of OPL and its Bermuda based reinsurance subsidiaries to maintain a minimum liquidity ratio whereby the value of their relevant assets (consisting mainly of cash, investments, receivables and other liquid assets) is not less than 75% of the amount of their relevant liabilities (consisting mainly of accrued losses and loss expenses, unearned premiums, reinsurance balances payable and other accounts payable). Investments in and advances to subsidiaries are not included in the definition of relevant assets for purposes of this test. OPL, OPRe and OPAL met these requirements for the six months ended June 30, 2005 and the year ended December 31, 2004.

3. As a holding company, a significant proportion of OPL’s assets relate to its investments in subsidiaries. As such, OPL’s ability to make future distributions is heavily dependent upon it receiving distributions from its subsidiaries. The Act prohibits OPL, OPRe and OPAL from distributing more than 15% of the prior year’s statutory capital unless specific approval is obtained from the Bermuda Monetary Authority. In addition to the requirements of the Act, the Bermuda Monetary Authority has requested that all distributions from OPL, OPRe and OPAL be pre-approved by the Bermuda Monetary Authority. In addition to the regulatory restrictions, each subsidiary needs to consider, inter alia, the potential for future adverse development in the settlement of reinsurance liabilities, the risk of investment losses, ongoing operating expenses, and the availability of unrestricted liquid assets prior to making such distributions. Distributions of $237.7 million, $296.9 million and $237.5 million were paid on April 9, 2003, January 5, 2004 and August 31, 2004, respectively. All liquidating distributions were pre-approved by the Bermuda Monetary Authority. On May 2, 2005, following approval from the Bermuda Monetary Authority, the Board of Directors of OPL declared a distribution to shareowners of $2 per share or $237.5 million and this amount was paid to shareowners on May 18, 2005.

OVERSEAS PARTNERS LTD. AND SUBSIDIARIES

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Transacted in U.S. Dollars)

The following is a discussion and analysis of our results of operations, financial condition, liquidity, and capital resources as of and for the three ~~and six~~ months ended ~~June 30~~March 31, ~~2005~~2006 and ~~2004~~2005. ~~Our~~Following ~~results~~the classification of ~~operations~~OPRe ~~and~~as ~~cash~~a ~~flows~~subsidiary ~~for~~held ~~any interim period are not necessarily indicative of our results~~ for ~~the~~sale, ~~full year. Due to~~ the ~~runoff~~results ~~status~~ of ~~the~~OPRe ~~Company,~~have ~~our~~been ~~results~~presented ~~are~~as ~~likely~~discontinued tooperations ~~vary significantly from period to period. This discussion and analysis should be read~~ in ~~conjunction with~~ the ~~accompanying~~ ~~unaudited~~statement ~~condensed consolidated financial statements and notes thereto and the “Management’s Discussion and Analysis~~ of ~~Financial~~income ~~Condition~~in ~~and~~accordance ~~Results~~with ofSFAS ~~Operations”~~No. 144. The ~~and the audited consolidated~~ financial ~~statements~~results ~~of the Company~~ for ~~the~~prior ~~year~~periods ~~ended~~presented ~~December~~have ~~31,~~been ~~2004~~restated ~~and notes thereto included in the Company’s Annual Report~~ on ~~Form~~a ~~10-K~~consistent ~~for the fiscal year ended December 31, 2004~~basis.

~~RECENT~~A ~~RUN~~Special ~~OFF~~General ~~ACTIVITIES~~Meeting of shareowners of OPL was held on January 31, 2006 to approve the winding up of the Company, including the appointment and remuneration of joint liquidators and the distribution of the surplus assets of the Company. Under Bermuda law, upon the adoption of the resolutions in favor of the winding up and the appointment of a liquidator, the Board of Directors loses all power and authority, and the liquidator assumes responsibility for the winding up, including the identification and settlement of all remaining liabilities, the distribution of remaining capital to shareowners and the ultimate dissolution of the Company.

~~The~~Due ~~following~~to ~~results~~the ~~for~~liquidation status of the Company, ~~six~~our ~~month~~results are likely to vary significantly from period ~~ended~~to ~~June~~period. ~~30,~~Our ~~2005~~results ~~reflect~~of ~~the~~operations ~~following~~and ~~significant~~cash ~~transactions~~flows ~~that~~for ~~were~~any ~~effected~~interim inperiod ~~accordance~~are ~~with~~not necessarily indicative of our ~~runoff~~results ~~goals and~~to ~~objectives.~~be Inexpected ~~particular,~~for the ~~Company:~~full year.

•This ~~Commuted~~discussion orand ~~otherwise~~analysis ~~settled~~should abe ~~number~~read ofin ~~reinsurance~~conjunction ~~contracts,~~with ~~reducing~~the ~~total~~accompanying ~~reinsurance~~unaudited ~~liabilities~~condensed byconsolidated ~~approximately~~financial ~~$70~~statements ~~million~~and ~~for~~notes athereto ~~total~~and ~~net~~the “Management’s ~~cost~~Discussion ofand ~~approximately~~Analysis $4of ~~million~~Financial inCondition ~~excess~~and Results of ~~carried~~Operations” ~~reserves.~~and ~~The~~the ~~commutations~~audited ~~included~~consolidated ~~the~~financial ~~settlement~~statements of ~~our~~the ~~two~~Company ~~remaining~~for ~~aviation~~the ~~assumed~~year ~~contracts~~ended December 31, ~~thereby~~2005 ~~eliminating~~and ~~any~~notes ~~further~~thereto ~~aviation~~included ~~liabilities~~in ~~arising from~~ the Company’s ~~events~~Annual ofReport ~~September~~on ~~11.~~Form ~~The~~10-K ~~commutations~~for ~~reduced~~ the ~~potential~~fiscal ~~for~~year ~~future~~ended ~~adverse~~December 31, ~~claims~~2005. ~~experience while also releasing capital for distribution to shareowners;~~

• Commuted a further portion of our aviation excess of loss reinsurance protection, resulting in the collection of approximately $12.1 million of losses and loss expenses recoverable after allowing the reinsurers a discount of $8.7 million. In addition to the positive cash flow, the commutations eliminated the credit risk associated with such receivables; and

• Paid a further liquidating distribution to shareowners on May 18, 2005 in the amount of $237.5 million (equivalent to $2 per share).

RESULTS OF OPERATIONS

Three Months Ended June 30, 2005 and 2004

Summary of results:

	Three months endedJune 30,
(In thousands except for per share amounts)	Two Months Ended 31st March2006			One Month Ended 31st January2006			Three Months Ended 31st March2005
(In thousands except for per share amounts)	2005			2004
NET (LOSS) INCOME
NET (LOSS) INCOME BEFORE TAXES
Investment income	$	405		$	201		$	619
Underwriting (loss) income	$	(25,335	)	$	33,552
Investment expenses		—			—			(28	)
Investment income, net of expenses		4,099			451
Other operating expenses		(180	)		(4,514	)		(1,006	)
Other operating expenses		(1,762	)		(2,348	)
Net loss before taxes from continuing operations		225			(4,313	)		(415	)
Net (loss) income before taxes from continuing operations		(22,998	)		31,655
Income tax benefit		—			—			1,348
Income taxes		(400	)		107
Net (loss) income from continuing operations		225			(4,313	)		933
Net (loss) income from continuing operations		(23,398	)		31,762
Net income from discontinued operations		—			—			154
Net loss from subsidiary held for sale		—			(24,514	)
Net (loss) income		225		$	(4,313	)	$	1,087
Net (loss) income	$	(23,398	)	$	7,248
Basic and diluted net (loss) income per share		—			—		$	0.01
Basic and diluted net (loss) income per share	$	(0.20	)	$	0.06

~~The~~Other ~~underwriting~~operating ~~loss~~expenses ~~was~~for ~~primarily due~~the tothree ~~$15~~months ~~million~~ended ofMarch 31, ~~reserve~~2006 ~~strengthening~~were on$4.7 amillion ~~residual~~compared ~~value~~to ~~reinsurance~~$1.0 ~~program~~million for ~~and~~the athree ~~discount~~months ofended $6March 31, 2005.8 ~~million~~The ~~provided~~increased tooperating ~~reinsurers~~costs ~~for~~reflect the ~~commutation~~expensing ~~and settlement~~ of athe ~~further~~$4.0 ~~portion~~million cost of ~~our~~purchasing ~~aviation~~Directors ~~excess~~and ofOfficers ~~loss~~and ~~reinsurance~~Corporate ~~protection. A~~Reimbursement ~~more~~runoff ~~detailed~~insurance ~~discussion~~coverage. ofOther ~~the~~operating ~~underwriting~~expenses ~~and~~consist of ~~investment~~corporate ~~income~~expenses isincluding ~~set~~payroll, ~~out~~insurance, inshareowner ~~the~~costs ~~sections~~and ~~below~~rent.

~~Other~~9 operating expenses of $1.8 million for the three months ended June 30, 2005 and $2.3 million for the three months ended June 30, 2004 consist of corporate expenses not allocated to operating segments including payroll, insurance, shareowner costs and rent.

~~During~~Liquidity ~~the~~and ~~three~~Capital ~~months~~Resources ~~ended June 30, 2005 we recorded an income tax charge of $0.4 million to reflect a reduction in our estimate of Massachusetts State taxes recoverable.~~

During the three months ended June 30, 2004 OPL classified the operations of OPUS Re as held for sale in contemplation of its proposed sale to OdysseyRe. The sale was completed on November 15, 2004. For the three months ended June 30, 2004 OPUS Re generated a net loss of $24.5 million including operating income of $0.3 million, an estimated loss on sale of $23.8 million and a tax charge of $1.0 million primarily due to a valuation allowance against deferred tax assets.

Basic and diluted net loss per share was $0.20 for the three months ended June 30, 2005. For the same period in 2004 basic and diluted net income per share was $0.06 consisting of $0.27 per share of income from continuing operations offset by a loss of $0.21 per share from the discontinued operations of OPUS Re.

Underwriting

	Three months endedJune 30,
(In thousands)	2005			2004
Gross premiums written	$	79		$	(116	)
Premiums ceded		—			(4,200	)
Net premiums written		79			(4,316	)
Change in unearned premiums		5			1,505
Premiums earned		84			(2,811	)
Commission and fee income		710			—
		794			(2,811	)
Losses and loss expenses		(24,049	)		38,296
Commissions, taxes and other expenses		(2,080	)		(1,933	)
		(26,129	)		36,363
Underwriting (loss) income	$	(25,335	)	$	33,552

As a result of the reinsurance operations of the Company being in runoff, premiums written and earned are minimal and will remain insignificant in future periods. Premiums ceded of $4.2 million for the three months ended June 30, 2004 were primarily due to additional premiums relating to the Company’s aviation excess of loss reinsurance program.

For the three months ended June 30, 2005, the Company generated a net underwriting loss of $25.3 million, which is primarily due to the net effect of:

• Fee income earned of $0.7 million relating to the margin earned on one of our remaining finite risk reinsurance contracts;

• Strengthening of accrued loss reserves by approximately $15 million following the receipt of new forecast information from the reinsured on a residual value reinsurance program that covers lease income shortfalls on a portfolio of aircraft through to 2013;

• The commutation of our remaining aviation exposure for approximately $2 million in excess of our accrued loss reserves;

• A discount of $6.8 million provided to reinsurers to settle disputed balances receivable and commute a further portion of our aviation excess of loss reinsurance protection. The commutation settlement resulted in the collection of $8 million of losses and loss expenses recoverable in July 2005 and the termination of arbitration proceedings initiated by the Company to collect such balances; and

• Runoff costs of $1.9 million, comprising largely legal and consulting fees and internal costs of runoff.

For the three months ended June 30, 2004, the Company generated net underwriting income of $33.6 million, which is primarily due to net savings of approximately $36 million from commutations, partially offset by loss adjustment expenses of $1.9 million, consisting largely of letter of credit fees and internal costs of runoff. The commutations included a workers’ compensation contract, with recorded loss reserves of approximately $198 million, where reinsurance had been provided to a reinsurer that had commenced arbitration to rescind its own reinsurance contract with the primary carrier. The commutation allowed the Company to generate savings compared to booked reserves and eliminated the risk of further losses that may have arisen from an unfavorable arbitration decision in the underlying contract.

Remaining losses recoverable from our aviation excess of loss reinsurance protection as of June 30, 2005 are $35.2 million ($33.4 million of paid losses recoverable and $1.8 million of unpaid losses recoverable), net of a provision for bad debts of $6 million. We collected a further $8 million of such balances in July 2005 pursuant to the commutation discussed above. The remaining balances are subject to various disputes with our reinsurers and we have recently filed for arbitration to recover approximately $15 million of the balances due from one of the reinsurers. The Company may also initiate arbitration proceedings against the remaining reinsurers. These arbitration proceedings are likely to take at least a year to complete and possibly significantly longer. We continue to believe that our asset is fully recoverable but there is no guarantee that an arbitration decision will be in our favor.

Investment Income

	Three months ended June 30, 2005									Three months ended June 30, 2004
(In thousands)	Income			OtherComprehensive(Loss) Income			TotalReturn			Income(Loss)			OtherComprehensiveLoss			TotalReturn
Equities
Available-for-sale	$	—		$	(337	)	$	(337	)	$	7		$	(444	)	$	(437	)
Trading		—			—			—			(2,513	)		—			(2,513	)
Debt securities		4,186			646			4,832			3,217			(8,440	)		(5,223	)
Other		265			—			265			178			—			178
Expenses		(352	)		—			(352	)		(438	)		—			(438	)
	$	4,099		$	309		$	4,408		$	451		$	(8,884	)	$	(8,433	)

The Company’s investments are classified as either trading or available-for-sale. The trading portfolio is recorded at fair value with unrealized gains and losses recorded in net income. The available-for-sale portfolio is recorded at fair value with unrealized gains and losses recorded in members’ equity as other comprehensive income. We manage the Company’s cash and investments in total and do not place much importance on whether the return is recognized in net income or as other comprehensive income. Therefore, this discussion will focus on the total investment return.

Our investment portfolio generated a return of $4.4 million for the three months ended June 30, 2005 compared to a negative return of $8.4 million for the three months ended June 30, 2004. The improved return in 2005 was primarily due to the net effect of:

• Our trading equities generating a negative return of $2.5 million for the three months ended June 30, 2004. Our trading equities were investments in a multi-manager fund that followed a combination of fixed income strategies and were sold during the year ended December 31, 2004; and

• Our debt securities generating a return of $4.8 million for the three months ended June 30, 2005 compared to a negative return of $5.2 million for the three months ended June 30, 2004. The increase was principally due to an improvement in the U.S. fixed income markets.

Six Months Ended June 30, 2005 and 2004

Summary of results:

	Six months ended June 30,
(In thousands except for per share amounts)	2005			2004
NET (LOSS) INCOME BEFORE TAXES
Underwriting (loss) income	$	(26,192	)	$	40,783
Investment income, net of expenses		6,255			15,325
Other operating expenses		(3,322	)		(5,588	)
Net (loss) income before taxes from continuing operations		(23,259	)		50,520
Income taxes		948			184
Net (loss) income from continuing operations		(22,311	)		50,704
Net loss from subsidiary held for sale		—			(24,072	)
Net (loss) income	$	(22,311	)	$	26,632
Basic and diluted net (loss) income per share	$	(0.19	)	$	0.22

The underwriting loss was primarily due to $15 million of reserve strengthening on a residual value reinsurance program and a discount of $6.8 million provided to reinsurers for the commutation and settlement of a further portion of our aviation excess of loss reinsurance protection. A more detailed discussion of the underwriting and investment income is set out in the sections below.

Other operating expenses of $3.3 million for the six months ended June 30, 2005 and $5.6 million for the six months ended June 30, 2004 consist of corporate expenses not allocated to operating segments including payroll, insurance, shareowner costs and rent. The decrease reflects the progress of our run off and, in particular, a further reduction in the number of employees.

During the six months ended June 30, 2005 we recorded an income tax credit of $0.9 million for Massachusetts State taxes that were previously paid but are now expected to be recovered following the favorable resolution of an earlier tax audit.

For the six months ended June 30, 2004 OPUS Re generated a net loss of $24.1 million including operating income of $0.9 million, the loss on sale of $23.8 million and a tax charge of $1.2 million primarily due to a valuation allowance against deferred tax assets. The sale of OPUS Re was completed on November 15, 2004.

Basic and diluted net loss per share was $0.19 for the six months ended June 30, 2005. For the same period in 2004 basic and diluted net income per share was $0.22 consisting of $0.42 per share of income from continuing operations offset by a loss of $0.20 per share from the discontinued operations of OPUS Re.

Underwriting

	Six months ended June 30,
(In thousands)	2005			2004
Gross premiums written	$	(140	)	$	3,297
Premiums ceded		—			(4,321	)
Net premiums written		(140	)		(1,024	)
Change in unearned premiums		10			4,903
Premiums earned		(130	)		3,879
Commission and fee income		1,174			(2	)
		1,044			3,877
Losses and loss expenses		(23,315	)		43,404
Commissions, taxes and underwriting expenses		(3,921	)		(6,498	)
		(27,236	)		36,906
Underwriting (loss) income	$	(26,192	)	$	40,783

As a result of the reinsurance operations of the Company being in runoff, premiums written and earned are minimal and will remain insignificant in future periods. Gross premiums written for the six months ended June 30, 2004 of $3.3 million were due to changes in the estimates of ultimate written premium. Premiums ceded of $4.3 million for the six months ended June 30, 2004 are primarily due to additional premiums relating to the Company’s aviation excess of loss reinsurance program.

For the six months ended June 30, 2005, the Company generated a net underwriting loss of $26.2 million, which is primarily due to the net effect of:

• Fee income earned of $1.2 million relating to the margin earned on one of our remaining finite risk reinsurance contracts;

• The commutation of our remaining aviation exposures for approximately $3.9 million in excess of our accrued loss reserves;

• A discount of $8.7 million provided to reinsurers to settle disputed balances receivable and commute a further portion of our aviation excess of loss reinsurance protection. The commutation settlements resulted in the collection of $12.1 million of losses and loss expenses recoverable, of which $8 million was received in July 2005; and

• Runoff costs of $3.2 million, comprising largely legal and consulting fees and internal costs of runoff.

For the six months ended June 30, 2004 we generated net underwriting income of $40.8 million, which is primarily due to net savings of approximately $46 million generated through commutations, including the commutation of one of the Company’s large workers’ compensation contracts. The commutation savings were partially offset by loss adjustment expenses of $4.6 million, consisting largely of legal fees, letter of credit fees and internal costs of runoff.

Investment Income

	Six months ended June 30, 2005								Six months ended June 30, 2004
(In thousands)	Income			OtherComprehensiveIncome		TotalReturn			Income			OtherComprehensiveLoss			TotalReturn
Equities
Available-for-sale	$	—		$	523	$	523		$	7		$	(993	)	$	(986	)
Trading		—			—		—			5,698			—			5,698
Debt securities		6,780			78		6,858			10,192			(8,141	)		2,051
Other		311			—		311			474			—			474
Expenses		(836	)		—		(836	)		(1,046	)		—			(1,046	)
	$	6,255		$	601	$	6,856		$	15,325		$	(9,134	)	$	6,191

Our investment portfolio generated a total return of $6.9 million for the six months ended June 30, 2005 compared to a total return of $6.2 million for the six months ended June 30, 2004. The comparative performance was primarily due to the net effect of:

• Our investment in a Bermuda based life reinsurer generating a return of $0.5 million for the six months ended June 30, 2005 compared to a negative return of $1.0 million for the six months ended June 30, 2004;

• Our trading equities generating a positive return of $5.7 million for the six months ended June 30, 2004. Our trading equities, which were sold during the year ended December 31, 2004, were investments in a multi-manager fund that followed a combination of fixed income strategies; and

• Our debt securities generating a return of $6.9 million for the six months ended June 30, 2005 compared to $2.1 million for the six months ended June 30, 2004. The increase was principally due to improved performance in the U.S. fixed income markets.

The results for the six months ended June 30, 2005 included the effects of the write down in the first quarter of 2005 in the cost basis of certain investments in our fixed income portfolio, where the decline in value was considered other than temporary, recognizing our intent to sell a portion of our fixed income portfolio to fund the May 18, 2005 distribution to shareowners. In accordance with Statement of Financial Accounting Standards No. 115, “Accounting for Certain Investments in Debt and Equity Securities”, such a write-down is recognized as a realized loss in the income statement, even though there were no sales of the securities. For the six months ended June 30, 2005 the amount of the write-down was $1.5 million. No impairment charge was recognized during the six months ended June 30, 2004.

For the six months ended June 30, 2005 investment expenses decreased to $0.8 million from $1.0 million for the six months ended June 30, 2004. This was primarily due to a reduction in assets invested.

LIQUIDITY AND CAPITAL RESOURCES

Sources of capital and liquidity

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

~~Following~~Since going into runoff, OPL’s ~~decision~~has tosold ~~cease~~all ~~writing~~of ~~new~~its ~~business~~real ~~and~~estate holdings, toextinguished ~~runoff~~all ~~our~~indebtedness ~~reinsurance~~associated ~~operations,~~with the ~~banks~~real ~~that~~estate ~~had~~investments, ~~provided~~dissolved ~~letters~~or ofsold ~~credit~~all toof ~~ceding~~its ~~companies on~~former ~~our~~real ~~behalf~~estate ~~required~~and ~~that~~reinsurance ~~our~~operating ~~letter~~subsidiaries ofand ~~credit~~settled ~~facilities~~all beof ~~fully~~its ~~secured~~own byreinsurance aliabilities. ~~portion~~As ofsuch, ~~the Company~~OPL’s ongoing ~~investment~~liquidity ~~portfolio~~needs ofare atlimited ~~least~~to ~~equivalent~~operating ~~value.~~overhead Asand ~~OPL’s~~costs ~~letter~~associated ofwith ~~credit~~the ~~facilities~~winding-up ~~expired~~and onliquidation ~~December~~process. At March 31, ~~2004~~2006 the Company ~~no longer~~had ~~has~~approximately ~~investments~~$58 ~~collateralizing~~million ~~these~~of ~~facilities~~cash. ~~Where~~The ~~necessary,~~joint ~~the~~liquidators ~~Company~~believe ~~has~~that ~~provided~~the ~~replacement~~current ~~collateral~~cash holdings inare adequate for the ~~form~~payment of ~~deposits~~current ~~with~~creditors ~~the~~and ~~reinsureds~~future operating and liquidation expenses. Any excess capital will be returned to shareowners as liquidating distributions.

At June 30, 2005 the Company had $377 million of cash and highly liquid investments. We believe that our current cash holdings and future sales and maturities of investments are adequate sources of liquidity for the future payment of claims and operating expenses.

Following the Board of Directors February 13, 2002 announcement about its decision to restructure OPL and cause its operations to begin an orderly runoff, the Company is seeking to provide shareowners with both near term and longer-term liquidity. However, due to the regulated nature of the reinsurance business and other business reasons, it could take many years to complete the runoff of OPL’s businesses and fully return share capital to shareowners.

As a holding company, a substantial proportion of OPL’s assets relate to its investments in subsidiaries. As such, OPL’s ability to make future distributions to shareowners is largely dependent upon it receiving distributions from its subsidiaries. Insurance regulation in Bermuda requires that OPL, OPRe and OPAL each maintain minimum capital and liquidity requirements and also prohibits such entities from distributing more than 15% of their prior year’s statutory capital unless specific approval is obtained from the Bermuda Monetary Authority. In addition to existing regulatory requirements, the Bermuda Monetary Authority has requested that it pre-approve all distributions from OPAL, OPRe and OPL. See Note 4 to the Unaudited Consolidated Financial Statements for further information on the restrictions on distributions. On May 2, 2005, following approval from the Bermuda Monetary Authority, the Board of Directors of OPL declared a distribution to shareowners of $2 per share or $237.5 million and this amount was paid to shareowners on May 18, 2005.

Cash and cash equivalents decreased due to the following:

	Six months ended June 30,
(In thousands)	Two Months Ended 31st March2006			One Month Ended 31st January2006				Three Months Ended 31st March2005
(In thousands)	2005				2004
CASH FLOWS
CASH FLOWS
Operating activities	$	712		$	11,100			$	109
Operating activities	$	(54,849	)		$	(195,128	)
Investing activities		—			—				2,874
Investing activities		42,654				359,645
Financing activities		—			(166,267	)			—
Financing activities		(237,566	)			(296,924	)
Net (decrease) increase in cash and cash equivalents	$	712		$	(155,167	)		$	2,983
Distribution from subsidiary held for sale		—				6,971
Net decrease in cash and cash equivalents	$	(249,761	)		$	(125,436	)

Operating activities

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

During the six months ended June 30, 2005 reinsurance balances receivable, funds withheld, accrued losses and loss expenses and reinsurance balances payable decreased by $3.5 million, $12.3 million, $47.5 million and $4.9 million, respectively. These decreases were primarily a result of the commutation and novation of several reinsurance contracts. We anticipate that these balances will continue to decrease as the runoff of OPL’s reinsurance operations progresses.

Reinsurance underwriting operations used $47.8 million of cash for the six months ended June 30, 2005 compared to using $223.3 million of cash for the six months ended June 30, 2004. These cash outflows were primarily due to commutation and novation payments.

During the six months ended June 30, 2005, the Company received $1.1 million of tax refunds relating to our real estate and leasing operations compared to receiving $19.5 million of tax refunds during the six months ended June 30, 2004. The Company no longer has any real estate operations or obligations.

We received $6.8 million of interest during the six months ended June 30, 2005 compared to $14.0 million of interest and dividends for the six months ended June 30, 2004. The reduction reflects the reduced level of assets invested.

During the six months ended June 30, 2005 we used $15.0 million for the payment of other operating expenses compared to using $5.6 million for the six months ended June 30, 2004. The increase was due to the payment of previously accrued retention and incentive awards and severance to employees in connection with their employment for the three years ending between March 31 and June 30, 2005.

Investing activities

Following ~~our~~the decision to go into runoff, ~~our~~the Company’s investment objective has been ~~and will continue~~ to befocus ~~more focused~~ on capital preservation and short- to medium-term liquidity, as opposed to long-term return. Consequently, wethe ~~have~~Company ~~been~~has ~~reducing~~steadily reduced the duration of ~~our~~its investment portfolio and ~~increasing~~increased ~~our~~its short-term investment positions to ensure that weit will have ~~sufficient~~ cash available to ~~meet~~distribute ~~claims~~to ~~obligations~~shareowners ~~as they fall due~~ and to mitigate ~~our~~the exposure to investment losses in the event of interest rate increases. WeFollowing ~~will~~the ~~continue~~sale toof ~~review~~OPRe, ~~our~~the ~~asset~~Company ~~allocation~~invested asa ~~our runoff~~significant ~~progresses.~~portion ~~Despite~~of ~~these~~its ~~actions~~funds ~~there~~in ~~may~~cash ~~still~~equivalents beas ~~periods~~it inprepared ~~which~~for the liquidation of the Company. ~~records~~During anJanuary ~~investment~~2006 ~~loss~~the asCompany asold ~~result~~all of ~~the~~its ~~continued~~remaining ~~volatility~~marketable insecurities ~~bond~~and is ~~markets~~holding the proceeds as cash.

During the six months ended June 30, 2005 we purchased $191.3 million and sold $233.9 million of available-for-sale investments compared to $368.0 million and $694.2 million, respectively for the six months ended June 30, 2004.

Financing activities

As a result of the decision to restructure OPL and cause its operations to begin an orderly runoff, wethe Company amended ~~our~~its dividend policy. It is unlikely that the Company will pay ordinary dividends in the future. WeIt ~~expect~~is expected that all future returns of capital to ~~our~~ shareowners will be in the form of liquidating distributions, giving due consideration to the Company’s required capital levels to support ~~the~~its ~~runoff of our accrued loss and loss expense liabilities, our~~ contingent liabilities, ~~regulatory requirements~~ and the availability of ~~unrestricted~~ liquid assets.

~~Since~~A ~~going into runoff OPL has made four~~ liquidating ~~distributions~~distribution ~~to shareowners totaling $8.50 per share. Distributions~~ of $~~237~~166.73 million, ~~$296.9~~was ~~million, $237.5 million and $237.5 million were~~ paid on ~~April 9, 2003,~~ January 5 4, ~~2004, August 31, 2004 and May 18, 2005, respectively~~2006. All liquidating distributions were pre-approved by the Bermuda Monetary Authority. The timing and amount of any future distributions is dependent on OPL’s ability to obtain specific approval from the Bermuda Monetary Authority.

Credit Risk

Credit risk represents the loss that would occur if a counterparty or issuer failed to perform its contractual obligations. ~~Certain~~Following ~~policies~~the ~~and~~sale ~~procedures~~of ~~have been established to protect~~ the Company’s ~~against~~remaining ~~such losses~~marketable ~~from~~securities ~~its~~in ~~investments~~January or2006 ~~receivables. Controlling duration of~~ the ~~investment~~Company ~~portfolio~~has byminimal ~~limiting tracking error to known benchmarks, placing limits on~~ exposure to ~~any~~credit ~~one~~risk ~~counterparty~~as ~~and~~all ~~mandating~~remaining ~~minimum~~cash ~~credit~~is ~~ratings~~held ~~all~~on ~~serve to manage~~deposit ~~the~~at ~~credit~~a ~~exposure~~major ~~associated~~international ~~with the Company’s financial instruments~~bank.

~~The~~10 Company is also exposed to credit risk on losses recoverable from reinsurers and premiums receivable from cedants. The Company mitigated this risk by diversifying its assumed and ceded business with a number of different counterparties and mandating minimum credit ratings for each reinsurer at the time of placement and contractual features that permit the right of offset. The Company continues to monitor financial stability of its reinsurers and cedants on a regular basis.

Following the terrorist attacks of September 11, 2001 OPL’s management conducted a thorough review of the claims paying ability of the Company’s reinsurers and subsequently made a provision for non-collectable reinsurance receivables of $10 million. This amount was reduced by $4 million in 2004 to reflect the reduced credit risk following the collection of approximately $34 million of losses and loss expenses recoverable due on our aviation excess of loss reinsurance protection.

Inflation

~~Inflation,~~The ~~including damage awards and costs, can substantially increase the ultimate cost of claims in certain types of insurance. This is because the actual payment of~~impact ~~claims may take place a number~~ of ~~years~~inflation ~~after~~on the ~~provisions~~Company’s ~~for~~remaining ~~losses are reflected in the financial statements. We will~~assets, ~~however,~~liabilities ~~earn~~and ~~income~~future onoperations ~~the~~is ~~funds retained for a period of time until eventual payment of a claim. Our investments are~~ not ~~significantly~~ ~~affected~~expected byto ~~inflation~~be assignificant given the ~~liquidity~~Company’s ofplans ~~our portfolio permits us~~ to ~~respond~~liquidate ~~quickly~~in tothe ~~changing~~near ~~market conditions~~future.

~~ITEM~~ Item 3. ~~QUANTITATIVE~~Quantitative ~~AND~~and ~~QUALITATIVE~~Qualitative ~~DISCLOSURES~~Disclosures ~~ABOUT~~About ~~MARKET~~Market ~~RISK~~Risk

~~There~~The ~~has~~Company ~~been~~sold noall ~~material~~of ~~change~~its remaining marketable securities in ~~the~~January ~~Company’s~~2006 ~~market~~and ~~risks~~as insuch ~~2005~~has minimal remaining exposure to market risk. The Company’s exposures to market risks are disclosed in detail in the Overseas Partners Ltd. Annual Report on Form 10-K for the fiscal year ended December 31, ~~2004~~2005.

~~ITEM~~ Item 4. ~~CONTROLS~~Controls ~~AND~~and ~~PROCEDURES~~Procedures

As of ~~June 30~~March 31, ~~2005~~2006, the Company carried out an evaluation, under the supervision and with the participation of the Company’s ~~management,~~ ~~including~~Joint ~~the President & Chief Executive Officer and the Chief Accounting Officer~~Liquidators, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e). Based upon that evaluation, the ~~President~~Joint &Liquidators ~~Chief Executive Officer and the Chief Accounting Officer~~ concluded that the Company’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Company ~~(including its consolidated subsidiaries)~~ required to be included in the Company’s periodic ~~SEC~~Securities and Exchange Commission filings.

InA ~~consequence~~Special General Meeting of shareowners of OPL was held on January 31, 2006 to approve the ~~continued~~winding ~~progress~~up of ~~our~~the ~~runoff~~Company, including the ~~Company~~appointment ~~reduced~~and ~~its~~remuneration ~~number~~of joint liquidators. Under Bermuda law, upon the adoption of ~~employees~~the resolutions toin ~~eleven~~favor asof the winding up and the appointment of ~~April~~a 15liquidator, ~~2005.~~the ~~Since~~Board ~~that~~of ~~time~~Directors and Officers lose all power and authority, weand ~~have~~the ~~further reduced~~joint ~~our~~liquidators ~~staff~~assume toresponsibility ~~seven~~for asthe winding up, including the identification and settlement of ~~June~~all 30remaining liabilities, ~~2005~~the distribution of remaining capital to shareowners and the ultimate dissolution of the Company. ~~These~~The ~~staff~~employment ~~reductions~~of all OPL’s remaining officers and employees terminated on February 10, 2006 which necessitated changes to the Company’s current policies and procedures, including ~~our~~the Company’s internal controls over financial reporting and ~~our~~the Company’s disclosure controls and procedures. We ~~believe~~The ~~that the~~ changes in controls ~~were~~have been appropriately designed to provide reasonable assurance regarding the reliability of financial reporting (and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States) and the effectiveness of ~~our~~the Company’s internal controls. However, there is increased reliance on a ~~smaller~~small number of personnel ~~in both financial~~ and ~~executive positions and~~ it ~~will~~is therefore ~~be more~~ difficult to ensure adequate segregation of duties.

There were no other changes in the Company’s internal control over financial reporting during the Company’s most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Safe Harbor Disclosure

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

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

• The uncertainties of the loss and loss expense reserving process;

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

• Future losses on unexpired policies, including a residual value reinsurance program where the Company is exposed to losses until 2013 and has a maximum exposure of $180 million;

• Our ability to collect reinsurance recoverables, particularly given our disputes with reinsurers;

•

Uncertainties relating to government and regulatory policies;

• ~~Losses~~Adverse ~~due~~outcomes tofrom ~~interest~~any ~~rate~~future ~~fluctuations~~state ~~and~~or ~~volatility~~federal tax audits in ~~the~~relation to our former U.S. ~~financial~~real ~~markets~~estate ~~which could affect our investment portfolio~~operations;

• ~~Losses~~The ~~arising~~resolution ~~from~~of any ~~potential~~current, ~~sale~~pending ofor ~~OPRe~~future litigation or other legal proceedings; and

• ~~Adverse~~The ~~outcomes~~costs ~~from~~of ~~any~~the ~~current,~~liquidation ~~pending or future state or federal tax audits; and~~process.

• The resolution of any current, pending or future litigation or other legal proceedings.

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

OVERSEAS PARTNERS LTD. AND SUBSIDIARIES

PART II. OTHER INFORMATION

~~ITEM 5~~Item 1. Legal Proceedings

The Company is not ~~currently~~directly involved in any legal proceedings. However, ~~although~~there ~~the~~is ~~Company~~one outstanding personal injury claim against one of OPL’s ~~wholly-owned~~former ~~subsidiary,~~real ~~OPRe,~~estate issubsidiaries ~~involved~~for inwhich ~~disputes~~OPL ~~relating~~has toassumed ~~certain reinsurance~~liability. ~~contracts~~This ~~that~~claim ~~have~~is ~~arisen~~fully ininsured ~~the~~above ~~ordinary~~a ~~course~~small ~~of business~~deductible.

~~ITEM 6~~Item 4. ~~Exhibits~~Submission ~~and~~of ~~Reports~~Matters onto ~~Form~~a ~~8-K~~Vote of Security Holders.

A Special General Meeting of Shareowners of the Company was held on January 31, 2006 in Paget, Bermuda. The notice of the Special General Meeting and Proxy Statement were mailed on or about December 29, 2005 to shareowners of record as of December 15, 2005. The shareowners voted upon the following matters with the following results:

The minutes of the annual general meeting of shareowners of the Company held on August 8, 2005 were approved by a vote of 104,798,610 for and 100,263 against with 166,633 shares abstaining.

The proposal that the Company be wound up voluntarily pursuant to the provisions of the Bermuda Companies Act 1981 was approved by a vote of 104,799,441 for and 126,326 against with 139,739 shares abstaining.

The proposal that Peter C.B. Mitchell and Nigel J.S. Chatterjee be appointed joint liquidators, to act both jointly and severally, for the purposes of the winding up was approved by a vote of 104,694,574 for and 207,799 against with 163,133 shares abstaining.

The proposal that the joint liquidators be authorized to distribute the surplus assets in specie as they may determine was approved by a vote of 104,579,450 for and 265,156 against with 220,900 shares abstaining.

The proposal that the joint liquidators be authorized to appoint attorneys-in-fact to act on their behalf in their absence from Bermuda was approved by a vote of 104,572,469 for and 275,051 against with 217,986 shares abstaining.

The proposal that the joint liquidators be remunerated for all work reasonably and properly carried out in the winding up of the Company, together with reasonable out-of-pocket expenses and proper disbursements incurred in the winding up was approved by a vote of 104,594,965 for and 264,747 against with 205,794 shares abstaining.

Item 6. Exhibits

Exhibits:


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

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

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

SIGNATURES

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

Date: August 8, 2005	OVERSEAS PARTNERS LTD.
Date: May 1, 2006	OVERSEAS PARTNERS LTD.
	By:	/s/ Mark R. Bridges
	IN LIQUIDATION
		Mark R. Bridges
	By:	/s/ Peter C.B. Mitchell
		President and Chief Executive Officer
		Peter C.B Mitchell
	By:	/s/ Chris Fleming
		Joint Liquidator
		Chris Fleming
	By:	/s/ Nigel J.S. Chatterjee
		Chief Accounting Officer
		Nigel J.S. Chatterjee
		Joint Liquidator

Filing Compare · OVERSEAS PARTNERS LTD