Allied Life: Earnings News Release ALLIED LIFE FINANCIAL CORPORATION REPORTS SECOND QUARTER RESULTS Contact Jeff Roling 800-532-1436 ext.4454 Des Moines, Iowa, July 23, 1998 ---ALLIED Life Financial Corporation (NASDAQ symbol ALFC) today released earnings for the quarter ended June 30, 1998. Operating earnings were $0.13 per share compared with $0.49 for the second quarter of 1997. Operating earnings were less than expectations primarily because of a charge of $0.20 per share for expenses associated with a merger agreement with Nationwide Mutual Insurance Company ("Nationwide") and because of higher than expected death claims. Net income per share for the quarter came to $0.15 compared to $0.50 for the second quarter of 1997. Year to date net income per share was $0.36 versus $0.87 in 1997. Net death claims for the quarter were $0.36 per share compared to $0.21 per share for the second quarter of 1997. Net investment spread for the quarter decreased to 170 basis points compared with 192 basis points for the same period in 1997. Earlier this month, the Company announced that it had incurred second quarter 1998 expenses associated with the Agreement and Plan of Merger to be acquired by Nationwide at a price of $30 per share cash. The transaction is subject to regulatory approvals and if necessary, approval by the ALFC shareholders. The transaction is structured as a tender offer for all of the outstanding shares of common stock of ALFC, to be followed by a second-stage merger of a subsidiary of Nationwide with and into ALFC. Management believes the events leading up to the proposed Plan of Merger during the second quarter caused questions in the minds of the field producers which resulted in new production at less than expected levels. A series of meetings with agents are being held to address their questions, and management expects, after the close of the contemplated transaction, future new business to return to more historic levels. The Company's expectations discussed in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 ("Reform Act"). These forward-looking statements are made pursuant to the safe harbor provisions of the Reform Act. Investors are cautioned that there are important factors that could cause actual results to differ materially from those in these forward-looking statements. Investors are referred to Management's Discussion and Analysis of Financial Condition and Results of Operations in the Company's 1997 Annual Report on Form 10-K filed with the Securities and Exchange Commission for a discussion of additional factors that could cause actual results to differ from these forward-looking statements. 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 United States. ALLIED Life Financial Corporation Summarized Consolidated Financial Highlights Three Months Ended June 30, Percent 1998 1997 Change Summarized income statement data Insurance revenues $9,702,473 $8,587,387 13% Investment income 13,886,785 12,851,595 8% Realized investment gains 348,781 140,436 148% Other income 380,420 338,873 12% Revenues 24,318,459 21,918,291 11% Benefits and expenses 22,168,850 17,901,425 24% Income before income taxes 2,149,609 4,016,866 -46% Income taxes 1,023,353 1,337,922 -24% Net income $1,126,256 $2,678,944 -58% Net income applicable to common stock $699,506 $2,279,824 -69% Diluted earnings per share Adjusted operating earnings excluding litigation reserve and merger related expenses $0.33 $0.49 -33% Litigation Reserve 0.00 0.00 N/A Merger related expenses (0.20) 0.00 N/A Realized investment gains net of related DPAC amortization and taxes 0.02 0.01 100% Net income $0.15 $0.50 -70% Weighted average shares 4,570,879 4,581,590 0% Dividends paid per common share $0.07 $0.06 17% Interest rate analysis Net investment yield- investment portfolio 7.14% 7.26% -2% Total interest-credited rate 5.44% 5.34% 2% Net interest margin 1.70% 1.92% -12% 2 ALLIED Life Financial Corporation Summarized Consolidated Financial Highlights Six Months Ended June 30, Percent 1998 1997 Change Summarized income statement data Insurance revenues $19,534,954 $16,761,968 17% Investment income 27,629,715 25,534,722 8% Realized investment gains(losses) 513,813 (252,319) 304% Other income 797,311 662,014 20% Revenues 48,475,793 42,706,385 14% Benefits and expenses 44,293,193 35,498,772 25% Income before income taxes 4,182,600 7,207,613 -42% Income taxes 1,714,743 2,401,867 -29% Net income $2,467,857 $4,805,746 -49% Net income applicable to common stock $1,621,438 $4,014,129 -60% Diluted earnings per share Adjusted operating earnings excluding litigation reserve and merger related expenses $0.82 $0.88 -7% Litigation Reserve (0.29) 0.00 N/A Merger related expenses (0.20) 0.00 N/A Realized investment gains(losses) net of related DPAC amortization and taxes 0.03 (0.01) 400% Net income $0.36 $0.87 -59% Weighted average shares 4,558,184 4,612,680 -1% Dividends paid per common share $0.14 $0.12 17% Interest rate analysis Net investment yield- investment portfolio 7.20% 7.26% -1% Total interest-credited rate 5.46% 5.38% 1% Net interest margin 1.74% 1.88% -8% 3 ALLIED Life Financial Corporation Summarized Consolidated Balance Sheets June 30, December 31, Percent 1998 1997 Change Assets Investments Fixed maturities Available for sale at fair value 814,003,892 766,028,463 6% Other investments 21,516,054 21,956,749 -2% Total investments 835,519,946 787,985,212 6% Deferred acquisition costs- operating 105,809,722 102,626,995 3% Deferred acquisition costs- 'SFAS 115 (20,405,714) (18,439,211) 11% Other assets 35,345,980 32,283,874 9% Total assets $956,269,934 $904,456,870 6% Liabilities Policy liabilities Policyholder account balances Annuity contracts $537,959,705 $514,908,099 4% Universal life contracts 202,690,260 196,708,702 3% Other policy liabilities 58,037,345 51,736,086 12% Total policy liabilities 798,687,310 763,352,887 5% Deferred income taxes 12,523,406 10,552,777 19% Note payable 17,570,000 6,360,000 176% Other liabilities 9,505,189 10,033,989 -5% Total liabilities 838,285,905 790,299,653 6% Stockholders' equity Preferred stock 27,237,669 26,335,907 3% Common stock 4,437,620 4,397,692 1% Additional paid-in capital 45,573,034 44,963,963 1% Retained earnings 30,353,337 29,403,775 3% Unrealized appreciation on investments 10,382,369 9,055,880 15% Total stockholders' equity 117,984,029 114,157,217 3% Total liabilities and stockholders' equity $956,269,934 $904,456,870 6% Shares outstanding 6.75% Series preferred stock 2,370,103 2,292,093 3% ESOP Series convertible 98,934 100,732 -2% preferred stock Common stock 4,437,620 4,397,692 1% Total shares outstanding 6,906,657 6,790,517 2% Book value per common share $20.34 $19.85 2% Book value per common share excluding net unrealized investment gains res outstanding 6,906,657 6,790,517 2% Book value per common share $20.34 $19.85 2% Book value per common share excluding net unrealized investment gains $18.05 $17.84 1% 4 ALLIED Life Financial Corporation Summary of Life Insurance Operations Three Months Ended June 30, Percent 1998 1997 Change Life insurance profitability Investment income $13,876,307 $12,839,790 8% Interest credited on Annuities 7,342,156 6,437,051 14% Universal life 2,662,112 2,487,882 7% Other 108,485 89,299 21% Total interest expense 10,112,753 9,014,232 12% Investment spread 3,763,554 3,825,558 -2% Fee income Universal life 6,613,123 5,831,325 13% Annuity surrender charges 236,958 204,107 16% Total fee income 6,850,081 6,035,432 13% Other insurance income Life premiums,net 1,826,637 1,759,929 4% SPIA with life 0 228,026 -100% Ceded reinsurance commission 1,025,755 564,001 82% Other insurance income 2,852,392 2,551,956 12% Adjusted insurance revenues 13,466,027 12,412,946 8% Other expenses Amortization of DPAC 2,689,119 2,485,891 8% Renewal commissions 1,172,504 804,882 -46% Other operating expenses 1,346,865 1,197,590 12% Premium and other taxes 402,237 533,125 -25% LTC administration expense 196,785 126,547 56% Total acquisition and operating expenses 5,807,510 5,148,035 13% Death benefits, net 3,341,619 1,967,587 70% Other policyholder benefits,net 1,385,651 1,353,809 2% Total other expenses 10,534,780 8,469,431 24% Income before taxes and realized gains from insurance operations 2,931,247 3,943,515 -26% Litigation reserve 0 0 N/A Merger related expenses (954,500) 0 N/A Realized investement gains 348,781 140,436 148% DPAC amortization on realized gains (192,433) (71,101) 171% Income before tax from other operations 16,514 4,016 311% Income before income taxes 2,149,609 4,016,866 -46% Income taxes 1,023,353 1,337,922 -24% Net income $1,126,256 $2,678,944 -58% DPAC amortization ratio 47.8% 38.7% 5 ALLIED Life Financial Corporation Summary of Life Insurance Operations Six Months Ended June 30, Percent 1998 1997 Change Life insurance profitability Investment income $27,599,897 $25,511,944 8% Interest credited on Annuities 14,623,790 12,857,894 14% Universal life 5,280,743 4,944,085 7% Other 181,424 215,430 -16% Total interest expense 20,085,957 18,017,409 11% Investment spread 7,513,940 7,494,535 0% Fee income Universal life 13,111,136 11,668,927 12% Annuity surrender charges 396,247 369,037 7% Total fee income 13,507,383 12,037,964 12% Other insurance income Life premiums,net 3,439,143 3,300,200 4% SPIA with life 708,859 365,275 94% Ceded reinsurance commission 1,879,569 1,058,530 78% Other insurance income 6,027,571 4,724,005 28% Adjusted insurance revenues 27,048,894 24,256,504 12% Other expenses Amortization of DPAC 5,074,590 4,921,592 3% Renewal commissions 2,207,316 1,493,129 48% Other operating expenses 2,711,132 2,332,036 16% Premium and other taxes 939,704 989,840 -5% LTC administration expense 379,115 247,289 53% Total acquisition and operating expenses 11,311,857 9,983,885 13% Death benefits, net 5,324,354 4,293,679 24% Other policyholder benefits,net 3,530,199 2,750,970 28% Total other expenses 20,166,410 17,028,534 18% Income before taxes and realized gains (losses) from insurance operations 6,882,484 7,227,970 -5% Litigation reserve (2,000,000) 0 N/A Merger related expenses (954,500) 0 N/A Realized investement gains(losses) 513,813 (252,319) 304% DPAC amortization on realized gains(losses) (278,250) 208,669 -233% Income before tax from other operations 19,053 23,293 -18% Income before income taxes 4,182,600 7,207,613 -42% Income taxes 1,714,743 2,401,867 -29% Net income $2,467,857 $4,805,746 -49% DPAC amortization ratio 42.4% 40.5% 6 ALLIED Life Financial Corporation New Production Information (000s) Three Months Ended June 30, Percent 1998 1997 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 $80,981 $141,707 -43% Term life 267,916 358,491 -25% Whole life 1,282 2,723 -53% Subtotal 350,179 502,921 -30% Life insurance-other 2,241 1,475 52% Total $352,420 $504,396 -30% Annuities $12,945 $18,933 -32% Policyholder assessments collected on universal life First-year $553 $669 -17% Renewal 5,056 4,716 7% Total $5,609 $5,385 4% Statutory information Premiums and annuity considerations, net Universal life insurance $7,318 $7,578 -3% Term life insurance 2,599 2,456 6% Annuities 13,735 20,064 -32% Other 407 381 7% Total $24,059 $30,479 -21% 7 ALLIED Life Financial Corporation New Production Information (000s) Six Months Ended June 30, Percent 1998 1997 Change Life insurance face amount in force Directly produced by agents Universal life $4,459,617 $4,485,388 -1% Term life 4,789,323 4,468,907 7% Whole life 50,935 50,630 1% Total produced by agents 9,299,875 9,004,925 3% Other 411,605 378,839 9% Total $9,711,480 $9,383,764 3% 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 $170,516 $299,346 -43% Term life 566,670 630,678 -10% Whole life 3,582 4,479 -20% Subtotal 740,768 934,503 -21% Life insurance-other 4,048 3,249 25% Total $744,816 $937,752 -21% Annuities $32,638 $32,957 -1% Policyholder assessments collected on universal life First-year $1,220 $1,364 -11% Renewal 10,035 9,408 7% Total $11,255 $10,772 4% Statutory information Premiums and annuity considerations, net Universal life insurance $16,286 $15,959 2% Term life insurance 4,711 4,527 4% Annuities 34,343 34,921 -2% Other 655 649 1% Total $55,995 $56,057 0% 8 ALLIED Life Financial Corporation New Production by Distribution System (000s) Three Months Ended June 30, Percent 1998 1997 Change Life insurance face amount sold Directly produced by agents Property--casualty agencies Universal life $38,692 $70,495 -45% Term life 219,131 246,009 -11% Whole life 585 1,856 -68% Subtotal 258,408 318,360 -19% Traditional agencies Universal life 42,289 71,212 -41% Term life 48,785 112,482 -57% Whole life 697 867 20% Subtotal 91,771 184,561 -50% Total produced by agents 350,179 502,921 -30% Other 2,241 1,475 52% Total $352,420 $504,396 -30% Life insurance policies sold Property--casualty agencies Universal life 289 496 -42% Term life 1,367 1,316 4% Total 1,657 1,812 -9% Traditional agencies Universal life 368 425 -13% Term life 285 390 -27% Total 653 815 -20% Annuity premiums Deferred annuities Property--casualty agencie $6,529 $7,793 -16% Traditional agencies 7,060 11,917 -41% Subtotal 13,589 19,709 -31% Immediate annuities 145 355 -59% Total $13,735 $20,064 -32% 9 ALLIED Life Financial Corporation New Production by Distribution System (000s) Six Months Ended June 30, Percent 1998 1997 Change Life insurance face amount in force Directly produced by agents Property--casualty agencies Universal life $2,800,871 $2,802,229 0% Term life 3,731,219 3,398,722 10% Whole life 34,715 35,416 -2% Subtotal 6,566,805 6,236,368 5% Traditional agencies Universal life 1,658,746 1,683,159 -1% Term life 1,058,104 1,070,185 -1% Whole life 16,220 15,214 7% Subtotal 2,733,070 2,768,557 -1% Total produced by agents 9,299,875 9,004,925 3% Other 411,605 378,839 9% Total $9,711,480 $9,383,764 3% Life insurance face amount sold Directly produced by agents Property--casualty agencies Universal life $83,364 $142,862 -42% Term life 458,992 458,134 0% Whole life 1,436 3,159 -55% Subtotal 543,792 604,155 -10% Traditional agencies Universal life 87,152 156,484 -44% Term life 107,678 172,544 -38% Whole life 2,146 1,320 62% Subtotal 196,976 330,348 -40% Total produced by agents 740,768 934,503 -21% Other 4,048 3,249 25% Total $744,816 $937,752 -21% Life insurance policies sold Property--casualty agencies Universal life 638 976 -35% Term life 2,851 2,423 18% Total 3,489 3,399 3% Traditional agencies Universal life 729 804 -9% Term life 628 638 -2% Total 1,357 1,442 -6% Annuity premiums Deferred annuities Property--casualty agencie $14,391 $13,864 4% Traditional agencies 18,726 20,226 -7% Subtotal 33,117 34,091 -3% Immediate annuities 1,226 830 48% Total $34,343 $34,921 -2% 10 Ends.