Allied Life: Earnings News Release ALLIED LIFE FINANCIAL CORPORATION REPORTS SPECIAL AFTER TAX CHARGE AND ESTIMATES EARNINGS Contact Jeff Roling 800-532-1436 ext.4454 Des Moines, Iowa, January 23, 1997 -- ALLIED Life Financial Corporation (NASDAQ symbol ALFC) today announced that fourth-quarter and full-year 1996 results will include a special after tax charge of $1.9 million ($0.42 per share). The Company also released estimated earnings. Operating earnings per share, excluding the charge, are expected to be in the $0.44 to $0.46 range for the fourth quarter and in the $1.77 to $1.79 range for the year. Net income per share, which is reduced by the charge, is expected to be in the $0.07 to $0.09 range for the fourth quarter and in the $1.39 to $1.41 range for the year. Net income includes realized investment gains per share of $0.05 for the fourth quarter of 1996 and $0.04 for the full year. The company also reported net death claims of $1.8 million ($0.27 per share) for the fourth quarter of 1996 and $6.9 million ($1.02 per share) for the full year. The Company took the special charge in response to its annual deferred policy acquisition cost (DPAC) study that suggested refinements in assumptions of future annuity policy persistency and interest spread were necessary. Annuity DPAC reflects the deferred costs (primarily commissions) associated with sales. These expenses are amortized in proportion to the actual profits and estimated future profits of a given block of annuity policies. The assumptions related to estimated future profits are subject to change on the basis of actual experience. These assumptions are sensitive to the rate of policyholder fund withdrawals, the net interest margin, and other factors affecting profitability. While the Company will continue to reevaluate the DPAC assumptions, they do not anticipate making additional material adjustments to its annuity DPAC amortization schedule in the foreseeable future. Further adjustments would be necessary only if actual experience should differ significantly from the assumptions used in the DPAC study models. ALLIED Life Financial Corporation will report actual 1996 earnings on or about February 10, 1997. ALLIED Life Financial Corporation is a holding company that, through its principal subsidiary, ALLIED Life Insurance Company, underwrites, markets, and distributes life insurance and annuity products in rural and suburban areas of the midwestern and western United States. ALLIED Life Financial Corporation New Production Information (000s) Three Months Ended December 31, Percent 1996 1995 Change New production information Face amount of new life insurance sold and first-year annuity premiums collected during the period Life insurance sold directly by agents Universal life $136,877 $144,773 -5% Term life 303,189 377,674 -20% Whole life 847 1,087 -22% Subtotal 440,913 523,534 -16% Life insurance-other 1,047 2,225 -53% Total $441,960 $525,759 -16% Annuities $20,861 $11,407 83% Policyholder assessments collected on universal life First-year $758 $834 -9% Renewal 4,528 4,166 9% $5,286 $5,000 6% Statutory information Premiums and annuity considerations, net Universal life insurance $7,577 $7,105 7% Term life insurance 2,122 1,967 8% Annuities 21,788 12,142 79% Other 207 (117) -277% $31,694 $21,097 50% ALLIED Life Financial Corporation New Production Information (000s) Twelve Months Ended December 31, Percent 1996 1995 Change Life insurance face amount in force Directly produced by agents Universal life $4,340,601 $4,215,564 3% Term life 4,198,504 3,415,536 23% Whole life 49,079 50,180 -2% Subtotal 8,588,184 7,681,280 12% Other 371,130 433,236 -14% $8,959,314 $8,114,516 10% New production information Face amount of new life insurance sold and first-year annuity premiums collected during the period Life insurance sold directly by agents Universal life $410,635 $609,700 -33% Term life 1,475,977 1,223,544 21% Whole life 4,239 4,511 -6% Subtotal 1,890,851 1,837,755 3% Life insurance-other 9,431 21,549 -56% Total $1,900,282 $1,859,304 2% Annuities $68,063 $75,944 -10% Policyholder assessments collected on universal life First-year $2,886 $3,904 -26% Renewal 17,805 15,993 11% $20,691 $19,897 4% Statutory information Premiums and annuity considerations, net Universal life insurance $29,370 $27,055 9% Term life insurance 8,411 6,903 22% Annuities 72,231 78,639 -8% Other 663 598 11% $110,675 $113,195 -2% ALLIED Life Financial Corporation New Production by Distribution System (000s) Three Months Ended December 31, Percent 1996 1995 Change Life insurance face amount sold Directly produced by agents Property--casualty agencies Universal life $93,620 $107,746 -13% Term life 250,353 291,146 -14% Whole life 946 949 -0% Subtotal 344,919 399,841 -14% Traditional agencies Universal life $43,257 $37,027 17% Term life 52,836 86,528 -39% Whole life (99) 138 -172% Subtotal 95,994 123,693 -22% Total produced by agents 440,913 523,534 -16% Other 1,047 2,225 -53% Total $441,960 $525,759 -16% Life insurance policies sold Property--casualty agencies Universal life 655 728 -10% Term life 1,170 1,265 -8% Total 1,825 1,993 -8% Traditional agencies Universal life 175 199 -12% Term life 233 315 -26% Total 408 514 -21% Annuity premiums Deferred annuities Property--casualty agencies $7,628 $4,846 57% Traditional agencies 14,028 5,968 135% Subtotal 21,656 10,814 100% Immediate annuities 132 1,328 -90% Total $21,788 $12,142 79% ALLIED Life Financial Corporation New Production by Distribution System (000s) Twelve Months Ended December 31, Percent 1996 1995 Change Life insurance face amount in force Directly produced by agents Property--casualty agencies Universal life $2,809,270 $2,627,447 7% Term life 3,200,793 2,506,890 28% Whole life 34,521 34,402 0% Subtotal 6,044,584 5,168,739 17% Traditional agencies Universal life 1,531,331 1,588,116 -4% Term life 997,711 908,647 10% Whole life 14,558 15,778 -8% Subtotal 2,543,600 2,512,541 1% Total produced by agents 8,588,184 7,681,280 12% Other 371,130 433,236 -14% Total $8,959,314 $8,114,516 10% Life insurance face amount sold Directly produced by agents Property--casualty agencies Universal life $282,388 $384,763 -27% Term life 1,127,060 889,624 27% Whole life 3,115 2,775 12% Subtotal 1,412,563 1,277,162 11% Traditional agencies Universal life 128,247 224,937 -43% Term life 348,917 333,920 4% Whole life 1,124 1,736 -35% Subtotal 478,288 560,593 -15% Total produced by agents 1,890,851 1,837,755 3% Other 9,431 21,549 -56% Total $1,900,282 $1,859,304 2% Life insurance policies sold Property--casualty agencies Universal life 2,162 2,820 -23% Term life 6,464 4,203 54% Total 8,626 7,023 23% Traditional agencies Universal life 769 1,264 -39% Term life 1,683 1,260 34% Total 2,452 2,524 -3% Annuity premiums Deferred annuities Property--casualty agencies $30,816 $30,321 2% Traditional agencies 40,188 45,956 -13% Subtotal 71,004 76,277 -7% Immediate annuities 1,227 2,362 -48% Total $72,231 $78,639 -8% Ends.