Allied Life: 1st Quarter 1997 News Release ALLIED LIFE FINANCIAL CORPORATION REPORTS FIRST-QUARTER PRODUCTION GAINS Contact Jeff Roling 800-532-1436 ext.4454 Des Moines, Iowa, April 23, 1997--ALLIED Life Financial Corporation (NASDAQ symbol ALFC) today announced significant sales increases for the first quarter. Face amount of universal life insurance sold directly by agents was up 60% and annuity premiums from the Company's two distribution systems rose 48% from totals reported a year ago. "The positive trends we developed in the third and fourth quarters of 1996 strengthened in the first three months of the new year," said Chairman John Evans. "Given the industry's lackluster universal life and fixed annuity sales, our increases were particularly encouraging." Management is revitalizing the Company's traditional distribution system. Life insurance sales through the traditional distribution system were up 36% from the first quarter of 1996, driven by universal life production that rose 166% to $85.3 million face amount from $32 million; traditional-side annuity premiums were up 60% to $8.3 million from $5.2 million. Insurance production through the ALLIED property-casualty system held steady overall, offsetting a 3% decline in term sales with a 9% increase in universal life sales. Annuity premiums were up 34% from the previous first quarter. The Company previously introduced four 1997 goals: increase invested assets at cost by 15% to $820 million, raise agent-produced life insurance in force 12% to $9.6 billion, raise the total annuity account balance 15% to $535 million, and grow life insurance revenues 12% to $35 million. For the first quarter of 1997 compared with the first quarter of 1996, invested assets rose 11%, life insurance in force was up 12%, the total annuity account balance increased 13%, and insurance revenues grew 11%. "Growth is our priority in 1997, and we intend to build on the significant gains achieved in the first quarter," said President Sam Wells. "Marketing Vice President Joe Ross will continue implementing strategies to raise production levels on the traditional side. We are recruiting a new marketing vice president responsible for ALLIED Life sales through the property-casualty distribution system. We will notify stockholders when an appointment is made." Earnings did not keep pace with the Company's positive trends. For the quarter just ended, death claims totaled $2.3 million ($0.25 per share) and held operating earnings per share to $0.40; net income per share was $0.38. For the previous first quarter, death claims were only $1.5 million ($0.17 per share) and operating earnings per share were $0.51; net income per share was $0.50 For the first three months of 1997, the net investment spread was 186 basis points, 6 basis points above the 1996 average. "We are in the life insurance business, and we serve our policyowners by paying claims when they come due," Wells explained. "Our relatively small size requires that we consistently remind our stockholders to expect quarter-to-quarter earnings fluctuations due to the uneven occurrence of such claims. We are confident our products are actuarially sound on a long-term basis, and we adhere to high underwriting standards." 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 the United States. ALLIED Life Financial Corporation Summarized Consolidated Financial Highlights Three Months Ended March Percent 1997 1996 Change Summarized income statement data Insurance revenues $8,174,581 $7,370,355 11% Investment income $12,683,127 $11,749,917 8% Realized investment losses ($392,755) ($84,184) -367% Other income 323,141 287,986 12% Revenues 20,788,094 19,324,074 8% Benefits and expenses 17,597,347 15,279,694 15% Income before income taxes 3,190,747 4,044,380 -21% Income taxes 1,063,945 1,347,080 -21% Net income $2,126,802 $2,697,300 -21% Net income applicable to common stock $1,707,305 $2,306,015 -26% Earnings per share Net operating earnings $0.40 $0.51 -22% Realized investment losses net of related DPAC amortization and taxes (0.02) (0.01) -100% Net income $0.38 $0.50 -24% Weighted average common shares outstanding 4,501,597 4,633,202 -3% Dividends paid per common share $0.06 $0.05 20% Interest rate analysis Net investment yield- investment portfolio 7.28% 7.50% -3% Total interest-credited rate 5.42% 5.56% -3% Net interest margin 1.86% 1.94% -4% ALLIED Life Financial Corporation Summarized Consolidated Balance Sheets March 31, December 31, Percent 1997 1996 Change Assets Investments Fixed maturities Held to maturity at amortized cost $198,622,393 $199,208,835 0% Available for sale at fair value 498,675,105 500,289,070 0% Other investments 24,878,218 22,841,066 9% Total investments 722,175,716 722,338,971 0% Deferred acquisition costs- operating 98,352,960 96,410,860 2% Deferred acquisition costs- SFAS 115 1,641,256 (3,993,272) 141% Other assets 23,659,513 20,843,164 14% Total assets $845,829,445 $835,599,723 1% Liabilities Policy liabilities Policyholder account balances Annuity contracts $474,727,449 $467,504,991 2% Universal life contracts 186,738,606 182,726,695 2% Other policy liabilities 48,754,731 47,631,332 2% Total policy liabilities 710,220,786 697,863,018 2% Deferred income taxes 7,396,256 8,008,946 -8% Note payable 25,000,000 20,470,000 22% Other liabilities 5,790,383 9,316,138 -38% Total liabilities 748,407,425 735,658,102 2% Stockholders' equity Preferred stock 25,233,388 24,586,232 3% Common stock 4,514,081 4,497,238 0% Additional paid-in capital 46,816,438 46,596,171 0% Retained earnings 23,188,182 21,751,088 7% Unrealized (depreciation) appreciation on investments (2,330,069) 2,510,892 -193% Total stockholders' equity 97,422,020 99,941,621 -3% Total liabilities and stockholders' equity $845,829,445 $835,599,723 1% Shares outstanding 6.75% Series preferred stock 2,179,865 2,143,691 2% ESOP Series convertible 108,014 93,982 15% preferred stock Common stock 4,514,081 4,497,238 0% Total shares outstanding 6,801,960 6,7343,691 2% ESOP Series convertible 108,014 93,982 15% preferred stock Common stock 4,514,081 4,497,238 0% Total shares outstanding 6,801,960 6,734,911 1% Book value per common share $15.96 $16.70 -4% Book value per common share excluding net unrealized investment gains and losses $16.46 $16.16 2% ALLIED Life Financial Corporation Summary of Life Insurance Operations Three Months Ended March Percent 1997 1996 Change Life insurance profitability Investment income $12,672,154 $11,739,312 8% Interest credited on Annuities 6,420,843 5,800,453 11% Universal life 2,456,203 2,375,262 3% Other 126,131 84,197 50% Total interest expense 9,003,177 8,259,912 9% Investment spread 3,668,977 3,479,400 5% Fee income Universal life 5,837,602 5,684,646 3% Annuity surrender charges 164,930 111,114 48% Total fee income 6,002,532 5,795,760 4% Other insurance income Life premiums,net 1,540,272 1,112,135 38% SPIA with life 137,249 102,641 34% Ceded reinsurance commission 494,529 359,819 37% Other insurance income 2,172,050 1,574,595 38% Adjusted insurance revenues 11,843,559 10,849,755 9% Other expenses Amortization of DPAC 2,435,701 1,762,037 38% Renewal commissions 688,247 567,899 21% Other operating expenses 1,591,160 1,505,051 6% LTC administration expense 120,742 92,250 31% Total acquisition and operating expenses 4,835,850 3,927,237 23% Death benefits, net 2,326,092 1,503,420 55% Other policyholder benefits,ne 1,397,161 1,357,260 3% Total other expenses 8,559,103 6,787,917 26% Income before taxes and realized losses from insurance operations 3,284,456 4,061,838 -19% Realized investment losses (392,755) (84,184) -367% DPAC amortization on realized losses 279,770 29,443 850% Income before tax from other operations 19,276 37,283 -48% Income before income taxes 3,190,747 4,044,380 -21% Income taxes 1,063,945 1,347,080 -21% Net income $2,126,802 $2,697,300 -21% DPAC amortization ratio 42.6% 30.3% ALLIED Life Financial Corporation New Production Information (000s) Three Months Ended March Percent 1997 1996 Change Life insurance face amount in force Directly produced by agents Universal life $4,419,829 $4,228,392 5% Term life 4,287,625 3,555,948 21% Whole life 49,198 49,688 -1% Subtotal 8,756,652 7,834,028 12% Other 383,770 382,440 0% Total $9,140,422 $8,216,468 11% 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 $157,639 $98,326 60% Term life 272,187 293,833 -7% Whole life 1,756 977 80% Subtotal 431,582 393,136 10% Life insurance-other 1,774 4,347 -59% Total $433,356 $397,483 9% Annuities $14,024 $9,268 51% Policyholder assessments collected on universal life First-year $695 $770 -10% Renewal 4,692 4,382 7% Total $5,388 $5,152 5% Statutory information Premiums and annuity considerations, net Universal life insurance $8,381 $7,648 10% Term life insurance 2,071 1,857 12% Annuities 14,856 10,423 43% Other 269 142 89% Total $25,578 $20,070 27% ALLIED Life Financial Corporation New Production by Distribution System (000s) Three Months Ended March Percent 1997 1996 Change Life insurance face amount in force Directly produced by agents Property--casualty agencies Universal life $2,769,876 $2,647,025 5% Term life 3,275,134 2,616,680 25% Whole life 34,509 33,691 2% Subtotal 6,079,520 5,297,396 15% Traditional agencies Universal life 1,649,953 1,581,367 4% Term life 1,012,491 939,268 8% Whole life 14,689 15,997 -8% Subtotal 2,677,132 2,536,632 6% Total produced by agents 8,756,652 7,834,028 12% Other 383,770 382,440 0% Total $9,140,422 $8,216,468 11% Life insurance face amount sold Directly produced by agents Property--casualty agencies Universal life $72,367 $66,283 9% Term life 212,125 219,352 -3% Whole life 1,303 650 -100% Subtotal 285,795 286,286 0% Traditional agencies Universal life $85,272 $32,043 166% Term life 60,062 74,481 -19% Whole life 453 327 39% Subtotal 145,787 106,850 36% Total produced by agents 431,582 393,136 10% Other 1,774 4,347 -59% Total $433,356 $397,483 9% Life insurance policies sold Property--casualty agencies Universal life 480 502 -4% Term life 1,107 1,075 3% Total 1,587 1,577 1% Traditional agencies Universal life 379 209 81% Term life 248 301 -18% Total 627 510 23% Annuity premiums Deferred annuities Property--casualty agencie $6,072 $4,527 34% Traditional agencies 8,310 5,198 60% Subtotal 14,381 9,726 48% Immediate annuities 475 698 -32% Total $14,856 $10,423 43% End