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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10 - Q

Quarterly Report Under Section 13 or 15 (d)

of the Securities Exchange Act of 1934

Overseas Partners Ltd.

(Exact name of registrant as specified in its charter)

Cumberland House, One Victoria Street, Hamilton HM 11, Bermuda

(Address of principal executive offices) (Zip Code)

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

N/A

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 an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    YES  x    NO  ¨

Common Stock, par value $.10 per share

(Title of Class)

118,769,846 Shares

Outstanding at May 5, 2005

PART I. FINANCIAL INFORMATION

OVERSEAS PARTNERS LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

See condensed notes to unaudited consolidated financial statements.

OVERSEAS PARTNERS LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)

See 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)

See condensed notes to unaudited consolidated financial statements.

OVERSEAS PARTNERS LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF MEMBERS’ EQUITY

Three Months Ended March 31, 2005 and 2004

(In thousands)

(Unaudited)

See condensed notes to unaudited consolidated financial statements.

OVERSEAS PARTNERS LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S.$ in thousands)

(Unaudited)

See condensed notes to unaudited consolidated financial statements.

OVERSEAS PARTNERS LTD. AND SUBSIDIARIES

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2005

(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 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 and its reinsurance subsidiaries have discontinued writing new business. OPL has disposed of all its real estate assets such that the Company is no longer engaged in the real estate and leasing business.

The decision to put the reinsurance operations into runoff has significantly changed the ongoing results of OPL’s operations and the associated cash flows and will continue to do so. There has been no new business written, therefore the cash received from premiums has significantly decreased and will be negligible in the future. The commutation and novation of reinsurance programs has significantly accelerated loss payments and will continue to result in negative cash flows in 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 future payment of claims and operating expenses.

The results of operations for the three-month periods ended March 31, 2005 and 2004 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.

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.

In 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.

In March 2004, the Emerging Issues Task Force (“EITF”) reached consensus on the guidance provided in EITF Issue No. 03-1, “The Meaning of Other-Than-Temporary Impairment and its Application to Certain Investments” (“EITF 03-1”) as applicable to debt and equity securities that are within the scope of Statement of Financial Accounting Standards No. 115, “Accounting for Certain Investments in Debt and Equity Securities”. This new guidance for determining whether impairment is other-than-temporary was originally effective for the period beginning July 1, 2004. However, on September 30, 2004, the FASB issued FASB Staff Position EITF 03-1-1 delaying the effective date for the accounting and measurement provisions of EITF 03-1 until further clarification can be provided. Adoption of this standard is not anticipated to have a significant impact on the Company’s financial position, results of operations or financial reporting.

OVERSEAS PARTNERS LTD. AND SUBSIDIARIES

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2005

(Unaudited)

3. SALE OF OVERSEAS PARTNERS US REINSURANCE COMPANY

In July 2004 OPL and Odyssey Re Holdings Corp. (“OdysseyRe”) entered into a definitive stock purchase agreement, pursuant to which OdysseyRe would purchase 100% of the outstanding shares of Overseas Partners US Reinsurance Company (“OPUS Re”). The closing of the transaction occurred on November 15, 2004. The purchase price was $43.0 million and the loss on sale was $25.9 million. The loss on sale was recorded during the nine months ended September 30, 2004.

In accordance with SFAS 144, the net operating results of OPUS Re have been recorded as discontinued operations. The financial statements for the three months ended March 31, 2004 have been restated on a consistent basis.

Summary financial information about the Company’s discontinued operations is presented in the following tables:

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:

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 months ended March 31, 2005 and 2004. Our results of operations and cash flows for any interim period are not necessarily indicative of our results for the full year. Due to the sale of OPUS Re, and in accordance with SFAS 144, the results have been restated for the prior period presented to record the results of OPUS Re as discontinued operations. Due to the runoff status of the Company, our results are likely to vary significantly from period to period. This discussion and analysis should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and notes thereto and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the audited consolidated financial statements of the Company for the year ended December 31, 2004 and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004.

RESULTS OF OPERATIONS

Summary of results:

The reinsurance operations generated $1.3 million of net income for the three months ended March 31, 2005 due to investment income of $2.2 million and a net underwriting loss of $0.9 million. A more detailed discussion of such results is set out in the underwriting and investment income sections below.

Other operating expenses for the three months ended March 31, 2005 were $1.6 million compared to $3.8 million for the three months ended March 31, 2004. The reduced operating costs reflect a reduction in the estimate of the total cost of retention and incentive awards. Other operating expenses consist of corporate expenses including payroll, insurance, shareowner costs and rent.

During the three months ended March 31, 2005 we recorded an income tax credit of $1.3 million for Massachusetts state taxes that we have previously paid and now expect to recover as a result of the favorable resolution of matters that were raised in a previous state tax audit.

For the three months ended March 31, 2004 we recorded net income from subsidiary held for sale of $0.4 million, which reflected OPUS Re’s operating income of $0.6 million and an associated tax charge of $0.2 million.

Basic and diluted net income per share was $0.01 for the three months ended March 31, 2005. For the same period in 2004 basic and diluted net income per share was $0.16.

Underwriting

The reinsurance results for the three months ended March 31, 2005 reflect the following significant transactions that were effected in accordance with our runoff goals and objectives. In particular, the Company:

As a result of the reinsurance operations of the Company being in runoff, premiums written, ceded and earned are minimal and are expected to continue to be so in the future.

For the three months ended March 31, 2005, the Company generated a net underwriting loss of $0.9 million, primarily due to the net effect of:

For the three months ended March 31, 2004, we generated net underwriting income of $7.7 million. This result which was primarily due to net savings of approximately $10 million generated by the commutation of two large reinsurance contracts, offset by loss adjustment expenses of $2.3 million, consisting largely of letter of credit fees and internal costs of runoff.

As of March 31, 2005 we have recorded total losses recoverable from our aviation excess of loss reinsurance protection of $47.9 million ($42.1 million of paid losses recoverable and $5.8 million of unpaid losses recoverable) with a provision for bad debts of $6 million to give a net recoverable of $41.9 million. We are currently in dispute with some of our reinsurers and have recently filed for arbitration to recover the balances due to us. 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

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 reinsurance portfolio generated a total return of $2.4 million for the three months ended March 31, 2005 compared to a total return of $14.8 million for the three months ended March 31, 2004. The comparative performance was primarily due to the net effect of:

The results for the three months ended March 31, 2005 included the effects of the write down 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 next 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 three months ended March 31, 2005 the amount of the write-down was $1.5 million. No impairment charge was recognized during the three months ended March 31, 2004.

For the three months ended March 31, 2005 investment expenses decreased to $0.5 million from $0.6 million for the three months ended March 31, 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 OPL’s decision to cease writing new business and to runoff our reinsurance operations, the banks that had provided letters of credit to ceding companies on our behalf required that our letter of credit facilities be fully secured by a portion of the Company’s investment portfolio of at least equivalent value. As OPL’s letter of credit facilities expired on December 31, 2004 the Company no longer has investments collateralizing these facilities. Where necessary, the Company has provided replacement collateral in the form of deposits with the reinsureds.

At March 31, 2005 the Company had $623 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 will be paid to shareowners on May 18, 2005.

Cash and cash equivalents decreased due to the following:

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 three months ended March 31, 2005 reinsurance balances receivable, funds withheld, accrued losses and loss expenses and reinsurance balances payable decreased by $1.6 million, $1.8 million, $47.8 million and $4.8 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 $41.3 million of cash for the three months ended March 31, 2005 compared to using $24.6 million of cash for the three months ended March 31, 2004. These cash outflows were primarily due to commutation payments.

During the three months ended March 31, 2005, the Company received $0.7 million of tax refunds relating to our real estate and leasing operations compared to receiving $5.1 million of tax refunds during the three months ended March 31, 2004. The Company no longer has any real estate operations or obligations.

We received $2.5 million of interest during the three months ended March 31, 2005 compared to $5.9 million of interest and dividends for the three months ended March 31, 2004.

During the three months ended March 31, 2005 we used $6.9 million for the payment of other operating expenses compared to using $3.7 million for the three months ended March 31, 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 March 31, 2005.

Investing activities

Following our decision to go into runoff, our investment objective has been and will continue to be more focused on capital preservation and short- to medium-term liquidity, as opposed to long-term return. Consequently, we have been reducing the duration of our investment portfolio and increasing our short-term investment positions to ensure that we will have sufficient cash available to meet claims obligations as they fall due and to mitigate our exposure to investment losses in the event of interest rate increases. We will continue to review our asset allocation as our runoff progresses. Despite these actions there may still be periods in which the Company records an investment loss as a result of the continued volatility in bond markets.

During the three months ended March 31, 2005 we purchased $119.9 million and sold $73.1 million of available-for-sale investments compared to $249.4 million and $414.7 million, respectively for the three months ended March 31, 2004.

Financing activities

As a result of the decision to restructure OPL and cause its operations to begin an orderly runoff, we amended our dividend policy. It is unlikely that the Company will pay ordinary dividends in the future. We expect 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 runoff of our accrued loss and loss expense liabilities, our contingent liabilities, regulatory requirements and availability of unrestricted liquid assets.

Since going into runoff OPL has made three liquidating distributions to shareowners totaling $6.50 per share. 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. The timing and amount of any future distributions is dependent on OPL’s ability to obtain specific approval from 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 will be paid to shareowners on May 18, 2005.

Credit Risk

Credit risk represents the loss that would occur if a counterparty or issuer failed to perform its contractual obligations. Certain policies and procedures have been established to protect the Company against such losses from its investments or receivables. Controlling duration of the investment portfolio by limiting tracking error to known benchmarks, placing limits on exposure to any one counterparty and mandating minimum credit ratings all serve to manage the credit exposure associated with the Company’s financial instruments.

The 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, 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 claims may take place a number of years after the provisions for losses are reflected in the financial statements. We will, however, earn income on the funds retained for a period of time until eventual payment of a claim. Our investments are not significantly affected by inflation as the liquidity of our portfolio permits us to respond quickly to changing market conditions.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There has been no material change in the Company’s market risks in 2005. 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.

Item 4. Controls and Procedures

As of March 31, 2005, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the President & Chief Executive Officer and the Chief Accounting Officer, 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 & 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 filings. No change in the Company’s internal control over financial reporting occurred during the Company’s most recent fiscal quarter that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

In consequence of the continued progress of our runoff, the Company reduced its number of employees to eleven as of April 15, 2005. We expect to further reduce our staff to six by June 30, 2005. These staff reductions will necessitate changes to the Company’s current policies and procedures, including our internal controls over financial reporting and our disclosure controls and procedures. We expect that the changes in controls will be 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 internal controls. However, there will be increased reliance on a smaller number of personnel in both financial and executive positions and it will therefore be more difficult to ensure adequate segregation of duties.

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 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,” “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.

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:

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 1. Legal Proceedings

The Company is not currently involved in any legal proceedings, although the Company’s wholly-owned subsidiary, OPRe, is involved in disputes relating to certain reinsurance contracts that have arisen in the ordinary course of business.

Item 6. Exhibits

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.