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                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                               -------------------

                                    FORM 10-K

                               -------------------


                  ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                               -------------------

For the fiscal year ended December 31, 1996     Commission File Number 001-12746

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                        SECURITY-CONNECTICUT CORPORATION
             (Exact Name of Registrant as Specified in its Charter)

       Delaware                                         06-1383088
State of Incorporation)                  (I.R.S. Employer Identification Number)

                   20 Security Drive, Avon, Connecticut 06001
                   ------------------------------------------
                    (Address of Principal Executive Offices)

                  Registrant's telephone number (860) 677-8621

           Securities registered pursuant to Section 12(b) of the Act:

                                                        Name of Each Exchange on
            Title of Each Class                             Which Registered
       ----------------------------                     ------------------------
       Common Stock, $.01 Par Value                      New York Stock Exchange

           Securities registered pursuant to Section 12(g) of the Act:

                                      NONE

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 (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.
     Yes [ X ]No [    ]

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.[ X ]

As of February 28, 1997, 8,572,115 shares of Common Stock were outstanding.  The
aggregate  market  value of such shares  (based upon the closing  price of these
shares on the New York Stock Exchange) held by non-affiliates  was approximately
$395,000,000.

Select   materials   from  the  Proxy   Statement  for  the  Annual  Meeting  of
Shareholders,  scheduled for May 15, 1997,  have been  incorporated by reference
into Part III of this Form 10-K.

The exhibit index to this report is located on page 70.

                                  Page 1 of 138

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                                      -1-
<PAGE>







                                TABLE OF CONTENTS




Item                                                                        Page

                                     PART I

  1   Business.............................................................   3
  2   Properties...........................................................  19
  3   Legal Proceedings....................................................  19
  4   Submission of Matters to a Vote of Security Holders..................  19


                                     PART II

  5   Market for Registrant's Common Equity and Related Shareholder
        Matters............................................................  21
  6   Selected Financial Data..............................................  22
  7   Management's Discussion and Analysis of Financial Condition
        and Results of Operations..........................................  24
  8   Financial Statements and Supplementary Data..........................  30
  9   Changes in and Disagreements with Accountants on Accounting and
        Financial Disclosure...............................................  59


                                    PART III

 10   Directors and Executive Officers of the Registrant...................  60
 11   Executive Compensation...............................................  60
 12   Security Ownership of Certain Beneficial Owners and Management.......  60
 13   Certain Relationships and Related Transactions.......................  60


                                     PART IV

 14   Exhibits, Financial Statement Schedules, and Reports on Form 8-K.....  60


                                      -2-
<PAGE>


                                     PART I

Item 1 - Business


General

     Security-Connecticut Corporation  ("Security-Connecticut" or the "Company")
was formed in 1993 by its parent  corporation,  Lincoln  National Life Insurance
Company    ("LNL")   to   serve   as   an   insurance    holding   company   for
Security-Connecticut  Life Insurance Company ("SCL") and its subsidiary  Lincoln
Security Life Insurance  Company ("LSL").  On February 2, 1994, LNL sold 100% of
the outstanding shares of  Security-Connecticut  Corporation  through an Initial
Public  Offering  ("IPO").  Prior to the IPO, LNL effected a  reorganization  in
which it contributed $10 million in capital and all of its outstanding shares of
SCL to the Company in exchange  for  8,500,000  shares of the  Company's  Common
Stock and a term loan note in the principal amount of $65 million ("Term Note").
On April 26, 1995,  Arrowhead  Ltd.  ("AHL"),  a wholly owned  subsidiary of the
Company,  was incorporated as an insurance company in Bermuda.  Although AHL was
funded  during 1995,  it remained  inactive  until  January 1, 1996. On March 1,
1996,  the Company sold $75 million of medium term debt  securities and used $65
million of the net proceeds to repay the Term Note to LNL.

     On  February  23,  1997,   ReliaStar  Financial  Corp.   ("ReliaStar")  and
Security-Connecticut  signed a definitive agreement to combine the two companies
through the statutory  merger of  Security-Connecticut  with and into ReliaStar.
The Board of  Directors of  Security-Connecticut  has  unanimously  approved the
merger.  Completion  of the  merger is  subject  to normal  closing  conditions,
including  approval  by  the  Company's   shareholders  and  various  regulatory
approvals.  Provided  there  has been no  material  breach by  ReliaStar  of the
representations,  warranties,  covenants and  agreements of ReliaStar  under the
merger agreement, Security-Connecticut has agreed to pay ReliaStar $8 million if
the merger agreement is terminated either as a result of (a) the modification or
withdrawal,  in any way detrimental to ReliaStar,  of the  recommendation of the
Security-Connecticut  Board with respect to the merger,  or (b) the execution by
Security-Connecticut of a definitive agreement with a party other than ReliaStar
with respect to a publicly announced offer or intent to make an offer to acquire
all or substantially all Security-Connecticut or its subsidiaries.

     Separately and not  additionally,  if the merger agreement is terminated by
ReliaStar  on the  basis  that  the  Security-Connecticut  shareholders  did not
approve the merger, then Security-Connecticut would be required to pay ReliaStar
$2.5 million to reimburse  ReliaStar's  expenses incurred in connection with the
merger  agreement.  In addition to the  foregoing  $2.5 million  payment,  if an
acquisition  proposal is outstanding on the date of such termination,  or at any
time within 90 days  thereafter,  and an  acquisition  proposal  is  consummated
within twelve months of the termination of the merger agreement, the Company has
agreed to pay ReliaStar an additional $5.5 million.  The foregoing discussion is
qualified  in its  entirety by  reference  to the merger  agreement  filed as an
exhibit to this report.  See "Management's  Discussion and Analysis of Financial
Condition and Results of  Operations-Liquidity  and Capital  Resources-Liquidity
for the Holding Company."

     The Company,  through SCL and LSL, offers a diverse portfolio of individual
life insurance and annuity products to customers  throughout the 50 states,  the
District of Columbia and Guam.  Both SCL and LSL have  specialized  in providing
individual  life  insurance  products  since their  formation  in 1955 and 1984,
respectively.  In the late 1980s, both began selling annuity products;  however,
significant sales did not occur until 1990. In January 1996, AHL began operating
as a small  reinsurance  company with  assumed  premiums of  approximately  $9.5
million in 1996.

Products

     Security-Connecticut  has  designed a diverse  line of  products  which are
tailored  to its  customer  market  for  distribution  through  its  independent
agencies. Included in the portfolio are universal life, interest-sensitive whole
life, term life, single premium deferred and immediate  annuities,  as well as a
small amount of group life and accident and health insurance.


                                      -3-
<PAGE>


     Life premiums in the following table are expressed as first year annualized
premiums,  a common  industry  definition  of sales  achievement.  Such premiums
consist of the initial  premium  payment  for each  policy,  plus the  remaining
payments  expected  in the first  policy  year.  Amounts in excess of the target
premium  on any  universal  life  policy are  credited  at 10%.  Actual  premium
payments  may be higher or lower  than  first  year  annualized  life  premiums.
Annuity premiums are statutory premiums which reflect actual amounts paid.
                            Sales Activity by Product

                                                       Year Ended December 31,
                                                      1996      1995      1994
                                                     -------   -------   -------
                                                         (Dollars in millions)
Annualized Life Insurance Premiums
Universal life                                       $  25.9   $  27.3   $  24.9
Term insurance                                          23.2      18.7      20.5
Other life insurance                                     0.5       0.9       1.3
                                                     -------   -------   -------

     Total life insurance premiums                   $  49.6   $  46.9   $  46.7
                                                     =======   =======   =======

Annuity Premiums
Single premium deferred annuities                    $  48.1   $  83.6   $ 163.0
Single premium immediate annuities                       4.7      14.1      17.8
Other annuities                                                              0.2
                                                     -------   -------   -------

     Total annuity premiums                          $  52.8   $  97.7   $ 181.0
                                                     =======   =======   =======



     The  following  table  sets forth  information  regarding  life  insurance,
annuity business and accident and health  insurance  in-force at the end of each
period presented.

                        Insurance and Annuities In-Force

                                                     Year Ended December 31,
                                                    1996       1995       1994
                                                  --------   --------   --------
                                                       (Dollars in millions)
Individual Life Insurance (1)
Total number of direct policies                    281,193    263,886    249,154
Total in-force annualized direct premiums (2)     $    281   $    267   $    247
Total face amounts (3)                              33,356     32,204     29,210
Total GAAP life reserves (4)                           989        927        858

Annuities
Total number of policies                            16,163     16,501     15,352
Total statutory premiums                          $     53   $     98   $    181
Total GAAP annuity reserves                            676        685        610

Group Life Insurance
Total number of lives                               11,303     18,463     30,702
Total statutory premiums (3)                      $      1   $      2   $      2
Total face amount (3)                                  210        277        347

Accident and Health Insurance
Total number of lives                                2,947     23,519     25,720
Total statutory premiums (3)                      $      3   $      2   $      5


                                      -4-
<PAGE>


(1)  Includes universal life policies.
(2)  In-force  annualized  direct  premiums  assumes that (a) all in-force fixed
     premium  policyholders  pay  the  full  scheduled  annual  premium  at  the
     beginning of the policy year and (b) all flexible premium policyholders pay
     the full planned premium at the beginning of the policy year.
(3)  Net of reinsurance.
(4)  Amounts reported are net of reinsurance. Policy liabilities at December 31,
     1996,  1995 and 1994 are  reported  in the  financial  statements  gross of
     reinsurance. Amounts recoverable from reinsurers at December 31, 1996, 1995
     and 1994 were $39.6 million, $35.0 million and $41.8 million, respectively,
     and are shown as assets with respect to life reserves.

Life Products

     Security-Connecticut's  life  insurance  business  consists  of  a  diverse
portfolio of term and  universal  life  insurance  policies.  Two series of term
plans are offered by SCL with varying level rate periods and guarantees  ranging
from 5 to 20 years.  LSL offers  two  series  with  varying  level rate  periods
ranging  from 5 to 15 years  with  either 5 or 10 year rate  guarantee  periods.
Multiple term plans and varying  guarantee periods are offered by both companies
to meet the diverse needs of the marketplace.

     The Company's  universal life  insurance  policies  provide  permanent life
insurance  with  adjustable  rates of return  based on current  interest  rates.
Universal  life policies  provide  flexibility  in both the timing and amount of
premium  payments  with a  corresponding  fluctuation  in the  amount  of policy
benefits, although some of the Company's universal life products require minimum
premiums and thus provide minimum policy benefits.  Scheduled  surrender charges
exist  generally  for 12 or 19 years  (varying by  universal  life plan) and are
deducted from the account value upon early policy  termination.  These surrender
penalties serve to discourage premature lapses.

     The  Company's   universal   life   products   include   first-to-die   and
second-to-die products. The distinguishing features of these products from other
universal  life products are that two lives are insured rather than one, and the
policy  proceeds are paid upon the first or second death,  respectively,  of the
two insureds.  First-to-die  policies are used in business succession  planning,
especially for  partnerships,  and in dual income family markets.  Second-to-die
policies are used in individual estate planning,  often to fund estate taxes for
a married couple.  SCL's  second-to-die  and one of its individual plans contain
attractive  death benefit  guarantees  which have been very well received in the
marketplace.

     The  Company's   interest-crediting   rates  on  its  universal   life  and
interest-sensitive  life products  ranged from 6.25% to 7.55% in 1994,  6.00% to
7.25% in 1995 and 5.75% to 7.25% in 1996.

Annuity Products

     Security-Connecticut  sells two types of single premium  annuities:  single
premium  deferred  annuities  ("SPDA") and single  premium  immediate  annuities
("SPIA").  A SPDA  contract  calls for the payment by the  annuitant of a single
premium at time of issue,  the crediting of interest to the annuitant's  account
at a variable  interest rate during the  accumulation  period,  and the ultimate
payout  of  accumulated  funds at a date and  under an  option  selected  by the
annuitant.  The current  interest  crediting  rate in effect at time of issue is
guaranteed  for a fixed  number of years (1 or 3 years for 1996  issues)  at the
annuitant's option and thereafter is subject to change based on market and other
economic conditions at the Company's discretion. The current crediting rates are
set at a level  designed  to  provide an  interest  spread  consistent  with the
Company's profit goals.


                                      -5-
<PAGE>


     Each contract also has a minimum guaranteed  crediting rate (e.g., 3.0% for
LSL and 4.0%  for SCL on 1996  issues).  The  accrual  of  interest  during  the
accumulation  period is on a tax-deferred  basis to the annuitant.  Up to 10% of
the account  value may be withdrawn in a contract  year without  assessment of a
surrender charge. For contracts sold in 1996, there are several surrender charge
schedules in effect, starting at 7% or 9% and generally declining by 1% per year
depending on the product.

     A SPIA  contract  provides a series of income  payments  of a fixed  amount
beginning  immediately in return for a single premium received by the Company at
time of issue.  Many  payment  options are  available,  but once the contract is
issued, the annuitant cannot be changed, and no change can be made in any of the
payment provisions elected in the application.

     The Company's  interest-crediting rates on its annuity products ranged from
4.50% to 8.00% in 1994, 4.40% to 8.00% in 1995 and 4.05% to 7.80% in 1996.

Group Term Life and Accident and Health Insurance

     Security-Connecticut  sells a small  amount of group term life and accident
and health  insurance.  The group life  insurance is written  either as one-year
term for smaller  employers,  or as a one-year  companion product with stop loss
coverage.  The accident and health insurance  business  consists of specific and
aggregate stop loss coverage for self insured employers with small groups.

Product Development

     The Company's product development process includes extensive input from its
distribution system. Internally, the product development process is interactive,
involving  employees from many  disciplines.  Employees  from sales,  marketing,
product development,  actuarial,  underwriting, data processing,  accounting and
administration are all brought into the process early to ensure that pricing and
underwriting  are aligned,  and that  administrative  support is  efficient  and
developed on a cost-effective basis.

Marketing and Distribution

     The Company markets life insurance  products  through  independent  general
agents to two principal groups. The first includes professionals, high net worth
and  upper  middle  class  individuals  and  small,   closely  held  businesses.
Management  believes this target market is attractive  because of its high level
of disposable income, desire for tax efficient investment vehicles, knowledge of
and access to financially  sophisticated investment and life insurance products,
and willingness to purchase such products.  The second principal market includes
middle-income  individuals in need of low-cost term and permanent  death benefit
protection.  The Company  believes it must  continue to tailor its  products and
respond quickly to the changing needs of its target markets.

     Security-Connecticut  is one of a number  of  insurance  holding  companies
providing  life  insurance  and  annuity   products   through  a  non-exclusive,
independent  general agency system.  Within the independent agency  distribution
system, the Company accesses three principal distribution  channels:  wholesale,
retail  and  special   markets  which  account  for  74.3%,   13.3%  and  12.4%,
respectively,  of the  Company's  1996 first year  annualized  life premiums and
84.8%, 7.4% and 7.8%, respectively, of 1996 annuity premiums.

     Wholesale  agencies  -  These  general  agencies  are  independently  owned
brokerage  agencies which operate as  wholesalers of the Company's  products and
obtain business in turn from independent brokers/producers.

     Retail agencies - These  independently  owned agencies  [frequently  called
Personal  Producing General Agencies (PPGAs) or Direct Associates] sell products
directly to the consumer and write business directly with the Company.


                                      -6-
<PAGE>


     Special markets - Distributors of Security-Connecticut products not falling
into the wholesale or retail agency  categories  are termed  "special  marketing
organizations."  These  distributors are national or regional  organizations and
may be either wholesale or retail in character.

     The Company believes that its consistent  focus on the independent  general
agency  distribution  system is cost effective since most of the Company's costs
associated with recruiting, training and maintaining agents are variable and may
be managed as business fluctuates.

     Security-Connecticut's  distribution  strategy  is to  add  value  to  each
distribution  channel by providing a balanced  package of competitive  products,
support and  administrative  services  which is tailored  for each  distribution
channel and designed to improve the  efficiency and reduce the costs within each
channel.  To  achieve  this  objective,  Security-Connecticut  seeks to  provide
quality service to each distribution system as well as to meet the product needs
of the insured, and the agents and brokers who sell its products.  Two programs,
the  Connector  Program and the Profit  Sharing  Plan,  help to  establish  this
value-added marketing approach.

     The Connector Program provides improved  communication between agencies and
the  Company.  The  Company  and the  agency  share the  costs of the  Connector
Program, which provides immediate access to an agency's policy level information
(on both  pending  and  in-force  policies),  immediate  access  to agent  level
information,  electronic  mail, and the capability to print  policies,  upon the
Company's  approval,  at the agency (rather than waiting for  multiple-day  mail
delivery  from the home  office).  Appropriate  security  controls  limit agency
access to only its own block of business.

     The information accessibility and speed of policy delivery provide value to
agencies in their own marketing and service activities,  and allow the agency to
increase revenue and/or decrease expenses by allowing employees to perform other
functions. At December 31, 1996,  approximately 230 agencies participated in the
Connector  Program,  accounting for approximately 83% of SCL's paid premiums and
approximately  56% of  LSL's  paid  premiums.  All new  agencies  recruited  are
expected to utilize the Connector  Program.  The Company  believes the Connector
Program provides a sustainable  competitive advantage because of its flexibility
and range of features.

     Beginning  in 1989,  SCL began  offering a Profit  Sharing Plan to selected
agencies  (both  wholesale and retail) and CORE  Producers.  CORE  Producers are
recruited by wholesale  agencies and commit to specific  production and activity
levels  with the  brokerage  general  agency (and with the  Company).  Under the
Profit  Sharing  Plan,  the agency or CORE  Producer can share in the profits of
business  written  by that  agency  or  CORE  Producer.  This is a  nonqualified
deferred   compensation   arrangement,   providing  for   contributions   to  an
accumulation  account  based on the  quantity,  persistency  and  quality of the
agency's or CORE Producer's  block of business.  The Profit Sharing Plan aims to
increase the quality,  quantity and  consistency of production from both general
agencies and CORE Producers,  and aligns the interests of the agency or producer
with those of the Company. A similar plan is not offered by LSL.

     The Company's commitment to and consistent focus on the independent general
agency  distribution system has allowed it to develop a strong relationship with
these  agencies.  In 1996,  the 15 largest  agencies or groups with the Company,
responsible  for  approximately  44% of first year  annualized life premiums and
approximately 63% of annuity premiums,  had been selling the Company's  products
for an average of 14 years and 8 years, respectively. The top two groups account
for approximately 8.8% and 7.3%, respectively, of the first year annualized life
premiums and 14.4%,  and 7.8%,  respectively,  of annuity  premiums  produced in
1996.

     The  Company's  plan for  financial  institution  marketing  focuses on the
development of strategic alliances in order to efficiently sell life and annuity
products to the vast middle market customer base served by these institutions.


                                      -7-
<PAGE>


     The Company's  distribution  system is geographically  diverse.  Management
believes  that this  diversity,  both in  distribution  channels and  geographic
location,  will  enable  it to  continue  to  improve  its  growth  in  sales by
permitting  broad access to its target  customer  base. In addition,  management
believes that this  diversity,  particularly  as it relates to the  distribution
components,  will  prevent the Company  from  becoming  too  dependent  upon any
particular market group or product type.

     The  following  table  identifies  the top 10 states,  and all other states
combined,  in terms of  Security-Connecticut's  statutory premiums for 1996. The
Company intends to continue its focus on geographic diversity as it continues to
expand its agency distribution system.


                      Direct Statutory Premiums by State *

                                                            December 31, 1996
                                                          ----------------------
                                                                        % of
                                                                    Total Direct
State                                                       Amount    Business
-----                                                     ----------- ----------
                                                           (Dollars in millions)

New York                                                  $      66.7      18.5%
California                                                                 29.2
8.1
Florida                                                          23.0       6.4
Connecticut                                                      20.6       5.7
Pennsylvania                                                     19.5       5.4
Texas                                                            19.5       5.4
Massachusetts                                                    16.1       4.5
Ohio                                                             15.2       4.2
Illinois                                                         13.5       3.8
New Jersey                                                       12.3       3.4
All other jurisdictions                                         124.7      34.6
                                                          ----------- ----------
    Total                                                 $     360.3     100.0%
                                                          =========== ==========

------------
*    Includes  statutory life and health premiums,  annuity  considerations  and
     annuity and other fund deposits.


Service and Policy Administration

     Customer  service  and  efficient  policy  administration  are  significant
factors in maintaining and expanding Security-Connecticut's  distribution system
and  customer  base.  In  that  regard,  management,  through  formal  programs,
continuously   focuses  attention  on  productivity   improvements  and  process
reassessments. One program, referred to as "Service Through Excellence Process,"
involves cross-training  employees and streamlining  operations.  Customer needs
are regularly evaluated through extensive surveys and feedback sessions. As part
of this quality process,  Security-Connecticut creates quality service standards
based upon industry  studies  which are used to evaluate the  Company's  overall
performance. Management believes its service performance compares favorably with
other life  insurance  companies  which  utilize  the  independent  distribution
system.

     The  effectiveness  of  policyholder  administration  is  maximized  by the
application of technology both at the Company and general agency level.  Through
the Connector Program,  agencies around the country have immediate access to the
Company's home office. This program allows for fast, efficient  communication of
information, enabling the independent agents to efficiently serve policyholders.


                                      -8-
<PAGE>


Underwriting

     Security-Connecticut  follows detailed,  uniform underwriting practices and
procedures  designed  to  properly  assess and  quantify  risks  before  issuing
coverage to qualified  applicants.  A prospective  policyholder must submit to a
variety of underwriting  tests,  which may include medical  examinations,  blood
tests,  electrocardiograms,  urine tests, treadmill tests and inspection reports
depending  on the  product,  policy  face  amount  and  age  of the  prospective
policyholder.  Underwriting  requirement  limits  are  continually  compared  to
industry  standards  to  minimize  the  risk of  anti-selection  and to  monitor
industry  trends.  During 1996,  comprehensive  blood test screening,  including
tests for the AIDS  antibody,  was  performed on  approximately  98% of business
written.

     The  Company  separately  evaluates  each  policy  application  from  every
distributor.  The  Company  is not  obligated  to accept  any policy or group of
policies from any  distributor.  Every policy is underwritten on its own merits,
and no  individual  policy  is issued  without  its  having  been  reviewed  and
underwritten individually.

     Security-Connecticut's  underwriting  management has an average of 27 years
of underwriting  experience.  Management  believes that a particular strength of
Security-Connecticut  is the  ability to  coordinate  underwriting  and  product
pricing. Product specifications are designed to prevent underwriting requirement
anti-selection.   Mortality   assumptions   are   thoroughly   communicated   to
underwriting and monitored. The underwriting department tracks the profitability
indicators  of business by each general  agent,  including  the mix of business,
percentage  of  substandard  and declined  cases,  placement  ratio and business
decisions.  Ongoing internal underwriting audits,  conducted at multiple levels,
monitor  consistency  of  underwriting  requirements  and  philosophy.   Routine
independent  underwriting  audits conducted by its reinsurers have supported the
Company's underwriting policies and procedures.

Life Insurance and Annuity Reserves

     In accordance with applicable insurance  regulations,  Security-Connecticut
records  as  liabilities  in  its  statutory  financial  statements  actuarially
determined  reserves  that are  calculated  to meet  future  obligations  of its
in-force  life  insurance  and  annuity  contracts.  The  reserves  are based on
actuarially  recognized  methods using prescribed  mortality tables and interest
rates.  Reserves also include unearned premiums,  premium deposits,  claims that
have been reported but not yet paid, claims that have been incurred but have not
been reported,  and claims in the process of settlement.  Security-Connecticut's
reserves comply with state insurance department statutory requirements.

     The  reserves  reflected  in  the  Consolidated  Financial  Statements  are
calculated based on generally accepted accounting principles ("GAAP").  Reserves
are based upon Security-Connecticut's best estimates of mortality,  persistency,
expenses and  investment  income;  and by using methods  prescribed in Financial
Accounting  Standards  Board ("FASB") Nos. 60 and 97. GAAP reserves  differ from
statutory reserves due to the use of different  assumptions  regarding mortality
and interest  rates,  and the  introduction of lapse  assumptions  into the GAAP
reserve  calculation.  In  addition,  the  mortality  assumptions  used  in GAAP
reserving  contain an explicit  provision  for AIDS risk for products  developed
after 1986.


                                      -9-
<PAGE>


Reinsurance

     Security-Connecticut  follows the usual  industry  practice  of  reinsuring
("ceding") portions of its life insurance risks with other companies, a practice
that permits it to write  policies in amounts larger than the risk it is willing
to retain on any one life.  Security-Connecticut  ceded approximately 22% of its
total  statutory  life  premiums  in  1996.   Security-Connecticut  has  several
reinsurance treaties in place, established on a first dollar quota share, yearly
renewable term and coinsurance basis. The majority of reinsurance is ceded under
two automatic  treaties,  each with several  highly rated  domestic  reinsurance
companies.  One  treaty  is for  universal  life and the  other is for term life
insurance. Under each treaty, reinsurers are automatically bound up to a maximum
of 10 times  Security-Connecticut's  retention.  The reinsurance is ceded to the
treaty  participants  on a percentage  basis.  The Company remains liable to its
policyholders  without  regard to whether its  reinsurers are able to meet their
contractual obligations under the applicable reinsurance agreements. The Company
has entered into reinsurance treaties with highly rated reinsurers. For 1996, no
one reinsurer  assumed more than 18% of the Company's life insurance ceded. Life
Reinsurance  Corporation of America  ("Life Re"),  Life Re  International,  LTD,
Swiss  Re  Life  Company  America,  RGA  Reinsurance  Company  and  Transamerica
Occidental  Life  Insurance  Company each  assumed 10% or more of the  Company's
ceded life insurance. All of these reinsurers (except for Life Re International,
LTD) are rated "A (excellent)" or better by A.M.
Best.

     The maximum retention limits for SCL are as follows:  (i) group,  $250,000;
(ii)  individuals up to age 70,  $500,000;  (iii)  individuals  age 70 and over,
$250,000;  and (iv)  second-to-die,  $1,000,000;  (v) joint end age 70 and over,
$500,000.  Facultative reinsurance relationships exist for cases where SCL deems
it appropriate to lower its retention limits,  desires more competitive rates or
needs greater capacity.

     With respect to policies issued by LSL, the maximum retention limits are as
follows:  (i) individuals up to age 70,  $100,000;  (ii)  individuals age 70 and
over, $50,000; and (iii) second-to-die,  $100,000. Amounts exceeding the maximum
retention  limits are ceded to SCL,  which retains an additional  $400,000 up to
age 70, $200,000 for age 70 and over, and $900,000 on  second-to-die up to joint
end age 70,  $400,000  for  joint end age 70 and over,  before  retroceding  the
remainder with automatic reinsurance pools.

     AHL began operations in 1996 and has one agreement in place with Life Re to
reinsure  yearly  renewable  term  insurance  and a block of 10 year  level term
insurance.

Investments

     Security-Connecticut's investment philosophy is to invest for total return,
recognizing  current  income in addition to changes in the  underlying  value of
invested  assets.  The rate of return earned on the portfolio must be sufficient
to satisfy the interest  assumptions used in product pricing.  In addition,  the
preservation  of  principal  and the  matching  of assets  and  liabilities  are
important.

     The Company  seeks to manage the  relationship  between  risk and return in
setting its investment policy, and is committed to maintaining a prudent balance
of the two.  The  Company is exposed to two major  sources of  investment  risk:
credit risk, relating to the uncertainty surrounding the amount of principal and
interest payments;  and interest rate risk,  relating to the economic effects of
changing  interest rates.  The Company's  principal  methods for managing credit
risk are  diversification  and asset allocation.  The Company's principal method
for managing  interest rate risk is  asset/liability  management.  In 1994,  the
Company also began using interest rate caps as a hedge against  rising  interest
rates in its single premium deferred annuity investment portfolio.

     The Company's  investment  portfolio consists primarily of publicly traded,
investment-grade debt securities. Lincoln Investment Management, Inc. ("LIM"), a
subsidiary of Lincoln National  Corporation  ("LNC"), and General Re/New England
Asset  Management,  Inc. ("NEAM") provide  investment  advisory services for the
Company,  pursuant to investment advisory  agreements.  The Company's investment
policy  is  established  by  senior  management  after   consultation  with  its
investment advisors.


                                      -10-
<PAGE>


     Shown below are the Company's invested assets by category.


                           Invested Assets by Category

                                                             December 31, 1996
                                                             -----------------
                                                           (Dollars in millions)
Securities available-for-sale, at fair value:
     Fixed maturity securities                               $ 1,587.3   86.8%
     Equity securities                                             1.9    0.1
Mortgage loans on real estate                                    128.5    7.0
Policy loans                                                      74.4    4.1
Cash and invested cash                                            29.1    1.6
Other investments                                                  6.9    0.4
                                                             --------- ------
     Total invested assets                                   $ 1,828.1  100.0%


                      Fixed Maturity Securities by Category

                                                             December 31, 1996
                                                             -----------------
                                                           (Dollars in millions)

Corporate bonds                                              $   938.1   59.1%
Securitized investments                                          447.1   28.2
Foreign government bonds                                         150.3    9.5
United States government and municipal bonds                      51.8    3.2
                                                             --------- ------
     Total                                                   $ 1,587.3  100.0%
                                                             ========= ======


     The Company believes that the liquidity status of its investment  portfolio
would allow it to adequately  satisfy  policy and contract  commitments  under a
broad range of adverse  circumstances.  Invested  assets,  at carrying  amounts,
categorized as to liquidity are as follows:


                          Liquidity of Invested Assets

                                                             December 31, 1996
                                                             -----------------
                                                           (Dollars in millions)
Most liquid:
     Cash and invested cash                                  $    29.1    1.6%
     Equity securities                                             1.9    0.1
     Investment-grade publics                                  1,187.4   65.0
                                                             --------- ------
        Total most liquid                                      1,218.4   66.7
                                                             --------- ------

Least liquid:
     Private, below investment-grade publics and other
        investments                                              481.2   26.3
     Mortgage loans on real estate                               128.5    7.0
                                                             --------- ------
        Total least liquid                                       609.7   33.3
                                                             --------- ------
        Total invested assets                                $ 1,828.1  100.0%
                                                             ========= ======


                                      -11-
<PAGE>


     At December 31, 1996,  approximately  20.8% of the Company's fixed maturity
securities  portfolio  was  invested  in  private  placement  securities.  These
securities  are not registered  with the Securities and Exchange  Commission and
generally  can only be  purchased  by  institutional  investors.  Since  private
placements  are  negotiated  transactions,  they are  less  liquid  than  public
securities.  However, covenants for private placements are generally designed to
mitigate the impact of the increased liquidity risk of such securities.  Most of
the Company's private placement securities are participations in securities also
owned by other investors,  principally LNC and its affiliates. In addition, some
of the private placement securities are rated by outside rating agencies. To the
extent that such  securities  are not rated by outside  agencies,  the Company's
portfolio managers assign ratings for internal  monitoring  purposes,  which the
Company believes generally track methodologies employed by outside agencies. The
Company has also entered into several  interest  rate cap  agreements as a hedge
against  rising   interest  rates  in  its  SPDA   investment   portfolio.   See
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations  -  Liquidity  and  Capital   Resources  -  Liquidity  for  Insurance
Operations."

Quality distribution of fixed maturity securities at fair value is as follows:

                Quality Distribution of Fixed Maturity Securities

                                                             December 31, 1996
                                                           (Dollars in millions)

U.S. Government and AAA                                      $   409.3   25.8%
AA                                                               162.9   10.3
A                                                                548.1   34.5
BBB                                                              368.5   23.2
BB                                                                68.4    4.3
Less than BB                                                      30.1    1.9
                                                             --------- ------
     Total                                                   $ 1,587.3  100.0%
                                                             ========= ======


     Securities   that  have  received   ratings  from   nationally   recognized
statistical  rating  organizations  are categorized  according to those ratings.
Approximately  88% (in terms of  principal  amount of  securities)  of the fixed
maturity securities have ratings from nationally  recognized  statistical rating
organizations.  Securities that are not so rated (generally private  placements)
are assigned  ratings by the Company's  investment  advisors,  LIM or NEAM,  for
purposes of the  distribution  table.  LIM and NEAM consider the  guidelines and
principles  employed by the rating  organizations in determining  their assigned
ratings.

     At  December  31,  1996,  the Company  had  approximately  28% of its fixed
maturity  portfolio  invested  in  securitized  investments.  Included  in  this
category  are agency and  non-agency  planned and target  amortization  classes,
agency  and  non-agency  pass-through  securities  and  collateralized  mortgage
obligations,  interest-only  securities,  as well as commercial and asset-backed
securities.  Securitized investments are subject to significant prepayment risk,
especially in a declining  interest rate environment since underlying  mortgages
may be repaid more rapidly than scheduled.  As a result,  holders of securitized
investments  may  receive  prepayments  which  cannot  be  reinvested  at yields
comparable to the rates on such securitized  investments.  Approximately  28% of
the securitized  investment  portfolio  consists of securities that were current
coupon Planned  Amortization Class securities  ("PACs") at the time of purchase.
PACs are designed to reduce the risk of  prepayments  normally  associated  with
securitized  investments  by shifting a portion of the risk of prepayment of the
underlying collateral to other investors. Residual CMOs represent less than 0.2%
of the carrying value of the securitized investment portfolio.


                                      -12-
<PAGE>

<TABLE>
                             Securitized Investments
<CAPTION>
                                                                 December 31, 1996
                                                       --------------------------------------
                                                      Amortized             Fair
                                                         Cost       %       Value       %
                                                       --------  --------  --------  --------
                                                               (Dollars in millions)
<S>                                                    <C>       <C>       <C>       <C>
Residential mortgage-backed securities:
   Agency and non-agency planned and target
     amortization classes                              $  121.7      27.7% $  126.0      28.2%
   Agency and non-agency pass-through securities           94.7      21.6      95.3      21.3
   Other agency and non-agency collateralized 
     mortgage obligations                                  32.8       7.4      31.8       7.1
   CMO residual                                             0.7       0.2       0.7       0.2
                                                       --------  --------  --------  --------
        Total residential mortgage-backed securities      249.9      56.9     253.8      56.8
Commercial mortgage-backed securities and
     asset-backed securities                              189.4      43.1     193.3      43.2
                                                       --------  --------  --------  --------
        Total securitized investments                  $  439.3     100.0% $  447.1     100.0%
                                                       ========  ========  ========  ======== 

</TABLE>

     The  Company's  portfolio  managers  conservatively  position the Company's
portfolio  relative to prepayment  risk.  The Company  believes it has benefited
from this strategy as early returns of principal have been relatively small.

     Mortgage  loans are  carried  at unpaid  balances,  net of  allowances  for
uncollectible amounts, and are shown below by type and geographic location.

                        Mortgage Loans by Type and Region

                                                             December 31, 1996
                                                             -----------------
                                                           (Dollars in millions)
Type:
     Apartments                                              $    32.1     25.0%
     Commercial office buildings                                  30.1     23.4
     Retail stores                                                30.0     23.4
     Industrial buildings                                         24.9     19.4
     Hotels/motels                                                 5.5      4.2
     Other                                                         5.9      4.6
                                                             --------- --------
        Total                                                $   128.5    100.0%
                                                             ========= ========


Region:
     East North Central                                      $    21.9     17.0%
     West North Central                                           20.0     15.6
     South Atlantic                                               19.2     14.9
     New England                                                  15.9     12.4
     Pacific                                                      13.6     10.6
     Middle Atlantic                                              11.6      9.0
     East South Central                                           10.0      7.8
     West South Central                                            9.7      7.6
     Mountain                                                      6.6      5.1
                                                             --------- --------
        Total                                                $   128.5    100.0%
                                                             ========= ========


                                      -13-
<PAGE>


     Mortgage loans are considered  impaired when, based on current  information
and  events,  it is  probable  that the  Company  will be unable to collect  all
amounts due according to the contractual  terms of the loan agreement.  When the
Company  determines  that a loan is impaired,  a provision for loss is estimated
for the  difference  between the  carrying  value of the  mortgage  loan and the
estimated  value.  Estimated  value is  based on  either  the  present  value of
expected future cash flows discounted at the loan's effective interest rate, the
loan's observable market price or the fair value of the collateral.  Real estate
values have  generally  fallen  during the last several years but appear to have
stabilized in 1995 and 1996. The Company  believes it is adequately  reserved in
its mortgage loan  portfolio and expects to continue to invest in mortgage loans
consistent  with the Company's  investment  policy and the overall trends in the
real estate industry.

     Mortgage loans are rated for quality and monitored  based on these ratings.
Mortgage  loan  allowances  are  established  during a  quarterly  review of the
estimated  value  of  selected  mortgage  loans  versus  their  carrying  value,
irrespective of their payment  status.  The property is analyzed to determine if
it has sufficient value to support the mortgage loan amount. Factors involved in
the analysis  include the  property's  physical  condition,  the  strengths  and
weaknesses of the market place, the financial condition of the borrower,  trends
in the market place, the property's location,  occupancy and ability to generate
income to cover debt  service,  financial  condition  of tenants,  tenant  lease
maturity dates, the payment history of the loan, the ability to realize the loan
security, as well as other quantitative and qualitative factors. LIM's expertise
is used to conduct this analysis. However, independent appraisal specialists are
contracted when  necessary.  The Company is a participant in  approximately  $95
million of mortgage loans with LNL. The participation  contracts between LNL and
SCL  provide  that LNL has the right at any time on 10 day's  notice to purchase
the Company's  interest for the  then-existing  principal plus accrued interest.
The Company believes this contractual  provision may not be enforceable  against
the Company.

Insurance Regulations

General Regulation at State Level

     The Company is subject to  regulation by the states in which it and SCL and
LSL are  domiciled  or transact  business.  State laws  require  prior notice or
regulatory agency approval of changes in control of an insurer.  State insurance
holding company  statutes  applicable to the Company  generally  provide that no
person may acquire control of the Company,  and thus indirect control of SCL and
LSL,  without  the  prior  approval  of the  appropriate  insurance  regulators.
Generally,  any person who acquires  beneficial  ownership of 10% or more of the
outstanding  shares of the  Company's  common  stock  would be  presumed to have
acquired  such  control,   unless  the  appropriate  insurance  regulators  upon
application  determine  otherwise.  Applicable state insurance laws, rather than
federal  bankruptcy  laws,  apply to the  liquidation or the  reorganization  of
insurance companies.

     In addition,  the laws of the various states establish  regulatory agencies
with broad  administrative  powers to  approve  policy  forms,  grant and revoke
licenses to transact business, regulate trade practices, license agents, require
statutory financial statements, and prescribe the type and amount of investments
permitted.

     SCL's and LSL's reserves and related actuarial values meet the requirements
of the insurance laws and regulations of the states of Connecticut and New York,
respectively,  and are at  least  as  great  as the  minimum  aggregate  amounts
required by law. Cash flow testing is performed  each year to ensure that assets
and  anticipated  future  cash  flows  provide  adequate  provision  for  future
contractual obligations.


                                      -14-
<PAGE>


     Insurance  companies are required to file annual  statements with the state
insurance regulators in each of the states in which they do business,  and their
business and accounts are subject to  examination  by such agencies at any time.
In addition,  insurance regulators  periodically examine the insurer's financial
condition,  adherence to statutory  accounting  practices,  and compliance  with
insurance  department  rules  and  regulations.  During  1995,  the  Connecticut
Insurance Department completed its regular examination of SCL for the four years
ended  December 31, 1993. The report did not note any issues that had a material
adverse effect on SCL's results of operations or financial condition.

     During  1996,  the New York  Insurance  Department  commenced  its  regular
tri-annual  examination of LSL for the three years ended December 31, 1995. This
examination was completed on December 31, 1996 and a final report is expected to
be issued in the second or third quarter of 1997. At this time,  the Company has
not been  informed  by the  regulators  of any issues that would have a material
adverse effect on LSL's results of operations or financial condition.

     Security-Connecticut  is dependent on receiving  dividends from SCL and AHL
to pay operating  expenses,  make debt service payments and pay dividends to its
shareholders.  Under current Connecticut law, any proposed payment of a dividend
or distribution  from SCL which,  together with dividends or distributions  paid
during the  preceding  12 months,  exceeds the  greater of (i) 10% of  statutory
surplus  as of the  preceding  December  31,  or (ii)  statutory  net gain  from
operations  for the preceding  calendar  year,  is designated an  "extraordinary
dividend"  and may not be paid until  either it has been  approved,  or a 30-day
waiting  period shall have passed during which it has not been  disapproved,  by
the  Insurance  Commissioner  of the  State  of  Connecticut  (the  "Connecticut
Insurance  Commissioner").  The  Connecticut  insurance  law also  states that a
Connecticut-domiciled  insurer may not pay any  dividend  or other  distribution
without the  Connecticut  Insurance  Commissioner's  prior approval in an amount
exceeding such insurer's earned surplus. The Connecticut  insurance law requires
that the  statutory  surplus of SCL following  any dividend or  distribution  be
reasonable in relation to its  outstanding  liabilities and adequate to meet its
financial needs. The Connecticut  Insurance  Commissioner may bring an action to
enjoin or rescind  the payment of a dividend  or  distribution  that would cause
statutory surplus to be unreasonable or inadequate under this standard.

     Under Bermuda regulations,  any dividend payments greater than 15% of total
statutory capital and surplus requires prior approval from the Bermuda Registrar
of Companies. AHL must maintain statutory capital and surplus of $250,000.

     In the event of a default on Security-Connecticut Corporation's debt or the
bankruptcy,  liquidation or other  reorganization of  Security-Connecticut,  the
creditors  and  shareholders  of  Security-Connecticut  would  have no  right to
proceed  against  the assets of SCL or AHL. If SCL were to be  liquidated,  such
liquidation would be conducted by the Connecticut Insurance Commissioner, as the
receiver with respect to such insurance  company's property and business.  Under
the  Connecticut  insurance  law,  all  creditors of such  insurance  companies,
including  without  limitation,  holders of its  reinsurance  agreements and the
various state guaranty  associations,  would be entitled to payment in full from
such assets before  Security-Connecticut,  as the  shareholder  of SCL, would be
entitled to receive any  distribution  therefrom.  If AHL were to be liquidated,
such liquidation would be monitored by the Bermuda Registrar of Companies by its
appointment  of a liquidator.  All creditors of AHL would be entitled to payment
in full prior to any distribution to Security-Connecticut.


                                      -15-
<PAGE>


     The NAIC has passed a model  regulation for minimum  reserve  standards for
individual life insurance policies,  sometimes referred to as Guideline XXX (the
"Guideline").  This Guideline is intended to require  companies  selling certain
types of individual  life insurance  policies,  such as term insurance  policies
with non-level  premiums and/or  benefits and universal life insurance  products
with secondary  guarantees,  to modify their reserve standards for future issues
of affected policies.  The Guideline  provides for stricter valuation  standards
but more relaxed valuation mortality; in aggregate,  the Guideline may require a
company to hold higher statutory  reserves on the  aforementioned  types of life
insurance policies.  In order for the Guideline to be effective in a state, each
state  insurance  department is required to complete the  necessary  legislative
process for a regulation to become  effective.  As of February 28, 1997, no more
than 10 states have moved to adopt the Guideline.  In most of those states,  the
effective  date of the  regulation is no earlier than January 1, 1998.  New York
has adopted its own form of the  Guideline in the form of  Regulation  147 as of
January 1, 1994. The Company is currently  holding  reserves in compliance  with
Regulation 147 for LSL.

     The NAIC  currently is in the process of recodifying  statutory  accounting
practices,  the result of which is  expected  to  constitute  the only source of
"prescribed" statutory accounting practices. Accordingly, that project, which is
expected to be completed in 1997, will likely change, to some extent, prescribed
statutory  accounting  practices,  and may  result in changes in SCL's and LSL's
statutory surplus.

     The increase in the number of insurance companies that are under regulatory
supervision  has resulted,  and is expected to continue to result,  in increased
assessments  by state  guaranty  funds  to  cover  losses  to  policyholders  of
insolvent or rehabilitated  companies.  At December 31, 1996, the Company held a
liability  for $3.3  million  to cover  its  share of  estimated  guaranty  fund
assessments.  This  liability  was based on  estimates  provided by the National
Organization  of Life and Health  Guaranty  Associations  ("NOLHGA").  Mandatory
assessments  may be partially  recovered  through a reduction in future  premium
taxes in certain states, and at December 31, 1996, the Company recorded an asset
of $4.5 million for such expected recoveries.

Regulation at a Federal Level

     Although the federal  government  generally does not directly  regulate the
insurance business,  federal initiatives often have an impact on the business in
a variety of ways.  Current and proposed federal measures that may significantly
affect the insurance business include limitations on antitrust immunity, minimum
solvency requirements and the further removal of barriers restricting banks from
engaging in the insurance, annuity and mutual fund businesses.

     Congressional  initiatives directed at repeal of the  McCarran-Ferguson Act
(which exempts the "business of insurance" from most federal laws, including the
antitrust  laws, to the extent it is subject to state  regulation)  and judicial
decisions   narrowing   the   definition   of   "business  of   insurance"   for
McCarran-Ferguson  Act purposes may limit the ability of insurance  companies in
general to share  information  with respect to rate  setting,  underwriting  and
claims management practices.

     Congress  and  certain  federal  agencies  are  investigating  the  current
condition   of   the   insurance   industry    (encompassing   both   life   and
property-casualty  insurance)  in the United  States in order to decide  whether
some form of federal  role in the  regulation  of insurance  companies  would be
appropriate.  It is not  possible  to  predict  whether,  or in what  form,  any
legislation would be enacted, or the potential effects of the legislation on the
Company or its competitors.


                                      -16-
<PAGE>


Competition

     The Company  operates in a highly  competitive  environment.  Numerous life
insurance  companies  and other  entities,  including  banks and  mutual  funds,
compete with the Company, many of which have greater resources than the Company.
The  Company  believes  that the  principal  competitive  factors in the sale of
insurance are product features, price, commission structure, perceived stability
of the insurer, claims paying ratings, value-added service and name recognition.
Many other life  insurance  companies  are capable of competing for sales in the
Company's target markets. The Company's ability to compete is affected, in part,
by its  ability to  provide  competitive  products  and  quality  service to the
insurance consumer, general agents, licensed insurance agents and brokers.

     In addition to competing for sales,  the Company  competes for distributors
such as insurance agents or brokers.  There are relatively low entry barriers to
such competition with the Company. However, management believes competition only
on the basis of  pricing or agent  compensation  cannot be  sustained.  This may
further  enhance  the value of the  advantages  the  Company  already  enjoys in
competing for agents.  These  advantages  include the strong  relationships  the
Company has developed with its distributors, and the services (Connector, Profit
Sharing Plan, etc.) it provides to them.

     Continuing  deregulation of the financial  services industry is eroding the
exclusivity of life insurance  companies.  United States Supreme Court decisions
have paved the way for national banks to sell annuities and life insurance under
certain  circumstances.  Some  states have  allowed  their state banks to follow
suit.  Financial  institutions  continue  to gain  market  share of new  annuity
business  written and are  establishing  relationships  with  insurers and third
party marketers for the sale of life insurance to their customers.

Ratings

     Insurers compete with other insurance companies,  financial  intermediaries
and  other  institutions  on the  basis of a number of  factors,  including  the
ratings assigned by A.M. Best,  Standard & Poor's Corporation  ("S&P"),  Moody's
Investor Services ("Moody's") and other nationally recognized statistical rating
organizations.  On November 5, 1996 A.M. Best announced that it had reclassified
SCL's rating from "A+ (superior)" to "A (excellent)."  A.M. Best assigns ratings
which   currently  range  from  "A++   (superior)"  to  "F  (in   liquidation)."
Publications  of A.M.  Best  indicate  that the "A" rating is  assigned to those
companies  that  in  A.M.  Best's  opinion  have  achieved   excellent   overall
performance  when compared to the standards  established  by A.M. Best, and have
demonstrated a strong ability to meet their obligations to policyholders  over a
long  period  of  time.  In  evaluating  a  company's  financial  and  operating
performance,  A.M.  Best  reviews  the  company's  profitability,  leverage  and
liquidity, as well as the company's book of business, the adequacy and soundness
of its  reinsurance,  the quality and  estimated  fair value of its assets,  the
adequacy of its reserves,  surplus and capital structure, and the experience and
competency  of its  management.  A.M.  Best's  ratings  are based  upon  factors
relevant to policyholders,  agents, insurance brokers and intermediaries and are
not directed to the  protection  of  investors.  A.M.  Best has placed SCL's "A"
rating  "under  review  with  developing   implications"   in  response  to  the
announcement regarding the merger of the Company into ReliaStar (see "Business -
General").  The rating will remain under review pending further  discussion with
management and the transaction closing.


                                      -17-
<PAGE>


     SCL's  claims-paying  ability is rated "A+" (good) by S&P.  The S&P ratings
for insurance companies range from "AAA (superior  financial  security)" to "CCC
(extremely  vulnerable financial security)." S&P's ratings attempt to assess the
relative  capacity of  insurance  companies  to meet  policyholder  obligations,
incorporating  both ownership and support factors,  if applicable.  According to
S&P, a claims-paying  ability rating of "A+" (good) indicates that a company has
"good  financial  security,  but capacity to meet  policyholder  obligations  is
somewhat  susceptible  to adverse  economic  and  underwriting  conditions."  On
February  24,  1997 S&P placed its ratings of SCL and LSL "on  creditwatch  with
positive   implications"  in  response  to  the  merger   announcement  made  by
Security-Connecticut  and  ReliaStar.  S&P has noted that  "with the  successful
conclusion of the transaction,  it is likely that  Security-Connecticut  ratings
will be revised upwards to match ReliaStar ratings."

     SCL's insurance  financial  strength is rated Baa1 by Moody's.  The Moody's
ratings for insurance  companies range from "Aaa (exceptional)" to "C (lowest)."
Moody's  ratings are  opinions of the ability of  insurance  companies to repay,
punctually,  senior policyholder  claims and obligations.  Numeric modifiers are
used to refer to the ranking  within the group - one being the highest and three
being the lowest.  However, the financial strength of companies within a generic
rating  symbol (Aa, for example) is broadly the same.  According to Moody's,  an
insurance  financial  strength  rating of Baa1 indicates that a company  "offers
adequate financial security. However, certain protective elements may be lacking
or may be  characteristically  unreliable  over any  great  length  of time." On
February  24,  1997,  Moody's  placed its rating of SCL "on review for  possible
upgrade" in response to the merger announcement made by Security-Connecticut and
ReliaStar.

     LSL's A.M.  Best rating of "A  (excellent)"  is "based on the  consolidated
financial  condition and operating  performance  of the company" and SCL,  while
LSL's S&P assigned  claims-paying  rating of "A+" is "based on its strategic and
operating fit" with SCL, according to the respective ratings agencies.

     The Company believes that ratings may have a material effect on its ability
to sell its  products,  and on its financial  condition  and operating  results.
SCL's  capital and surplus has increased  from $121.8  million in 1992 to $148.3
million in 1996 due to favorable  earnings  offset in part by dividends  paid to
its parent.  It is expected that SCL will continue to make dividend  payments to
its parent and  continue to add new  business,  which may result in a decline of
surplus.  Even if SCL's surplus  increases,  the ratings from A.M. Best, S&P and
Moody's could be subject to a downgrade as the Company  experienced  in November
1996 by A.M.  Best. If a downgrade were to  materialize,  sales of the Company's
products could be adversely affected. The Company continues to pursue courses of
action, such as expense containment and limits on capital purchases, which could
help mitigate any future decrease in surplus or rating reclassifications.  There
are no assurances that any of these or other actions would result in alleviating
future surplus declines or rating reclassifications.

Employees

     The Company had  approximately  425  full-time  equivalent  employees as of
December  31,  1996.  None  of the  employees  of the  Company  are  covered  by
collective  bargaining  agreements,   and  the  Company  believes  its  employee
relations are satisfactory.


                                      -18-
<PAGE>


Item 2 - Properties

     SCL leases its home office complex at 20 Security Drive, Avon,  Connecticut
under a lease  agreement  which provides for a 25-year lease period that expires
in 2009 and  contains  options  for SCL to renew  the lease  thereafter  for six
additional  terms of five years each. The lease agreement also grants to SCL (i)
a right to purchase  the  property  at fair market  value on the last day of the
25-year  period  or any  renewal  period  and (ii) a right of first  refusal  to
purchase  the  property  upon the terms and  conditions  of any offer by a third
party.  The annual rental  payment was $1.3 million for 1996. SCL also leases an
office suite at Suite 304, 740 North Blue Parkway, Lee's Summit, Missouri for an
annual cost of approximately  $10,000.  The lease term expires February 28, 1998
and can be extended for three additional periods of one year each.

     LSL leases its  property  located at Suite  101,  Building  100,  Southeast
Executive  Park,  Brewster,  New York  under  the  terms of an  agreement  which
provides  for a term  through  April 30,  1998.  The annual  rental  payment was
$176,000 in 1996.


Item 3 - Legal Proceedings

     The Company is from time to time involved in various pending and threatened
legal proceedings  relating to the policies and contracts of SCL and LSL and the
actions of the independent agents in the distribution system.

     The Company is involved in three class action suits:

     Zipf vs.  Security-Connecticut  Life  Insurance  Company,  et al., Court of
Common Pleas of Allegheny County, Pennsylvania.

     Jacobson, et al. vs.  Security-Connecticut  Life Insurance Company, et al.,
Superior  Court,   Judicial  District  of  Hartford/New   Britain  at  Hartford,
Connecticut.

     Semler vs. First Colony Life Insurance Company, et al., Superior Court, San
Francisco, California.


     See Note 12 to the Consolidated  Financial  Statements for details relating
to these lawsuits.


Item 4 - Submission of Matters to a Vote of Security Holders

     During  the fourth  quarter  of 1996,  no  matters  were  submitted  to the
security holders of Security-Connecticut Corporation for a vote.


                                      -19-
<PAGE>
Executive Officers of the Registrant

     Executive  Officers  of the  Registrant  as of  December  31,  1996 were as
follows:

                           Position  with the  Company  and  business experience
Name                  Age  during the past five years
----                  ---  -----------------------------------------------------
Ronald D. Jarvis       59  Chairman,  President  and  Chief  Executive  Officer.
                           President    and   Chief    Executive    Officer   of
                           Security-Connecticut  Life and Lincoln  Security Life
                           since 1984.  President of  Security-Connecticut  Life
                           since  1978.  Director of  Security-Connecticut  Life
                           since 1976.  Director of Lincoln  Security Life since
                           1984.  President and Director of Arrowhead Ltd. since
                           1995.

Robert J. Voight       47  Executive  Vice  President.  Executive Vice President
                           of Security-Connecticut  Life since 1996. Senior Vice
                           President,        Financial       Management       of
                           Security-Connecticut  Life since  1994.  Senior  Vice
                           President,     Marketing,     and     Treasurer    of
                           Security-Connecticut  Life  (1992-1994).  Senior Vice
                           President and Treasurer of Security-Connecticut  Life
                           (1990-1992).  Senior Vice  President,  Treasurer  and
                           Controller of Security-Connecticut  Life (1982-1990).
                           Director  of  Security-Connecticut  Life since  1994.
                           Director of Lincoln  Security  Life since 1984.  Vice
                           President and Director of Arrowhead Ltd. since 1995.

William P. Norris, Jr. 52  Senior Vice  President,  Sales and Marketing.  Senior
                           Vice    President,    Sales    and    Marketing    of
                           Security-Connecticut  Life since  1994.  Senior  Vice
                           President,   Sales   of   Security-Connecticut   Life
                           (1987-1994).  Director of  Security-Connecticut  Life
                           since 1994.  Director of Lincoln  Security Life since
                           1989.

Barry J. St. Pierre    50  Senior  Vice  President,   Operations.   Senior  Vice
                           President,  Operations of  Security-Connecticut  Life
                           since   1992.   Senior  Vice   President,   Marketing
                           (1982-1992).  Director of  Security-Connecticut  Life
                           since 1994.  Director of Lincoln  Security Life since
                           1986.

Richard D. Mocarski    51  Vice  President,   Controller  and  Treasurer.   Vice
                           President,     Controller     and     Treasurer    of
                           Security-Connecticut    Life   since    1994.    Vice
                           President,  Controller  and  Assistant  Treasurer  of
                           Security-Connecticut Life (1990-1994).  Treasurer and
                           Director of Arrowhead Ltd. since 1995.


                                      -20-
<PAGE>


                                     PART II

Item 5 - Market for Registrant's Common Equity and Related Shareholder Matters

Market Information

     The common stock of Security-Connecticut  was listed for trading on the New
York Stock Exchange (the "NYSE") on January 27, 1994 under the symbol SRC.

     As of March 1, 1997, there were approximately 146 holders of record.  Based
on  information  supplied  by the NYSE,  the high and low sale  prices  for each
quarterly period from January 1, 1995 to December 31, 1996 were:

                      Period                      High             Low
        ---------------------------------       -------          -------
        January 1, 1995 - March 31, 1995        $26.125          $22.00
        April 1, 1995 - June 30, 1995            25.875           22.625
        July 1, 1995 - September 30, 1995        28.50            24.50
        October 1, 1995 - December 31, 1995      27.75            23.375
        January 1, 1996 - March 31, 1996         27.625           24.875
        April 1, 1996 - June 30, 1996            29.625           24.875
        July 1, 1996 - September 30, 1996        32.00            25.00
        October 1, 1996 - December 31, 1996      35.625           30.50

Dividends

     The Board of Directors of the Company has established a policy of declaring
quarterly  cash  dividends.  Dividends of $0.12 per share were paid on April 30,
1995, July 31, 1995,  October 31, 1995,  January 31, 1996,  April 30, 1996, July
31,  1996,  October  31,  1996 and  January 31,  1997.  On  February  10,  1997,
Security-Connecticut's Board of Directors declared a dividend of $0.14 per share
to be paid on April 30, 1997 to  shareholders of record at the close of business
on April 10, 1997.

     The  declaration  and payment of  dividends in the future is subject to the
discretion of the Board of Directors of the Company and will depend upon general
business   conditions,   the  effect  of   claims-paying   ratings  and  capital
requirements of SCL and AHL, legal restrictions on the payment of dividends, and
other  factors  the  Board of  Directors  of the  Company  deems  relevant.  The
Company's general policy is to retain most of its earnings to finance the growth
and  development of its business,  and there is no requirement or assurance that
future  dividends  will be paid.  The  dividend to be paid on April 30, 1997 was
increased  to  $0.14  per  share  as a  result  of  the  Company's  strong  1996
performance.  The  availability  of funds to pay  dividends  is dependent on the
ability of SCL and AHL to transfer  funds to the  Company.  Both SCL and AHL are
subject to certain  laws and  regulations  that limit their  ability to transfer
funds and pay dividends.

     As an insurance holding company, the Company depends on dividends and other
permitted  payments from SCL and AHL to pay cash  dividends to  shareholders  as
well as to pay operating expenses and meet debt service requirements. Payment of
dividends and other payments by SCL are subject to restrictions set forth by the
laws of  Connecticut.  AHL  dividend  payments  are  restricted  by the  Bermuda
Registrar of Companies.  Dividends and other  payments by LSL to SCL are subject
to restrictions  under the laws of New York, and no such payments have been made
since the organization of LSL. The Company does not expect that these regulatory
restrictions will affect its ability to declare and pay dividends at the current
rate. See "Insurance  Regulations"  and  "Management  Discussion and Analysis of
Financial Condition."


                                      -21-
<PAGE>


Item 6 - Selected Financial Data

     The  selected  financial  data  have  been  derived  from the  consolidated
financial statements of Security-Connecticut  Corporation (1996, 1995 and 1994),
and  Security-Connecticut  Life Insurance Company and subsidiary (referred to as
"Predecessor Company") for each of the
years in the two-year period ended December 31, 1993.

     This  information  should  be  read  in  conjunction  with  the  historical
consolidated  financial  statements of the Company and SCL and the notes thereto
and "Management's  Discussion and Analysis of Financial Condition and Results of
Operations"  included  elsewhere herein.  The following  selected financial data
presented under the caption  "Operating  Data" and "Balance Sheet Data" for, and
as at the end of,  each of the years  ended  December  31,  1992 and 1993,  were
derived from the consolidated  financial  statements of SCL.  Statutory data has
been  derived  from  the  Annual  Statements  of SCL and LSL as  filed  with the
insurance regulatory authorities.

<TABLE>
<CAPTION>
                                                        Year Ended December 31,
                                              ------------------------------------------
                                                                          (Predecessor
                                                                            Company)
                                                                         ---------------
                                               1996     1995     1994     1993     1992
                                              ------   ------   ------   ------   ------
Operating Data                               (Dollars in millions, except per share data)
<S>                                           <C>      <C>      <C>      <C>      <C>
Premiums                                      $ 58.3   $ 64.1   $ 66.5   $ 52.1   $ 55.7
Insurance fees                                 136.8    125.5    116.9    104.2     94.6
Net investment income                          135.3    132.0    115.4    109.4    102.1
Realized gains (losses) on investments           7.3      6.2     (0.7)     8.6     (0.5)
Other                                            0.6      1.4      0.3      0.2      0.5
                                              ------   ------   ------   ------   ------
     Total revenues                            338.3    329.2    298.4    274.5    252.4
Benefits and reserve increases                 192.9    207.6    177.1    170.1    153.2
Insurance and other expenses                    91.9     85.2     83.3     61.2     63.4
                                              ------   ------   ------   ------   ------
     Total benefits and expenses               284.8    292.8    260.4    231.3    216.6
Federal income taxes                            18.2     12.3     12.8     18.0      9.6
Income before cumulative effect
  of accounting changes (1)                     35.3     24.1     25.2     25.2     26.2
Cumulative effect of accounting changes (2)                                (1.2)
                                              ------   ------   ------   ------   ------
Net income (1)(2)                             $ 35.3   $ 24.1   $ 25.2   $ 24.0   $ 26.2
                                              ======   ======   ======   ======   ======


Earnings per share before cumulative effect
  of accounting changes (1)(3)                $  4.10  $  2.81  $  2.94  $  2.75  $  2.84
Earnings per share (1)(2)(3)                  $  4.10  $  2.81  $  2.94  $  2.61  $  2.84

Common stock and equivalents (3)                 8.6      8.6      8.5      8.5      8.5

Dividends declared                            $  4.1   $  4.1   $  4.1   $  6.0   $ 12.0
Cash dividend per common share (3)            $  0.48  $  0.48  $  0.48  $  0.70  $  1.40

Ratios of Earnings to Fixed Charges:
   Excluding interest on annuities
     and financial products (3)(4)               8.33     6.73     8.55    10.14     7.89

   Including interest on annuities
     and financial products (3)(5)               1.58     1.39     1.47     1.54     1.45

</TABLE>


                                      -22-
<PAGE>

<TABLE>
<CAPTION>
                                                             Year Ended December 31,
                                                ------------------------------------------------
                                                                                 (Predecessor
                                                                                   Company)
                                                                              ------------------
                                                  1996      1995      1994      1993      1992
                                                --------  --------  --------  --------  --------
                                            (Dollars in millions, except per share and in-force data)
Balance Sheet Data
<S>                                             <C>       <C>       <C>       <C>       <C>
Total investments                               $1,799.1  $1,796.1  $1,510.7  $1,427.4  $1,217.5
Total assets                                     2,338.3   2,281.4   2,042.0   1,829.1   1,599.7
Long-term debt                                      75.0      65.0      65.0
Shareholders' equity (6)                           355.2     348.4     245.3     355.7     308.5

Statutory Data

Life insurance in-force, in billions (7)        $   33.6  $   32.5  $   29.6  $   25.6  $   20.8
First year annualized life premiums (8)             49.6      46.9      46.7      45.4      32.0

Capital and surplus (9)                            148.3     126.0     120.4     113.2     121.8
Ratio of capital and surplus to insurance
  liabilities (10)                                  11.8%     10.4%     10.4%      9.7%     11.6%

<FN>
(1)  Income before  cumulative  effect of accounting  changes and net income for
     1993  were  affected  by the  early  adoption  of FAS 114,  and a change in
     estimate related to securitized investments.
(2)  Cumulative effect of accounting changes for 1993 was the result of adopting
     FAS 106.
(3)  For years 1992-1993, earnings per share, cash dividend per common share and
     earnings to fixed charges ratios are pro-forma for the interest on the debt
     outstanding  and  the  change  in   capitalization   as  a  result  of  the
     reorganization.  The calculation is based on 8,547,727  shares  outstanding
     for these two years.
(4)  This ratio is comprised of the relationship of "earnings excluding interest
     on annuities and financial  products" to "fixed charges excluding  interest
     on annuities and financial products." (See Exhibit 12.01)
(5)  This  ratio is  comprised  of the  relationship  of  "earnings"  to  "fixed
     charges."  (See  Exhibit  12.01)
(6)  Shareholders'  equity as of December 31, 1993 and  thereafter  includes the
     effect of the adoption of FAS 115.
(7)  Life insurance in-force is net of reinsurance.
(8)  First year annualized life premiums  consist of the initial premium payment
     for each policy,  plus the remaining  payments expected in the first policy
     year.  Amounts in excess of the target premium on any universal life policy
     are credited at 10%.  Actual  premium  payments may be higher or lower than
     first year annualized life premiums.
(9)  For years  1992-1993,  the decline in the Company's  statutory  capital and
     surplus was  primarily  due to  dividends to LNC (the  previous  parent) of
     $18.0 million and the  finalization  of the 1980 to 1988 federal income tax
     audits,  which  resulted in  nonrecurring  charges that reduced  surplus by
     $20.8 million.
(10) For purposes of  computing  the ratio of  statutory  capital and surplus to
     insurance liabilities, the numerator includes statutory capital and surplus
     plus the  asset  valuation  reserve  ("AVR")  and/or  mandatory  securities
     valuation  reserve  ("MSVR").   The  denominator  consists  of  liabilities
     excluding AVR and/or MSVR.
</FN>
</TABLE>
                                      -23-
<PAGE>


Item 7 - Management's Discussion and Analysis of Financial Condition and Results
of Operations

     This Form 10-K contains  forward  looking  statements that are qualified by
the fact that actual results of the Company may differ  materially from any such
statement  due to  the  following  important  factors,  among  other  risks  and
uncertainties inherent in the Company's business:

     1.   Prevailing  interest rate levels,  which may affect the ability of the
          Company to sell its products,  mortality experience,  the market value
          of the  Company's  investments  and the  lapse  rate of the  Company's
          policies,  notwithstanding product design features intended to enhance
          persistency of the Company's products.
     2.   Changes  in the  federal  income  tax laws and  regulations  which may
          affect the relative tax advantages of the Company's products.
     3.   Changes in the regulation of financial services,  including bank sales
          and  underwriting  of  insurance   products,   which  may  affect  the
          competitive environment for the Company's products.
     4.   Other factors affecting the performance of the Company, including, but
          not limited to,  stock  market  performance,  litigation  and industry
          insolvencies.

Company Overview

     On October 13, 1993,  LNL formed the Company to serve as a holding  company
for  SCL  and  its  subsidiary   LSL.  On  January  19,  1994,  LNL  effected  a
reorganization  in which it  contributed  $10  million in capital and all of the
outstanding shares of SCL to the Company in exchange for 8,500,000 shares of the
Company's  Common Stock and a Term Note in the principal  amount of $65 million.
On  February  2,  1994,  LNL sold 100% of the  outstanding  common  stock of the
Company  in an IPO for $187  million.  All of the  proceeds  of the IPO,  net of
related  issuance  expenses,  were received by LNL.  Also at this date,  certain
officers  were granted  47,727  shares of stock  subject to  restrictions  which
lapsed upon repayment of the Term Note. On March 1, 1996, the Company repaid the
Term Note utilizing  proceeds from the public sale of $75 million of medium term
notes with an effective  interest  rate of 7.39% due in 2003. On April 26, 1995,
AHL, a wholly owned subsidiary of the Company,  was incorporated as an insurance
company in Bermuda. AHL commenced operations in 1996,  reinsuring life insurance
policies  for  an  unaffiliated  reinsurance  company.

     On  February  23,  1997,  ReliaStar  and   Security-Connecticut   signed  a
definitive  agreement to combine the two companies  through the statutory merger
of  Security-Connecticut  with and into  ReliaStar.  The Board of  Directors  of
Security-Connecticut  has  unanimously  approved the merger.  Completion  of the
merger is  subject  to normal  closing  conditions,  including  approval  by the
Company's shareholders and various regulatory approvals. Provided there has been
no material breach by ReliaStar of the  representations,  warranties,  covenants
and agreements of ReliaStar under the merger agreement, Security-Connecticut has
agreed to pay ReliaStar $8 million if the merger agreement is terminated  either
as a result of (a) the  modification  or withdrawal,  in any way  detrimental to
ReliaStar, of the recommendation of the Security-Connecticut  Board with respect
to the merger,  or (b) the  execution  by  Security-Connecticut  of a definitive
agreement with a party other than ReliaStar with respect to a publicly announced
offer  or  intent  to  make  an  offer  to  acquire  all  or  substantially  all
Security-Connecticut or its subsidiaries.

     Separately and not  additionally,  if the merger agreement is terminated by
ReliaStar  on the  basis  that  the  Security-Connecticut  shareholders  did not
approve the merger, then Security-Connecticut would be required to pay ReliaStar
$2.5 million to reimburse  ReliaStar's  expenses incurred in connection with the
merger  agreement.  In addition to the  foregoing  $2.5 million  payment,  if an
acquisition  proposal is outstanding on the date of such termination,  or at any
time within 90 days  thereafter,  and an  acquisition  proposal  is  consummated
within twelve months of the termination of the merger agreement, the Company has
agreed to pay ReliaStar an additional $5.5 million.  The foregoing discussion is
qualified  in its  entirety by  reference  to the merger  agreement  filed as an
exhibit to this report.


                                      -24-
<PAGE>


Industry Overview

     The demand for life insurance and tax-advantaged investment products should
continue to increase as the aging population grows and becomes more aware of the
need for income  protection  and retirement  savings.  According to the American
Council of Life  Insurance  ("ACLI"),  life  insurance  companies  have realized
significant  growth with total industry  assets  increasing at a compound annual
growth rate of approximately 8% from 1991 to 1995, from $1.6 trillion in 1991 to
$2.1 trillion in 1995. In addition,  based on ACLI data, life insurance in-force
increased  at a compound  annual  growth rate of  approximately  6% from 1991 to
1995,  from $10.0  trillion in 1991 to $12.6  trillion  in 1995.  The market for
annuity products has grown significantly as well. According to the ACLI, annuity
premiums  have  grown at an average  rate of more than 10% per year since  1991.
Individual annuity considerations  increased from $51.7 billion in 1991 to $77.4
billion in 1995, according to ACLI data.

     Concurrent  with this  growth  in demand  for life  insurance  and  annuity
products,  the life insurance  business in the United States has undergone major
product and structural  changes in response to increased  competition from other
financial  intermediaries.   Until  the  late  1970s,  life  insurance  products
consisted  primarily of fixed  premium/guaranteed  cost value and death  benefit
whole life  products,  which  combined a death  benefit with cash  accumulation.
These products were competitive under stable and low interest rate environments;
however,  the volatile and high interest rate environments of the late 1970s and
early 1980s  caused many  insurance  buyers to consider  other  higher  yielding
financial  products.  As a result of the  increase in  competition  from savings
products offered by mutual funds, savings and loan associations, banks and other
financial  institutions,  many insurers  responded by offering  products such as
low-cost term insurance and higher  yielding  annuity  products,  in addition to
their traditional products.  In addition,  the life insurance industry responded
to the  demand  for  capital  accumulation  insurance  products  by  introducing
universal life, variable life and variable universal life products which combine
the  tax-deferred  income  accretion  of  traditional  insurance  products  with
flexible payment features and yields comparable to other investment  vehicles. A
consolidation trend emerged in the industry in the 1990s,  spurred on by factors
such as intensified  competition,  focus on profitable growth,  increased rating
agency scrutiny and deregulation in the financial services industry.

     The  following  analysis  of the  consolidated  results of  operations  and
financial condition should be read in conjunction with "Selected Financial Data"
and the  consolidated  financial  statements  and  accompanying  notes  included
elsewhere herein.

Results of Operations

Year Ended December 31, 1996 compared to Year Ended December 31, 1995

     Premiums - Premiums  decreased  $5.8 million or 9.1% from $64.1  million in
1995 to $58.3 million in 1996  primarily  due to the decrease in single  premium
immediate  annuity  premiums of $8.4  million and an increase in ceded  premiums
under various  reinsurance  agreements of $16.7 million,  partially offset by an
increase  in term  insurance  premiums of $9.0  million and assumed  reinsurance
premiums of $9.5 million.

     On a statutory-basis,  the Company's first year annualized life premiums on
new life insurance sales for individual  life insurance  increased $2.7 million,
or 5.6% from $46.9 million in 1995 to $49.6 million in 1996.  This was primarily
the result of a 24.1%  increase in term life sales offset by a 5.2%  decrease in
universal life insurance  sales.  Although first year  annualized  life premiums
increased in comparison to the prior year,  such premiums  decreased  during the
second  half of 1996 in  comparison  to both the first half of 1996 and the last
six months of 1995. The Company expects this trend to continue  through at least
the first quarter of 1997 due to the highly  competitive  insurance  environment
and the recent  downgrade of the Company's  claims paying  ability by A.M. Best.
Annualized  annuity sales decreased $44.9 million or 45.9% from $97.7 million in
1995 to $52.8 million in 1996 due primarily to the  relatively  flat yield curve
interest rate  environment  that has made fixed annuity products less attractive
than variable  annuity  products.  In addition,  the Company elected to maintain
profit  margins on annuity  products  rather  than  sacrifice  profitability  to
increase sales.


                                      -25-
<PAGE>


     Insurance  Fees - Insurance fees increased  $11.4  million,  or 9.1%,  from
$125.5  million  in 1995 to $136.9  million  in 1996,  reflecting  primarily  an
increase in the mortality and expense assessments for universal life products of
$5.2  million  and  $4.9  million,   respectively.  The  mortality  and  expense
assessment  increases  resulted  from (i)  growth  of  in-force  universal  life
business  from $13.4  billion at December 31, 1995 to $14.1  billion at December
31, 1996 and (ii) aging of the in-force  business  resulting  in higher  average
mortality charges.

     Net Investment  Income - Net investment  income increased $3.4 million,  or
2.6%,  from $132.0 million in 1995 to $135.4 million in 1996.  This reflects the
increase in the cost basis of invested assets, offset by a lower effective yield
on such  assets.  The  amortized  cost of  invested  assets was $1.8  billion at
December 31, 1996  compared to $1.7 billion at December 31, 1995,  reflecting an
increase  due to cash flow  from  sales of life  insurance  and  annuities.  The
effective  yield on  invested  assets was 7.6% for 1996  compared  with 7.9% for
1995.

     Realized Gains on Investments - Net realized gains on investments were $7.3
million in 1996  compared  with $6.2  million  in 1995.  The 1996 gains were the
result of net  realized  gains  from the sale of  investments  of $8.8  million,
partially  offset  by  increases  in the  allowance  for  losses  and  permanent
impairment  writedowns  of $1.0 million and deferred  policy  acquisition  costs
("DAC") associated with realized gains of $0.5 million.  The 1995 gains were the
result  of net  realized  gains of $15.1  million  from the sale of  investments
partially  offset  by  increases  in the  allowance  for  losses  and  permanent
impairment  writedowns of $4.3 million and DAC associated with realized gains of
$4.6  million.  One  investment  represented  $3.0  million of the $4.3  million
increase in allowance for losses in 1995.

     Benefits and Reserve Increases - Benefits and reserve  increases  decreased
$14.7 million,  or 7.0%,  from $207.6 million in 1995 to $192.9 million in 1996.
Life and annuity benefits decreased $9.6 million, or 9.4%, from $99.7 million in
1995 to $90.1 million in 1996. The Company's life claim  experience for 1996 was
favorable  compared to plan by $2.8 million,  or approximately  $0.21 per share,
after-tax,  and was approximately $7.4 million below 1995.  Interest credited to
policyholders  decreased  $2.1 million,  or 2.4%,  from $87.0 million in 1995 to
$84.9 million in 1996 due primarily to a slight decrease in crediting rates as a
result of rate resets on contract anniversary dates.

     Insurance and Other Expenses - Insurance and other expenses  increased $6.6
million,  or  7.8%,  from  $85.2  million  in 1995 to  $91.8  million  in  1996.
Commissions,  net of DAC, increased $1.0 million, or 3.0%, from $32.0 million in
1995 to $33.0 million in 1996.  This increase in net commission  expense was due
to a decrease in the deferral of  commissions  on new business as a result of an
increase in  reinsurance  ceded in connection  with the quota share  reinsurance
agreements.  General  administrative  and  other  operating  costs,  net of DAC,
increased $5.6 million, or 10.7%, from $53.2 million in 1995 to $58.8 million in
1996  primarily due to: (i) an increase in legal costs,  including  additions to
reserves,  of $3.7 million,  (ii) an increase in staff related  expenses of $4.6
million,  and (iii) an increase in interest  expense of $1.0 million,  partially
offset by a  reduction  in taxes,  licenses  and fees  expense of $6.5  million,
primarily  due to the release of a portion of the  liability  for guaranty  fund
assessments.

     Federal  Income Taxes - Federal  income taxes  increased  $5.9 million from
$12.3 million in 1995 to $18.2 million in 1996. This was primarily due to higher
pre-tax operating  income.  Effective tax rates were 34.0% and 33.8% in 1996 and
1995, respectively, compared to a statutory rate of 35%.


Year Ended December 31, 1995 compared to Year Ended December 31, 1994

    Premiums - Premiums  decreased $2.4 million,  or 3.6%, from $66.5 million in
1994 to $64.1  million in 1995 due  principally  to a decrease in  accident  and
health premiums from $4.8 million in 1994 to $2.5 million in 1995.


                                      -26-
<PAGE>


    On a  statutory-basis,  the Company's first year annualized life premiums on
new life insurance sales for individual  life insurance  increased $0.2 million,
or 0.4%, from $46.7 million in 1994 to $46.9 million in 1995. This was primarily
the result of a 9.5% increase in universal  life sales offset by a 8.8% decrease
in term life insurance sales.  Annualized  annuity sales decreased $83.3 million
or 46.0% from $181.0  million in 1994 to $97.7  million in 1995 due primarily to
the changing interest rate environment that had made longer-term  annuities less
attractive  than other  investments  such as  certificates of deposit and equity
securities and the Company's  election to maintain  interest rate spreads on its
annuity  products.  First year  annualized  life premium from Lincoln  Financial
Group ("LFG") in 1995 accounted for  approximately  $6.6 million or 14.1% of the
Company's total,  compared with $6.6 million or 14.2% in 1994. LFG annuity sales
in 1995 were $6.3 million,  or 6.4% of the Company's total,  compared with $13.3
million,  or 7.3% in 1994.  The level of life sales  produced  by LFG for SCL in
1996 was expected to decrease as LNC subsidiaries are manufacturing similar life
products which LFG was permitted to sell in 1996.

    Insurance Fees - Insurance fees increased $8.6 million, or 7.4%, from $116.9
million in 1994 to $125.5 million in 1995,  reflecting  primarily an increase in
the  mortality  and expense  assessments  for  universal  life  products of $4.8
million and $5.0 million,  respectively.  The  mortality and expense  assessment
increases  resulted from (i) increased  sales of universal life  products,  (ii)
growth of in-force  universal  life  business from $12.4 billion at December 31,
1994 to $13.4  billion at  December  31,  1995 and (iii)  aging of the  in-force
business resulting in higher average mortality charges.

    Net Investment  Income - Net investment  income increased $16.6 million,  or
14.3%,  from $115.4 million in 1994 to $132.0 million in 1995. This reflects the
increase in the amount of invested assets and a slightly higher  effective yield
on such  assets.  The  amortized  cost of  invested  assets was $1.7  billion at
December 31, 1995  compared to $1.6 billion at December 31, 1994,  reflecting an
increase  due to cash flow  from  sales of life  insurance  and  annuities.  The
effective  yield on  invested  assets was 7.8% for 1994  compared  with 7.9% for
1995.

     Realized Gains (Losses) on Investments - Net realized losses on investments
were $0.7 million in 1994  compared  with net realized  gains of $6.2 million in
1995.  The 1995  gains were the  result of net  realized  gains from the sale of
investments of $15.1 million, partially offset by increases in the allowance for
losses and permanent  impairment  writedowns of $4.3 million and DAC  associated
with realized gains of $4.6 million. One investment  represented $3.0 million of
the  increase in  allowance  for losses.  The 1994 losses were the result of net
realized  capital gains of $3.5 million from the sale of  investments  offset by
increases in the  allowance for losses and  permanent  impairment  writedowns of
$2.7 million and DAC associated with realized gains of $1.3 million.

    Benefits and Reserve  Increases - Benefits and reserve  increases  increased
$30.5 million,  or 17.2%, from $177.1 million in 1994 to $207.6 million in 1995.
Life and annuity benefits increased $19.8 million,  or 24.9%, from $79.9 million
in 1994 to $99.7 million in 1995. The Company's  life claim  experience for 1995
was unfavorable  compared to expected experience by $14.3 million, or 21.1%, and
was  approximately  $17.1  million  above  1994.  Subsequent  mortality  studies
indicated that the adverse  mortality was not  attributable to any single source
of  business,  product or cause of death.  Interest  credited  to  policyholders
increased $11.3 million, or 14.9% from $75.7 million in 1994 to $87.0 million in
1995 due primarily to the growth of account  values of annuity,  universal  life
and other interest sensitive  products,  offset somewhat by a slight decrease in
crediting rates.

    Insurance and Other Expenses - Insurance and other  expenses  increased $1.9
million,  or  2.3%,  from  $83.3  million  in 1994 to  $85.2  million  in  1995.
Commissions,  net of DAC, decreased $0.7 million, or 2.3%, from $32.7 million in
1994 to $32.0 million in 1995.  This  decrease in commission  expense was due to
the  decrease  in annuity  sales in 1995.  The 1994 net  commission  expense was
negatively  impacted by a refinement in the coinsurance  commission DAC estimate
of $1.8 million.  General  administrative and other operating costs, net of DAC,
increased $2.6 million,  or 5.2%, from $50.6 million in 1994 to $53.2 million in
1995  primarily  due to (i) an  increase in guaranty  fund  assessments  of $3.1
million, and (ii) an increase in interest expense of $1.7 million.


                                      -27-
<PAGE>


    Federal  Income  Taxes - Federal  income taxes  decreased  $0.5 million from
$12.8 million in 1994 to $12.3 million in 1995.  This was primarily due to lower
pre-tax operating  income.  Effective tax rates were 33.8% and 33.7% in 1995 and
1994, respectively compared to a statutory rate of 35%.


Liquidity and Capital Resources

Liquidity for the Holding Company

     As a holding company whose principal  assets are the investments in AHL and
SCL and its wholly owned insurance  subsidiary,  the Company's future ability to
pay operating expenses, meet debt service payments and make dividend payments to
shareholders  depends upon  receiving  sufficient  funds from SCL and AHL. Those
funds may come either from dividend payments or payments for services, which may
be provided by the Company to SCL.

     On June 8, 1995, the Company  registered $100 million of debt securities on
Form S-3 with the  Securities  and  Exchange  Commission.  The Company  sold $75
million of medium  term debt  securities  ("Debt") on March 1, 1996 and used $65
million of the net proceeds to repay the Term Note to LNL. The  remainder of the
proceeds was used for general corporate purposes. The Debt has an effective rate
of 7.39%  and is due March 1, 2003 and may not be  redeemed  prior to  maturity.
Interest on the Debt is payable semiannually in arrears on March 1 and September
1 of each year. Interest payments began on September 1, 1996.

Liquidity for Insurance Operations

     The principal  requirement for liquidity in connection with SCL's insurance
operations is its contractual  obligations to policyholders and annuitants,  and
its payment of dividends to the Company.  SCL's contractual  obligations include
payments of  surrender  benefits,  guaranteed  interest,  contract  withdrawals,
claims under outstanding insurance policies and annuities, and policy loans. The
primary source of meeting these  contractual  requirements is investment  income
from its  total  investment  portfolio,  scheduled  maturities  from  its  fixed
maturity  security  portfolio,   and  principal  repayments  from  its  mortgage
portfolio, as well as a portion of premium income.

     To  provide  for  additional   liquidity  to  meet  normal   variations  in
contractual obligations,  the Company maintains cash and short-term investments,
and a significant portion (65.0% at December 31, 1996) of its invested assets in
readily  marketable  public  debt  securities.  The  Company  believes  that its
liquidity needs are adequately met with the aforementioned  investment policies,
combined with the contractual terms of its life insurance and annuity products.

     The  Company's  net cash  flows  used in  operating  activities  were $69.0
million in 1996,  $60.7 million in 1995 and $38.5 million in 1994. The cash flow
statement  for the Company has been  prepared in  accordance  with  Statement of
Financial  Accounting  Standards  No. 95,  "Statement  of Cash Flows" ("FAS 95")
which requires  deposits of a financial  institution to be recorded as financing
activities.  As universal life and single premium deferred annuity contracts are
similar to deposits of a financial institution, cash receipts from policyholders
and payments that represent a return of policyholder balances have been reported
as financing  activities  in the  Company's  statement  of cash flows.  Net cash
receipts  of $126.1  million,  $180.0  million  and  $265.1  million  from these
contracts  were  reported  in  financing  activities  in 1996,  1995  and  1994,
respectively.  If these net cash receipts are considered in conjunction with the
Company's  net  cash  used in  operating  activities,  then  cash  derived  from
operating activities for 1996, 1995 and 1994 were $57.1 million,  $119.3 million
and $226.6 million,  respectively.  Operating cash flows in 1996 were negatively
impacted by higher insurance and operating expenses.


                                      -28-
<PAGE>


     At December 31, 1996, the fair value of  Security-Connecticut's  investment
in  fixed   maturity   securities   was  $1.6  billion,   93.8%  of  which  were
investment-grade  securities.  This  includes  $368.5  million,  or 23.2% of the
investment-grade  securities  that were  invested in fixed  maturity  securities
rated BBB by S&P, which  represents the lowest category of investment  grade, or
were of a  comparable  credit  quality.  A rating  of "BBB,"  according  to S&P,
indicates  that the  security  "exhibits  adequate  protection  parameters,  but
adverse economic conditions or changing circumstances are more likely to lead to
weakened capacity to pay."  Security-Connecticut  maintains  approximately 66.7%
($1.2 billion at December 31, 1996) of its invested assets in cash, equities and
highly liquid investment-grade  securities,  which could be sold to meet unusual
liquidity needs.

     The Company has entered  into several  interest  rate cap  agreements  as a
hedge against rising  interest  rates in its SPDA  investment  portfolio.  As of
December 31, 1996, these agreements  established cap rates ranging from 7.07% to
12.5% on notional principal of $510 million with termination dates through 2001.
The aggregate cost of $3.6 million is being  amortized to net investment  income
over the effective  life of the caps.  These  investments  are reported as fixed
maturity securities and classified as available-for-sale and are carried at fair
value ($1.9  million as of December 31, 1996) with  unrealized  gains and losses
reported in shareholders'  equity.  The Company is exposed to credit loss in the
event of  non-performance by counterparties on the caps. Due to the high quality
rating of the counterparties, the Company does not anticipate non-performance by
any of the  counterparties.  The amount of such  exposure is  approximately  the
unrealized gain in such contracts as interest rates rise.

     The NAIC has a system for assessing  the adequacy of statutory  capital and
surplus for life and health insurers.  The system,  known as risk-based  capital
("RBC"),  augments the states' current fixed dollar minimum capital requirements
and was effective  beginning with annual statutory reports in 1993. The focus of
the system is a risk-based  formula that applies  prescribed  factors to various
risk elements in an insurer's business to develop a minimum capital  requirement
that is  proportional  to the amount of risk  assumed by the  insurer.  Based on
computations made by the Company in accordance with the prescribed formula,  RBC
at December 31, 1996, for both SCL and LSL,  significantly  exceeded the minimum
capital requirements as produced by the RBC formula.

     SCL's  capital and surplus  increased  from $121.8  million at December 31,
1992 to $148.3 million at December 31, 1996, due to favorable  earnings  offset,
in part, by dividends paid to its parent.  It is expected that SCL will continue
to make dividend payments to its parent and continue to add new business,  which
may result in a decline of surplus. Even if SCL's surplus increases, the ratings
from A.M.  Best,  S&P and Moody's could be subject to a downgrade as the Company
experienced in November 1996 by A.M.  Best. If a downgrade were to  materialize,
sales  of the  Company's  products  could be  adversely  affected.  The  Company
continues to pursue courses of action, such as expense containment and limits on
capital  purchases,  which could help mitigate any future decrease in surplus or
rating  reclassifications.  There are no assurances  that any of these, or other
actions,   would  result  in  alleviating  future  surplus  declines  or  rating
reclassifications.

Inflation and Interest Rate Changes

     The Company does not believe that  inflation  has had a material  effect on
its results of  operations.  The Company  manages its investment  portfolio,  in
part,  to reduce its exposure to interest  rate  fluctuations.  In general,  the
market value of the Company's fixed maturity portfolio increases or decreases in
inverse  relationship with fluctuations in interest rates, and the Company's net
investment  income increases or decreases in direct  relationship  with interest
rate changes.  For example, if interest rates decline (as was the case in 1995),
the  Company's  fixed  maturity  investments  generally  will increase in market
value,  while net investment  income may decrease as fixed maturity  investments
mature or are sold and  proceeds  are  reinvested  at the  declining  rates.  If
interest rates increase (as was the case in 1996),  the Company's fixed maturity
investments generally will decrease in market value, while net investment income
may increase as fixed maturity  investments  mature or are sold and proceeds are
reinvested at the increased rates.


                                      -29-
<PAGE>


     Interest  rate  changes  may  have  temporary   effects  on  the  sale  and
profitability of the universal life and annuity products offered by the Company.
For example, if interest rates rise, competing investments (such as annuities or
life insurance  offered by the Company's  competitors,  certificates of deposit,
mutual funds,  and similar  instruments) may become more attractive to potential
purchasers  of the  Company's  products  until the  Company  increases  the rate
credited  to holders of its  universal  life and annuity  products.  The Company
monitors  interest  rates  with  respect to a spectrum  of  durations  and sells
policies and annuities that permit  flexible  responses to interest rate changes
as part of the Company's management of interest spreads.

Item 8 - Financial Statements and Supplementary Data

Consolidated Financial Statements

     The  consolidated   financial   statements  of   Security-Connecticut   and
subsidiaries follow on pages 30 through 58.


Unaudited Operating Results by Quarter

     The unaudited  operating  results by quarter are reported in Note 14 of the
consolidated financial statements of Security-Connecticut Corporation.


                                      -30-
<PAGE>














                         REPORT OF INDEPENDENT AUDITORS

Board of Directors
Security-Connecticut Corporation

     We  have  audited  the   accompanying   consolidated   balance   sheets  of
Security-Connecticut  Corporation  as of  December  31,  1996 and 1995,  and the
related consolidated statements of income,  shareholders' equity, and cash flows
for each of the three years in the period ended  December  31, 1996.  Our audits
also  included  the  financial  statement  schedule  listed in the Index at Item
14(a)(2).  These financial statements and schedule are the responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements and schedule based on our audits.

     We conducted  our audits in accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

     In our opinion,  the financial statements referred to above present fairly,
in   all   material   respects,   the   consolidated   financial   position   of
Security-Connecticut  Corporation  at  December  31,  1996  and  1995,  and  the
consolidated  results of its operations and its cash flows for each of the three
years in the period ended  December  31,  1996,  in  conformity  with  generally
accepted  accounting  principles.  Also, in our opinion,  the related  financial
statement  schedule,   when  considered  in  relation  to  the  basic  financial
statements  taken as a whole,  presents  fairly  in all  material  respects  the
information set forth therein.






                                                           /s/ Ernst & Young LLP
                                                               ERNST & YOUNG LLP



Hartford, Connecticut
February 23, 1997


                                      -31-

<PAGE>



<TABLE>
                        SECURITY-CONNECTICUT CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                    (Dollars in thousands, except share data)
<CAPTION>
                                                                            December 31,
                                                                     ------------------------
                                                                        1996          1995
                                                                     ----------    ----------
<S>                                                                  <C>           <C>
ASSETS
  Investments:
    Securities available-for-sale, at fair value:
      Fixed maturity securities (cost: 1996-$1,555,884;
        1995-$1,469,970)                                             $1,587,309    $1,564,576
      Equity securities (cost: 1996-$1,913, 1995-$3,435)                  1,930         6,331
  Mortgage loans on real estate                                         128,530       145,080
  Policy loans                                                           74,393        73,916
  Other invested assets                                                   6,914         6,221
                                                                     ----------    ----------
      Total investments                                               1,799,076     1,796,124
  Cash and invested cash                                                 29,027        29,753
  Deferred policy acquisition costs                                     388,668       335,821
  Premiums and fees receivable                                            7,860         5,871
  Accrued investment income                                              28,798        28,710
  Goodwill                                                               20,653        21,557
  Property and equipment                                                  8,516         9,455
  Acquired insurance in-force                                             8,284         8,966
  Amounts recoverable from reinsurers                                    39,616        34,974
  Other assets                                                            7,772        10,188
                                                                     ----------    ----------
      Total assets                                                   $2,338,270    $2,281,419
                                                                     ==========    ==========

LIABILITIES
  Future policy benefits and claims                                  $1,735,277    $1,682,364
  Contractholder funds                                                   61,407        49,978
  Long-term debt                                                         75,000        65,000
  Federal income taxes payable                                           20,909        38,178
  Dividends payable                                                       1,027         1,066
  Accrued expenses and other liabilities                                 88,185        95,137
  Deferred gain on sale/leaseback                                         1,233         1,334
                                                                    -----------    ----------
      Total liabilities                                               1,983,038     1,933,057

SHAREHOLDERS' EQUITY
  Preferred stock,  par value $0.01 per share;
    Authorized - 10,000,000  shares;
    issued and outstanding - none
  Common  stock,  par value $0.01 per share;
    Authorized - 50,000,000  shares;
    issued and outstanding 1996 - 8,564,626 shares;
    less 4,782 treasury shares; 1995 - 8,556,903 shares                      86            86
  Paid-in capital                                                        82,558        82,405
  Deferred compensation                                                                  (379)
  Net unrealized gains on securities available-for-sale                  10,873        35,748
  Retained earnings                                                     261,715       230,502
                                                                     ----------    ----------
      Total shareholders' equity                                        355,232       348,362
                                                                     ----------    ----------
      Total liabilities and shareholders' equity                     $2,338,270    $2,281,419
                                                                     ==========    ==========



<FN>
                       See notes to consolidated financial statements.
</FN>
</TABLE>


                                      -32-
<PAGE>


                        SECURITY-CONNECTICUT CORPORATION
                        CONSOLIDATED STATEMENTS OF INCOME
                  (Dollars in thousands, except per share data)

                                                   Year ended December 31,
                                              ---------------------------------
                                                1996        1995         1994
                                              ---------   ---------   ---------
REVENUES
   Premiums                                   $  58,261   $  64,085   $  66,503
   Insurance fees                               136,864     125,481     116,875
   Net investment income                        135,361     131,974     115,464
   Realized gains (losses) on investments         7,251       6,166        (726)
   Other                                            610       1,451         255
                                              ---------   ---------   ---------
      Total revenues                            338,347     329,157     298,371

BENEFITS AND EXPENSES
   Benefits and reserve increases               192,933     207,558     177,094
   Insurance and other expenses                  91,843      85,203      83,310
                                             ----------   ---------   ---------
      Total benefits and expenses               284,776     292,761     260,404
                                              ---------   ---------   ---------

Income before federal income taxes               53,571      36,396      37,967

Federal income taxes                             18,226      12,286      12,808
                                              ---------   ---------   ---------
      NET INCOME                              $  35,345   $  24,110   $  25,159
                                              =========   =========   =========


EARNINGS PER COMMON SHARE                     $    4.10   $    2.81   $    2.94
                                              =========   =========   =========


DIVIDENDS DECLARED PER COMMON SHARE           $    0.48   $    0.48   $    0.48
                                              =========   =========   =========


Common stock and equivalents                  8,628,398   8,590,376   8,547,727


















                 See notes to consolidated financial statements.


                                      -33-
<PAGE>
<TABLE>

                        SECURITY-CONNECTICUT CORPORATION
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                             (Dollars in thousands)
<CAPTION>
                                                                  Year ended December 31,
                                                            ----------------------------------
                                                               1996        1995         1994
                                                            ---------   ---------    ---------
<S>                                                         <C>         <C>          <C>
Common Stock:
    Balance at beginning of year                            $      86   $      85
    Issuance of common stock                                                    1    $      85
                                                            ---------   ---------    ---------
       Balance at end of year                                      86          86           85

Paid-in Capital:
    Balance at beginning of year                               82,405      82,186
    Issuance of common stock                                      258         219      136,136
    Note payable                                                                       (65,000)
    Capital contribution                                                                10,000
    Issuance of restricted common stock                                                  1,050
    Treasury stock acquired                                      (105)
                                                            ---------   ---------    ---------
       Balance at end of year                                  82,558      82,405       82,186

Common Stock and Paid-in Capital of Predecessor Company:
    Balance at beginning of year                                                       136,221
    Reorganization of subsidiary, at book value                                       (136,221)
                                                                                     ---------
       Balance at end of year                                                                0

Deferred Compensation:
    Balance at beginning of year                                 (379)       (729)           0
    Issuance of restricted common stock                                                 (1,050)
    Change for the year                                           379         350          321
                                                            ---------   ---------    ---------
       Balance at the end of year                                   0        (379)        (729)

Net Unrealized Gains (Losses) on Securities Available-For-Sale:
    Balance at beginning of year                               35,748     (46,730)      30,050
    Change for the year                                       (24,875)     82,478      (76,780)
                                                            ---------   ---------    ---------
       Balance at end of year                                  10,873      35,748      (46,730)

Retained Earnings:
    Balance at beginning of year                              230,502     210,497      189,442
    Net income                                                 35,345      24,110       25,159
    Dividends to shareholders                                  (4,108)     (4,105)      (4,104)
    Treasury stock acquired                                       (24)
                                                            ---------   ---------    ---------
       Balance at end of year                                 261,715     230,502      210,497
                                                            ---------   ---------    ---------


Total shareholders' equity at end of year                   $ 355,232   $ 348,362    $ 245,309






<FN>
                 See notes to consolidated financial statements.
</FN>
</TABLE>

                                      -34-
<PAGE>
<TABLE>

                        SECURITY-CONNECTICUT CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)
<CAPTION>
                                                                     Year ended December 31,
                                                                ---------------------------------
                                                                   1996        1995        1994
                                                                ---------   ---------   ---------
<S>                                                             <C>         <C>         <C>
Operating activities
Net income                                                      $  35,345   $  24,110   $  25,159
Adjustments to reconcile net income to net cash used:
   Deferred policy acquisition costs:
      Amortization                                                 35,498      35,539      36,506
      Deferral                                                    (57,873)    (68,333)    (72,263)
   Increase in accrued investment income                              (88)     (1,175)     (5,907)
   Decrease in policy liabilities and contractholder funds        (64,985)    (47,269)    (24,423)
   Decrease in federal income taxes payable                        (3,867)    (10,645)     (1,309)
   Net amortization of acquired insurance in-force and goodwill     1,586       1,630       1,742
   Decrease (increase) in amounts recoverable from reinsurers      (4,642)      6,828     (18,051)
   Decrease (increase) in premiums and fees receivable             (1,989)      3,295        (359)
   Realized (gains) losses on investments                          (7,251)     (6,166)        726
   Other                                                             (765)      1,504      19,631
                                                                ---------   ---------   ---------
Net cash used in operating activities                             (69,031)    (60,682)    (38,548)

Investing activities
Fixed maturity securities available-for-sale:
   Purchases                                                     (373,321)   (553,806)   (602,712)
   Sales                                                          225,842     203,294     281,647
   Maturities                                                      63,440     215,128      75,808
Equity securities:
   Purchases                                                       (3,206)     (4,793)     (1,008)
   Sales                                                            8,178       8,880       5,433
Purchases of other investments                                     (1,532)     (6,618)     (3,792)
Sales or maturities of other investments                           17,989      21,895      18,461
Other                                                              (1,592)      3,648        (522)
                                                                ---------   ---------   ---------
Net cash used in investing activities                             (64,202)   (112,372)   (226,685)
                                                                ---------   ---------   ---------

Financing activities
Universal life and investment contract deposits                   243,430     261,715     325,229
Universal life and investment contract withdrawals               (117,284)    (81,733)    (60,163)
Issuance of long-term debt                                         75,000
Repayment of long-term debt                                       (65,000)
Dividends to shareholders                                          (4,108)     (4,105)     (3,060)
Issuance of common stock                                              258         220
Issuance of restricted common stock                                                         1,050
Acquisition of treasury stock                                        (129)
Capital contribution                                                                       10,000
Other                                                                 340         372        (729)
                                                                ---------   ---------   ---------
Net cash provided by financing activities                         132,507     176,469     272,327
                                                                ---------   ---------   ---------

Net increase (decrease) in cash and invested cash                    (726)      3,415       7,094
Cash and invested cash at beginning of year                        29,753      26,338      19,244
                                                                ---------   ---------   ---------

Cash and invested cash at end of year                           $  29,027   $  29,753   $  26,338
                                                                =========   =========   =========




<FN>
                 See notes to consolidated financial statements.
</FN>
</TABLE>

                                      -35-
<PAGE>


                        SECURITY-CONNECTICUT CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   Organization and Significant Accounting Policies

Organization

     Security-Connecticut Corporation  ("Security-Connecticut" or the "Company")
is an insurance  holding  company  which owns 100% of the  outstanding  stock of
Security-Connecticut  Life  Insurance  Company  ("SCL")  and  its  wholly  owned
subsidiary  Lincoln Security Life Insurance  Company  ("LSL").  The Company also
owns 100% of Arrowhead  Ltd.  ("AHL"),  an  insurance  company  incorporated  in
Bermuda in 1995. The Company, through SCL and LSL, offers a diverse portfolio of
individual  life insurance and annuity  products to customers  throughout the 50
states, the District of Columbia and Guam. Included in the portfolio of products
are universal life,  interest  sensitive  whole life, term life,  single premium
deferred and  immediate  annuities,  as well as a small amount of group life and
accident and health insurance. Most of the Company's sales for 1996 were related
to term,  universal  life and single  premium  deferred  annuity  products.  The
Company  provides  its products  through a  non-exclusive,  independent  general
agency system.  Within the independent agency system, the Company accesses three
principal distribution channels:  wholesale, retail and special markets that are
geographically  diverse.  In  January  1996,  AHL  began  operating  as a  small
reinsurance  company  reinsuring  life  insurance  policies  of an  unaffiliated
reinsurance  company. AHL had assumed premiums of approximately $9.5 million, in
1996.

     On October 13, 1993, Lincoln National Life Insurance Company ("LNL") formed
the  Company to serve as a holding  company for SCL and its  subsidiary  LSL. On
January 19, 1994,  LNL effected a  reorganization  in which it  contributed  $10
million in capital  and all of the  outstanding  shares of SCL to the Company in
exchange for 8,500,000  shares of the Company's  Common Stock and a Term Note in
the principal  amount of $65 million.  On February 2, 1994, LNL sold 100% of the
outstanding  common stock of the Company in an Initial Public  Offering  ("IPO")
for $187  million.  All of the  proceeds  of the IPO,  net of  related  issuance
expenses, were received by LNL. Also at that date, certain officers were granted
47,727 shares of stock subject to  restrictions  which lapsed upon  repayment of
the Term Note on March 1, 1996. The Company sold $75 million of medium term debt
securities  on March 1, 1996 and used $65  million of the net  proceeds to repay
the Term Note to LNL. (See Note 4)

     On  February  23,  1997,   ReliaStar  Financial  Corp.   ("ReliaStar")  and
Security-Connecticut  signed a definitive agreement to combine the two companies
through the merger of  Security-Connecticut  into ReliaStar in a stock-for-stock
exchange (see Notes 7, 9 and 13).

Basis of Financial Statements

     The consolidated  financial statements of the Company have been prepared in
conformity with generally accepted accounting  principles  ("GAAP"),  which vary
from  statutory  accounting  practices  prescribed  or  permitted  by  insurance
regulatory  authorities  (see Note 9). They  include the accounts of the Company
and its  subsidiaries,  SCL and its  wholly  owned  subsidiary,  LSL,  and  AHL.
Significant intercompany transactions and balances have been eliminated.

Use of Estimates

     The  preparation of financial  statements in conformity  with GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities  and disclosure of contingent  liabilities as of the date
of the financial  statements,  and that affect the reported  amounts of revenues
and expenses during the reporting period.
Actual results could differ from these estimates.



                                      -36-
<PAGE>


1.   Organization and Significant Accounting Policies (continued)

Investments

     All fixed maturity  securities  (bonds) and equity  securities  (common and
preferred  stock) are classified as  available-for-sale  and,  accordingly,  are
carried at fair value.  The cost of fixed  maturity  securities  is adjusted for
amortization of premium or discount through charges or credits to net investment
income. Changes in the fair values of available-for-sale securities are reported
directly in shareholders'  equity after adjustments for related  amortization of
deferred policy  acquisition  costs ("DAC") and changes in other  policy-related
liabilities,  net of tax,  which would have been  required had these  securities
actually been sold.

     For the  securitized  investment  portion of the fixed maturity  securities
portfolio,  the Company recognizes income using a constant effective yield based
on anticipated  prepayments and the estimated  economic lives of the securities.
When actual prepayments differ significantly from anticipated  prepayments,  the
effective  yield  is  recalculated  to  reflect  actual  payments  to  date  and
anticipated future payments. The net investment in the securities is adjusted to
the amount that would have  existed  had the new  effective  yield been  applied
since the  acquisition of the  securities.  This  adjustment is reflected in net
investment income.

     Mortgage  loans and  policy  loans are  carried at unpaid  balances  net of
allowances for  uncollectible  amounts.  The  determination of declines in value
deemed  other than  temporary  and related  adjustments  are made on a quarterly
basis by management in consultation with its investment  advisor.  The change in
these allowances is reported as realized gains (losses) on investments.

     Realized  gains  (losses) on sales of  investments  are  recognized  in net
income using the specific  identification  method.  Realized  gains  (losses) on
investments supporting  interest-sensitive  policies include adjustments for DAC
and other policy-related liabilities.

     Interest on investments  is recognized on the accrual basis as earned,  and
dividends on equity  securities  are recognized  principally on the  ex-dividend
date. Interest on restructured loans is recognized on the cash basis.

Interest Rate Caps

     Interest  rate  caps  are used as part of an  overall  interest  rate  risk
management  strategy for certain annuity products primarily to hedge the risk of
investment  losses due to product  surrenders  in an  increasing  interest  rate
environment.  The cost is amortized  over the lives of the caps.  Interest  rate
caps  are   reported   as  fixed   maturity   securities   and   classified   as
available-for-sale  and, accordingly,  are carried at fair value with unrealized
gains and losses reported as a separate component of shareholders' equity.

Cash and Invested Cash

     Cash and invested cash include all highly liquid debt instruments purchased
with a maturity of three months or less. Carrying value approximates fair value.


                                      -37-
<PAGE>


1.   Organization and Significant Accounting Policies (continued)

Deferred Policy Acquisition Costs

     To the extent  recoverable  from future policy  revenues and gross profits,
commissions  and other  costs,  net of  commission  and expense  allowances  for
reinsurance  ceded,  incurred to acquire or renew  universal  life insurance and
other  interest-sensitive  life  insurance,   traditional  life  insurance,  and
annuities  that vary with and are  primarily  related to the  production  of new
business,  have been deferred.  DAC for universal  life  insurance  policies and
deferred  annuities is  amortized  over the lives of the policies in relation to
the  present  value of  estimated  gross  profits  from  surrender  charges  and
investment,  mortality and expense  margins.  Traditional  life DAC is amortized
over  the  premium-paying  period  of the  related  policies  using  assumptions
consistent with those used in computing policy reserves.

Acquired Insurance In-Force

     The value of acquired  insurance  in-force  represents the present value of
future  profits  of the  business  in force on  October  31,  1979 (the date LNC
acquired  SCL),  using a discount  rate of 15%.  Interest is accreted at 15% per
annum,  and the present value of future  profits is amortized over the estimated
premium-paying  period in proportion to the ratio of annual anticipated  premium
revenues to total anticipated premium revenues.  Generally, the same assumptions
used in calculating  the liability for future policy  benefits (also referred to
as policy  reserves)  were used in computing  the  anticipated  annual  profits.
Accumulated  amortization  was $60.8  million and $60.1  million at December 31,
1996 and 1995,  respectively.  The carrying value of acquired insurance in-force
is reviewed periodically for indicators of impairment in value.

Goodwill

     The excess of the purchase  price over the fair value of  identifiable  net
assets acquired is being amortized on a straight-line  basis over a period of 40
years.  Accumulated amortization was $16.3 million and $15.4 million at December
31,  1996 and 1995,  respectively.  The  carrying  value of goodwill is reviewed
periodically for indicators of impairment in value.

Property and Equipment

     Property  and  equipment  owned for  Company  use is  carried  at cost less
allowances  for  depreciation.  Depreciation  is  computed  principally  on  the
straight-line method over the estimated useful lives of the assets.

Future Policy Benefits and Unpaid Claims

     The  liabilities  for future policy  benefits for universal  life insurance
policies and deferred  annuities  consist of policy account balances that accrue
to the  benefit of the  policyholders,  without  reduction  (or  offset)  for/by
surrender charges. Interest-crediting rates for these products during 1996, 1995
and 1994 ranged from 4.05% to 8.00%.  The liabilities for future policy benefits
for traditional  life policies and immediate  annuities are computed using a net
level premium method (i.e., the benefit and expense net premiums determined as a
level  percentage  of the  corresponding  gross  premiums)  and  assumptions  of
investment  yields,  mortality  and  withdrawals  based  principally  on Company
experience  projected at the time of policy issue,  with provisions for possible
adverse deviations.


                                     -38-
<PAGE>


1.   Organization and Significant Accounting Policies (continued)

Future Policy Benefits and Unpaid Claims (continued)

     Interest  assumptions for traditional  direct  individual life reserves for
all policies range from 2.25% level to 10.00% level.  Mortality  assumptions for
traditional  life  business  issued  prior to  mid-1987  are  equal  to  varying
percentages of the 1965-70 Select and Ultimate Table depending on age,  duration
and underwriting classification; for issues after mid-1987, the underlying table
is the 1975-80 Select and Ultimate  Table.  Withdrawal  assumptions are based on
Company experience and vary by plan and policy duration.

     Policy  benefits  are  charged  to  expense  in the  period  incurred.  All
insurance  related benefits and expenses are reported net of reinsurance  ceded;
policy liabilities and accruals are reported gross of reinsurance ceded.

     The liability for unpaid claims is based on estimates of ultimate  payments
to be made for the individual  claims reported and  unreported.  In addition SCL
and LSL pay interest to policy  beneficiaries  in the ordinary  course of paying
death claims.  Cash paid for interest for 1996, 1995 and 1994, was $3.5 million,
$4.4 million and $3.2 million, respectively.

Recognition of Premium Revenue, Insurance Fees and Benefits

     Revenue for universal  life insurance  policies  consists of policy charges
for the  cost of  insurance,  administration,  and  surrenders  that  have  been
assessed  against  policy  account  balances  during the period.  Universal life
revenue also includes policy  initiation fees that are deferred and amortized in
relation to the estimated  future gross  profits of the  policies.  Expenses for
universal life insurance  policies include  interest  credited to policy account
balances  and  benefit  claims  incurred  during  the period in excess of policy
account balances.  Expenses for deferred  annuities include interest credited to
account  balances.   Premiums  for  traditional  individual  life  policies  and
immediate  annuities are recognized as revenue over the  premium-paying  period.
All  insurance  related  revenue and expenses  are  reported net of  reinsurance
ceded.

     In the  accompanying  financial  statements,  amounts  reported as premiums
include premiums earned from traditional  life, group life, health insurance and
immediate annuities, net of related reinsurance amounts.

Reinsurance

     The Company is involved in both the cession and  assumption of  reinsurance
with other companies,  including former affiliates.  The Company has established
retention limits which it believes are appropriate for its business. The portion
of risk that exceeds the retention limits is reinsured with other insurers.

     Risk  associated  with  universal  life and  traditional  life insurance is
reinsured  through  first  dollar  quota  share,   yearly   renewable-term   and
co-insurance  reinsurance contracts.  Expenses associated with ceded reinsurance
are recognized over the life of the reinsured policies.

     Amounts  recoverable from reinsurers for unpaid losses, and future life and
health  benefits,   are  recorded  in  a  manner  consistent  with  the  related
liabilities associated with the reinsured policies.

Stock Incentive Plan

     The Company grants stock options for a fixed number of shares to employees,
with an exercise  price equal to the fair value of the shares at the date of the
grant.  The Company  accounts for stock  option  grants in  accordance  with APB
Opinion No. 25 and,  accordingly,  recognizes  no  compensation  expense for the
stock option grants.


                                      -39-
<PAGE>


1.   Organization and Significant Accounting Policies (continued)

Income Taxes

     The Company  accounts for income taxes in accordance with FAS Statement No.
109  "Accounting  for Income Taxes." Under this method,  deferred tax assets and
liabilities are determined based on differences  between financial reporting and
tax basis assets and liabilities,  principally DAC, unrealized gains (losses) on
available-for-sale  securities,  acquired insurance in-force and liabilities for
future policy benefits and claims.

Earnings and Dividends Per Common Share

     Primary  earnings per common share is based on the weighted  average number
of  common  shares  outstanding  during  the  periods  presented  including,  if
applicable,  dilutive common stock equivalents. Common stock equivalents consist
of stock options for the period prior to their exercise or  cancellation.  Fully
diluted  earnings per common share are not presented as they are not  materially
different from primary earnings per common share.

Reclassifications

     Certain 1995 and 1994 amounts have been reclassified to conform to the 1996
presentation.  These  reclassifications had no impact on the previously reported
net income.

2.   Recently Issued Accounting Standards

Stock-Based Compensation

     In  October  1995,  the  FASB  issued  Statement  of  Financial  Accounting
Standards No. 123,  "Accounting for Stock-Based  Compensation" ("FAS 123") which
became  effective in 1996,  and provides an  alternative  to APB Opinion No. 25,
"Accounting  for Stock Issued to Employees"  ("APB No. 25"),  in accounting  for
stock-based  compensation  issued to employees.  FAS 123 allows for a fair value
based  method of  accounting  for  employee  stock  options and  similar  equity
instruments.  However,  for companies  that continue to account for  stock-based
compensation  arrangements under APB No. 25, FAS 123 requires  disclosure of the
pro-forma  effect on net income and  earnings  per share of its fair value based
accounting for those  arrangements.  The Company has not adopted the recognition
and  measurement  provisions  of FAS  123  and  will  continue  to  account  for
stock-based compensation under APB No. 25. Accordingly, adoption of FAS 123 only
requires  additional  financial statement footnote  disclosures.  See Note 7 for
disclosures.

Investments

     In June 1996, the FASB issued Statement of Financial  Accounting  Standards
No. 125,  "Accounting  for  Transfers  and  Servicing  of  Financial  Assets and
Extinguishments  of  Liabilities,"  which  requires an entity to  recognize  the
financial and servicing  assets it controls and the  liabilities it has incurred
and to  derecognize  financial  assets  when  control  has been  surrendered  in
accordance with the criteria  provided in the Statement.  The Company will apply
the new rules  prospectively  to transactions  beginning in the first quarter of
1997.  Based on current  circumstances,  the Company believes the application of
the new rules will not have a material impact on the financial statements.


                                      -40-
<PAGE>


3.   Investments and Fair Value of Financial Instruments

     Major categories of net investment income consisted of the following:

                                                   Year ended December 31,
                                              ---------------------------------
                                                1996        1995         1994
                                              ---------   ---------   ---------
                                                        (000s omitted)
Fixed maturity securities                     $ 116,877   $ 112,726   $  95,323
Equity securities                                    10          36          98
Mortgage loans                                   13,634      15,092      17,380
Policy loans                                      5,104       5,344       4,855
Other invested assets                             3,385       1,888       1,671
                                              ---------   ---------   ---------
   Total investment income                      139,010     135,086     119,327
Investment expenses                               3,649       3,112       3,863
                                              ---------   ---------   ---------
   Net investment income                      $ 135,361   $ 131,974   $ 115,464
                                              =========   =========   =========


     Realized gains (losses) on investments consisted of the following:

                                                    Year ended December 31,
                                               --------------------------------
                                                  1996       1995        1994
                                               ---------  ---------   ---------
                                                        (000s omitted)
Fixed maturity securities available-for-sale:
  Gross gains                                 $   6,306   $   9,494   $   7,493
  Gross losses                                   (3,091)     (1,353)     (7,621)
Equity securities:
  Gross gains                                     4,520       5,684       2,154
  Gross losses                                   (1,069)       (260)       (235)
Mortgage loans:
  Gross gains                                     1,335         887         595
  Gross losses                                                 (678)
Real estate                                         (37)
Policy loans*                                       (18)        (11)         (4)
Other invested assets*                             (695)     (7,597)     (3,108)
                                              ---------   ---------   ---------
   Realized gains (losses) on investments         7,251       6,166        (726)
Tax benefit (expense)                            (2,533)     (2,158)        254
                                              ---------   ---------   ---------
   Net realized gains (losses) on investments $   4,718   $   4,008   $    (472)
                                              =========   =========   ========= 

*  1995 and 1994 amounts  consist  principally of provisions for losses,  net of
   recoveries.  The realized  losses on other  invested  assets also reflect the
   amortization of DAC recognized upon the realization of gains above.

     Increases  (decreases) in provisions for losses,  which are included in the
realized gains (losses) on investments shown above are as follows:

                                                   Year ended December 31,
                                              ---------------------------------
                                                 1996        1995        1994
                                              ---------   ---------   ---------
                                                       (000s omitted)

Mortgage loans on real estate                 $    (896)  $    (852)  $  (2,586)
Policy loans                                         22          21          19
Other invested assets                            (4,601)      2,976       1,625
                                              ---------   ---------   ---------
   Total                                      $  (5,475)  $   2,145   $    (942)
                                              =========   =========   ========= 


                                      -41-
<PAGE>


3.   Investments and Fair Value of Financial Instruments (continued)

     The cost  information for mortgage  loans,  policy loans and other invested
assets is net of allowances  for losses.  The cost and allowances for such items
are as follows:
                                                     December 31,
                                   ---------------------------------------------
                                            1996                   1995
                                   ----------------------  ---------------------
                                      Cost     Allowances     Cost    Allowances
                                   ----------  ----------  ---------- ----------
                                                   (000s omitted)
Mortgage loans                     $  128,870  $      340  $  146,316 $    1,236
Policy loans                           74,719         326      74,220        304
Other invested assets                   6,914                  10,822      4,601

     The change in unrealized  gains  (losses) on  investments  consisted of the
following:

                                                   Year ended December 31,
                                              ---------------------------------
                                                 1996        1995       1994
                                              ----------  ---------- ----------
                                                        (000s omitted)

Fixed maturity securities                    $   63,181)  $  153,111 $ (144,232)
Equity securities                                (2,879)       3,509     (1,041)
                                             ----------   ---------- ----------
   Total unrealized gains (losses)           $  (66,060)  $  156,620 $ (145,273)
                                             ==========   ========== ========== 

     The amortized cost, gross  unrealized  gains and losses,  and fair value of
securities available-for-sale are as follows:
<TABLE>
<CAPTION>
                                                             December 31, 1996
                                                          ----------------------
                                             Amortized       Gross Unrealized
                                             ----------   ----------------------
                                                Cost         Gains       Losses    Fair Value
                                             ----------   ----------   ---------   ----------
                                                              (000s omitted)
<S>                                          <C>          <C>          <C>         <C>
Fixed maturity securities:
   Corporate bonds                           $  916,150   $   30,521   $   8,583   $  938,088
   Securitized investments                      439,341       11,092       3,339      447,094
   Foreign government bonds                     146,137        5,451       1,317      150,271
   United States government bonds                52,256          285       2,681       49,860
   State and municipal bonds                      2,000                        4        1,996
                                             ----------   ----------   ---------   ----------
     Total fixed maturity securities          1,555,884       47,349      15,924    1,587,309
Equity securities                                 1,913           51          34        1,930
                                             ----------   ----------   ---------   ----------
   Total securities available-for-sale       $1,557,797   $   47,400   $  15,958   $1,589,239
                                             ==========   ==========   =========   ==========
</TABLE>
<TABLE>
<CAPTION>
                                                             December 31, 1995
                                              ------------------------------------------------
                                              Amortized       Gross Unrealized
                                                           ----------------------
                                                 Cost        Gains       Losses     Fair Value
                                              ----------   ----------   ---------   ----------
                                                               (000s omitted)
<S>                                           <C>          <C>          <C>         <C>
Fixed maturity securities:
   Corporate bonds                            $  837,608   $   64,495   $   2,680   $  899,423
   Securitized investments                       440,982       23,112       1,326      462,768
   United States government bonds                 48,070        1,459         111       49,418
   Foreign government bonds                      143,310       11,701       2,044      152,967
                                              ----------   ----------   ---------   ----------
      Total fixed maturity securities          1,469,970      100,767       6,161    1,564,576
Equity securities                                  3,435        4,040       1,144        6,331
                                              ----------   ----------   ---------   ----------
   Total securities available-for-sale        $1,473,405   $  104,807   $   7,305   $1,570,907
                                              ==========   ==========   =========   ==========

</TABLE>


                                      -42-
<PAGE>


3.   Investments and Fair Value of Financial Instruments (continued)

     Fair values for fixed maturity  securities and equity  securities are based
on quoted market prices,  where  available.  For fixed  maturity  securities not
actively   traded,   fair  values  are  estimated  using  values  obtained  from
independent  pricing  services  or,  in  the  case  of  private  placements,  by
discounting expected future cash flows using a current market rate applicable to
the coupon rate, credit quality and maturity of the investments.

     At  December  31,  1996,  fixed  maturity  securities  with a fair value of
approximately  $3.4 million were on deposit with state insurance  departments to
satisfy regulatory requirements.

     The components of the balance sheet caption "net unrealized  gains (losses)
on securities  available-for-sale"  in  shareholders'  equity are  summarized as
follows:
                                                        December 31,
                                            -----------------------------------
                                               1996         1995         1994
                                            ----------   ----------   ---------
                                                      (000s omitted)

Fair value of securities                    $1,589,239   $1,570,907  $1,267,342
Amortized cost of securities                 1,557,797    1,473,405   1,326,460
                                            ----------   ----------   ---------
Net unrealized gains (losses)                   31,442       97,502     (59,118)
Adjustments:
   DAC                                         (16,563)     (47,526)     21,002
   Other policy liabilities                      1,832        5,012      (2,280)
   Deferred income taxes                        (5,838)     (19,240)     (6,334)
                                            ----------   ----------   ---------
     Net unrealized gains (losses) on
         available-for-sale securities      $   10,873   $   35,748  $  (46,730)
                                            ==========   ==========  ==========

     The increase in net unrealized  gains  (losses) and the  adjustments to DAC
and other policy liabilities reflect the effects the unrealized gains and losses
have on DAC and other policy  liabilities as if realized.  The above adjustments
to DAC and other policy  liabilities  are netted  against the DAC and the future
policy benefits and claims accounts in the accompanying balance sheets.

     The following  data for fixed  maturity  securities is based on contractual
maturities,  except for  securitized  investments  which are not due at a single
maturity date.  Actual  maturities  will differ in some cases because  borrowers
have the right to call or prepay  obligations with or without call or prepayment
penalties.
                                                            December 31, 1996
                                                          ----------------------
                                                          Amortized     Fair
                                                             Cost       Value
                                                          ----------  ----------
                                                              (000s omitted)
Due in one year or less                                   $   50,367  $   51,300
Due after one year through five years                        307,875     318,385
Due after five years through ten years                       415,337     425,321
Due after ten years                                          342,964     345,209
Securitized investments                                      439,341     447,094
                                                          ----------  ----------
   Total                                                  $1,555,884  $1,587,309
                                                          ==========  ==========

     The  Company's  recorded  investment  in impaired  mortgage  loans,  net of
allowances for loan losses, was $4.2 million,  and $7.7 million,  as of December
31, 1996 and 1995,  respectively.  The average  recorded  investment in impaired
mortgage loans was $2.1 million,  $1.5 million and $1.8 million for December 31,
1996, 1995 and 1994, respectively. Interest income of $0.6 million, $0.9 million
and $1.8 million was recorded in 1996, 1995 and 1994, respectively.  Progression
of the allowance for loan losses for impaired mortgage loans is as follows:


                                      -43-
<PAGE>


3.   Investments and Fair Value of Financial Instruments (continued)

                                                        December 31,
                                              ---------------------------------
                                                1996        1995        1994
                                              ---------   ---------   ---------
                                                      (000s omitted)

Balance at beginning of period                $   1,236   $   2,088   $   4,674
Provisions for losses                                           616       1,012
Releases, principally due to sales                 (896)     (1,468)     (3,598)
                                              ---------   ---------   ---------
   Balance at end of period                   $     340   $   1,236   $   2,088
                                              =========   =========   =========

     The Company invests in mortgage loans principally involving commercial real
estate.  At December 31, 1996, 43.2% of such mortgages ($55.5 million)  involved
properties   located   in   California,   Illinois,   Massachusetts,   Missouri,
Pennsylvania  and Texas.  Such  investments  consist of first liens on completed
income-producing  properties.  The  maximum  percentage  of any one  loan to its
property  value  at the  time  of the  loan  is 75  percent.  The  Company  is a
participant in approximately  $95 million of mortgage loans with LNL under which
LNL has the  right at any  time on 10 days  notice  to  purchase  the  Company's
interest for the then-existing principal plus accrued interest.

     The Company has entered into several  interest  rate cap  agreements,  as a
hedge against  rising  interest  rates in its single  premium  deferred  annuity
investment portfolio.  As of December 31, 1996, these agreements established cap
rates  ranging  from 7.07% to 12.5% on notional  principal  of $510 million with
termination  dates  through 2001.  The  aggregate  cost of $3.6 million is being
amortized to net investment  income over the effective  life of the caps.  These
investments  are  reported  as  fixed  maturity  securities  and  classified  as
available-for-sale  and are carried at fair value ($1.9 million and $0.7 million
in 1996 and 1995,  respectively)  with  unrealized  gains and losses reported in
shareholders'  equity.  The  Company is  exposed to credit  loss in the event of
non-performance by counterparties on the caps. Due to the high quality rating of
the  counterparties,  the Company does not anticipate  non-performance by any of
the counterparties.  The amount of such exposure is approximately the unrealized
gain in such contracts as interest rates rise.

     The following  table  summarizes  the carrying  amounts and estimated  fair
values of mortgage loans,  policy loans, and deposit contract  liabilities as of
December 31, 1996 and 1995. The table  excludes,  other invested assets and cash
and invested cash, all of which had fair values  approximating  carrying values.
It also  excludes  fixed  maturity and equity  securities  whose fair values are
disclosed elsewhere in this footnote.

                                                 December 31,
                                ------------------------------------------------
                                         1996                      1995
                                -----------------------   ----------------------
                                              Estimated                Estimated
                                 Carrying       Fair      Carrying       Fair
                                  Amount        Value       Amount       Value
                                ----------   ----------   ---------   ----------
                                                 (000s omitted)
Assets
  Mortgage loans (1)            $  128,530   $  134,280   $ 145,080   $  153,858
  Policy loans (2)                  74,393       77,244      73,916       78,840

Liabilities
  Deposit contracts (2)(3)      $   21,383   $   20,884   $  24,451   $   24,106
  Long-term debt (4)                75,000       74,255      65,000       65,000


                                      -44-
<PAGE>


3.   Investments and Fair Value of Financial Instruments (continued)

     (1)  Estimated  fair values for  mortgage  loans were  established  using a
          discounted  cash flow  method  based on credit  rating,  maturity  and
          future income when compared to the expected yield for mortgages having
          similar  characteristics.  The ratings for  mortgages in good standing
          are based on property type,  location,  market conditions,  occupancy,
          debt service coverage, loan to value, caliber of tenancy, borrower and
          payment  record.  Fair values of impaired  mortgage loans are measured
          based  either on the  present  value of  expected  future  cash  flows
          discounted at the loan's effective interest rate, at the loan's market
          price or the fair value of the  collateral  if the loan is  collateral
          dependent.  If the  estimated  fair value of the mortgage loan is less
          than the recorded  investment in the loan,  the difference is recorded
          in the allowance for loan losses account.

     (2)  Estimated  fair  values for policy  loans and deposit  contracts  were
          calculated on a composite  discounted  cash flow basis using risk free
          interest rates consistent with the maturity durations  assumed.  These
          durations were based on historical experience.

     (3)  Deposit  contracts  are included in the  consolidated  balance  sheets
          under the caption "Contractholder Funds." The remainder of the balance
          sheet caption  "Contractholder Funds" that does not fit the definition
          of "investment-type  insurance  contracts" (i.e. deposit contracts) is
          considered  insurance  contracts.   Fair  value  disclosures  are  not
          required for these insurance  contracts and have not been  determined.
          However,  the fair values of liabilities under all insurance contracts
          are taken into  consideration in the Company's  overall  management of
          interest  rate risk  such  that the  Company's  exposure  to  changing
          interest  rates  is  minimized  through  the  matching  of  investment
          maturities with amounts due under insurance contracts. It is important
          to  note  that  readers  of  these  financial  statements  could  draw
          inappropriate  conclusions about the Company's  shareholders'  equity,
          determined on a fair value basis,  since only the fair value of assets
          and liabilities  defined as financial  instruments are disclosed.  The
          Company and other  companies in the insurance  industry are monitoring
          the related actions of the various  rule-making  bodies and attempting
          to determine an appropriate  methodology for estimating and disclosing
          the "fair value" of their insurance contract liabilities.

     (4)  Estimated  fair  value  of  long-term  debt  was  determined  using  a
          discounted  cash flow method based on crediting  rate,  mortality  and
          future income when compared to the expected  yield for long-term  debt
          having similar characterstics.

4.   Long-term Debt

     At December 31, 1995, the Company was obligated under a note payable to LNL
for $65 million  which bore  interest at the 90-day  LIBOR rate plus 0.75%.  The
note payable was incurred in  connection  with the pre-IPO  reorganization  (see
Note 1).

     On June 8, 1995, the Company  registered $100 million of debt securities on
Form S-3 with the  Securities  and  Exchange  Commission.  The Company  sold $75
million of medium  term debt  securities  ("Debt") on March 1, 1996 and used $65
million of the net proceeds to repay the Term Note to LNL. The  remainder of the
proceeds was used for general corporate purposes. The Debt has an effective rate
of  7.39%,  is due  March 1,  2003 and may not be  redeemed  prior to  maturity.
Interest on the Debt is payable semiannually in arrears on March 1 and September
1 of each year.  Interest payments began on September 1, 1996. In 1996, 1995 and
1994 the Company paid interest of $4.4  million,  $4.5 million and $2.2 million,
respectively, on both the LNL note payable and the Debt.

     The indenture  agreement  covering the Debt contains several debt covenants
that, among other things:  (i) places limitations on liens, (ii) requires prompt
payments, (iii) requires continued corporate existence and (iv) limits the issue
or disposition of capital stock of any subsidiary. The Company has complied with
all debt covenants during 1996.


                                      -45-
<PAGE>


5.   Federal Income Taxes

     Federal income tax expense consisted of the following:

                                                     Year ended December 31,
                                                  ------------------------------
                                                    1996       1995       1994
                                                  --------   --------   --------
                                                          (000s omitted)
Current                                           $ 25,075   $ 20,247   $ 10,804
Deferred                                            (6,849)    (7,961)     2,004
                                                  --------   --------   --------
Total                                             $ 18,226   $ 12,286   $ 12,808
                                                  ========   ========   ========

     Federal income taxes paid in 1996, 1995 and 1994 were $22.1 million,  $22.9
million and $14.3 million, respectively.

     The effective tax rate on pre-tax  income is different  from the prevailing
corporate  federal income tax rate of 35%. A  reconciliation  of this difference
follows:
                                                    Year ended December 31,
                                                 ------------------------------
                                                   1996       1995       1994
                                                 --------   --------   --------
                                                         (000s omitted)

Tax rate times pre-tax income                    $ 18,750   $ 12,739   $ 13,288
Effect of:
   Tax-exempt investment income                      (212)      (295)      (397)
   Goodwill amortization                              317        317        317
   R&D tax credit                                    (336)
   Other                                             (293)      (475)      (400)
                                                 --------   --------   --------
   Provision for income taxes                    $ 18,226   $ 12,286   $ 12,808
                                                 ========   ========   ========
     Effective tax rate                             34.0%      33.8%     33.7%
                                                 ========   ========   ========

     Federal income taxes payable consisted of the following:

                                                              December 31,
                                                         ----------------------
                                                            1996         1995
                                                         ---------    ---------
                                                             (000s omitted)

Current                                                  $    (510)   $  (3,532)
Deferred                                                    21,419       41,710
                                                         ---------    ---------
Total                                                    $  20,909    $  38,178
                                                         =========    =========


                                      -46-
<PAGE>


5.   Federal Income Taxes (continued)

     The components of the net deferred liabilities were as follows:

                                                                December 31,
                                                            ---------  ---------
                                                              1996       1995
                                                            ---------  ---------
                                                                (000s omitted)
Total deferred tax liabilities:
   DAC                                                      $ 107,486  $  93,606
   Unrealized gains on available-for-sale securities           11,005     34,126
   Other                                                        6,183      9,244
                                                            ---------  ---------
     Total deferred tax liabilities                           124,674    136,976

Total deferred tax assets:
   Acquired insurance in-force                                 16,540     18,388
   Liabilities for future policy benefits and claims           61,339     54,160
   Acquisition load liability                                  16,817     11,618
   Tax basis adjustments on invested assets                      (258)     1,859
   Other                                                        8,817      9,241
                                                            ---------  ---------
     Total deferred tax assets                                103,255     95,266
                                                            ---------  ---------
        Net deferred tax liability                          $  21,419  $  41,710
                                                            =========  =========

     Security-Connecticut  has separate company net operating loss carryforwards
of $11.7  million and  capital  loss  carryforwards  of $0.5  million  which are
available   to   offset   future    separate    company    taxable   income   of
Security-Connecticut.  The loss  carryforwards  will  expire  as  follows:  $0.5
million in 1999,  $3.1 million in 2009, $4.7 million in 2010 and $3.9 million in
2011.

6.   Reinsurance

     The Company is involved in both the cession and  assumption of  reinsurance
with other companies.  The maximum retention limits for SCL are as follows:  (i)
group, $250,000; (ii) individuals up to age 70, $500,000;  (iii) individuals age
70 and over, $250,000; and (iv) second-to-die,  $1,000,000; (v) joint end age 70
and over, $500,000.  Facultative reinsurance relationships exist for cases where
SCL deems it appropriate to lower its retention limits, desires more competitive
rates, or needs greater capacity.

     With respect to policies  issued by LSL, the maximum  retention limit is as
follows:  (i) individuals up to age 70,  $100,000;  (ii)  individuals age 70 and
over,  $50,000;  (iii)  Second-to-die,  $100,000.  Amounts exceeding the maximum
retention limits are then ceded to SCL, which retains an additional  $400,000 up
to age 70, $200,000 age 70 and over, and $900,000 on  second-to-die  up to joint
end age 70,  $400,000  for  joint end age 70 and over,  before  retroceding  the
remainder with automatic reinsurance pools.

     In the accompanying  financial statements,  premiums,  benefits and reserve
increases  and  insurance  and other  expenses are  reported net of  reinsurance
ceded; policy liabilities and accruals are reported gross of reinsurance ceded.


                                      -47-
<PAGE>


6.   Reinsurance (continued)

                              Reinsurance Activity
<TABLE>
<CAPTION>
                                                                                     Percentage
                                                  Ceded to     Assumed               of Amount
                                       Gross       Other      from Other      Net     Assumed
                                      Amount     Companies    Companies     Amount     to Net
                                                           (000s omitted)
<S>                                 <C>          <C>          <C>         <C>          <C>
Year Ended December 31, 1996

Life insurance in-force             $47,444,106  $16,342,220  $2,464,233  $33,566,119    7.3%
                                    ===========  ===========  ==========  ===========  ===== 

Premiums:
   Life and immediate annuities     $   112,373  $    66,189  $    9,531  $    55,715   17.1%
   Accident and health                    4,693        2,147                    2,546    0.0%
                                    -----------  -----------  ----------  -----------  -----
     Total                          $   117,066  $    68,336  $    9,531  $    58,261   16.4%
                                    ===========  ===========  ==========  ===========  ===== 

Year Ended December 31, 1995

Life insurance in-force             $42,784,614  $10,318,323  $   15,294  $32,481,585    0.0%
                                    ===========  ===========  ==========  ===========  ===== 

Premiums:
   Life and immediate annuities     $   111,024  $    49,445  $       23  $    61,602    0.0%
   Accident and health                    4,689        2,206                    2,483    0.0%
                                    -----------  -----------  ----------  -----------  -----
     Total                          $   115,713  $    51,651  $       23  $    64,085    0.0%
                                    ===========  ===========  ==========  ===========  ===== 

Year Ended December 31, 1994

Life insurance in-force             $39,509,547  $ 9,973,184  $   20,566  $29,556,929    0.1%
                                    ===========  ===========  ==========  ===========  ===== 

Premiums:
   Life and immediate annuities     $   110,538  $    49,021  $      183  $    61,700    0.3%
   Accident and health                    6,830        3,894       1,867        4,803   38.9%
                                    -----------  -----------  ----------  -----------  -----
     Total                          $   117,368  $    52,915  $    2,050  $    66,503    3.1%
                                    ===========  ===========  ==========  ===========  ===== 
</TABLE>

     Life insurance  in-force and life and immediate  annuity  premiums  assumed
from other companies  increased in 1996 due to the inclusion of premiums assumed
by AHL. AHL commenced operations January 1, 1996.

     The income statement caption,  "Benefits and reserve  increases," is net of
reinsurance recoveries of $48.7 million, $49.7 million and $39.3 million for the
years ended December 31, 1996, 1995 and 1994, respectively.  Amounts recoverable
from  reinsurers  for claims  paid by the  Company  were $3.0  million  and $0.3
million  at  December  31,  1996 and  1995,  respectively.  Amounts  payable  to
reinsureds  for claims were $2.8  million and $1.1  million at December 31, 1996
and 1995, respectively.


                                      -48-
<PAGE>


6.   Reinsurance (continued

     The Company remains liable to its  policyholders  without regard to whether
its  reinsurers  are  able to  meet  their  contractual  obligations  under  the
applicable  reinsurance  agreements.  To minimize  its  exposure to  significant
losses from  reinsurance  insolvencies,  the  Company  evaluates  the  financial
condition of its reinsurers and monitors  concentrations  of credit risk arising
from similar geographic regions,  activities or economic  characteristics of the
reinsurers.  The Company  seeks to enter into  reinsurance  treaties with highly
rated  reinsurers.  For  1996,  no one  reinsurer  assumed  more than 18% of the
Company's life insurance ceded. Life Reinsurance Corporation of America, Life Re
International,  LTD, Swiss Re Life Company America,  RGA Reinsurance Company and
Transamerica  Occidental  Life  Insurance  Company had 10% or more. All of these
reinsurers are rated "A" or better by A.M. Best.

7.   Stock-Based Compensation Plans

Stock Incentive Plan

     The Company has elected to follow  Accounting  Principles Board Opinion No.
25,   "Accounting  for  Stock  Issued  to  Employees"  ("APB  25")  and  related
Interpretations  in  accounting  for its  employee  stock  options  because,  as
discussed below,  the alternative fair value accounting  provided for under FASB
Statement  No. 123,  "Accounting  for  Stock-Based  Compensation,"  ("FASB 123")
requires  use of option  valuation  models  that were not  developed  for use in
valuing employee stock options.  Under APB 25, because the exercise price of the
Company's employee stock options equals the market price of the underlying stock
on the date of grant, no compensation expense is recognized.

     The Company  adopted the 1993 Stock  Incentive Plan ("SIP") for the benefit
of employees of the Company and its  subsidiary  which provides for the issuance
of stock options, stock appreciation rights ("SARs") and restricted stock. Under
the SIP,  a maximum  of 510,000  shares of common  stock may be issued  upon the
exercise of options,  or in the form of SARs or restricted stock.  Stock options
granted  under the SIP are at the fair  market  value at the time of grant  and,
subject to termination  of  employment,  expire 10 years from the date of grant.
Such options are not  transferable  other than on death and are  exercisable  in
equal increments on the option issuance anniversary in the three years following
issuance.  In  September  1996,  the SIP was amended to provide for  accelerated
vesting of issued options by written  agreement  between the participant and the
Board of Directors.

     As of February 2, 1994,  47,727  shares of  restricted  stock were  granted
under the SIP subject to restrictions  on transfer,  which lapsed upon repayment
of the Term Note on March 1, 1996. The value of the  restricted  stock awards of
$22.00 per share, was reported as deferred  compensation in a separate component
of shareholders'  equity.  Deferred compensation expense was recognized in equal
amounts over the three year vesting period.

     Pro-forma  information  regarding  net  income  and  earnings  per share is
required by FASB 123, which also requires that the  information be determined as
if the Company has accounted for its employee stock options  granted  subsequent
to December  31, 1994 under the fair value  method of that FASB.  The fair value
for these  options  was  estimated  at the date of grant  using a  Black-Scholes
option pricing model with the following  weighted-average  assumptions  for 1996
and 1995,  respectively:  risk-free interest rates of 6.21% and 7.49%;  dividend
yields of 0.86% and 1.04%;  volatility  factors of the expected  market price of
the Company's common stock of 24.34%;  and a  weighted-average  expected life of
the options of 10 and 9.9 years.


                                      -49-
<PAGE>


7.   Stock-Based Compensation Plans (continued)

     The  Black-Scholes   option  valuation  model  was  developed  for  use  in
estimating the fair value of traded  options which have no vesting  restrictions
and are fully  transferable.  In addition,  option  valuation models require the
input of highly  subjective  assumptions  including  the  expected  stock  price
volatility.  Because the Company's  employee stock options have  characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially  affect the fair value estimate,  in
management's  opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.

     For  purposes of pro-forma  disclosures,  the  estimated  fair value of the
options is amortized to expense over the options' vesting period.  The Company's
pro-forma  information  follows  (in  thousands  except for  earnings  per share
information):
                                                  1996            1995
                                               ----------      ----------

Net income:           As Reported              $   35,345      $   24,110
                      Pro-Forma                    34,767          23,772
Primary EPS:          As Reported              $     4.10      $     2.81
                      Pro-Forma                      4.03            2.77

     The weighted-average fair value of options granted during 1996 and 1995 was
$12.02 and $11.58, respectively.

     The preceding  pro-forma  disclosures  are not indicative of future amounts
until the new rules are applied to all outstanding  nonvested awards;  and since
the FASB 123 method of accounting has not been applied to options  granted prior
to January 1, 1995, the resulting  pro-forma  effect will not be fully reflected
until 1997.

     A summary of the Company's stock option activity,  and related  information
for the three years ended December 31, 1996 follows:

                                                         Options Outstanding
                                             Shares    ------------------------
                                            Available           Weighted-Average
                                            for Grant   Shares   Exercise Price
                                            ---------  --------  --------------

Balance at January 1, 1994                   510,000
Granted                                     (234,792)   234,792     $   21.87
Forfeited                                     11,205    (11,205)        22.00
Restricted stock awards                      (47,727)
                                           ---------  ---------     ---------
     Balance at December 31, 1994            238,686    223,587         21.87
Granted                                      (75,900)    75,900         24.13
Exercised                                                  (909)        22.00
Forfeited                                      1,818     (1,818)        22.00
                                           ---------  ---------     ---------
     Balance at December 31, 1995            164,604    296,760         22.45
Granted                                      (87,550)    87,550         26.43
Exercised                                                (7,026)        22.26
Forfeited                                      7,160     (7,160)        23.70
                                           ---------  ---------     ---------
     Balance at December 31, 1996             84,214    370,124     $   23.34
                                           =========  =========     =========


                                      -50-
<PAGE>


7.   Stock-Based Compensation Plans (continued)

     At  December  31,  1996  and  1995,   there  were  219,452  shares  with  a
weighted-average   exercise   price  of  $22.54   and  85,050   shares   with  a
weighted-average price of $21.96, respectively, exercisable under the SIP.

     Exercise prices for options outstanding as of December 31, 1996 ranged from
$19.25 to $33.875.  The  weighted-average  remaining  contractual  life of those
options is 7.8 years.

     On February 20, 1997, 74,800 options were granted with an exercise price of
$36.50.  In  connection  with the  merger of the  Company  and  ReliaStar,  each
outstanding  Security-Connecticut  stock option will be assumed by ReliaStar and
will  be   exercisable   on  the  same  terms  and   conditions   as  under  the
Security-Connecticut option plan under which such option was granted and related
stock option agreement.  However, each option will be exercisable for the number
of shares of ReliaStar common stock as would have been received  pursuant to the
merger for the shares of Security-Connecticut common stock subject to the option
had the option been  exercisable and exercised  immediately  prior to the merger
date.  The exercise price of the options will be adjusted accordingly.

Management Incentive Plan

     The Company has adopted  the  Security-Connecticut  Corporation  Management
Incentive Plan ("MIP") for management positions whose level of responsibility is
such as to  impact  significantly  on  Company  results.  The  participants  are
measured on overall Company  performance  goals as measured against  established
targets.  The  participants'  percentage of  eligibility  is determined by their
level of responsibility. The level of cash and/or stock payment to the executive
officers is determined  based on the Company  attaining set  performance  goals.
Total awards earned in 1996,  1995 and 1994 were $1.2 million,  $0.3 million and
$1.0 million,  respectively. In 1995, the Company reserved 100,000 shares of the
Company's  common stock for issuance  under the MIP. As of December 31, 1996 and
1995, 8,964 and 8,267 shares, respectively, had been issued.

Long Term Incentive Plan

     The Company also  adopted the  Security-Connecticut  Corporation  Long-Term
Incentive Plan ("LTIP") for management  positions whose level of  responsibility
is such as to impact  significantly  on Company  results.  The  participants are
measured on the attainment of established target adjusted return on equity goals
during a three year  performance  cycle. The  participants'  award percentage is
determined by their level of responsibility.  The awards are paid out 80% in SCC
stock and 20% in cash.  Each  participant may elect to receive a greater portion
of their award in stock. The total amount awarded for the 1994-1996  performance
cycle was $0.7 million.

Employment Contracts

     The Company is a party to employment  contracts with certain key executives
which provide for employment  terms and benefits upon a change of control of the
Company. These contracts generally provide that, upon a change in control of the
Company,  the  executive  will be guaranteed  employment  with the Company for a
specified  period of time  following  the change in  control.  In the event of a
termination  of  employment  or a diminution  in the  executive's  compensation,
benefits,  responsibilities or working conditions,  the executive is entitled to
severance pay and a continuation  of certain  benefits.  These contracts are not
expected to have a material impact on the Company's financial statements.


                                      -51-
<PAGE>


8.   Employee Benefit Plans

Pension Plans

     The  Company  has  adopted  an  Employees'  Retirement  Plan,  which  is  a
noncontributory,  defined benefit plan (the "Retirement  Plan"),  and covers all
employees  of the Company who meet age and service  requirements.  Benefits  for
employees  are based on total  years of  service  and the  highest  60 months of
compensation  during  the last 10 years of  employment.  The plan is  funded  by
contributions to a tax-exempt  trust. The Company's funding policy is consistent
with the funding requirements of federal law and regulations.  Contributions are
intended to provide not only benefits  attributable to service to date, but also
those expected to be earned in the future.  Plan assets  consist  principally of
deposits in separate accounts of LNL.

     The Company also sponsors  unfunded,  nonqualified  defined benefit pension
plans. A supplemental  retirement  plan provides  employees with defined pension
benefits  in  excess  of  limits  imposed  by  federal  tax  law,  and a  salary
continuation  plan provides certain officers of the Company with defined pension
benefits  based on years of service and final  average  salary as well as with a
pre-retirement death benefit.

     The status of the  funded  defined  benefit  pension  plan and the  amounts
recognized on the balance sheets were as follows:
                                                               December 31,
                                                            -------------------
                                                              1996       1995
                                                            --------   --------
                                                              (000s omitted)
Actuarial present value of benefit obligation:
Vested benefits                                             $ (5,445)  $ (4,760)
Nonvested benefits                                               (86)      (140)
                                                            --------   --------
   Accumulated benefit obligation                             (5,531)    (4,900)
Effect of projected future compensation increases             (3,442)    (3,127)
                                                            --------   --------
   Projected benefit obligation                               (8,973)    (8,027)
Plan assets at fair value                                      8,871      8,132
                                                            --------   --------
   Plan assets in excess of (less than) projected
      benefit obligations                                       (102)       105
Unrecognized transition asset                                   (117)      (126)
Unrecognized net gain                                         (1,255)      (946)
                                                            --------   --------
   Pension liability included in other liabilities          $ (1,474)  $   (967)
                                                            ========   ======== 

     The status of the unfunded  nonqualified  defined benefit pension plans and
the amounts recognized on the balance sheets were as follows:

                                                                December 31,
                                                            -------------------
                                                              1996       1995
                                                            --------   --------
                                                               (000s omitted)
Actuarial present value of benefit obligation:
Vested benefits                                             $ (1,244)  $ (1,207)
                                                            --------   --------
   Accumulated benefit obligation                             (1,244)    (1,207)
Effect of projected future compensation increases               (933)      (707)
                                                            --------   --------
   Projected benefit obligation                               (2,177)    (1,914)
Unrecognized transition obligation                               111        124
Unrecognized net gain                                            327        271
                                                            --------   --------
   Accrued pension costs included in other liabilities      $ (1,739)  $ (1,519)
                                                            ========   ======== 


                                      -52-
<PAGE>


8.   Employee Benefit Plans (continued)

     Net pension  cost for the defined  benefit  pension  plans  consists of the
following components:

                                                       Year ended December 31,
                                                      -------------------------
                                                        1996     1995     1994
                                                      -------  -------  -------
                                                           (000s omitted)

Service cost-benefits earned during the year          $   766  $   633  $   649
Interest cost on projected benefit obligation             767      636      570
Actual return on plan assets including
   realized gains and losses on investments              (823)  (1,616)    (310)
Net amortization (deferral)                               146    1,044     (254)
                                                      -------  -------  -------
   Net pension cost                                   $   856  $   697  $   655
                                                      =======  =======  =======

     Determination of the projected obligation for the defined benefit plans was
based on an assumed  discount  rate of 7.75% and 7.5% for  December 31, 1996 and
1995,  respectively.  The assumed long-term rate of increase in compensation was
4.5% (6.5% for the salary continuation plan) for December 31, 1996 and 1995. The
assumed  long-term  rate of return on plan  assets  was 9.0% for 1996,  1995 and
1994.

401(k) Plan

     The Company also  sponsors a  contributory  defined  contribution  plan for
eligible  employees.  The  Company's  contributions  to the plan are  equal to a
participant's pre-tax contributions, not to exceed 6% of base pay, multiplied by
a  percentage,  ranging  from  25%  to  100%,  which  varies  according  to  the
achievement  of  predetermined  goals.  Expenses  for the plan  amounted to $0.7
million, $0.2 million and $0.7 million in 1996, 1995 and 1994, respectively.

Postretirement Medical and Life Insurance Benefit Plans

     The  Company  sponsors   unfunded,   defined  benefit  plans  that  provide
postretirement  medical and life insurance  benefits to full-time  employees who
work for the Company 10 years and have  attained  age 65.  Medical  benefits are
also   available  to  spouses  and  other   dependents  of  employees.   Limited
contributions,  which can be adjusted  annually  based on such items as years of
service and  retirement  age are required from  individuals.  The life insurance
benefits  are  noncontributory,  although  participants  can elect  supplemental
contributory benefits.

     The status of the  postretirement  medical and life insurance benefit plans
and the amount recognized on the balance sheets was as follows:

                                                                 December 31,
                                                               ----------------
                                                                 1996     1995
                                                               -------  -------
                                                                (000s omitted)
Accumulated postretirement benefit obligation:
   Retirees                                                    $   (72) $   (45)
   Fully eligible active plan participants                         (77)     (79)
   Other active plan participants                                 (199)    (239)
                                                               -------  -------
     Accumulated postretirement benefit obligation                (348)    (363)
   Unrecognized prior service costs                             (2,166)  (2,282)
   Unrecognized transition obligation                             (126)     (66)
                                                               -------  -------
     Accrued plan cost included in other liabilities           $(2,640) $(2,711)
                                                               =======  ======= 


                                      -53-
<PAGE>


8.   Employee Benefit Plans (continued)

Post-retirement Medical and Life Insurance Benefit Plans (continued)

     The components of periodic postretirement benefit costs were as follows:

                                                        Year ended December 31,
                                                       ------------------------
                                                         1996     1995     1994
                                                       -------  -------  -------
                                                            (000s omitted)
Service cost                                           $    27  $   193  $   183
Interest cost                                               28      174      153
Amortization of prior service costs                       (116)     (28)
Amortization of (gain) loss                                 (1)      10
                                                       -------  -------  -------
     Net periodic postretirement (benefit) cost        $   (62) $   349  $   336
                                                       =======  =======  =======

     Effective January 1, 1996, the following changes to the Plan occurred which
reduced the net periodic  postretirement  benefit cost: (i) retirees must attain
age 65 (previously 55), and (ii) benefits are now administered through a managed
care organization which has reduced the Company's medical premiums to zero.

     The  calculation  of  the  accumulated  postretirement  benefit  obligation
assumes a  weighted-average  annual  rate of  increase in the per capita cost of
covered  benefits  (i.e.  health  care  cost  trend-rate)  of 3.5%  for 1996 and
thereafter and a long-term rate of increase in compensation of 4.5% for December
31, 1996 and 1995,  respectively.  The  weighted-average  discount  rate used in
determining the accumulated postretirement benefit obligation was 7.75% and 7.5%
for December 31, 1996 and 1995, respectively. A one percentage point increase in
the assumed health care cost  trend-rate  would not be material to the financial
statements.

9.   Shareholders' Equity

     Generally, the net assets of the Company's insurance subsidiaries available
for transfer to the parent company are limited to the amounts that the insurance
subsidiaries' net assets, as determined in accordance with statutory  accounting
practices,  exceed minimum statutory capital requirements;  however, payments of
such amounts as dividends are subject to approval by regulatory authorities.  In
1997, the Company's insurance subsidiary,  SCL, can transfer approximately $22.1
million in the form of dividends  to the parent  without  prior  approval of the
regulatory  authorities.  AHL can transfer up to 15% of total statutory  capital
and surplus,  or  approximately  $0.3  million as of December 31, 1996,  without
prior permission from the Bermuda Registrar of Companies.

     Life insurance  companies are subject to certain Risk-Based Capital ("RBC")
requirements as specified by the NAIC. Under those  requirements,  the amount of
capital and surplus maintained by the life insurance company is to be determined
based on the various  risk  factors  related to it. At December  31,  1996,  the
Company met the RBC requirements.

     The Company's Board of Directors has adopted a Shareholder Rights Plan. The
rights provide protection  against coercive or unfair takeover tactics,  and are
intended to encourage  anyone  seeking to acquire the Company to negotiate  with
the Board of Directors  first. The plan was not adopted in response to any known
effort to acquire  the  Company.  This plan is similar to plans  adopted by many
public   companies,   and  should  provide  a  sound  and  reasonable  means  of
safeguarding  the interest of all  shareholders  if an effort is made to acquire
the Company at a price not reflective of its fair value. The distribution of the
rights  were made on March 6,  1995,  payable to  shareholders  of record at the
close of business on that date.  The rights  expire on February  16,  2005.  The
rights  distribution  is not  taxable to  shareholders.  Pursuant  to the merger
agreement the Company signed with ReliaStar,  prior to the effective date of the
merger,  Security-Connecticut  intends to amend the  Shareholder  Rights Plan to
provide  for the  expiration  of the rights  issued  under the plan prior to the
effective date of the merger.


                                      -54-
<PAGE>


9.   Shareholders' Equity (continued)

     The following table reconciles  consolidated  net income and  shareholders'
equity  as  reported  herein  on the  basis  of  GAAP  with  SCL's  consolidated
statutory-basis net income and consolidated statutory-basis capital and surplus.
SCL's consolidated results include those of its wholly owned subsidiary, LSL.

                                                    Year ended December 31,
                                                  1996       1995       1994
                                                ---------  ---------  ---------
                                                        (000s omitted)

Consolidated GAAP income                        $  35,345  $  24,110  $  25,159
     Eliminate parent company loss                  4,693      3,271      2,814
     Eliminate AHL income                          (2,955)
                                                ---------  ---------  ---------
SCL consolidated GAAP income                       37,083     27,381     27,973
Add (subtract) GAAP adjustments:
     DAC                                          (21,883)   (28,216)   (34,274)
     Deferred income tax expense                   (5,913)    (6,199)     3,519
     Change in future policy benefits              16,554     22,057      5,471
     Policyholders' share of earnings on
        participating business                        355        335      1,002
     Acquired insurance in-force and goodwill       1,586      1,630      1,742
     Other                                         (6,391)    (2,731)     4,518
                                                ---------  ---------  ---------

SCL consolidated statutory-basis net income     $  21,391  $  14,257  $   9,951
                                                =========  =========  =========

Consolidated GAAP shareholders' equity          $ 355,232  $ 348,362  $ 245,309
     Eliminate parent company deficit              71,101     61,313     58,846
     Eliminate AHL surplus                         (2,221)
                                               ----------  ---------  ---------
SCL consolidated GAAP shareholders' equity        424,112    409,675    304,155
Add (subtract) GAAP adjustments
     DAC                                         (405,231)  (383,347)  (355,132)
     Change in future policy benefits             153,475    136,921    114,863
     Unrealized (gains) losses on fixed
        maturity securities available-for-sale    (31,425)   (94,606)    58,505
     DAC (FAS 115)                                 16,563     47,526    (21,002)
     Future policy benefit costs (FAS 115)         (1,832)    (5,012)     2,280
     Asset valuation reserve                      (17,770)   (17,840)   (13,377)
     Deferred income tax liabilities               25,683     44,988     38,279
     Acquired insurance in-force and goodwill     (28,937)   (30,523)   (32,153)
     Policyholders' share of surplus on
        participating business                      8,023      7,667      7,332
     Other                                          5,684     10,511     16,661
                                                ---------  ---------  ---------
SCL consolidated statutory-basis
     capital and surplus                        $ 148,345  $ 125,960  $ 120,411
                                                =========  =========  =========

10.  Commitments

     During  1984,  SCL entered  into a  sale/leaseback  agreement  for its home
office property.  The agreement provides for a 25-year lease period with options
to renew  for six  additional  terms of five  years  each.  The  agreement  also
provides SCL with right of first  refusal to purchase  the  property  during the
term of the  lease,  including  renewal  periods,  at a price as  defined in the
agreement.  In addition,  SCL has the right to purchase  the leased  property at
fair  market  value as defined in the  agreement  on the last day of the initial
25-year lease period or the last day of any of the renewal periods.


                                      -55-
<PAGE>


10.  Commitments (continued)

     In addition,  SCL leases an office suite in Lee's Summit,  Missouri and LSL
leases property in Brewster,  New York. Both of these lease agreements expire in
1998.  The Missouri  lease can be extended for three  additional  periods of one
year each.

     Total  rental  expense on operating  leases was $3.3 million in 1996,  $2.9
million in 1995 and $2.8 million in 1994. Future minimum rental  commitments are
as follows (000s omitted) at December 31, 1996:

                    1997                       $   2,515
                    1998                           2,391
                    1999                           3,075
                    2000                           3,190
                    2001                           2,927
                    Thereafter                    19,870
                                               ---------
                       Total                   $  33,968
                                               =========

     Data  processing  for the Company is provided by  Electronic  Data  Systems
Corporation  ("EDS").  Pursuant to an agreement  expiring December 31, 2011, EDS
provides the Company  with  services,  including:  (i) systems  development  and
operations  for  existing  products  and  in-force  business,   (ii)  technology
planning,  (iii)  programming  and development for new products and (iv) ongoing
systems  management.  The agreement was amended  effective  October 1, 1996. The
amendment extended the term of the agreement from 2008 to 2011. It also provides
for various  termination  options  available to the Company  after  December 31,
1998, provided 12 months written notice is given. If the agreement is terminated
between  December 1998 and 2001 the Company must pay EDS a  termination  fee. If
termination occurs on or subsequent to December 31, 2001, no additional fee must
be paid. The Company  incurred  expenses of $7.8 million,  $7.7 million and $8.4
million in 1996, 1995 and 1994,  respectively,  for services  provided under the
EDS  agreement.  Future  minimum  service costs are as follows (000s omitted) at
December 31, 1996:

                    1997                       $   4,126
                    1998                           4,007
                    1999                           3,918
                    2000                           3,809
                    2001                           3,705
                    Thereafter                    23,555
                                               ---------
                       Total                   $  43,120
                                               =========

11.  Value of Acquired Insurance In-Force

     The following table presents an analysis of the value of acquired insurance
in-force:

                                                          December 31,
                                                 ------------------------------
                                                   1996       1995       1994
                                                 --------   --------   --------
                                                         (000s omitted)

Balance at beginning of year                     $  8,966   $  9,691   $ 10,528
Interest accretion at 15%                           1,344      1,454      1,579
Amortization                                       (2,026)    (2,179)    (2,416)
                                                 --------   --------   --------
     Balance at end of year                      $  8,284   $  8,966   $  9,691
                                                 ========   ========   ========


                                      -56-
<PAGE>


11.  Value of Acquired Insurance In-Force (continued)

     The amortization,  net of interest accretion,  is included in insurance and
other expenses in the  accompanying  consolidated  statements of income.  During
each of the next five  years,  the  balance of the value of  acquired  insurance
in-force at December 31, 1996 is expected to decrease  (representing  the net of
amortization and interest accretion) at a rate of approximately 8% per year.

12.  Litigation and Other Contingencies

     The Company is involved in litigation  concerning policy terms and benefits
and the actions of independent agents, which seek both punitive and compensatory
damages.  Management believes these suits are substantially  without merit, that
valid defenses  exist,  and that the results of such  litigation will not have a
material adverse effect on the accompanying financial statements.

     In  addition,  the Company is involved  in three class  action  lawsuits as
follows:

     Zipf vs.  Security-Connecticut  Life  Insurance  Company,  et al., Court of
Common Pleas of Allegheny County, Pennsylvania.

     The complaint,  seeking actual and punitive damages, alleges that SCL has a
practice  of  misleading  and/or  misinforming  policyholders  on the basis of a
policy rate class  designation.  Specifically,  the  plaintiff  alleges that the
"special  non-smoker"  designation leads  policyholders to believe that they are
being charged  premiums based on a "superior"  rate when the actual premiums are
based on an "inferior, substandard or rated class."

     In June 1995, the Pennsylvania  court ordered the case certified as a class
action.  The court  later  limited  the  class to  Pennsylvania  residents  "who
purchased  life  insurance  policies from  Security-Connecticut  Life  Insurance
Company  designated  as  'Premium  Rate Class  Special  Non-Smoker'  on or after
November  17,   1986."  SCL  has  filed  a  motion  for   revocation   of  class
certification.  Management believes this suit is without merit and will continue
to vigorously defend the action.

     Jacobson, et al. vs.  Security-Connecticut  Life Insurance Company, et al.,
Superior  Court,   Judicial  District  of  Hartford/New   Britain  at  Hartford,
Connecticut.

     Plaintiffs  originally  filed a class action  complaint  in November  1995,
alleging breach of contract,  fraud and violation of Connecticut's  Unfair Trade
Practices  Act.  Plaintiffs  claimed  that  SCL  improperly  charged  additional
premiums to pay for the tax on DAC incurred by defendants LNL and the Company.

     In  November  1996,  the  plaintiffs  filed a  Request  for  Leave to Amend
Complaint,  alleging in the proposed  Complaint that SCL misled purchasers about
the cost of insurance and insurance rates and improperly  increased premiums for
factors other than changes in mortality.  Plaintiffs  now seek to assert a class
action claim against SCL and SCC on behalf of "all persons . . . who purchased a
life insurance policy from defendant Security-Connecticut Life Insurance Company
and  thereafter  had  their  premiums  increased,"  as  well as on  behalf  of a
sub-class of Connecticut policyholders under an Unfair Trade Practices count.

     The proposed amended complaint alleges breach of contract,  fraud, fraud in
the sale of insurance  contracts,  and violation of  Connecticut's  Unfair Trade
Practices  Act.  It does not  allege,  as before,  that SCL  charged  additional
premiums to pay for tax on DAC. SCL has filed an  objection  to the  plaintiffs'
request to amend the Complaint. The plaintiffs also have moved to withdraw their
claims against LNL, stating that the claims in the proposed amended complaint do
not directly implicate LNL.


                                      -57-
<PAGE>


12.  Litigation and Other Contingencies (continued)

     Plaintiffs seek contractual damages, punitive damages,  attorneys' fees and
the imposition of a constructive  trust as to any excess amounts  allegedly paid
by the plaintiffs.  The parties are presently pursuing  settlement  discussions;
however,  management  does not believe that any  resulting  settlement  would be
material to the Company's financial statements.

     Semler vs. First Colony Life Insurance Company, et al., Superior Court, San
Francisco, California.

     The plaintiff  filed a class action  complaint in February 1997 against SCL
and twenty-nine  other insurance  companies,  alleging that those companies have
improperly  collected  "unearned premiums" for a period of time when they do not
actually  provide  insurance  coverage.  The  plaintiff,  who  purchased  a life
insurance policy from First Colony Life Insurance  Company,  claims that all the
defendant  companies  provide in their  contracts  that no insurance  shall take
effect  until the policy is  delivered  and the first  premium  paid  during the
continued  good health of the proposed  insured.  The companies  bill  premiums,
however, from either an issue date or policy date, which allegedly might precede
the effective date of coverage. The plaintiff claims that this industry practice
violates certain provisions of California's Business and Professions Code.

     The plaintiff seeks  restitution,  injunctive  relief,  attorneys' fees and
expenses.  Management  believes this suit is without  merit and will  vigorously
defend the action.

Guaranty Funds

     The increase in the number of insurance companies that are under regulatory
supervision  has resulted,  and is expected to continue to result,  in increased
assessments  by state  guaranty  funds  to  cover  losses  to  policyholders  of
insolvent or rehabilitated  insurance companies.  At December 31, 1996 and 1995,
the Company held a liability for $3.3 million and $8.4 million, respectively, to
cover its share of estimated guaranty fund assessments. This liability was based
on estimates  provided by the National  Organization of Life and Health Guaranty
Associations  ("NOLHGA").  Mandatory  assessments  may  be  partially  recovered
through a reduction in future premium taxes in certain  states;  and at December
31,  1996 and 1995,  the  Company  recorded  an asset of $4.5  million  and $6.1
million, respectively, for such expected recoveries.

13.  Subsequent Events

     On  February  23,  1997,  ReliaStar  and   Security-Connecticut   signed  a
definitive  agreement to combine the two companies  through the statutory merger
of  Security-Connecticut  with and into  ReliaStar.  The Board of  Directors  of
Security-Connecticut  has  unanimously  approved the merger.  Completion  of the
merger is  subject  to normal  closing  conditions,  including  approval  by the
Company's shareholders and various regulatory approvals. Provided there has been
no material breach by ReliaStar of the  representations,  warranties,  covenants
and agreements of ReliaStar under the merger agreement, Security-Connecticut has
agreed to pay ReliaStar $8 million if the merger agreement is terminated  either
as a result of (a) the  modification  or withdrawal,  in any way  detrimental to
ReliaStar, of the recommendation of the Security-Connecticut  Board with respect
to the merger,  or (b) the  execution  by  Security-Connecticut  of a definitive
agreement with a party other than ReliaStar with respect to a publicly announced
offer  or  intent  to  make  an  offer  to  acquire  all  or  substantially  all
Security-Connecticut or its subsidiaries.

     Separately and not  additionally,  if the merger agreement is terminated by
ReliaStar  on the  basis  that  the  Security-Connecticut  shareholders  did not
approve the merger, then Security-Connecticut would be required to pay ReliaStar
$2.5 million to reimburse  ReliaStar's  expenses incurred in connection with the
merger  agreement.  In addition to the  foregoing  $2.5 million  payment,  if an
acquisition  proposal is outstanding on the date of such termination,  or at any
time within 90 days  thereafter,  and an  acquisition  proposal  is  consummated
within twelve months of the termination of the merger agreement, the Company has
agreed to pay ReliaStar an additional $5.5 million.  The foregoing discussion is
qualified  in its  entirety by  reference  to the merger  agreement  filed as an
exhibit to this report.


                                      -58-
<PAGE>
<TABLE>
<CAPTION>
14.  Unaudited Operating Results by Quarter

(Dollars in millions, except per share data)    1st Qtr     2nd Qtr     3rd Qtr     4th Qtr
--------------------------------------------   ---------   ---------   ---------   ---------
<S>                                            <C>         <C>         <C>         <C>
1996 Data

Premiums and insurance fees                    $    47.9   $    49.7   $    49.9   $    47.6
Net investment income                               33.5        34.0        34.1        33.8
Realized gains (losses) on investments               4.1         3.2         0.5        (0.6)
Net income                                           9.2        10.5         8.4         7.3

   Earnings per share                          $    1.07   $    1.21   $    0.97   $    0.84

   Common stock and equivalents                8,598,410   8,614,340   8,628,955   8,660,697

1995 Data

Premiums and insurance fees                    $    48.8   $    48.0   $    48.7   $    44.1
Net investment income                               31.6        33.4        32.6        34.4
Realized gains (losses) on investments              (1.4)        1.9         0.7         4.9
Net income                                           3.5         8.0         7.8         4.8

   Earnings per share                          $    0.41   $    0.93   $    0.90   $    0.56

   Common stock and equivalents                8,579,979   8,584,348   8,600,625   8,599,322
</TABLE>

     In the fourth quarter of 1996,  lower-than-expected  life claims  increased
after-tax  earnings by $0.18 per share.  A release of a portion of the liability
held  for  anticipated   guaranty  fund  assessments   based  on  the  Company's
understanding  of  information  provided  by  NOLHGA  also  increased  after-tax
earnings by $0.25 per share. Partially offsetting these positive factors in 1996
was a $0.20 per share increase in litigation  expenses,  including  additions to
reserves, compared to 1995.

     In the fourth quarter of 1995, a charge of $0.26 per share,  after tax, was
incurred  for  anticipated  guaranty  fund  assessments  based on the  Company's
understanding of information  provided by NOLHGA. Also, in the fourth quarter of
1995,  higher-than-expected  life claims reduced after-tax earnings by $0.41 per
share.

     Due to changes in the number of average common stock and equivalent  shares
outstanding,  quarterly  earnings  per share may not add to the  totals  for the
years.

Item 9 -  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
          Financial Disclosure

     There  have  been no  changes  in, or  disagreements  with,  the  Company's
independent  auditors,  which are reportable  pursuant to Item 304 of Regulation
S-K.

                                     -59-
<PAGE>

                                    PART III

Item 10 - Directors and Executive Officers of the Registrant

     Information  for this item  relating to directors  of  Security-Connecticut
Corporation is incorporated by reference to the sections  captioned "NOMINEE FOR
DIRECTORS"  and  "DIRECTORS   CONTINUING  IN  OFFICE"  of   Security-Connecticut
Corporation's  Proxy  Statement  to be filed  with the  Commission  pursuant  to
Regulation  14A within 120 days after December 31, 1996.  Information  regarding
the executive officers of the Company is contained on page 19 of this report.

Item 11 - Executive Compensation

     Information  for this item is  incorporated  by  reference  to the  section
captioned "EXECUTIVE  COMPENSATION" of Security-Connecticut  Corporation's Proxy
Statement to be filed with the Commission  pursuant to Regulation 14A within 120
days after December 31, 1996.

Item 12 - Security Ownership of Certain Beneficial Owners and Management

     Information  for this item is  incorporated  by  reference  to the  section
captioned "SECURITY  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS,  SECURITY OWNERSHIP
OF   DIRECTORS,   NOMINEE  AND  EXECUTIVE   OFFICERS"  of   Security-Connecticut
Corporation's  Proxy  Statement  to be filed  with the  Commission  pursuant  to
Regulation 14A within 120 days after December 31, 1996.

Item 13 - Certain Relationships and Related Transactions

     Information    for   this   item   is    incorporated   by   reference   to
Security-Connecticut   Corporation's  Proxy  Statement  to  be  filed  with  the
Commission pursuant to Regulation 14A within 120 days after December 31, 1996.

                                     PART IV

Item 14 -Exhibits, Financial Statement Schedules, and Reports on Form 8-K

The  following   consolidated   financial  statements  of   Security-Connecticut
Corporation and subsidiaries are included in Item 8:

     Report of Independent Auditors

     Consolidated Balance Sheets - December 31, 1996 and 1995

     Consolidated Statements of Income - Years ended December 31, 1996, 1995 and
     1994

     Consolidated  Statements of Shareholders' Equity - Years ended December 31,
     1996, 1995 and 1994

     Consolidated Statements of Cash Flows - Years ended December 31, 1996, 1995
     and 1994

     Notes to Consolidated Financial Statements


                                      -60-
<PAGE>


Item 14 (a)(2) - Financial Statement Schedules

    The  following   financial   statement   schedule  of   Security-Connecticut
Corporation is included in Item 14 (d):

      II - Condensed Financial Information of Registrant

     All  other  schedules  for  which  provision  is  made  in  the  applicable
accounting  regulations  of the  Securities  and  Exchange  Commission  are  not
required  under the related  instructions,  are  inapplicable,  or the  required
information is included in the consolidated financial statements,  and therefore
have been omitted.

Item 14 (a)(3) - Listing of Exhibits

     The  following  exhibits  of the  Registrant  are  included in Item 14(c) -
(Note:  the numbers  preceding the exhibits  correspond to the specific  numbers
within Item 601 of Regulation S-K):

    2.01  Agreement  and Plan of Merger  dated  February 23, 1997 by and between
          ReliaStar Financial Corp. and Security-Connecticut Corporation. (7)
    3.01  Certificate  of  Incorporation  of the  Registrant,  dated October 13,
          1993.(1)
    3.02  Bylaws of the Registrant. (1)
    4.01  Instruments  Defining the Rights of Security Holders (see Exhibits 3.1
          and 3.2 above). (1)
    4.02  Rights Agreement,  dated as of February 16, 1995,  between the Company
          and the First National Bank of Boston. (3)
    4.03  Form of Fixed Rate Note. (5)
    4.04  Form of Floating Rate Note. (5)
   10.01  Term Note  Agreement,  dated January 19, 1994,  between the Registrant
          and Lincoln National Life Insurance Company ("LNL"). (2)
   10.02  Form of Investment  Advisory  Agreement between Registrant and Lincoln
          National Investment Management Company ("LNIMC"). (1)
   10.03  Form of Investment  Advisory  Agreement  between  Security-Connecticut
          Life Insurance Company ("SCL") and LNIMC. (1)
   10.04  Form of Investment  Advisory  Agreement  between Lincoln Security Life
          Insurance Company ("LSL") and LNIMC. (1)
   10.05  Form of  Administration  Agreement  between SCL and  Lincoln  National
          Sales Corporation. (1)
   10.06  Guarantee,   dated  as  of  March  1,  1984,  from  Lincoln   National
          Corporation to Avon Associates Limited Partnership. (1)
   10.07  Equipment Lease  Agreement,  dated December 18, 1984,  between SCL and
          LNL. (1)
   10.08  Form of Tax Sharing Agreement between SCL, the Registrant and LNL. (1)
   10.09  Form of Services Agreement between Registrant and LNL. (1)
   10.10  Agreement for Information Technology Services,  dated as of January 1,
          1994 between SCL and Electronic Data Systems Corporation. (2)
   10.11  1993 Stock Incentive Plan of the Registrant. (2)
   10.12  Management Incentive Plan of the Registrant,  amended through February
          16, 1995. (4)
   10.13  Form of  Employment  Agreement  between  the  Registrant  and  Certain
          Executive Officers. (2)
   10.14  Executive Savings and Profit Sharing Plan. (2)
   10.15  Employees' Excess Benefit Plans. (2)
   10.16  Form  of  Indenture  Agreement  between  the  Company  and  The  First
          National Bank of Boston. (5)
   10.17  Supplemental Executive Retirement Plans Trust Agreement. (6)
   10.18  Amendment  to  Amended  and   Restated   Agreement   for   Information
          Technology   Services   between  SCL  and   Electronic   Data  Systems
          Corporation. (8)
   10.19  First  Amendment  to   Security-Connecticut   Corporation  1993  Stock
          Incentive Plan. (8)
   10.20  Form of Employment  Agreement  between  Registrant and Chief Executive
          Officer. (8)
   10.21  Form of Employment  Agreement between Registrant and Certain Executive
          Officers. (8)
   10.22  Investment Management Agreement between LSL and General Re/New England
          Asset Management, Inc. (8)


                                      -61-
<PAGE>
   10.23  Investment  Accounting  Agreement  between  Conning  Asset  Management
          Company and SCL. (8)
   10.24  Investment  Accounting  Agreement  between  Conning  Asset  Management
          Company and LSL. (8)
   10.25  Form of Participation Agreement between LNL and/or Affiliates and SCL.
          (8)
   11.01  Computation of Earnings Per Common Share. (8)
   12.01  Calculation of Ratios of Earnings to Fixed Charges. (8)
   21.01  Subsidiaries of the Registrant. (6)
   23.01  Consent of Ernst & Young LLP. (8)
   27.01  Financial Data Schedule. (8)


(1)  Incorporated  by reference to the  Registrant's  Registration  Statement on
     Form S-1 (File No. 33-70358).
(2)  Incorporated  by reference to the  Company's  Form 10-K for the fiscal year
     ended  December  31,  1993,  as filed  with  the  Securities  and  Exchange
     Commission on March 25, 1994.
(3)  Incorporated  by  reference  to the  Company's  Form 8-K as filed  with the
     Securities and Exchange Commission on February 16, 1995.
(4)  Incorporated  by reference to the  Company's  Form 10-K for the fiscal year
     ended  December  31,  1994,  as filed  with  the  Securities  and  Exchange
     Commission on March 22, 1995.
(5)  Incorporated  by  reference  to the  Company's  Form S-3 as filed  with the
     Securities and Exchange Commission June 8, 1995.
(6)  Incorporated  by reference to the  Company's  Form 10-K for the fiscal year
     ended  December  31,  1995,  as filed  with  the  Securities  and  Exchange
     Commission on March 14, 1996.
(7)  Incorporated  by  reference  to the  Company's  Form 8-K as filed  with the
     Securities and Exchange Commission on February 26, 1997.
(8)  Filed herewith.

Item 14 (b) - Reports on Form 8-K

1.   A report on Form 8-K dated October 21, 1996  relating to Moody's  Investors
     Service,  Inc.  assigning a Baa1  insurance  financial  strength  rating to
     Security-Connecticut   Life  Insurance  Company,  the  principal  insurance
     operating subsidiary of Security-Connecticut Corporation.

2.   A report on Form 8-K dated November 13, 1996 relating to the amendment to a
     class  action  suit  filed  against   Security-Connecticut  Life  Insurance
     Company,   Security-Connecticut   Corporation  and  Lincoln  National  Life
     Insurance  Company in Superior  Court,  Judicial  District of  Hartford/New
     Britain at Hartford, Connecticut.


                                      -62-
<PAGE>


                        SECURITY-CONNECTICUT CORPORATION
                 SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT


                        SECURITY-CONNECTICUT CORPORATION
                                 BALANCE SHEETS
                                (Parent Company)
                             (Dollars in thousands)
<TABLE>
<CAPTION>
                                                                            December 31,
                                                                       ----------------------
                                                                          1996        1995
                                                                       ----------  ----------
<S>                                                                    <C>         <C>
ASSETS
  Equity securities available-for-sale (cost: $417)                    $      383
  Investment in subsidiaries                                              424,112  $  409,975
  Other invested assets                                                       200
  Cash and invested cash                                                    1,299       1,227
  Property and equipment                                                    1,387       1,894
  Deferred federal income taxes                                             4,264       3,277
  Other assets                                                              1,568       2,976
                                                                       ----------  ----------
    Total assets                                                       $  433,213  $  419,349
                                                                       ==========  ==========

LIABILITIES
  Long-term debt                                                       $   75,000  $   65,000
  Dividends payable                                                         1,027       1,066
  Accrued expenses and other liabilities                                    1,954       4,921
                                                                       ----------  ----------
    Total liabilities                                                      77,981      70,987

SHAREHOLDERS' EQUITY
  Preferred stock, par value $0.01 per share; Authorized
    10,000,000 shares; none issued
  Common stock, par value $0.01 per share; Authorized
    50,000,000 shares; issued and outstanding 1996 - 8,564,626 shares;
      less 4,782 treasury shares; 1995 - 8,556,903 shares                      86          86
  Paid-in capital                                                          82,558      82,405
  Deferred compensation                                                                  (379)
  Net unrealized gains on securities available-for-sale,
    principally of subsidiaries                                            10,873      35,748
  Retained earnings                                                       261,715     230,502
                                                                       ----------  ----------
    Total shareholders' equity                                            355,232     348,362
                                                                       ----------  ----------
    Total liabilities and shareholders' equity                         $  433,213  $  419,349
                                                                       ==========  ==========




<FN>
   The condensed financial statements should be read in conjunction with the
     consolidated financial statements and the accompanying notes thereto.
</FN>
</TABLE>
                                      -63-
<PAGE>


                        SECURITY-CONNECTICUT CORPORATION
                 SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                        SECURITY-CONNECTICUT CORPORATION
                              STATEMENTS OF INCOME
                                (Parent Company)
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                 Year Ended December 31,
                                                          ----------------------------------
                                                             1996        1995        1994
                                                          ----------  ----------  ----------
<S>                                                       <C>         <C>         <C>
REVENUES
   Net investment income                                  $      170  $       46  $      515
   Other revenue                                                 778         872
   Realized gains (losses) on investments                        356                    (834)
                                                          ----------  ----------  ----------
      Total revenues                                           1,304         918        (319)

BENEFITS AND EXPENSES
    Interest expense                                           5,268       4,495       3,208
    Other operating expenses                                   1,665       1,456         802
                                                          ----------  ----------  ----------
    Total benefits and expenses                                6,933       5,951       4,010
                                                          ----------  ----------  ----------

Loss before federal income tax benefit and
    equity in net income of subsidiaries                      (5,629)     (5,033)     (4,329)
Federal income tax benefit                                      (936)     (1,762)     (1,515)
                                                          ----------  ----------  ----------
Net loss before equity in net income of subsidiaries          (4,693)     (3,271)     (2,814)
Equity in net income of subsidiaries                          40,038      27,381      27,973
                                                          ----------  ----------  ----------

      NET INCOME                                          $   35,345  $   24,110  $   25,159
                                                          ==========  ==========  ==========










<FN>
   The condensed financial statements should be read in conjunction with the
     consolidated financial statements and the accompanying notes thereto.
</FN>
</TABLE>

                                      -64-
<PAGE>


                        SECURITY-CONNECTICUT CORPORATION
                 SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                        SECURITY-CONNECTICUT CORPORATION
                             STATEMENTS OF CASH FLOW
                                (Parent Company)
                             (Dollars in thousands)
<TABLE>
<CAPTION>
                                                               Year Ended December 31,
                                                          ----------------------------------
                                                             1996        1995        1994
                                                          ----------  ----------  ----------
<S>                                                       <C>         <C>         <C>
Operating activities
Net income                                                $   35,345  $   24,110  $   25,159
Adjustments to reconcile net income to net
   cash used in operating activities:
   Equity in net income of subsidiaries                      (40,038)    (27,381)    (27,973)
   Increase in deferred federal income taxes                    (936)     (1,762)     (1,515)
   Realized losses (gains) on investments                       (356)                    834
   Other                                                      (1,058)      2,010      (2,925)
                                                          ----------  ----------  ----------
Net cash used in operating activities                         (7,043)     (3,023)     (6,420)

Investing activities Securities available-for-sale:
   Purchases                                                    (989)                (11,812)
   Sales                                                         932                  10,903
   Maturities                                                                             81
Purchases of other investments                                  (200)
                                                          ----------  ----------  ----------
Net cash used in investing activities                           (257)                   (828)

Financing activities
Dividends to shareholders                                     (4,108)     (4,105)     (3,060)
Dividends from subsidiary                                      1,050       5,000       2,750
Issuance of long-term debt                                    75,000
Repayment of long-term debt                                  (65,000)
Issuance of common stock                                         258         220
Issuance of restricted common stock                                                    1,050
Capital contribution                                                                  10,000
Acquisition of treasury stock                                   (129)
Other                                                            301         372        (729)
                                                          ----------  ----------  ----------
Net cash provided by financing activities                      7,372       1,487      10,011
                                                          ----------  ----------  ----------

Net increase (decrease) in cash and invested cash                 72      (1,536)      2,763

Cash and invested cash at beginning of year                    1,227       2,763
                                                          ----------  ----------  ----------

Cash and invested cash at end of year                     $    1,299  $    1,227  $    2,763
                                                          ==========  ==========  ==========







<FN>
   The condensed financial statements should be read in conjunction with the
     consolidated financial statements and the accompanying notes thereto.
</FN>
</TABLE>
                                      -65-
<PAGE>


                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                               SECURITY-CONNECTICUT CORPORATION


                                               By: /s/Ronald D. Jarvis
                                                   -------------------
                                                   Ronald D. Jarvis, Chairman,
                                                   President and Chief Executive
                                                   Officer
March 21, 1997

                                POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS,  that each person whose  signature  appears
below  constitutes  and  appoints  Ronald D.  Jarvis,  Richard D.  Mocarski  and
Patricia  A.  DeVita,   and  each  of  them  severally,   his  true  and  lawful
attorney-in-fact,  or attorneys-in-fact,  each with power to act with or without
the other,  and with power of  substitution  and  resubstitution,  to execute in
his/her  name,  place and stead in his/her  capacity as a director or officer of
Security-Connecticut  Corporation  any and all amendments to this Report on Form
10-K for the year ended  December  31,  1996,  with  exhibits  thereto,  and all
instruments  necessary or incidental in  connection  therewith,  and to file the
same  with  the  Securities  and  Exchange  Commission,   hereby  ratifying  and
confirming all that each of said attorneys-in-fact or their substitutes,  may do
or cause to be done by virtue hereof.

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities indicated in each case on March 21, 1997.


/s/ Ronald D. Jarvis              Chairman,President and Chief Executive Officer
-----------------------           (Principal Executive Officer); Director
    Ronald D. Jarvis

/s/ Robert J. Voight              Executive Vice President
-----------------------           (Principal Financial Officer)
    Robert J. Voight

/s/ Richard D. Mocarski           Vice President, Controller and Treasurer
-----------------------           (Principal Accounting Officer)
    Richard D. Mocarski

/s/ J. Michael Divney             Director
-----------------------
    J. Michael Divney

/s/ Daniel F. Flynn               Director
-----------------------
    Daniel F. Flynn

/s/ Harvey S. Levenson            Director
-----------------------
    Harvey S. Levenson

/s/ John E. Silliman              Director
-----------------------
    John E. Silliman


                                      -66-
<PAGE>


                                                                   EXHIBIT 11.01

                        SECURITY-CONNECTICUT CORPORATION
                    COMPUTATION OF EARNINGS PER COMMON SHARE

<TABLE>
<CAPTION>
                                                        Year ended December 31,
                                                   ---------------------------------
                                                     1996        1995        1994
                                                   ---------   ---------   ---------
<S>                                                <C>         <C>         <C>
Primary

Average shares outstanding                         8,556,032   8,555,112   8,547,727
Net effect of incremental shares assumed to be
  outstanding for stock options                       72,366      35,264
                                                   ---------   ---------   ---------
    Total                                          8,628,398   8,590,376   8,547,727
                                                   =========   =========   =========

Earnings applicable to common shareholders
  (000s omitted)                                   $  35,345   $  24,110   $  25,159
                                                   =========   =========   =========

Earnings per common share                          $    4.10   $    2.81   $    2.94
                                                   =========   =========   =========

Fully Diluted

Average shares outstanding                         8,556,032   8,555,112   8,547,727
Net effect of incremental shares assumed to be
  outstanding for stock options                      122,449      43,366
                                                   ---------   ---------   ---------
    Total                                          8,678,481   8,598,478   8,547,727
                                                   =========   =========   =========

Earnings applicable to common shareholders
  (000s omitted)                                   $  35,345   $  24,110   $  25,159
                                                   =========   =========   =========

Earnings per common share                          $    4.07   $    2.80   $    2.94
                                                   =========   =========   =========
</TABLE>

                                      -67-
<PAGE>



                                                                   EXHIBIT 12.01

                      CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES


<TABLE>
<CAPTION>
                                                    Year Ended December 31,
                                     ----------------------------------------------------
                                       1996       1995       1994      1993(1)    1992(1)
                                     --------   --------   --------   --------   --------
                                          (thousands of dollars, except ratio data)
<S>                                  <C>        <C>        <C>        <C>        <C>
Earnings:
Income before federal
   income tax and
   cumulative effect
   of accounting changes             $ 53,571   $ 36,396   $ 37,967   $ 40,513   $ 32,815
Fixed charges, excluding
   interest on annuities
   and financial products               7,305      6,355      5,027      4,434      4,760
                                     --------   --------   --------   --------   --------

   Earnings, excluding interest
     on annuities and
     financial products                60,876     42,751     42,994     44,947     37,575

Interest on annuities and
   financial products                  84,939     87,034     75,747     70,785     67,708
                                     --------   --------   --------   --------   --------

   Earnings                          $145,815   $129,785   $118,741   $115,732   $105,283
                                     ========   ========   ========   ========   ========

Fixed Charges:
Interest expense on debt             $  5,409   $  4,495   $  3,208   $  2,641   $  2,990
Interest component of
   rent expense                         1,896      1,860      1,819      1,793      1,770
                                     --------   --------   --------   --------   --------

   Fixed charges, excluding
     interest on annuities and
     financial products                 7,305      6,355      5,027      4,434      4,760

Interest on annuities and
   financial products                  84,939     87,034     75,747     70,785     67,708
                                     --------   --------   --------   --------   --------

   Fixed charges                     $ 92,244   $ 93,389   $ 80,774   $ 75,219   $ 72,468
                                     ========   ========   ========   ========   ========

Ratios of Earnings to Fixed Charges:
Excluding interest on annuities
   and financial products (2)            8.33       6.73       8.55      10.14       7.89

Including interest on annuities
   and financial products (3)            1.58       1.39       1.47       1.54       1.45

<FN>
(1)  The amounts reported are pro-forma and assume the $65 million Term Note was
     outstanding  in years  1993 and 1992,  at LIBOR  plus  .75%,  as more fully
     described  in the  Company's  financial  statements  included in its Annual
     Report on Form 10-K, for the year ended December 31, 1996.
(2)  This ratio is comprised of the relationship of "earnings excluding interest
     on annuities and financial  products" to "fixed charges excluding  interest
     on annuities and financial products" as disclosed above.
(3)  This  ratio is  comprised  of the  relationship  of  "earnings"  to  "fixed
     charges" as disclosed above.

</FN>
</TABLE>
                                      -68-


<PAGE>


                                                   Commission File No. 001-12746







                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549









                              EXHIBITS TO FORM 10-K


                            ANNUAL REPORT PURSUANT TO


                           SECTION 13 OR 15(d) OF THE


                         SECURITIES EXCHANGE ACT OF 1934


                     FOR FISCAL YEAR ENDED DECEMBER 31, 1996











                        SECURITY-CONNECTICUT CORPORATION
             (Exact name of registrant as specified in its charter)









                                      -69-
<PAGE>


                                  EXHIBIT INDEX

Exhibit No.                      Description                         Page Number

 2.01 - Agreement and Plan of Merger dated February 23, 1997 by and
        between ReliaStar Financial Corp. and Security-Connecticut
        Corporation. (7)
 3.01 - Certificate of Incorporation of the Registrant, dated
        October 13, 1993. (1)
 3.02 - Bylaws of the Registrant. (1)
 4.01 - Instruments Defining the Rights of Security Holders
        (see Exhibits 3.1 and 3.2 above). (1)
 4.02 - Rights Agreement, dated as of February 16, 1995, between
        the Company and the First National Bank of Boston. (3)
 4.03 - Form of Fixed Rate Note. (5)
 4.04 - Form of Floating Rate Note (5)
10.01 - Term Note Agreement, dated January 19, 1994, between the
        Registrant and Lincoln National Life Insurance Company
        ("LNL"). (2)
10.02 - Form of Investment Advisory Agreement between Registrant
        and Lincoln National Investment Management Company
        ("LNIMC"). (1)
10.03 - Form of Investment Advisory Agreement between Security-
        Connecticut Life Insurance Company ("SCL") and LNIMC. (1)
10.04 - Form of Investment Advisory Agreement between Lincoln
        Security Life Insurance Company ("LSL") and LNIMC. (1)
10.05 - Form of Administration Agreement between SCL and Lincoln 
        National Sales Corporation. (1)
10.06 - Guarantee, dated as of March 1, 1984, from Lincoln National
        Corporation to Avon Associates Limited Partnership. (1)
10.07 - Equipment Lease Agreement, dated December 18, 1984, between 
        SCL and LNL. (1)
10.08 - Form of Tax Sharing Agreement between SCL, the Registrant
        and LNL.(1)
10.09 - Form of Services Agreement between Registrant and LNL.(1)
10.10 - Agreement for Information Technology Services, dated as of
        January 1, 1994 between SCL and Electronic Data Systems
        Corporation. (2)
10.11 - 1993 Stock Incentive Plan of the Registrant. (2)
10.12 - Management Incentive Plan of the Registrant, amended through
        February 16, 1995. (4)
10.13 - Form of Employment Agreement between the Registrant and
        Certain Executive Officers. (2)
10.14 - Executive Savings and Profit Sharing Plan. (2)
10.15 - Employees' Excess Benefit Plans. (2)
10.16 - Form of Indenture Agreement between the Company and The
        First National Bank of Boston. (5)
10.17 - Supplemental Executive Retirement Plans Trust Agreement. (6)
10.18 - Amendment to Amended and Restated Agreement for 
        Information Technology Services between SCL and Electronic
        Data Systems Corporation. (8)                                         72
10.19 - First Amendment to Security-Connecticut Corporation 1993
        Stock Incentive Plan. (8)                                             74
10.20 - Form of Employment Agreement between Registrant and Chief
        Executive Officer. (8)                                                76
10.21 - Form of Employment Agreement between Registrant and Certain
        Executive Officers. (8)                                               90
10.22 - Investment Management Agreement between LSL and General Re/New
        England Asset Management, Inc. (8)                                   101
10.23 - Investment Accounting Agreement between Conning Asset Management
        Company and SCL.(8)                                                  111
10.24 - Investment Accounting Agreement between Conning Asset Management
        Company and LSL. (8)                                                 120
10.25 - Form of Participation Agreement between LNL and/or
        Affiliates and SCL. (8)                                              129
11.01 - Computation of Earnings Per Common Share. (8)                         67


                                      -70-
<PAGE>


12.01 - Calculation of Ratios of Earnings to Fixed Charges. (8)               68
21.01 - Subsidiaries of the Registrant. (6)
23.01 - Consent of Ernst & Young LLP. (8)                                    137
27.01 - Financial Data Schedule. (8)                                         138
------------

(1) Incorporated  by reference  to the  Registrant's  Registration  Statement on
    Form S-1 (File No. 33-70358).
(2) Incorporated  by  reference to the  Company's  Form 10-K for the fiscal year
    ended  December  31,  1993,  as  filed  with  the  Securities  and  Exchange
    Commission on March 25, 1994.
(3) Incorporated  by  reference  to the  Company's  Form 8-K as  filed  with the
    Securities and Exchange Commission on February 16, 1995.
(4) Incorporated  by  reference to the  Company's  Form 10-K for the fiscal year
    ended  December  31,  1994,  as  filed  with  the  Securities  and  Exchange
    Commission on March 22, 1995.
(5) Incorporated  by  reference  to the  Company's  Form S-3 as  filed  with the
    Securities and Exchange Commission June 8, 1995.
(6) Incorporated  by  reference to the  Company's  Form 10-K for the fiscal year
    ended  December  31,  1995,  as  filed  with  the  Securities  and  Exchange
    Commission on March 14, 1996.
(7) Incorporated  by  reference  to the  Company's  Form 8-K as  filed  with the
    Securities and Exchange Commission on February 26, 1997.
(8) Filed herewith.


                                      -71-
<PAGE>


                                                                   Exhibit 10.18

                                    AMENDMENT
                                       TO
                              AMENDED AND RESTATED
                  AGREEMENT FOR INFORMATION TECHNOLOGY SERVICES
                                      AMONG
                  SECURITY-CONNECTICUT LIFE INSURANCE COMPANY,
                        SECURITY-CONNECTICUT CORPORATION
                                       AND
                       ELECTRONIC DATA SYSTEMS CORPORATION


     THIS  AMENDMENT,  dated to be  effective  as of October 1, 1996,  is  among
Security-Connecticut   Life  Insurance   Company,   a  Connecticut   corporation
("Company"),  Security Connecticut  Corporation,  a Delaware corporation ("SCC")
and  Electronic  Data  Systems  Corporation  ("EDS") and is in amendment of that
certain Amended and Restated Agreement for Information Technology Services among
Company, SCC and EDS dated as of January 1, 1994 ("the Restated Agreement).

     WHEREAS,  the parties desire to amend  the Expiration  Date and the initial
elective termination date of the Restated Agreement; and

     WHEREAS,  Company desires that EDS acquire a license to certain third party
software and modify such software for Company's use as an STP Project;

     NOW, THEREFORE, Company and EDS agree as follows:

1.   Terms  used in this  Amendment  and not  otherwise  defined  shall have the
     meaning set forth in the Restated Agreement.

2.   Section  1.2(a) of the Restated  Agreement is hereby amended to read in its
     entirety as follows:

     "The  term of this  Agreement  shall  commence  on  January  1,  1994  (the
     "Effective  Date"),  and shall expire on December 31, 2011 (the "Expiration
     Date"),  unless  terminated  earlier in  accordance  with the terms of this
     Agreement."

3.   Section  1.2(b) of the Restated  Agreement is hereby amended to read in its
     entirety as follows:

     "COMPANY may elect to terminate  this  Agreement as of December 31, 2001 or
     any  December 31  thereafter  by giving EDS written  notice at least twelve
     (12) months prior to the termination date elected by COMPANY.

     If there is a material  change in ownership of COMPANY  (defined as a third
     party which is not an  affiliate  of COMPANY,  having  acquired  over fifty
     percent  (50%) of  COMPANY's  common  stock  entitling  the third  party to
     exercise a majority of votes on COMPANY  business),  COMPANY shall have the
     option to terminate  this  Agreement  after  December 31, 1998 and prior to
     December 31, 2001 by giving EDS written  notice at least twelve (12) months
     prior to the  termination  date elected by COMPANY.  If COMPANY elects this
     termination  option,  COMPANY shall pay EDS, in addition to any  applicable
     savings  reduction  fees, a  termination  fee based on the invoice  credits
     received  by COMPANY  and  defined in  Section 5 of this  AMENDMENT  to the
     RESTATED  AGREEMENT  dated October 1, 1996.  Upon  notification of intended
     termination, EDS will cease issuing any further invoice credits.


                                      -72-
<PAGE>


     The applicable termination fees are:

            Termination Date                       Termination Fee
            ----------------                       ---------------

            After December 31, 1998, but
            prior to June 30,1999           100 percent of invoice credits
            After June 30, 1999 but
            prior to July 1, 2000            66 percent of invoice credits
            After June 30, 2000 but
            prior to July 1, 2001            33 percent of invoice credits

4.   Pursuant  to Section 4.3 of the  Restated  Agreement,  EDS will  purchase a
     license to Insurance  Software  Solutions Corp.'s  ("SOLCORP")  proprietary
     software  known as  Ingenium  ("Ingenium")  and will  install it at its IPC
     located  in Camp  Hill,  PA. or at any other EDS  facility  which EDS deems
     appropriate. EDS will perform such modifications to Ingenium as Company and
     EDS determine as part of the STP Project.

     Upon expiration or termination of the Restated  Agreement,  EDS will assign
     to Company its license to Ingenium in  accordance  with Section 5.3 of that
     certain  Joint  Marketing and Master  Software  License  Agreement  between
     E.D.S. of Canada, Ltd. and SOLCORP dated November 29, 1994.

5.   EDS will issue invoice  credits to be applied to the EDS Monthly Invoice as
     mutually  agreed  upon and  acceptable  to EDS and  Company.  However,  the
     aggregate amount of all such credits will not exceed $2,000,000.

6.   Except  as  expressly  modified  or  supplemented  by this  Amendment,  the
     provisions  of the Restated  Agreement  remain in full force and effect and
     will be applicable to the performance of the Ingenium Services.

     IN WITNESS  WHEREOF,  EDS and Company  have  executed  and  delivered  this
Amendment as of the date first set forth above.


ELECTRONIC DATA SYSTEMS                      SECURITY-CONNECTICUT LIFE
CORPORATION                                  INSURANCE COMPANY

By:  /s/ Thomas A. Egan                      By:  /s/ Barry J. St. Pierre
     -----------------------                      ------------------------

Title:  Vice President                       Title:  Senior Vice President
     -----------------------                      ------------------------

Date:  October 29, 1996                      Date:  October 28, 1996
     -----------------------                      ------------------------


SECURITY-CONNECTICUT CORPORATION

By:  /s/ Barry J. St. Pierre
     -----------------------

Title:  Senior Vice President
     -----------------------

Date: October 28, 1996
     -----------------------


                                      -73-
<PAGE>


                                                                   Exhibit 10.19

                               FIRST AMENDMENT TO
           SECURITY-CONNECTICUT CORPORATION 1993 STOCK INCENTIVE PLAN

     This   Amendment   made   this   12th  day  of   September   ,   1996,   by
SECURITY-CONNECTICUT  CORPORATION,  for the purpose of  amending  its 1993 Stock
Incentive Plan,

                              W I T N E S S E T H :

     WHEREAS,   Security-Connecticut   Corporation   ("SCC")   established   the
Security-Connecticut   Corporation   1993  Stock  Incentive  Plan  (the  "Plan")
effective November 16, 1993; and

     WHEREAS,  the Board of Directors of SCC has the authority to amend the Plan
in accordance  with subsection  1.4(b)  thereof,  subject to the limitations set
forth in said subsection 1.4; and

     WHEREAS,  the  Board of  Directors  of SCC  wishes to amend the Plan in the
particulars set forth below;

     NOW,  THEREFORE,  the Board of Directors  of SCC hereby  amends the Plan as
follows:

     1. The second  sentence of subsection  3.3 is deleted and the following new
sentence is added in its place:

     "The  Committee  shall also have the authority to accelerate  the time when
     any ISO or NQSO shall be or become  exercisable  by written  agreement with
     the Participant,  amending an existing stock option  agreement,  subject to
     the limitations of subsection 3.2"

     2. Except as  hereinabove  modified and  amended,  the Plan shall remain in
full force and effect.


                                      -74-
<PAGE>


     IN  WITNESS  WHEREOF,  the First  Amendment  is hereby  executed  by a duly
authorized    officer    of    Security-Connecticut     Corporation.

ATTEST:                                         SECURITY-CONNECTICUT CORPORATION

/s/ Patricia A. DeVita                          By /s/ Ronald D. Jarvis
----------------------                             -----------------------
                                                       ITS PRESIDENT


                                      -75-
<PAGE>


                                                                   Exhibit 10.20

                                    AGREEMENT

     AGREEMENT  made as of April 11, 1996,  by and between  SECURITY-CONNECTICUT
CORPORATION  (hereinafter called the "Company"),  a Delaware  corporation having
its principal  place of business in the Town of Avon,  County of Hartford in the
state of Connecticut, and RONALD D. JARVIS (hereinafter called "Employee").

                              W I T N E S S E T H :

     WHEREAS,  Employee  desires to continue to render  faithful  and  efficient
service to the Company; and

     WHEREAS,  the  Company  desires  to  continue  to  receive  the  benefit of
Employee's service; and

     WHEREAS, Employee is willing to continue to be employed by the Company; and

     WHEREAS,  the  Board  of  Directors  of  the  Company  (the  "Board"),  has
determined that it is in the best interests of the Company and its  shareholders
to assure that the Company will have the  continued  dedication of the Employee,
notwithstanding the possibility, threat of occurrence of a Change of Control (as
defined  below) of the Company.  The Board believes it is imperative to diminish
the   inevitable   distraction  of  the  Employee  by  virtue  of  the  personal
uncertainties and risks created by a pending or threatened Change of Control and
to  encourage  the  Employee's  full  attention  and  dedication  to the Company
currently and in the event of any threatened or pending  Change of Control,  and
to provide the  Employee  with  compensation  and benefits  arrangements  upon a
Change of Control which ensure that the compensation  and benefits  expectations
of the Employee will be satisfied and which are competitive  with those of other
corporations; and

     WHEREAS,  by  Agreement  dated as of December 3, 1993,  the Company and the
Employee  entered into an Agreement  setting forth the  conditions of Employee's
employment; and

     WHEREAS,  the  Company  and the  Employee  deem it  advisable  to amend and
restate the conditions of Employee's employment by written agreement;

     NOW,  THEREFORE,  in consideration of the premises and the mutual covenants
hereinafter  set forth,  the parties  agree to amend and restate said  Agreement
dated December 3, 1993, as follows:

     1. Office.  The Company  hereby employs  Employee as its President,  and if
elected by the Board,  its  Chairman;  and Employee  hereby  agrees to serve the
Company in such capacities.

     2. Term of Employment.  Employee's  employment shall be for the "Employment
Period",  with the term commencing April 11, 1996 and continuing for a period of
three (3) years and thirty (30) days  commencing as of said date. Such three (3)
year, thirty (30) day term shall  automatically be renewed on the same terms and
conditions  contained herein at the end of each thirty (30) day period such that
at no time will the balance of the term of  Employee's  employment  hereunder be
less than three (3) years,  unless the Employee  elects to retire or unless this
Agreement is sooner terminated in accordance with the terms hereof.


                                      -76-
<PAGE>


     3. Disability.  If the Company determines in good faith that the Disability
of the Employee  has  occurred  during the  Employment  Period  (pursuant to the
definition of Disability set forth below),  it may give to the Employee  written
notice in accordance  with Section  18(b) of this  Agreement of its intention to
terminate the Employee's  employment.  In such event, the Employee's  employment
with the Company shall terminate effective on the 30th day after receipt of such
notice by the Employee (the "Disability Effective Date"),  provided that, within
the 30 days  after  such  receipt,  the  Employee  shall  not have  returned  to
full-time  performance of the Employee's duties. For purposes of this Agreement,
"Disability"  shall mean the absence of the Employee from the Employee's  duties
with the Company on a full-time  basis for 180  consecutive  business  days as a
result of incapacity due to mental or physical illness which is determined to be
total and  permanent by a physician  selected by the Company or its insurers and
acceptable to the Employee or the Employee's legal representative.

     4. Death.  The  Employment  Period shall  automatically  terminate upon the
death of Employee.

     5.  Responsibilities.  During the  Employment  Period,  and  excluding  any
periods  of  vacation  and sick leave to which the  Employee  is  entitled,  the
Employee agrees to devote  reasonable  attention and time during normal business
hours to the business and affairs of the Company and, to the extent necessary to
discharge the  responsibilities  assigned to the Employee hereunder,  to use the
Employee's  reasonable best efforts to perform  faithfully and efficiently  such
responsibilities.  During the  Employment  Period it shall not be a violation of
this  Agreement for the Employee to (a) serve on corporate,  civic or charitable
boards or committees,  (b) deliver  lectures,  fulfill  speaking  engagements or
teach at educational  institutions and (c) manage personal investments,  so long
as such  activities do not  significantly  interfere with the performance of the
Employee's  responsibilities  as an employee of the Company in  accordance  with
this Agreement.

     6.  Compensation.  During the Employment  Period,  Employee shall receive a
base salary that shall be at an annual rate of not less than  $345,000,  payable
in accordance with the payroll  practices of the Company as from time to time in
effect with regard to  executive  personnel,  plus,  commencing  with January 1,
1997, any annual adjustment to such salary as determined by the Board.

     7. Benefit Plans and Programs. During the Employment Period, Employee shall
be eligible for  participation  in all  incentive,  bonus and benefit  plans and
programs, including those for executive employees, made available by the Company
to its respective employees.

     8. Expenses.  During the Employment Period the Company shall allow Employee
his  reasonable  expenses of travel and business  entertainment  incurred in the
performance  of his  duties  hereunder,  subject  to the rules  and  regulations
adopted by the Company for the handling of such business expenses.

     9.  Termination  Without  Cause.  In the event that  Employee is terminated
without Cause and while this Agreement is in effect:

         (a) the  Company  shall pay to  Employee  an amount  equal to  his then
     current annual base salary; plus the average of the Employee's annual bonus
     paid under the Company's  Management  Incentive Plan (or successor thereto)
     for the three full fiscal years  preceding the date of  termination  of the
     Employment  Period;  plus any  amounts  payable to the  Employee  under any
     severance  pay plan  maintained  by the  Company for its  employees  if the
     Employee is eligible for payment thereunder; and

         (b) all options  granted to him shall be  vested and exercisable to the
     extent provided in the applicable agreements relating thereto.


                                      -77-
<PAGE>


         (c) For purposes of this Agreement, "Cause" shall mean:

             (i) the willful and continued  failure of the  Employee  to perform
     substantially  the  Employee's  duties  with  the  Company  or  one  of its
     affiliates  (other than any such failure  resulting from  incapacity due to
     physical  or  mental  illness),  after a  written  demand  for  substantial
     performance  is delivered  to the Employee by the Board which  specifically
     identifies the manner in which the Board believes that the Employee has not
     substantially performed the Employee's duties, or

             (ii) the willful  engaging  by the  Employee  in illegal conduct or
     gross  misconduct  which  is materially and  demonstrably injurious  to the
     Company.

Any act, or failure to act, based upon authority  given pursuant to a resolution
duly adopted by the Board or any committee of the Board or based upon the advice
of counsel for the Company shall be conclusively presumed to be done, or omitted
to be done,  by the  Employee  in good  faith and in the best  interests  of the
Company.  The cessation of employment of the Employee  shall not be deemed to be
for Cause  unless and until there shall have been  delivered  to the  Employee a
copy of a  resolution  duly  adopted  by the  affirmative  vote of not less than
three-quarters  of the entire  membership of the Board at a meeting of the Board
called and held for such  purpose  (after  reasonable  notice is provided to the
Employee and the Employee is given an opportunity,  together with counsel, to be
heard before the Board),  finding  that, in the good faith opinion of the Board,
the  Employee is guilty of the conduct  described  in  subparagraph  (i) or (ii)
above, and specifying the particulars thereof in detail.

     10.  Grounds for  Termination  of  Employment.  The Board may terminate the
Employment  Period by  written  notice to  Employee,  specifying  the  ground or
grounds for such termination,  if any, but should the Employee's  termination be
without Cause, the provisions of Section 9 of this Agreement will be applicable.

     11. Effect of Termination of the Employment Period. Upon the termination of
the Employment Period,  this Agreement shall terminate,  and all of the parties'
obligations hereunder shall forthwith terminate, except that rights and remedies
accruing  prior to such  termination  or  arising  out of this  Agreement  shall
survive.

     12.  Change of  Control.  In the event of a Change of  Control,  as defined
herein,  the  provisions of this Section 12 shall  supersede  the  provisions of
Sections 3 through 10 of this Agreement, except as otherwise provided herein.

          (a)  Effective  Date.  The  "Effective  Date" shall mean the date upon
     which a  Change  of  Control  occurs.  Anything  in this  Agreement  to the
     contrary  notwithstanding,  if a  Change  of  Control  occurs  and  if  the
     Employee's  employment with the Company is terminated  prior to the date on
     which the Change of Control occurs, and if it is reasonably demonstrated by
     the Employee that such  termination of employment (i) was at the request of
     a third party who has taken steps reasonably  calculated to effect a Change
     of Control or (ii) otherwise  arose in connection with or anticipation of a
     Change of Control,  then for all purposes of this  Agreement the "Effective
     Date"  shall mean and a Change of  Control  shall be deemed to occur on the
     date immediately prior to the date of such termination of employment.

          (b) Change of Control. For the purpose of this Agreement, a "Change of
     Control" shall mean:


                                      -78-
<PAGE>


               (i) the  acquisition by any  individual,  entity or Group (within
          the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
          Act of  1934,  as  amended  (the  "Exchange  Act"))  (a  "Person")  of
          beneficial  ownership  (within the  meaning of Rule 13d-3  promulgated
          under  the  Exchange  Act)  of 20% or  more of  either  (A)  the  then
          outstanding  shares of common stock of the Company  (the  "Outstanding
          Company  Common  Stock") or (B) the combined  voting power of the then
          outstanding   voting  securities  of  the  Company  entitled  to  vote
          generally  in the  election of  directors  (the  "Outstanding  Company
          Voting  Securities");  provided,  however,  that for  purposes of this
          subparagraph  (i), the following  acquisitions  shall not constitute a
          Change of Control:  (A) any acquisition directly from the Company, (B)
          any  acquisition by the Company,  (C) any  acquisition by any employee
          benefit plan (or related trust) sponsored or maintained by the Company
          or any corporation controlled by the Company or (D) any acquisition by
          any corporation  pursuant to a transaction which complies with clauses
          (A), (B) and (C) of subparagraph (iii) of this paragraph (b); or

               (ii) Individuals who, as of the date hereof, constitute the Board
          (the "Incumbent  Board") cease for any reason to constitute at least a
          majority of the Board; provided, however, that any individual becoming
          a director subsequent to the date hereof whose election, or nomination
          for election by the Company's shareholders,  was approved by a vote of
          at least a majority of the  directors  then  comprising  the Incumbent
          Board shall be considered as though such  individual  were a member of
          the  Incumbent  Board,  but  excluding,  for  this  purpose,  any such
          individual whose initial assumption of office occurs as a result of an
          actual or threatened  election contest with respect to the election or
          removal of  directors or other actual or  threatened  solicitation  of
          proxies or consents by or on behalf of a person  other than the Board;
          or

               (iii)  Consummation of a reorganization,  merger or consolidation
          or sale or other disposition of all or substantially all of the assets
          of the  Company (a  "Business  Combination"),  in each  case,  unless,
          following such Business  Combination,  (A) all or substantially all of
          the  individuals   and  entities  who  were  the  beneficial   owners,
          respectively,  of the Outstanding Company Common Stock and Outstanding
          Company  Voting   Securities   immediately   prior  to  such  Business
          Combination  beneficially own,  directly or indirectly,  more than 50%
          of, respectively,  the then outstanding shares of common stock and the
          combined  voting  power  of the  then  outstanding  voting  securities
          entitled to vote  generally in the election of directors,  as the case
          may be, of the  corporation  resulting from such Business  Combination
          (including,  without  limitation,  a corporation  which as a result of
          such transaction  owns the Company or all or substantially  all of the
          Company's assets either directly or through one or more  subsidiaries)
          in substantially the same proportions as their ownership,  immediately
          prior to such Business  Combination of the Outstanding  Company Common
          Stock and Outstanding  Company Voting  Securities,  as the case may be
          (B) no Person (excluding any corporation  resulting from such Business
          Combination  or any employee  benefit  plan (or related  trust) of the
          Company or such corporation  resulting from such Business Combination)
          beneficially   owns,   directly  or   indirectly,   20%  or  more  of,
          respectively,  the then  outstanding  shares  of  common  stock of the
          corporation  resulting from such Business  Combination or the combined
          voting  power  of the  then  outstanding  voting  securities  of  such
          corporation  except to the extent that such ownership existed prior to
          the Business Combination and (C) at least a majority of the members of
          the board of directors of the corporation resulting from such Business
          Combination  were  members of the  Incumbent  Board at the time of the
          execution  of the  initial  agreement,  or of the action of the Board,
          providing for such Business Combination; or

               (iv)  Approval by the  shareholders  of the Company of a complete
          liquidation or dissolution of the Company.


                                      -79-
<PAGE>


          (c) Terms of Employment Following Change of Control.

               (i) Position and Duties.

                   (A) During  the  Employment  Period  following  a  Change  of
          Control,(1) the Employee's position (including status, offices, titles
          and reporting  requirements),  authority,  duties and responsibilities
          shall be at least  commensurate in all material respects with the most
          significant  of those held,  exercised and assigned at any time during
          the 120-day  period  immediately  preceding the Effective Date and (2)
          the  Employee's  services  shall  be  performed  at  the  location  or
          locations  where the Employee was employed  immediately  preceding the
          Effective  Date  or  any  office  or  location  within  the  State  of
          Connecticut.

                   (B) During  the  Employment  Period  following  a  Change  of
          Control, and excluding any periods of vacation and sick leave to which
          the  Employee is entitled,  the Employee  agrees to continue to devote
          reasonable  attention  and time during  normal  business  hours to the
          business  and  affairs of the Company as provided in Section 5 hereof.
          It is  expressly  understood  and agreed  that to the extent  that any
          activities referenced in Section 5 have been conducted by the Employee
          prior to the Effective Date, the continued  conduct of such activities
          (or the  conduct of  activities  similar in nature and scope  thereto)
          subsequent  to the  Effective  Date shall not  thereafter be deemed to
          interfere with the performance of the Employee's  responsibilities  to
          the Company.

               (ii) Compensation.

                   (A) Base Salary.  During the Employment  Period  following  a
          Change of Control,  the Employee  shall  receive an annual base salary
          ("Annual  Base  Salary"),  which shall be paid at a monthly  rate,  at
          least equal to twelve  times the highest  monthly  base salary paid or
          payable, including any base salary which has been earned but deferred,
          to the Employee by the Company and its affiliated companies in respect
          of the twelve-month  period  immediately  preceding the month in which
          the Effective Date occurs.  During the Employment  Period  following a
          Change of Control,  the Annual  Base Salary  shall be reviewed no more
          than 12 months after the last salary increase  awarded to the Employee
          prior to the  Effective  Date and  thereafter at least  annually.  Any
          increase in Annual Base Salary  shall not serve to limit or reduce any
          other  obligation to the Employee  under this  Agreement.  Annual Base
          Salary  shall  not be  reduced  after any such  increase  and the term
          Annual Base Salary as utilized in this Agreement shall refer to Annual
          Base  Salary  as so  increased.  As used in this  Agreement,  the term
          "affiliated  companies"  shall  include  any  company  controlled  by,
          controlling or under common control with the Company.

                    (B) Incentive,  Savings,  and Retirement  Plans.  During the
          Employment Period following a Change of Control, the Employee shall be
          entitled  to  participate  in  all  bonus,   incentive,   savings  and
          retirement  plans,   practices,   policies  and  programs   applicable
          generally to other peer  executives of the Company and its  affiliated
          companies,  but in no event shall such plans, practices,  policies and
          programs provide the Employee with incentive  opportunities  (measured
          with respect to both regular and special incentive  opportunities,  to
          the extent,  if any, that such  distinction  is  applicable),  savings
          opportunities and retirement benefit opportunities, in each case, less
          favorable, in the aggregate, than the most favorable of those provided
          by the Company and its  affiliated  companies  for the Employee  under
          such plans, practices,  policies and programs as in effect at any time
          during the 120-day period immediately  preceding the Effective Date or
          if more  favorable to the Employee,  those  provided  generally at any
          time after the Effective Date to other peer  executives of the Company
          and its affiliated companies.


                                      -80-
<PAGE>


                    (C) Welfare  Benefit  Plans.  During the  Employment  Period
          following  a Change of Control,  the  Employee  and/or the  Employee's
          family, as the case may be, shall be eligible for participation in and
          shall receive all benefits  under welfare  benefit  plans,  practices,
          policies  and  programs  provided by the  Company  and its  affiliated
          companies  including,  without  limitation,   medical,   prescription,
          dental,  disability,  employee life, group life,  accidental death and
          travel accident insurance plans and programs) to the extent applicable
          generally to other peer  executives of the Company and its  affiliated
          companies,  but in no event shall such plans, practices,  policies and
          programs  provide the Employee with benefits which are less favorable,
          in the aggregate,  that the most  favorable of such plans,  practices,
          policies  and  programs in effect for the  Employee at any time during
          the 120-day  period  immediately  preceding the Effective  Date or, if
          more favorable to the Employee,  those provided  generally at any time
          after the Effective  Date to other peer  executives of the Company and
          its affiliated companies.

                    (D)  Expenses.  During the  Employment  Period  following  a
          Change of Control,  the Employee  shall be entitled to receive  prompt
          reimbursement for all reasonable  expenses incurred by the Employee in
          accordance with the most favorable policies,  practices and procedures
          of the Company and its affiliated companies in effect for the Employee
          at any  time  during  the 120 day  period  immediately  preceding  the
          Effective  Date or, if more  favorable to the  Employee,  as in effect
          generally at any time thereafter with respect to other peer executives
          of the Company and its affiliated companies.

                    (E) Fringe Benefits.  During the Employment Period following
          a Change  of  Control,  the  Employee  shall  be  entitled  to  fringe
          benefits,  including,  without limitation,  tax and financial planning
          services,  payment  of  club  dues,  and,  if  applicable,  use  of an
          automobile  and payment of related  expenses,  in accordance  with the
          most favorable plans, practices,  programs and policies of the Company
          and its  affiliated  companies  in effect for the Employee at any time
          during the 120-day period immediately preceding the Effective Date or,
          if more favorable to the Employee,  as in effect generally at any time
          thereafter  with respect to other peer  executives  of the Company and
          its affiliated companies.

                    (F) Office and Support Staff.  During the Employment  Period
          following a Change of Control,  the  Employee  shall be entitled to an
          office  or  offices  of  a  size  and  with   furnishings   and  other
          appointments,  and to personal  secretarial and other  assistance,  at
          least equal to the most  favorable  of the  foregoing  provided to the
          Employee  by the  Company  and its  affiliated  companies  at any time
          during the 120-day period immediately preceding the Effective Date or,
          if more favorable to the Employee,  as provided  generally at any time
          thereafter  with respect to other peer  executives  of the Company and
          its affiliated companies.

                    (G)  Vacation.  During the  Employment  Period  following  a
          Change of Control,  the Employee shall be entitled to paid vacation in
          accordance  with the most  favorable  plans,  policies,  programs  and
          practices of the Company and its affiliated companies as in effect for
          the  Employee  at any  time  during  the  120-day  period  immediately
          preceding the Effective Date or, if more favorable to the Employee, as
          in effect  generally at any time thereafter with respect to other peer
          executives of the Company and its affiliated companies.


                                      -81-
<PAGE>


          (d) Termination of Employment Following Change of Control.

               (i)  Death  or  Disability.   The  Employee's   employment  shall
     terminate  automatically  upon the  Employee's  death during the Employment
     Period  following a Change of Control.  If the Company  determines  in good
     faith  that  the  Disability  of  the  Employee  has  occurred  during  the
     Employment Period following a Change of Control,  the provisions of Section
     3 hereof shall be applicable.

               (ii) Cause.  The Company may terminate the Employee's  employment
     during the Employment  Period  following a Change of Control for Cause,  as
     said term is defined in Section 9(c) hereof.

               (iii) Good Reason. The Employee's employment may be terminated by
     the Employee during the Employment Period following a Change of Control for
     Good Reason. For purposes of this Agreement, "Good Reason" shall mean:

                    (A)  the   assignment   to  the   Employee   of  any  duties
          inconsistent  in any respect with the Employee's  position  (including
          status, offices, titles and reporting requirements), authority, duties
          or  responsibilities  as contemplated  by subparagraph  (c)(i) of this
          Section  12, or any other  action by the  Company  which  results in a
          diminution in such position,  authority,  duties or  responsibilities,
          excluding for that purpose an isolated,  insubstantial and inadvertent
          action  not taken in bad faith and which is  remedied  by the  Company
          promptly after receipt of notice thereof given by the Employee;

                    (B) any  failure by the  Company  to comply  with any of the
          provisions of  subparagraph  (c)(ii) of this Section 12, other than an
          isolated,  insubstantial and inadvertent  failure not occurring in bad
          faith and which is remedied by the Company  promptly  after receipt of
          notice thereof given by the Employee;

                    (C) the Company's  requiring the Employee to be based at any
          office or location other than as provided in subparagraph (c)(i)(A)(2)
          hereof or the  Company's  requiring  the Employee to travel on Company
          business to a substantially  greater extent that required  immediately
          prior to the Effective Date:

                    (D)  any  purported   termination  by  the  Company  of  the
          Employee's  employment  otherwise than as expressly  permitted by this
          Agreement; or

                    (E) any  failure by the  Company to comply  with and satisfy
          Section 20(c) of this Agreement.

For purposes of this  subparagraph  (d)(iii),  any good faith  determination  of
"Good  Reason"  made by the  Employee  shall  be  conclusive.  Anything  in this
Agreement to the contrary notwithstanding, a termination by the Employee for any
reason during the period commencing on the Effective Date of a Change of Control
and ending one (1) year from the Effective  Date of a Change of Control shall be
deemed to be a termination for  Good Reason for all  purposes of this Agreement.

               (iv) Notice of  Termination.  Any  termination by the Company for
     Cause, or by the Employee for Good Reason,  shall be communicated by Notice
     of Termination  to the other party hereto given in accordance  with Section
     18 of  this  Agreement.  For  purposes  of this  Agreement,  a  "Notice  of
     Termination"  means a written  notice  which  (A)  indicates  the  specific
     termination  provision in this  Agreement  relied  upon,  (B) to the extent
     applicable,  sets forth in  reasonable  detail the facts and  circumstances
     claimed to provide a basis for  termination  of the  Employee's  employment
     under the  provision so indicated  and (C) if the Date of  Termination  (as
     defined below) is other than the date of receipt of such notice,  specifies
     the  termination  date (which date shall be not more than thirty days after
     the giving of such  notice).  The failure by the Employee or the Company to
     set  forth in the  Notice of  Termination  any fact or  circumstance  which
     contributes  to a showing of Good Reason or Cause shall not waive any right
     of the  Employee or the  Company,  respectively,  hereunder or preclude the
     Employee  or  the  Company,  respectively,  from  asserting  such  fact  or
     circumstance in enforcing the Employee's or the Company's rights hereunder.


                                      -82-
<PAGE>


               (v) Date of Termination.  "Date of Termination"  means (A) if the
     Employee's  employment is  terminated  by the Company for Cause,  or by the
     Employee for Good Reason,  the date of receipt of the Notice of Termination
     or any  later  date  specified  therein,  as the  case  may be,  (B) if the
     Employee's  employment is terminated by the Company other than for Cause or
     Disability,  the Date of Termination shall be the date on which the Company
     notifies  the  Employee  of  such  termination  and  (C) if the  Employee's
     employment  is  terminated  by reason of death or  Disability,  the Date of
     Termination  shall be the date of death of the  Employee or the  Disability
     Effective Date, as the case may be.

          (e)  Obligations  of  the  Company  upon   Termination  of  Employment
Following a Change of Control.

               (i) Good Reason:  Other Than for Cause,  Death or Disability  and
     Within Two Years.  If, during the Employment  Period  following a Change of
     Control and within the two (2) year  period  following a Change of Control,
     the Company shall terminate the Employee's  employment other than for Cause
     or Disability or the Employee shall terminate employment for Good Reason:

                    (A) the Company  shall pay to the  Employee in a lump sum in
          cash within 30 days after the Date of Termination the aggregate of the
          following amounts:

                         (1) the sum of (I) the  Employee's  Annual  Base Salary
               through  the Date of  Termination  to the extent not  theretofore
               paid,  (II) the  product  of (x) the  average  of the  Employee's
               annual bonus paid under the Company's  Management  Incentive Plan
               (or successor  thereto) for the three full fiscal years preceding
               the  date  of  termination  of the  Employment  Period  and (y) a
               fraction,  the  numerator  of which is the  number of days in the
               current  fiscal  year  through the Date of  Termination,  and the
               denominator   of  which  is  365;  and  (III)  any   compensation
               previously  deferred by the Employee  (together  with any accrued
               interest or earnings  thereon) and any accrued  vacation  pay, in
               each  case to the  extent  not  theretofore  paid (the sum of the
               amounts  described  in  clauses  (I),  (II),  and (III)  shall be
               hereinafter referred to as the "Accrued Obligation"); and

                         (2) An amount equal to the product of (I) three (3) and
               (II) the sum of (x) the  Employee's  Annual Base Salary in effect
               at the Date of Termination  and (y) the average of the Employee's
               annual bonus paid under the Company's  Management  Incentive Plan
               (or successor  thereto) for the three full fiscal years preceding
               the date of termination of the Employment Period; and

                         (3) An amount equal to the excess of (I) the  actuarial
               equivalent of the benefit under the Company's  qualified  defined
               benefit  retirement plan (the  "Security-Connecticut  Corporation
               Employees'  Retirement Plan") (utilizing actuarial assumptions no
               less  favorable  to the  Employee  than those in effect under the
               Security-Connecticut   Corporation   Employees'  Retirement  Plan
               immediately    prior   to   the   Effective    Date),   and   the
               Security-Connecticut  Corporation Excess Pension Benefit Plan and
               Security-Connecticut   Corporation  Excess  Compensation  Pension
               Benefit Plan in which the  Employee  participates  (the  "SERPS")
               which the Employee  would  receive if the  Employee's  employment
               continued for three years after the Date of Termination  assuming
               for this purpose that all accrued benefits are fully vested, and,
               assuming  that the  Employee's  Annual Base Salary in each of the
               three  years is equal to his  Annual  Base  Salary at the Date of
               Termination,   over  (II)  the   actuarial   equivalent   of  the
               Executive's  actual benefit (paid or payable),  if any, under the
               Security-Connecticut  Corporation  Employees' Retirement Plan and
               the SERPS as of the Date of Termination.


                                      -83-
<PAGE>


                    (B)  for  three   years   after  the   Employee's   Date  of
          Termination,  or such longer period as may be provided by the terms of
          the appropriate plan,  program,  practice or policy, the Company shall
          continue  benefits to the  Employee  and/or the  Employee's  family at
          least  equal  to those  which  would  have  been  provided  to them in
          accordance with the plans, programs,  practices and policies described
          in  subparagraph  (c)(ii)(C)  of  this  Section  12 if the  Employee's
          employment  had not  been  terminated  or,  if more  favorable  to the
          Employee,  as in effect  generally at any time thereafter with respect
          to other peer  employees of the Company and its  affiliated  companies
          and their families,  provided,  however,  that if the Employee becomes
          reemployed with another employer and is eligible to receive medical or
          other welfare  benefits  under  another  employer-provided  plan,  the
          medical and other welfare benefits described herein shall be secondary
          to those provided under such other plan during such applicable  period
          of eligibility.  For purposes of determining  eligibility (but not the
          time of commencement of benefits) of the Employee for retiree benefits
          pursuant to such plans, practices, programs and policies, the Employee
          shall be considered to have remained  employed until three years after
          the Date of  Termination  and to have  retired on the last day of such
          Period;

                    (C)  for  three   years   after  the   Employee's   Date  of
          Termination,  or such longer period as may be provided by the terms of
          the appropriate plan,  program,  practice or policy, the Company shall
          continue fringe benefits to the Employee at least equal to those which
          would have been provided to him in accordance with the plans, programs
          and policies  described in subparagraph  (c)(ii)(E) of this Section 12
          if the  Employee's  employment  had not been  terminated  or,  if more
          favorable  to  the  Employee,  as in  effect  generally  at  any  time
          thereafter with respect to other peer employees of the Company and its
          affiliated companies;

                    (D) the  Company  shall,  at its sole  expense as  incurred,
          provide the Employee with reasonable outplacement services;

                    (E) to the  extent not  theretofore  paid or  provided,  the
          Company  shall timely pay or provide to the Employee any other amounts
          or benefits  required to be paid or provided or which the  Employee is
          eligible  to receive  under any plan,  program,  policy or practice or
          contract or  agreement  of the Company  and its  affiliated  companies
          (such other amounts and benefits shall be  hereinafter  referred to as
          the "Other Benefits"); and

                    (F) the  provisions of paragraph (b) of Section 9 shall also
          apply.

               (ii) Good Reason:  Other Than for Cause,  Death or Disability and
     After Two Years.  If, during the  Employment  period  following a Change of
     Control,  and  after  two (2)  years  have  elapsed  following  a Change of
     Control,  the Company shall terminate the Employee's  employment other than
     for Cause or Disability or the Employee shall terminate employment for Good
     Reason, the provisions of subparagraph  (e)(i) of this Section 12 shall not
     apply, and the following provisions shall apply instead:


                                      -84-
<PAGE>


                    (A) the Company shall pay to Employee an amount equal to his
          then current  annual base salary;  plus the average of the  Employee's
          annual bonus paid under the Company's  Management  Incentive  Plan (or
          successor  thereto) for the three full fiscal years preceding the date
          of termination of the Employment  Period;  plus any amounts payable to
          the Employee  under any severance  pay plan  maintained by the Company
          for its employees if the Employee is eligible for payment  thereunder;
          and

                    (B)  all  options   granted  to  him  shall  be  vested  and
          exercisable  to  the  extent  provided  in the  applicable  agreements
          relating thereto.

               (iii) Death. If the Employee's employment is terminated by reason
     of the Employee's death during the Employment  Period following a Change of
     Control,  this Agreement shall terminate without further obligations to the
     Employee's  legal  representatives  under  this  Agreement,  other than for
     payment of Accrued Obligations and the timely payment or provision of Other
     Benefits.  Accrued  Obligations  shall be paid to the Employee's  estate or
     beneficiary,  as  applicable,  in a lump sum in cash  within 30 days of the
     Date of Termination.  With respect to the provision of Other Benefits,  the
     term Other Benefits as utilized in this  subparagraph  (iii) shall include,
     without limitation, and the Employee's estate and/or beneficiaries shall be
     entitled to receive, benefits at least equal to the most favorable benefits
     provided  by the  Company  and  affiliated  companies  to the  estates  and
     beneficiaries  of  peer  executives  of the  Company  and  such  affiliated
     companies under such plans,  programs,  practices and policies  relating to
     death benefits,  if any, as in effect with respect to other peer executives
     and their  beneficiaries at any time during the 120-day period  immediately
     preceding the Effective Date or, if more favorable to the Employee's estate
     and/or  the  Employee's  beneficiaries,  as in  effect  on the  date of the
     Employee's  death with respect to other peer  executives of the Company and
     its affiliated companies and their beneficiaries.

               (iv)  Disability.  If the Employee's  employment is terminated by
     reason of the Employee's  Disability during the Employment Period following
     a Change  of  Control,  this  Agreement  shall  terminate  without  further
     obligations to the Employee,  other than for payment of Accrued Obligations
     and the timely payment or provision of Other Benefits.  Accrued Obligations
     shall be paid to the  Employee  in a lump sum in cash within 30 days of the
     Date of Termination.  With respect to the provision of Other Benefits,  the
     term Other  Benefits as utilized in this  subparagraph  (iv) shall include,
     and the Employee shall be entitled  after the Disability  Effective Date to
     receive, disability and other benefits at least equal to the most favorable
     of those generally provided by the Company and its affiliated  companies to
     disabled  executives  and/or their families in accordance  with such plans,
     programs,  practices  and policies  relating to  disability,  if any, as in
     effect  generally with respect to other peer  executives and their families
     at any time during the 120 day period  immediately  preceding the Effective
     Date or, if more favorable to the Employee and/or the Employee's family, as
     in effect at any time  thereafter  generally  with  respect  to other  peer
     executives of the Company and its affiliated companies and their families.

               (v)  Cause:  Other  than  for  Good  Reason.  If  the  Employee's
     employment  shall be  terminated  for Cause  during the  Employment  Period
     following a Change of  Control,  this  Agreement  shall  terminate  without
     further obligations to the Employee other than the obligation to pay to the
     Employee (x) his Annual Base Salary  through the Date of  Termination,  (y)
     the amount of any compensation previously deferred by the Employee, and (z)
     Other  Benefits,  in each case to the  extent  theretofore  unpaid.  If the
     Employee  voluntarily  terminates  employment  during the Employment Period
     following a Change of Control,  excluding a  termination  for Good  Reason,
     this Agreement shall terminate without further obligations to the Employee,
     other than for Accrued  Obligations  and the timely payment or provision of
     Other Benefits.  In such case, all Accrued Obligations shall be paid to the
     Employee in a lump sum in cash within 30 days of the Date of Termination.


                                      -85-
<PAGE>


     13.  Payment  Limit.  (a)  Notwithstanding  the  other  provisions  of this
Employment Agreement, the Company shall make no payment that would constitute an
"excess  parachute  payment"  within the meaning of Section 280G of the Internal
Revenue Code of 1986 or any successor provision.

     (b) In the event that the  accounting  firm  selected  in  accordance  with
paragraph  (e) hereof (the  "Auditors")  determines  that any payment or benefit
provided  by the Company to or for the benefit of the  Employee,  whether  paid,
payable or provided  pursuant to the terms of this  Agreement  or  otherwise  (a
"Payment")  would  constitute an excess  parachute  payment,  then the aggregate
present value of the Payments  pursuant to this Agreement  shall be reduced (but
not below zero) to the Reduced Amount.  The "Reduced  Amount" shall be an amount
expressed  in present  value which  maximizes  the  aggregate  present  value of
Payments without causing any Payment to constitute an excess parachute payment.

     (c) If the Auditors  determine that any Payment would  constitute an excess
parachute  payment,  then the Company shall promptly give the Employee notice to
that effect and a copy of the  detailed  calculation  thereof and of the Reduced
Amount,  and the Employee may then elect, in his sole discretion,  which and how
much of the Payments  under this  Agreement  shall be  eliminated  or reduced in
order that no Payment shall  constitute an excess parachute  payment,  and shall
advise  the  Company in  writing  of his  election  within 10 days of receipt of
notice.  If no such election is made by the Employee  within such 10-day period,
then the  Company  may  elect  which  and how much of the  Payments  under  this
Agreement shall be eliminated or reduced and shall notify the Employee  promptly
of such election.

     (d) All  determinations  made by the  Auditors  shall be  binding  upon the
Company and the Employee and shall be made within 60 days of the Employee's Date
of Termination.

     (e) The Auditors  shall be a national  accounting  firm  selected by mutual
agreement of the Company and the Employee and may, but need not be, the auditors
of the Company.

     14.  Non-exclusivity of Rights.  Nothing in this Agreement shall prevent or
limit the Employee's  continuing or future  participation in any plan,  program,
policy or practice  provided by the Company or any of its  affiliated  companies
and for which the  Employee  may  qualify,  nor shall  anything  herein limit or
otherwise  affect such  rights as the  Employee  may have under any  contract or
agreement with the Company or any of its affiliated companies. Amounts which are
vested benefits or which the Employee is otherwise entitled to receive under any
plan,  policy,  practice  or program of or any  contract or  agreement  with the
Company or any of its affiliated  companies  shall be payable in accordance with
such plan,  policy,  practice  or program or  contract  or  agreement  except as
explicitly modified by this Agreement.

     15. Full Settlement. The Company's obligation to make the payments provided
for in this Agreement and otherwise to perform its  obligations  hereunder shall
not be  affected  by any  set-off,  counterclaim,  recoupment,  defense or other
claim,  right or action  which the  Company  may have  against  the  Employee or
others.  In no event shall the Employee be obligated to seek other employment or
take any  other  action  by way of  mitigation  of the  amounts  payable  to the
Employee  under any of the  provisions of this  Agreement and such amounts shall
not be reduced whether or not the Employee obtains other employment. The Company
agrees to pay as incurred,  to the full extent  permitted by law, all legal fees
and expenses which the Employee may reasonably  incur as a result of any contest
(regardless  of the outcome  thereof) by the Company,  the Employee or others of
the validity or  enforceability  of, or liability  under,  any provision of this
Agreement or any guarantee of performance  thereof (including as a result of any
contest  by the  Employee  about the  amount  of any  payment  pursuant  to this
Agreement),  plus in each case interest on any delayed payment at the applicable
Federal rate provided for in Section  7872(f)(2)(A) of the Internal Revenue Code
of 1986, as amended (the "Code").


                                      -86-
<PAGE>


     16.  Restrictive  Covenants.  Employee  shall not,  during  the  Employment
Period,  directly  or  indirectly,  alone or as a  member  of a  partnership  or
association, or as an officer, director, advisor,  consultant, agent or employee
of any other  company,  be  engaged  in or  concerned  with any other  duties or
pursuits  requiring his personal  services except with the prior written consent
of the  Board of  Directors  of the  Company.  Nothing  herein  contained  shall
preclude  the  ownership by Employee of stocks or other  investment  securities.
Nothing  herein  contained  shall  preclude  service  by  Employee  on boards of
directors or trustees of other entities not engaged in any business  competitive
with the business of the Company.

     17. Trade Secrets and Non-compete.  Employee  acknowledges that as a result
of his employment by the Company, he may develop, obtain or learn about specific
confidential information or trade secrets which are the property of the Company.
Employee  hereby  covenants  and agrees to use his best  efforts  and the utmost
diligence to guard and protect such  confidential  information and trade secrets
and that he will not,  without the prior written  consent of the Company,  for a
period of three (3) years use for  himself or others or disclose or permit to be
disclosed  to any third  party by any method  whatsoever  any such  confidential
information  or trade  secret of the Company.  For  purposes of this  paragraph,
confidential  information or trade secrets shall include, but not be limited to,
any and all records, notes, memoranda, data, ideas, processes, methods, devices,
programs, computer software, writings, research, personnel information, customer
information, financial information, plans or any information of whatever nature,
in the  possession  or control of the  Company  which  give to the  Employee  an
opportunity to obtain an advantage over competitors who do not know or use it.

     Employee  recognizes  that the  Company is engaged in a highly  competitive
business,  and that  personal  contact is of primary  importance in securing and
retaining  current  business  and in  protecting  the  business of the  Company.
Therefore,  Employee  further  covenants that for a period of one (1) year after
ceasing  employment  with the Company he shall not,  without  the prior  written
approval of the Board of Directors of the Company:

          (a) become an  officer,  employee,  agent or  partner of any  business
enterprise in  substantial  direct  competition  with the Company (or any of its
subsidiaries  or  affiliates),  as the  business  of the  Company  (or any  such
subsidiary or affiliate) may be constituted  during the term of employment or at
the  termination  thereof.  For  purposes  of this  paragraph  (a),  a  business
enterprise  will be considered to be in  "substantial  direct  competition"  if,
during a year when such  competition is prohibited,  its sales of any product or
service which is  competitive  with a product or service sold by the Company (or
its subsidiaries and affiliates),  including,  without limitation, sales of life
insurance or annuity  products,  amount to more than either ten percent (10%) of
its total sales or twenty-five million dollars ($25,000,000);

          (b) interfere with the  relationship  of the Company and any employee,
agent or representative;

          (c)  directly  or  indirectly  divert or  attempt  to divert  from the
Company any business in which the Company has been actively  engaged  during the
past  three (3) years nor  interfere  with  relationships  of the  Company  with
policyholders,   dealers,   distributors,   marketers,  sources  of  supply,  or
customers; or

          (d)  engage in any  pattern  of conduct  that  involves  the making or
publishing  or  written  or  oral  statements  or  remarks  (including,  without
limitation,  the repetition or distribution of derogatory  rumors,  allegations,
negative  reports  or  comments)  which  are  disparaging  or  damaging  to  the
integrity, reputation or good will of the Company and its management.

     Employee  further  specifically  acknowledges  that the geographic  area to
which the covenants  contained in paragraphs (a) through (d) applies is the same
geographic  area in which he performed  services for the Company during the past
three (3)  years.  In the event  that  Employee  is  terminated  without  Cause,
Employee will not be subject to the covenants set forth in this Section.


                                      -87-
<PAGE>


     If the provisions of this Section 17 are violated, in whole or in part, the
Company  shall be  entitled  to seek,  upon  application  to any court of proper
jurisdiction and an appropriate  showing to such court, a temporary  restraining
order or  preliminary  injunction  to restrain and enjoin the Employee from such
violation without prejudice to any other remedies the Company may have at law or
in equity.  Further,  in the event that the provisions of this Section 17 should
ever be deemed  to  exceed  the time,  geographic  or  occupational  limitations
permitted by  applicable  laws,  the  Employee  and the Company  agree that such
provisions  shall be and hereby are reformed to the maximum time,  geographic or
occupational limitations permitted by the applicable laws.

     18.  Notice.  Any notice  required to be given by the Company  hereunder to
Employee  shall be in proper  form and signed by an officer or  Director  of the
Company.  Until one party  shall  advise the other in  writing to the  contrary,
notices shall be deemed delivered:

          (a) to the Company if delivered to the Secretary of the Company, or if
mailed,  certified or registered mail, postage prepaid,  to the Secretary of the
Company at 20 Security Drive, Avon, Connecticut 06001;

          (b) to  Employee  if  delivered  to  Employee,  or if  mailed  to him,
certified or registered mail, postage prepaid,  at 165 Westmont,  West Hartford,
Connecticut 06117.

     19. Alternative Dispute Resolution.  Any controversy,  dispute or questions
arising  out of, in  connection  with or in relation  to this  Agreement  or its
interpretation,  performance  or  nonperformance  or any breach thereof shall be
resolved through mediation.  In the event mediation fails to resolve the dispute
within 60 days after a mediator has been agreed upon or such other longer period
as may be agreed to by the parties, such controversy,  dispute or question shall
be settled by  arbitration  in accordance  with the Center for Public  Resources
Rules  for  Non-Administered   Arbitration  of  Business  Disputes,  by  a  sole
arbitrator.  The arbitration shall be governed by the United States  Arbitration
Act, 9 U.S.C.  Sec. 1-16, and judgment upon the award rendered by the arbitrator
may be  entered  by any  court  having  jurisdiction  thereof.  The place of the
arbitration shall be Hartford, Connecticut.

     20. Successors.

          (a) This  Agreement  is personal to the Employee and without the prior
written consent of the Company shall not be assignable by the Employee otherwise
than by will or the laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by the Employee's legal representatives.

          (b) This  Agreement  shall inure to the benefit or and be binding upon
the Company and its successors and assigns.

          (c)  The  Company  will  require  any  successor  (whether  direct  or
indirect,   by  purchase,   merger,   consolidation  or  otherwise)  to  all  or
substantially  all of the  business  and/or  assets  of the  Company  to  assume
expressly and agree to perform this Agreement in the same manner and to the same
extent  that the Company  would be required to perform it if no such  succession
had taken place. As used in this Agreement,  "Company" shall mean the Company as
hereinbefore  defined  and  any  successor  to its  business  and/or  assets  as
aforesaid  which  assumes and agrees to perform  this  Agreement by operation of
law, or otherwise.


                                      -88-
<PAGE>


     21. Miscellaneous.

          (a) This  Agreement  shall be governed by and  construed in accordance
with the laws of the State of  Connecticut,  without  reference to principles of
conflict of laws.  The captions of this Agreement are not part of the provisions
hereof and shall have no force and effect.  This Agreement may not be amended or
modified otherwise than by a written agreement executed by the parties hereto or
their respective successors and legal representatives.

          (b)  The  invalidity  or  unenforceability  of any  provision  of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.

          (c) The  Company may  withhold  from any  amounts  payable  under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.

          (d) The  Employee's  or the  Company's  failure to insist  upon strict
compliance  with any  provision  of this  Agreement or the failure to assert any
right  the  Employee  or the  Company  may have  hereunder,  including,  without
limitation,  the right of the Employee to terminate  employment  for Good Reason
following a Change of Control pursuant to Section  12(d)(iii) of this Agreement,
shall  not be  deemed  to be a waiver  of such  provision  or right or any other
provision or right of this Agreement.

          (e)  Counterparts.  This  Agreement  may be  executed  in one or  more
counterparts,  each of which shall be deemed to be an original  but all of which
together will constitute one and the same instrument.

     22. Effect on Previous  Agreements.  This Agreement amends and restates the
Agreement  dated  December 3, 1993,  between  Employee and  Security-Connecticut
Corporation,  and supersedes other previous agreements pertaining to the subject
matter hereof.




     IN WITNESS  WHEREOF,  the parties hereto have executed this Agreement as of
the day and year first above written.

Attest:                                         SECURITY-CONNECTICUT CORPORATION


/s/Patricia A. DeVita                           By /s/John E. Silliman
---------------------                           ----------------------



Witness:


/s/Patricia A. DeVita                           /s/Ronald D. Jarvis
---------------------                           -------------------
                                                Ronald D. Jarvis
                                                Employee





                                      -89-
<PAGE>
                                                                   Exhibit 10.21


                                    AGREEMENT

     AGREEMENT by and between  SECURITY-CONNECTICUT  CORPORATION (the "Company")
and ________________ (the "Executive"), dated as of the 11th day of April, 1996.

     The Board of Directors of the Company (the "Board"), has determined that it
is in the best interests of the Company and its  shareholders to assure that the
Company will have the continued dedication of the Executive, notwithstanding the
possibility,  threat or occurrence of a Change of Control (as defined  below) of
the Company.  The Board  believes it is  imperative  to diminish the  inevitable
distraction of the Executive by virtue of the personal  uncertainties  and risks
created  by a pending  or  threatened  Change of Control  and to  encourage  the
Executive's  full attention and  dedication to the Company  currently and in the
event of any  threatened  or  pending  Change of  Control,  and to  provide  the
Executive with  compensation and benefits  arrangements upon a Change of Control
which ensure that the  compensation  and benefits  expectations of the Executive
will be satisfied and which are  competitive  with those of other  corporations.
Therefore,  in order to accomplish  these  objectives,  the Board has caused the
Company to enter into this Agreement.

     NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

     1. Certain Definitions.  (a) The "Effective Date" shall mean the first date
during  the Change of  Control  Period (as  defined in Section 1 (b)) on which a
Change of Control as defined in Section 2) occurs. Anything in this Agreement to
the  contrary  notwithstanding,  if a  Change  of  Control  occurs  and  if  the
Executive's employment with the Company is terminated prior to the date on which
the  Change of  Control  occurs,  and if it is  reasonably  demonstrated  by the
Executive that such  termination of employment (i) was at the request of a third
party who has taken steps reasonably calculated to effect a Change of Control or
(ii) otherwise  arose in connection with or anticipation of a Change of Control,
then for all purposes of this Agreement the  "Effective  Date" shall mean, and a
Change of Control shall be deemed to occur on, the date immediately prior to the
date of such termination of employment.

     (b) The "Change of Control Period" shall mean the period  commencing on the
date hereof and ending on the third  anniversary  of the date hereof;  provided,
however, that commencing on the date one year after the date hereof, and on each
annual anniversary of such date (such date and each annual  anniversary  thereof
shall be  hereinafter  referred to as the  "Renewal  Date"),  unless  previously
terminated,  the Change of Control Period shall be automatically  extended so as
to terminate  three years from such Renewal Date,  unless at least 60 days prior
to the Renewal  Date the Company  shall give  notice to the  Executive  that the
Change of Control Period shall not be so extended.

     2.  Change of  Control.  For the  purpose of this  Agreement,  a "Change of
Control" shall mean:

     (a) the acquisition by any individual,  entity or Group (within the meaning
of Section  13(d)(3) or  14(d)(2) of the  Securities  Exchange  Act of 1934,  as
amended (the "Exchange Act")) (a "Person") of beneficial  ownership  (within the
meaning  of Rule 13d-3  promulgated  under the  Exchange  Act) of 20% or more of
either  (i) the then  outstanding  shares of common  stock of the  Company  (the
"Outstanding  Company  Common  Stock") or (ii) the combined  voting power of the
then outstanding  voting securities of the Company entitled to vote generally in
the  election  of  directors  (the  "Outstanding  Company  Voting  Securities");
provided,  however,  that for purposes of this  subsection  (a),  the  following
acquisitions  shall not  constitute  a Change of  Control:  (i) any  acquisition
directly  from the  Company,  (ii) any  acquisition  by the  Company,  (iii) any
acquisition  by any  employee  benefit  plan (or  related  trust)  sponsored  or
maintained by the Company or any  corporation  controlled by the Company or (iv)
any acquisition by any corporation pursuant to a transaction which complies with
clauses (i), (ii) and (iii) of subsection (c) of this Section 2; or


                                      -90-
<PAGE>


     (b)  Individuals  who,  as of the date  hereof,  constitute  the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board; provided,  however, that any individual becoming a director subsequent to
the date hereof whose  election,  or  nomination  for election by the  Company's
shareholders,  was  approved by a vote of at least a majority  of the  directors
then  comprising  the  Incumbent  Board  shall  be  considered  as  though  such
individual  were a  member  of the  Incumbent  Board,  but  excluding,  for this
purpose,  any such  individual  whose  initial  assumption of office occurs as a
result of an actual or threatened  election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the Board; or

     (c)  Consummation of a  reorganization,  merger or consolidation or sale or
other  disposition of all or  substantially  all of the assets of the Company (a
"Business   Combination"),   in  each  case,  unless,  following  such  Business
Combination,  (i) all or  substantially  all of the individuals and entities who
were the beneficial  owners,  respectively,  of the  Outstanding  Company Common
Stock  and  Outstanding  Company  Voting  Securities  immediately  prior to such
Business Combination beneficially own, directly or indirectly, more than 50% of,
respectively,  the then  outstanding  shares  of common  stock and the  combined
voting  power  of the  then  outstanding  voting  securities  entitled  to  vote
generally in the election of directors,  as the case may be, of the  corporation
resulting  from such Business  Combination  (including,  without  limitation,  a
corporation  which as a result of such  transaction  owns the  Company or all or
substantially all of the Company's assets either directly or through one or more
subsidiaries)  in  substantially   the  same  proportions  as  their  ownership,
immediately prior to such Business Combination of the Outstanding Company Common
Stock and  Outstanding  Company  Voting  Securities,  as the case may be (ii) no
Person  (excluding any corporation  resulting from such Business  Combination or
any employee  benefit plan (or related trust) of the Company or such corporation
resulting  from  such  Business  Combination)  beneficially  owns,  directly  or
indirectly, 20% or more of, respectively,  the then outstanding shares of common
stock  of the  corporation  resulting  from  such  Business  Combination  or the
combined  voting  power  of the  then  outstanding  voting  securities  of  such
corporation  except to the  extent  that  such  ownership  existed  prior to the
Business  Combination  and (iii) at least a majority of the members of the board
of directors of the corporation  resulting from such Business  Combination  were
members  of the  Incumbent  Board at the time of the  execution  of the  initial
agreement,  or  of  the  action  of  the  Board,  providing  for  such  Business
Combination;

     (d) Approval by the  shareholders of the Company of a complete  liquidation
or dissolution of the Company.

     3. Employment  Period.  The Company hereby agrees to continue the Executive
in its employ,  and the  Executive  hereby agrees to remain in the employ of the
Company  subject to the terms and conditions of this  Agreement,  for the period
commencing on the  Effective  Date and ending on the third  anniversary  of such
date (the "Employment Period").

     4. Terms of Employment.

     (a) Position and Duties.

          (i)  During  the  Employment  Period,  (A)  the  Executive's  position
     (including status, offices, titles and reporting requirements),  authority,
     duties and responsibilities  shall be at least commensurate in all material
     respects with the most significant of those held, exercised and assigned at
     any time during the 120-day period immediately preceding the Effective Date
     and (B) the  Executive's  services  shall be  performed  at the location or
     locations  where the  Executive  was  employed  immediately  preceding  the
     Effective Date or any office or location within the State of Connecticut.


                                      -91-
<PAGE>


          (ii)  During the  Employment  Period,  and  excluding  any  periods of
     vacation and sick leave to which the  Executive is entitled,  the Executive
     agrees to devote reasonable attention and time during normal business hours
     to the business and affairs of the Company and, to the extent  necessary to
     discharge the responsibilities  assigned to the Executive hereunder, to use
     the  Executive's   reasonable  best  efforts  to  perform   faithfully  and
     efficiently such  responsibilities.  During the Employment  Period it shall
     not be a violation  of this  Agreement  for the  Executive  to (A) serve on
     corporate,  civic or charitable boards or committees, (B) deliver lectures,
     fulfill speaking  engagements or teach at educational  institutions and (C)
     manage   personal   investments,   so  long  as  such   activities  do  not
     significantly   interfere   with  the   performance   of  the   Executive's
     responsibilities  as an  employee of the  Company in  accordance  with this
     Agreement.  It is expressly  understood  and agreed that to the extent that
     any such  activities  have been  conducted  by the  Executive  prior to the
     Effective Date, the continued conduct of such activities (or the conduct of
     activities similar in nature and scope thereto) subsequent to the Effective
     Date shall not  thereafter be deemed to interfere  with the  performance of
     the Executive's responsibilities to the Company.

     (b) Compensation.

          (i) Base Salary.  During the Employment  Period,  the Executive  shall
     receive an annual base salary  ("Annual Base Salary"),  which shall be paid
     at a monthly rate, at least equal to twelve times the highest  monthly base
     salary paid or payable, including any base salary which has been earned but
     deferred,  to the Executive by the Company and its affiliated  companies in
     respect of the twelve-month period immediately preceding the month in which
     the Effective Date occurs.  During the Employment  Period,  the Annual Base
     Salary  shall be  reviewed  no more  than 12 months  after the last  salary
     increase  awarded  to  the  Executive  prior  to  the  Effective  Date  and
     thereafter at least annually.  Any increase in Annual Base Salary shall not
     serve to limit or reduce any other  obligation to the Executive  under this
     Agreement.  Annual Base Salary shall not be reduced after any such increase
     and the term Annual Base Salary as utilized in this  Agreement  shall refer
     to Annual Base Salary as so increased. As used in this Agreement,  the term
     "affiliated companies" shall include any company controlled by, controlling
     or under common control with the Company.

          (ii) Incentive,  Savings,  and Retirement Plans. During the Employment
     Period,  the  Executive  shall be  entitled  to  participate  in all bonus,
     incentive,  savings and retirement plans, practices,  policies and programs
     applicable  generally  to other  peer  executives  of the  Company  and its
     affiliated companies, but in no event shall such plans, practices, policies
     and programs provide the Executive with incentive  opportunities  (measured
     with respect to both regular and special  incentive  opportunities,  to the
     extent, if any, that such distinction is applicable), savings opportunities
     and retirement benefit opportunities,  in each case, less favorable, in the
     aggregate, than the most favorable of those provided by the Company and its
     affiliated  companies  for  the  Executive  under  such  plans,  practices,
     policies  and  programs  as in effect at any time during the 120 day period
     immediately  preceding  the  Effective  Date  or if more  favorable  to the
     Executive, those provided generally at any time after the Effective Date to
     other peer executives of the Company and its affiliated companies.

          (iii)  Welfare  Benefit  Plans.  During  the  Employment  Period,  the
     Executive  and/or  the  Executive's  family,  as the case may be,  shall be
     eligible for  participation in and shall receive all benefits under welfare
     benefit plans, practices, policies and programs provided by the Company and
     its  affiliated   companies   including,   without   limitation,   medical,
     prescription,  dental,  disability,  employee life, group life,  accidental
     death and  travel  accident  insurance  plans and  programs)  to the extent
     applicable  generally  to other  peer  executives  of the  Company  and its
     affiliated companies, but in no event shall such plans, practices, policies
     and programs  provide the Executive with benefits which are less favorable,
     in the  aggregate,  that  the  most  favorable  of such  plans,  practices,
     policies  and  programs in effect for the  Executive at any time during the
     120 day  period  immediately  preceding  the  Effective  Date  or,  if more
     favorable to the Executive,  those provided generally at any time after the
     Effective  Date to other peer  executives of the Company and its affiliated
     companies.


                                      -92-
<PAGE>


          (iv) Expenses.  During the Employment  Period,  the Executive shall be
     entitled  to  receive  prompt  reimbursement  for all  reasonable  expenses
     incurred by the Executive in accordance  with the most favorable  policies,
     practices  and  procedures of the Company and its  affiliated  companies in
     effect for the Executive at any time during the 120 day period  immediately
     preceding the Effective Date or, if more favorable to the Executive,  as in
     effect  generally  at any  time  thereafter  with  respect  to  other  peer
     executives of the Company and its affiliated companies.

          (v) Fringe Benefits. During the Employment Period, the Executive shall
     be entitled to fringe benefits in accordance with the most favorable plans,
     practices,  programs  and  policies  of  the  Company  and  its  affiliated
     companies in effect for the Executive at any time during the 120-day period
     immediately  preceding  the  Effective  Date or, if more  favorable  to the
     Executive,  as in effect  generally at any time  thereafter with respect to
     other peer executives of the Company and its affiliated companies.

          (vi) Office and  Support  Staff.  During the  Employment  Period,  the
     Executive  shall be  entitled  to an office or  offices  of a size and with
     furnishings and other appointments,  and to personal  secretarial and other
     assistance,  at least equal to the most favorable of the foregoing provided
     to the  Executive by the Company and its  affiliated  companies at any time
     during the 120 day period  immediately  preceding the Effective Date or, if
     more  favorable  to the  Executive,  as  provided  generally  at  any  time
     thereafter  with  respect to other peer  executives  of the Company and its
     affiliated companies.

          (vii) Vacation.  During the Employment  Period, the Executive shall be
     entitled to paid  vacation in  accordance  with the most  favorable  plans,
     policies,  programs  and  practices  of  the  Company  and  its  affiliated
     companies  as in effect for the  Executive  at any time  during the 120 day
     period  immediately  preceding the Effective  Date or, if more favorable to
     the Executive,  as in effect  generally at any time thereafter with respect
     to other peer executives of the Company and its affiliated companies.

     5. Termination of Employment.

     (a)  Death  or  Disability.  The  Executive's  employment  shall  terminate
automatically  upon the Executive's  death during the Employment  Period. If the
Company  determines  in good  faith that the  Disability  of the  Executive  has
occurred during the Employment  Period (pursuant to the definition of Disability
set forth below), it may give to the Executive written notice in accordance with
Section 12(b) of this  Agreement of its  intention to terminate the  Executive's
employment.  In such event,  the  Executive's  employment with the Company shall
terminate  effective  on the  30th  day  after  receipt  of such  notice  by the
Executive (the "Disability  Effective Date"),  provided that, within the 30 days
after  such  receipt,  the  Executive  shall  not  have  returned  to  full-time
performance  of  the  Executive's   duties.  For  purposes  of  this  Agreement,
"Disability" shall mean the absence of the Executive from the Executive's duties
with the  Company on a full time basis for 180  consecutive  business  days as a
result of incapacity due to mental or physical illness which is determined to be
total and  permanent by a physician  selected by the Company or its insurers and
acceptable to the Executive or the Executive's legal representative.

     (b) Cause. The Company may terminate the Executive's  employment during the
Employment Period for Cause. For purposes of this Agreement, "Cause" shall mean:


                                      -93-
<PAGE>


          (i) the  willful and  continued  failure of the  Executive  to perform
     substantially  the  Executive's  duties  with  the  Company  or  one of its
     affiliates  (other than any such failure  resulting from  incapacity due to
     physical  or  mental  illness),  after a  written  demand  for  substantial
     performance  is  delivered  to the  Executive  by the  Board  or the  Chief
     Executive Officer of the Company which  specifically  identifies the manner
     in which the Board or Chief Executive  Officer  believes that the Executive
     has not substantially performed the Executive's duties, or

          (ii) the willful engaging by the Executive in illegal conduct or gross
     misconduct which is materially and demonstrably injurious to the Company.

Any act, or failure to act, based upon authority  given pursuant to a resolution
duly  adopted  by the  Board or upon the  instructions  of the  Chief  Executive
Officer or a senior  officer of the  Company or based upon the advice of counsel
for the Company  shall be  conclusively  presumed  to be done,  or omitted to be
done, by the  Executive in good faith and in the best  interests of the Company.
The cessation of employment of the Executive shall not be deemed to be for Cause
unless and until there shall have been  delivered  to the  Executive a copy of a
resolution duly adopted by the affirmative vote of not less that  three-quarters
of the entire  membership of the Board at a meeting of the Board called and held
for such purpose (after  reasonable  notice is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be heard before the
Board),  finding that, in the good faith opinion of the Board,  the Executive is
guilty  of the  conduct  described  in  subparagraph  (i)  or  (ii)  above,  and
specifying the particulars thereof in detail.

     (c) Good  Reason.  The  Executive's  employment  may be  terminated  by the
Executive for Good Reason.  For purposes of this Agreement,  "Good Reason" shall
mean:

          (i) the assignment to the Executive of any duties  inconsistent in any
     respect with the Executive's  position (including status,  offices,  titles
     and  reporting  requirements),  authority,  duties or  responsibilities  as
     contemplated by Section 4(a) of this Agreement,  or any other action by the
     Company which results in a diminution in such position,  authority,  duties
     or responsibilities,  excluding for that purpose an isolated, insubstantial
     and inadvertent  action not taken in bad faith and which is remedied by the
     Company promptly after receipt of notice thereof given by the Executive;

          (ii) any failure by the  Company to comply with any of the  provisions
     of Section 4(b) of this  Agreement,  other than an isolated,  insubstantial
     and inadvertent failure not occurring in bad faith and which is remedied by
     the  Company  promptly  after  receipt  of  notice  thereof  given  by  the
     Executive;

          (iii) the Company's  requiring the Executive to be based at any office
     or  location  other than as provided  in Section  4(a)(i)(B)  hereof or the
     Company's  requiring  the  Executive  to travel on  Company  business  to a
     substantially  greater  extent  than  required  immediately  prior  to  the
     Effective Date:

          (iv) any  purported  termination  by the  Company  of the  Executive's
     employment otherwise than as expressly permitted by this Agreement; or

          (v) any  failure by the  Company to comply  with and  satisfy  Section
     11(c) of this Agreement.

     For purposes of this Section 5(c),  any good faith  determination  of "Good
     Reason" made by the Executive shall be conclusive.


                                      -94-
<PAGE>


     (d) Notice of Termination.  Any termination by the Company for Cause, or by
the Executive for Good Reason, shall be communicated by Notice of Termination to
the other party hereto given in accordance with Section 12(b) of this Agreement.
For purposes of this Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific termination  provision in this Agreement relied
upon, (ii) to the extent  applicable,  sets forth in reasonable detail the facts
and circumstances  claimed to provide a basis for termination of the Executive's
employment under the provision so indicated and (iii) if the Date of Termination
(as defined  below) is other than the date of receipt of such notice,  specifies
the  termination  date  (which date shall be not more than thirty days after the
giving of such notice). The failure by the Executive or the Company to set forth
in the Notice of Termination  any fact or  circumstance  which  contributes to a
showing of Good  Reason or Cause shall not waive any right of the  Executive  or
the Company,  respectively,  hereunder or preclude the Executive or the Company,
respectively,  from  asserting  such  fact  or  circumstance  in  enforcing  the
Executive's or the Company's rights hereunder.

     (e) Date of Termination. "Date of Termination" means (i) if the Executive's
employment is terminated by the Company for Cause,  or by the Executive for Good
Reason,  the date of  receipt  of the  Notice of  Termination  or any later date
specified  therein,  as the case may be, (ii) if the  Executive's  employment is
terminated  by the  Company  other  than for  Cause or  Disability,  the Date of
Termination  shall be the date on which the Company  notifies  the  Executive of
such termination and (iii) if the Executive's employment is terminated by reason
of death or Disability,  the Date of  Termination  shall be the date of death of
the Executive or the Disability Effective Date, as the case may be.

     6. Obligations of the Company upon Termination.

     (a) Good Reason:  Other Than for Cause,  Death or Disability and Within Two
Years.  If, during the Employment  Period within the two year period following a
Change of Control, the Company shall terminate the Executive's  employment other
than for Cause or Disability or the Executive  shall  terminate  employment  for
Good Reason:

          (i) the  Company  shall  pay to the  Executive  in a lump  sum in cash
     within 30 days after the Date of Termination the aggregate of the following
     amounts:

               A. the sum of (1) the Executive's  Annual Base Salary through the
          Date of  Termination  to the  extent  not  theretofore  paid,  (2) the
          product of (x) the annual  bonus paid or payable  under the  Company's
          Management Incentive Plan (or successor thereto),  including any bonus
          or portion  thereof which has been earned but deferred (and annualized
          for any fiscal  year  consisting  of less than  twelve  full months or
          during  which the  Executive  was  employed  for less than twelve full
          months),  for the most  recently  completed  fiscal  year  during  the
          Employment  Period, if any and (y) a fraction,  the numerator of which
          is the  number of days in  current  fiscal  year  through  the Date of
          Termination,  and  the  denominator  of  which  is  365  and  (3)  any
          compensation  previously  deferred by the Executive (together with any
          accrued interest or earnings thereon) and any accrued vacation pay, in
          each case to the extent not  theretofore  paid (the sum of the amounts
          described in clauses (1), (2), and (3) shall be  hereinafter  referred
          to as the "Accrued Obligation"); and

               B. the amount equal to the product of (1) two (2) and (2) the sum
          of (x) the  average  of the  Executive's  Annual  Base  Salary for the
          Company's  three full fiscal years  preceding the Date of  Termination
          and (y) the  average of the  Executive's  annual  bonus paid under the
          Company's  Management  Incentive  Plan (or successor  thereto) for the
          three full fiscal years preceding the Date of Termination; and


                                      -95-
<PAGE>


          (ii) for two years after the Executive's Date of Termination,  or such
     longer  period as may be  provided  by the terms of the  appropriate  plan,
     program,  practice or policy,  the Company shall  continue  benefits to the
     Executive and/or the Executive's family at least equal to those which would
     have  been  provided  to them  in  accordance  with  the  plans,  programs,
     practices and policies  described in Section 4(b)(iii) of this Agreement if
     the Executive's employment had not been terminated or, if more favorable to
     the Executive,  as in effect  generally at any time thereafter with respect
     to other peer  executives of the Company and its  affiliated  companies and
     their families, provided, however, that if the Executive becomes reemployed
     with another  employer and is eligible to receive  medical or other welfare
     benefits  under  another  employer  provided  plan,  the  medical and other
     welfare  benefits  described  herein shall be  secondary to those  provided
     under such other plan during such  applicable  period of  eligibility.  For
     purposes of determining  eligibility  (but not the time of  commencement of
     benefits) of the  Executive  for retiree  benefits  pursuant to such plans,
     practices, programs and policies, the Executive shall be considered to have
     remained  employed until three years after the Date of  Termination  and to
     have retired on the last day of such Period;

          (iii) the Company shall, at its sole expense as incurred,  provide the
     Executive with reasonable outplacement services;

          (iv) to the extent not theretofore paid or provided, the Company shall
     timely pay or  provide  to the  Executive  any other  amounts  or  benefits
     required  to be paid or  provided  or which the  Executive  is  eligible to
     receive  under any  plan,  program,  policy  or  practice  or  contract  or
     agreement of the Company and its affiliated  companies  (such other amounts
     and benefits  shall be  hereinafter  referred to as the "Other  Benefits");
     provided,  however,  that if Employee is eligible  for  payments  under any
     severance  pay  plan  maintained  by the  Company  or its  affiliates,  any
     payments  thereunder  shall  reduce  dollar  for  dollar  the amount of any
     payments to be made under subparagraph (a)(i) hereunder; and

          (v) all options  granted to him shall be vested and exercisable to the
     extent provided in the applicable agreements relating thereto.

     (b) Good Reason:  Other Than for Cause,  Death or Disability  and After Two
Years. If, during the Employment period following a Change of Control, and after
two (2) years have  elapsed  following  a Change of Control,  the Company  shall
terminate the  Employee's  employment  other than for Cause or Disability or the
Employee  shall  terminate   employment  for  Good  Reason,  the  provisions  of
subparagraph (a) of this Section 6 shall not apply, and the following provisions
shall apply instead:

               (A) the Company shall pay to Employee an amount equal to his then
          current annual base salary;  plus the average of the Employee's annual
          bonus paid under the Company's Management Incentive Plan (or successor
          thereto)  for the  three  full  fiscal  years  preceding  the  date of
          termination of the Employment Period;  plus any amounts payable to the
          Employee  under any severance  pay plan  maintained by the Company for
          its employees if the Employee is eligible for payment thereunder; and

               (B) all options granted to him shall be vested and exercisable to
          the extent provided in the applicable agreements relating thereto.


                                      -96-
<PAGE>


     (c) Death.  If the  Executive's  employment  is terminated by reason of the
Executive's death during the Employment  Period,  this Agreement shall terminate
without further obligations to the Executive's legal  representatives under this
Agreement,  other than for payment of Accrued Obligations and the timely payment
or  provision  of  Other  Benefits.  Accrued  Obligations  shall  be paid to the
Executive's estate or beneficiary,  as applicable,  in a lump sum in cash within
30 days of the Date of  Termination.  With  respect  to the  provision  of Other
Benefits,  the term  other  Benefits  as  utilized  in this  Section  6(b) shall
include,  without  limitation,  and the Executive's estate and/or  beneficiaries
shall be  entitled to  receive,  benefits  at least equal to the most  favorable
benefits  provided by the Company and  affiliated  companies  to the estates and
beneficiaries  of peer executives of the Company and such  affiliated  companies
under such plans,  programs,  practices and policies relating to death benefits,
if  any,  as  in  effect  with  respect  to  other  peer  executives  and  their
beneficiaries  at any time during the 120-day period  immediately  preceding the
Effective  Date or, if more  favorable  to the  Executive's  estate  and/or  the
Executive's  beneficiaries,  as in effect on the date of the  Executive's  death
with  respect  to  other  peer  executives  of the  Company  and its  affiliated
companies and their beneficiaries.

     (d) Disability.  If the  Executive's  employment is terminated by reason of
the Executive's  Disability during the Employment  Period,  this Agreement shall
terminate without further  obligations to the Executive,  other than for payment
of Accrued  Obligations  and the timely payment or provision of Other  Benefits.
Accrued  Obligations shall be paid to the Executive in a lump sum in cash within
30 days of the Date of  Termination.  With  respect  to the  provision  of Other
Benefits,  the term  Other  Benefits  as  utilized  in this  Section  6(c) shall
include, and the Executive shall be entitled after the Disability Effective Date
to receive,  disability  and other benefits at least equal to the most favorable
of those  generally  provided  by the Company and its  affiliated  companies  to
disabled  executives  and/or  their  families  in  accordance  with such  plans,
programs,  practices and policies  relating to disability,  if any, as in effect
generally  with respect to other peer  executives and their families at any time
during the 120 day period  immediately  preceding the Effective Date or, if more
favorable to the Executive  and/or the Executive's  family,  as in effect at any
time  thereafter  generally with respect to other peer executives of the Company
and its affiliated companies and their families.

     (e) Cause: Other than for Good Reason. If the Executive's  employment shall
be terminated  for Cause during the  Employment  Period,  this  Agreement  shall
terminate without further obligations to the Executive other than the obligation
to pay to the  Executive  (x)  his  Annual  Base  Salary  through  the  Date  of
Termination,  (y) the  amount of any  compensation  previously  deferred  by the
Executive,  and (z)  Other  Benefits,  in each  case to the  extent  theretofore
unpaid. If the Executive voluntarily terminates employment during the Employment
Period,  excluding a termination for Good Reason, this Agreement shall terminate
without further obligations to the Executive, other than for Accrued Obligations
and the timely payment or provision of Other Benefits. In such case, all Accrued
Obligations  shall be paid to the Executive in a lump sum in cash within 30 days
of the Date of Termination.

     7. Payment Limit.

     (a) Notwithstanding the other provisions of this Employment Agreement,  the
Company  shall  make no  payment  that would  constitute  an  "excess  parachute
payment" within the meaning of Section 280G of the Internal Revenue Code of 1986
or any successor provision.

     (b) In the event that the accounting firm of Ernst & Young or its successor
(the "Auditors")  determines that any payment or benefit provided by the Company
to or for the  benefit  of the  Employee,  whether  paid,  payable  or  provided
pursuant  to the  terms of this  Agreement  or  otherwise  (a  "Payment")  would
constitute an excess parachute payment,  then the aggregate present value of the
Payments pursuant to this Agreement shall be reduced (but not below zero) to the
Reduced  Amount.  The "Reduced  Amount" shall be an amount  expressed in present
value which  maximizes the aggregate  present value of Payments  without causing
any Payment to constitute an excess parachute payment.

     (c) If the Auditors  determine that any Payment would  constitute an excess
parachute  payment,  then the Company shall promptly give the Employee notice to
that effect and a copy of the  detailed  calculation  thereof and of the Reduced
Amount,  and the Employee may then elect, in his sole discretion,  which and how
much of the Payments  under this  Agreement  shall be  eliminated  or reduced in
order that no Payment shall  constitute an excess parachute  payment,  and shall
advise  the  Company in  writing  of his  election  within 10 days of receipt of
notice.  If no such election is made by the Employee  within such 10-day period,
then the  Company  may  elect  which  and how much of the  Payments  under  this
Agreement shall be eliminated or reduced and shall notify the Employee  promptly
of such election.


                                      -97-
<PAGE>


     (d) All  determinations  made by the  Auditors  shall be  binding  upon the
Company and the Employee and shall be made within 60 days of the Employee's Date
of Termination.

     8.  Non-exclusivity  of Rights.  Nothing in this Agreement shall prevent or
limit the Executive's  continuing or future  participation in any plan, program,
policy or practice  provided by the Company or any of its  affiliated  companies
and for which the Executive may qualify,  nor,  subject to Section 12(f),  shall
anything herein limit or otherwise  affect such rights as the Executive may have
under any  contract  or  agreement  with the  Company  or any of its  affiliated
companies. Amounts which are vested benefits or which the Executive is otherwise
entitled  to  receive  under any plan,  policy,  practice  or  program of or any
contract or agreement with the Company or any of its affiliated  companies at or
subsequent to the Date of Termination  shall be payable in accordance  with such
plan, policy,  practice or program or contract or agreement except as explicitly
modified by this Agreement.

     9. Full Settlement.  The Company's obligation to make the payments provided
for in this Agreement and otherwise to perform its  obligations  hereunder shall
not be  affected  by any  set-off,  counterclaim,  recoupment,  defense or other
claim,  right or action  which the Company may have  against  the  Executive  or
others. In no event shall the Executive be obligated to seek other employment or
take any  other  action  by way of  mitigation  of the  amounts  payable  to the
Executive  under any of the  provisions of this Agreement and such amounts shall
not be reduced  whether  or not the  Executive  obtains  other  employment.  The
Company  agrees to pay as  incurred,  to the full extent  permitted  by law, all
legal fees and expenses which the Executive may reasonably  incur as a result of
any contest (regardless of the outcome thereof) by the Company, the Executive or
others of the validity or  enforceability  of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive about the amount of any payment pursuant to this
Agreement),  plus in each case interest on any delayed payment at the applicable
Federal rate provided for in Section  7872(f)(2)(A) of the Internal Revenue Code
of 1986, as amended (the "Code").

     10.  Confidential  Information.  The  Executive  shall hold in a  fiduciary
capacity for the benefit to the Company all secret or confidential  information,
knowledge or data  relating to the Company or any of its  affiliated  companies,
and their respective businesses, which shall have been obtained by the Executive
during  the  Executive's  employment  by the  Company  or any of its  affiliated
companies and which shall not be or become public  knowledge (other than by acts
by the  Executive  or  representatives  of the  Executive  in  violation of this
Agreement).  After  termination of the Executive's  employment with the Company,
the Executive shall not,  without the prior written consent of the Company or as
may otherwise be required by law or legal  process,  communicate  or divulge any
such  information,  knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted  violation of the  provisions of
this  Section 9  constitute a basis for  deferring  or  withholding  any amounts
otherwise payable to the Executive under this Agreement.

     11. Successors. (a) This Agreement is personal to the Executive and without
the  prior  written  consent  of the  Company  shall  not be  assignable  by the
Executive  otherwise than by will or the laws of descent and distribution.  This
Agreement  shall inure to the benefit of and be enforceable  by the  Executive's
legal representatives.

     (b) This  Agreement  shall inure to the benefit of and be binding  upon the
Company and its successors and assigns.

     (c) The Company will require any successor (whether direct or indirect,  by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business  and/or assets of the Company to assume  expressly and agree to perform
this  Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. As used in this
Agreement,  "Company"  shall mean the  Company as  hereinbefore  defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.


                                      -98-
<PAGE>


     12. Miscellaneous. (a) This Agreement shall be governed by and construed in
accordance  with the laws of the  State of  Connecticut,  without  reference  to
principles of conflict of laws.  The captions of this  Agreement are not part of
the provisions hereof and shall have no force or effect.  This Agreement may not
be amended or modified  otherwise  than by a written  agreement  executed by the
parties hereto or their respective successors and legal representatives.

     (b) All notices and other communications  hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:

     If to the Executive:

     ____________________________

     ____________________________

     ____________________________

     ____________________________


     If to the Company:

     Security-Connecticut Corporation
     20 Security Drive
     Avon, Connecticut 06001

     Attention:  General Counsel


or to such other  address as either  party shall have  furnished to the other in
writing in accordance  herewith.  Notice and  communications  shall be effective
when actually received by the addressee.

     (c) The invalidity or  unenforceability  of any provision of this Agreement
shall not affect the validity or  enforceability  of any other provision of this
Agreement.

     (d) The Company may withhold from any amounts  payable under this Agreement
such Federal,  state, local or foreign taxes as shall be required to be withheld
pursuant to any applicable law or regulation.

     (e)  The  Executive's  or the  Company's  failure  to  insist  upon  strict
compliance  with any  provision  of this  Agreement or the failure to assert any
right the  Executive  or the  Company  may have  hereunder,  including,  without
limitation,  the right of the Executive to terminate  employment for Good Reason
pursuant  to  Section  5(c) (v) of this  Agreement,  shall not be deemed to be a
waiver  of such  provision  or right  or any  other  provision  or right of this
Agreement.

     (f) The Executive and the Company acknowledge this agreement supersedes any
other  agreement  between the parties with respect to the subject  matter hereof
and, in particular,  supersedes the Employment  Agreement  between the Executive
and the Company dated December 3, 1993 and that agreement is of no further force
or effect.

     (g)   Counterparts.   This  Agreement  may  be  executed  in  one  or  more
counterparts,  each of which shall be deemed to be an original  but all of which
together will constitute one and the same instrument.


                                      -99-
<PAGE>


     IN WITNESS  WHEREOF,  the Executive has hereunto set the  Executive's  hand
and, pursuant to the authorization from its Board of Directors,  the Company has
caused  these  presents to be executed in its name on its behalf,  all as of the
day and year first above written.


                                    /s/
                                    ----------------------
                                    Executive


                                    SECURITY-CONNECTICUT CORPORATION


                                    By /s/Ronald D. Jarvis
                                    ----------------------



                                      -100-
<PAGE>


                                                                   Exhibit 10.22


                  GENERAL RE/NEW ENGLAND ASSET MANAGEMENT, INC.



                         Investment Management Agreement



     This Agreement is made as of the 1st day of October, 1996, between

1.   GENERAL  RE/NEW  ENGLAND ASSET  MANAGEMENT,  INC., a corporation  organized
under the laws of the State of Delaware ( "Manager"); and

2.   LINCOLN SECURITY LIFE INSURANCE COMPANY, a corporation  organized under the
laws of the State of New York ("Client").

     WHEREAS,  Client desires to appoint  Manager as the  investment  manager of
that portion of Client's assets constituting the Account (as defined below);

     NOW THEREFORE,  in consideration of the mutual agreements herein contained,
it is agreed as follows:


Section 1. The Account

     The cash, securities and other assets placed by Client in the account to be
managed under this  Agreement  (the  "Account") are listed on Schedule A. Assets
may be added to the  Account at any time with the  consent of the  Manager.  The
Account  will  include  these  assets  and any  changes in them  resulting  from
transactions  directed by Manager,  withdrawals  made by Client,  or  dividends,
interest, stock splits and other earnings, gains or losses on the assets.


Section 2. Management of the Account

     Manager will make all  investment  decisions for the Account,  in Manager's
sole discretion and without first consulting or notifying  Client, in accordance
with the investment restrictions and guidelines which are attached as Schedule B
(the "Investment Guidelines").  Client may change these Investment Guidelines at
any time,  but  Manager  will be bound by the  changes  only after  Manager  has
received  and agreed to the  changes in  writing.  Other than by the  Investment
Guidelines and the terms of this Agreement,  the investments  made by Manager on
behalf of the Client will not be restricted  in any manner,  except by operation
of law.

     Manager  will  have full  power and  authority,  on  behalf of  Client,  to
instruct  any  brokers,  dealers  or banks to buy,  sell,  exchange,  convert or
otherwise trade in all securities, futures or other investments for the Account,
in accordance with what is further defined in the Statement of Investment Policy
attached to this contract.

     Manager will not be  responsible  for giving  Client  investment  advice or
taking any other  action with  respect to assets not in the Account  ("Unmanaged
Assets").


                                      -101-
<PAGE>


Section 3. Transactions for the Account

     Manager  will  arrange for  securities  transactions  for the Account to be
executed  through  those  brokers,  dealers or banks that Manager  believes will
provide  best  execution.  In choosing a broker,  dealer or bank,  Manager  will
consider  the broker,  dealer or bank's  execution  capability,  reputation  and
access to the markets for the securities  being traded for the Account.  Manager
will seek  competitive  commission  rates,  but not necessarily the lowest rates
available.

     Manager  may also send  transactions  for the Account to brokers who charge
higher commissions than other brokers,  provided that Manager determines in good
faith that the amount of  commissions  Manager pays is reasonable in relation to
the value of the  brokerage  and  research  services  provided,  viewed in terms
either of that particular transaction or Manager's overall responsibilities with
respect to all clients whose accounts Manager manages on a discretionary basis.

     If Manager  decides to purchase or sell the same  securities for Client and
other clients at about the same time,  Manager may combine  Client's  order with
those of other  clients if Manager  reasonably  believes that it will be able to
negotiate better prices or lower  commission rates or transaction  costs for the
combined order than for Client's order alone.  Client will pay the average price
and  transaction  costs  obtained for such combined  orders.  If Manager  cannot
obtain execution of the combined orders at prices or for transaction  costs that
Manager believes to be desirable, Manager will allocate the securities purchased
or  sold as part  of the  combined  order  by  following  its  order  allocation
procedures.

     Manager generally will allocate  securities  purchased or sold as part of a
combined order to Client's  Account and to accounts of other clients pro rata in
proportion to the size of the order placed for each client. However, Manager may
increase  or  decrease  the amounts of  securities  allocated  to each client if
necessary to avoid having odd or small numbers of shares held for the account of
any client.  Each client that  participates  in a combined order will receive or
pay the  average  share  price  for  all  transactions  executed  as part of the
combined order and will pay its pro rata share of the transaction costs.

     If Client directs  Manager to use particular  brokers,  dealers or banks to
execute  transactions for the Account,  Manager will do so, but Manager will not
seek better execution services or prices for Client from other brokers,  dealers
or banks,  and Client may pay higher  prices or  transaction  costs as a result.
Manager  also may not be able to seek better  execution  services  for Client by
combining Client's orders with those of other clients.

     Client may direct all transactions for the Account to a particular  broker,
dealer or bank,  by writing the name and address of that broker,  dealer or bank
in the space provided on Schedule A.


Section 4. Transaction Confirmations

     Manager  will   instruct   the  brokers,   dealers  or  banks  who  execute
transactions  for the  Account  to send  Client all  transaction  confirmations,
unless Client chooses not to receive confirmations by written notice to Manager.
Manager will notify Client of each  transaction for the account as soon as it is
known by Manager but, in any event, no later than the trade date.


Section 5. Custody of Account Assets

     The  assets  in the  Account  will  be held  for  Client  by the  custodian
appointed by Client and named on Schedule A (the "Custodian").  Manager will not
have custody of any Account assets. Client will pay all fees of the Custodian.


                                      -102-
<PAGE>


     Client will  authorize the Custodian to follow  Manager's  instructions  to
make and accept payments for, and to deliver or to receive,  securities, cash or
other investments purchased,  sold, redeemed,  exchanged,  pledged or loaned for
the Account.  Client also will instruct the Custodian to send Client and Manager
monthly  statements  showing the assets in and all  transactions for the Account
during the month, including any payments of Manager's fees.

     Client  will  provide  Manager  with  a  copy  of its  agreement  with  the
Custodian,  and will give  Manager  reasonable  advance  notice of any change of
Custodian.


Section 6. Reports to Client

     Manager will send Client  monthly  written  reports  showing the  identity,
cost,  par,  and  current  market  value of the assets in the  Account  and each
transaction  made for the Account during the period  covered by the report.  The
Account's performance will be sent quarterly.


Section 7. Account Valuation

     Manager will value the securities in the Account that are listed and traded
on a national  securities  exchange  or on NASDAQ on the  valuation  date at the
closing price on the principal  market where the securities are traded.  Manager
will value  other  securities  or  investments  in the  Account in a manner that
Manager believes in good faith reflects their fair market value.


Section 8. Manager's Fees

     For  Manager's  services,  Client will pay a  percentage  of the value,  as
determined under Section 7 of this Agreement, of all assets in the Account as of
the last trading day of each calendar month.  The fees are payable at the end of
each calendar  quarter for services  provided by Manager  during the prior three
months. The percentage amount of the fees is shown on Schedule A. In any partial
quarter,  the fees  will be  reduced  pro rata  based on the  number of days the
Account was managed.

     Client agrees to pay Manager's fees as follows:

     [ ]  The Custodian will deduct the fees from Client's  Account and pay them
          to Manager each quarter. Manager will send Client and the Custodian at
          the same time a bill showing the amount of Manager's fees, the Account
          value on which  they  were  based and how they  were  calculated.  The
          Custodian  will send  Client a monthly  statement  showing all amounts
          paid from the Account, including Manager's fees.

     [X]  Client will be billed directly  by Manager and will pay Manager's fees
          within 30 days of receiving the bill.

     If Manager  invests in  securities  issued by money  market  funds or other
investment  companies for the Account,  these securities will be included in the
value of the Account when Manager's fees are calculated.  These same assets will
be subject to additional  investment  management and other fees that are paid by
the  investment  company  but  ultimately  borne  by  its  shareholders.   These
additional fees are described in each investment company's prospectus.


                                      -103-
<PAGE>


Section 9.  Proxy Voting

     Proxies for securities in the Account should be voted as follows:

     [X]  Client directs  Manager to vote all proxies for securities in Client's
          Account.  Except if otherwise  notified by Client by a prior  writing,
          Manager  will vote  Client's  proxies  in  accordance  with  Manager's
          internal proxy voting  policies.  Client will direct Custodian to send
          promptly all proxies and related shareholder communications to Manager
          and  to  identify  them  as  relating  to  Client's  Account.   Client
          understands that Manager will have no  responsibility  to vote proxies
          if they are not  received  on a timely  basis  from the  Custodian  as
          properly identified as relating to Client's Account.

     [ ]  Client directs Manager not to vote proxies for securities held for the
          Account.

     This proxy voting election may be changed at any time by notifying  Manager
in writing.


Section 10. Risk

     Manager cannot guarantee the future performance of the Account, promise any
specific  level  of  performance  or  promise  that  its  investment  decisions,
strategies  or  overall  management  of the  Account  will  be  successful.  The
investment decisions Manager will make for Client are subject to various market,
currency,  economic,  political and business risks,  and will not necessarily be
profitable.


Section 11. Standard of Care; Limitation of Liability

     Except as may  otherwise be provided by law,  Manager will not be liable to
Client for any loss (i) that  Client may  suffer as a result of  Manager's  good
faith  decisions or actions where Manager  exercises the degree of care,  skill,
prudence and diligence that a prudent person acting in a like fiduciary capacity
would use; (ii) caused by following  Client's  instructions;  or (iii) caused by
the Custodian,  any broker, dealer or bank to which Manager directs transactions
for the Account or any other person.

     Federal  and  state  securities  laws  impose   liabilities  under  certain
circumstances  on persons who act in good  faith,  and this  Agreement  does not
waive or limit Client's rights under those laws.

     Manager  will not be  responsible  for  Client's  own  compliance  with the
insurance  investment  laws  of  Client's  state  of  domicile  or for  Client's
compliance with applicable tax laws.

     In managing  the Account,  Manager will not consider any other  securities,
cash, or other  investments or assets Client owns for  diversification  or other
purposes.  Manager shall have no responsibility whatsoever for the management of
the  Unmanaged  Assets or any assets of Client  other than the Account and shall
incur no liability  for any loss or damage which may result from the  management
of such other assets.


Section 12. Client Directions

     The names and specimen  signatures of each  individual who is authorized to
give directions to Manager on Client's behalf under this Agreement are set forth
on Schedule C.  Directions  received by Manager from Client must be signed by at
least one such person. If Manager receives  directions from Client which are not
signed by a person that  Manager  reasonably  believes is  authorized  to do so,
Manager shall not be required to comply with such  directions  until it verifies
that the directions are properly authorized by Client.


                                      -104-
<PAGE>


     Manager shall be fully  protected in relying upon any  direction  signed or
given by a person that Manager  reasonably  believes is  authorized to give such
directions on Client's behalf. Manager also shall be fully protected when acting
upon an instrument, certificate, or paper that Manager reasonably believes to be
genuine and to be signed or  presented  by any such  person or persons.  Manager
shall be under no duty to make any  investigation or inquiry as to any statement
contained in any writing and may accept the same as conclusive evidence of truth
and accuracy of statements contained therein.


Section 13. Confidentiality

     Except  as Client  and  Manager  otherwise  agree in  writing  or as may be
required by law, all  information  concerning the Account and services  provided
under this Agreement shall be kept confidential.


Section 14. Non-Exclusive Agreement

     Manager  provides  investment  advice  to other  clients  and may give them
advice or take actions for them,  for  Manager's own accounts or for accounts of
persons  related to or  employed  by  Manager,  that is  different  from  advice
provided to or actions taken for Client.

     Manager is not obligated to buy, sell or recommend for Client's Account any
security or other  investment  that Manager may buy, sell or recommend for other
clients or for the account of Manager or its related persons or employees.

     If Manager obtains material, non-public information about a security or its
issuer that  Manager may not  lawfully  use or  disclose,  Manager  will have no
obligation  to  disclose  the  information  to Client or to use it for  Client's
benefit.


Section 15. Term of Agreement

     Either Client or Manager may cancel this Agreement at any time upon 30 days
written  notice.  This  Agreement  will  remain in effect for 30 days  following
written  notice.  Termination of this Agreement will not affect (i) the validity
of any action that Manager or Client has previously  taken; (ii) the liabilities
or obligations of Manager or Client for transactions started before termination;
or  (iii)  Client's  obligation  to pay  Manager's  fees  through  the  date  of
termination.  Upon termination,  Manager will have no obligation to recommend or
take any  action  with  regard to the  securities,  cash or other  assets in the
Account.


Section 16. Agreement Not Assignable

     This  Agreement  may not be assigned  within the meaning of the  Investment
Advisers Act of 1940 (the "Advisers  Act") by Manager without  Client's  written
consent.


Section 17. Governing Law

     The  internal  law of  Connecticut  will  govern this  Agreement.  However,
nothing in this  Agreement  will be construed  contrary to any  provision of the
Advisers Act or the rules thereunder.


                                      -105-
<PAGE>


Section 18. Arbitration Clause

     Any dispute,  controversy  or claim which  relates to,  arises out of or is
connected with this  Agreement,  including,  without  limitation,  the creation,
validity, interpretation, breach or termination of this Agreement, and which has
not been mutually resolved by the parties shall, on the written demand by either
party to the other party, be determined and settled in Hartford,  Connecticut by
a panel of three arbitrators in accordance with the Commercial Arbitration Rules
of the American Arbitration Association.


Section 19. Miscellaneous

     If any  provision  of this  Agreement is or becomes  inconsistent  with any
applicable law or rule,  the provision  will be deemed  rescinded or modified to
the extent  necessary  to comply with such law or rule.  In all other  respects,
this Agreement will continue in full force and effect.  This Agreement  contains
the entireunderstanding between Manager and Client and may not be changed except
in writing signed by both parties.  Failure to insist on strict  compliance with
this  Agreement  or with any of its terms or any  continued  conduct will not be
considered a waiver by either party under this Agreement.


Section 20. Notices

     All notices and  instructions  with respect to the Account or other matters
covered  by this  Agreement  may be sent by U.S.  mail,  overnight  courier,  or
facsimile  transmission  (with a hard copy sent by U.S.  mail) to Client  and to
Manager at the  addresses  at the end of this  agreement  or to another  address
provided in writing.


Section 21. Representations of Client

     Client represents and warrants to Manager that (a) Client is the beneficial
owner of all  assets  in the  Account  and that  there  are no  restrictions  on
transfer  or sale of any of those  assets;  (b)  this  Agreement  has been  duly
authorized,  executed, and delivered by Client and is Client's valid and binding
obligation;  (c) the names of the  individuals  who are  authorized to act under
this Agreement on behalf of Client have been given to Manager in writing; (d) no
government authorizations,  approvals, consents, or filings not already obtained
are required in connection with the execution,  delivery, or performance of this
Agreement  by  Client;  and (e) the  assets in the  Account  are not and are not
deemed  to be  assets of any  employee  benefit  plan  subject  to the  Employee
Retirement  Income Security Act of 1974, as amended.  Client agrees to indemnify
and hold  harmless  Manager from all  liability  and costs  (including  costs of
defense)  which may be  asserted or incurred by reason of any defect in Client's
authority  to appoint  Manager or any defect in the  conduct of Client in making
the appointment under this Agreement.


Section 22. Representations of Manager

     Manager   represents  and  warrants  that  this  Agreement  has  been  duly
authorized,  executed  and  delivered  by Manager  and is its valid and  binding
obligation. Manager represents and warrants to Client that Manager is registered
as an Investment Adviser under the Investment Advisers Act of 1940, as amended.


Section 23. Disclosure

     Client has received  and  reviewed a copy of Part II of Manager's  Form ADV
and a copy of this Agreement.


                                      -106-
<PAGE>


AGREED TO AND ACCEPTED BY:



GENERAL RE/NEW ENGLAND                    LINCOLN SECURITY LIFE
ASSET MANAGEMENT, INC.                    INSURANCE COMPANY




By: /s/  Gerald T. Lynch                  By: /s/  Robert J. Voight
    ----------------------                -----------------------
   (Signature)                            (Signature)



  Gerald T. Lynch                           Robert J. Voight
----------------------                    -----------------------
(Name)                                    (Name)



     President                            Executive Vice President
----------------------                    -----------------------
(Title)                                   (Title)



30 Waterside Drive                        Route 312, Southeast Executive Park
Farmington, Connecticut  06032-3065       Brewster , NY 10509-0565
                                          (Principal Address)



                                          22-2491079
                                          ----------
                                          (Taxpayer Identification Number)



                                      -107-
<PAGE>


SCHEDULE A

--------------------------------------------------------------------------------

I. ACCOUNT  ASSETS.  Client has deposited the  following  securities,  cash  and
other  assets  with the  Custodian  identified  below to be managed  under  this
Agreement:


Schedule D, dated 9/30/96, as attached.

--------------------------------------------------------------------------------

II.  CUSTODY OF ACCOUNT  ASSETS.  The assets to be managed under  this Agreement
will be held by:

Chase Manhattan Bank                     G04847
(Name)                                   (Custodial Account Number)

(Address)
--------------------------------------------------------------------------------

III.  FEES.  Manager's fees for services  provided  under  this Agreement  shall
be as follows:

Annual fee of .10 of 1% of market value of invested assets.





--------------------------------------------------------------------------------

IV.  BROKERAGE  DIRECTION.  Client  directs  Manager to  cause all  transactions
for the Account to be executed through the following broker, dealer or bank:

 None
-----------------------------

(Name)
------------------------------------------------------------------------------

(Address)
------------------------------------------------------------------------------
Client has read,  understands  and accepts the  limitations  that this direction
will place on Manager's  ability to seek best  execution  for the Account.  This
direction may be changed by Client at any time by notifying Manager in writing.

-------------------------------------------------------------------------------

V.  Name of Client:                                        VI.  Date:
    Lincoln Security Life Insurance Company
    /s/  Robert J. Voight
    ---------------------

    By:  Robert J.Voight, Executive Vice President         October 1, 1996

--------------------------------------------------------------------------------



                                      -108-
<PAGE>


SCHEDULE B
--------------------------------------------------------------------------------


INVESTMENT  GUIDELINES:  The investment guidelines to be followed by Manager in
managing Client's Account are set forth below:



Statement of Investment Policy, dated 9/17/96 , as attached.


























--------------------------------------------------------------------------------
Name of Client:                                            Date:
Lincoln Security Life Insurance Company

/s/  Robert J. Voight
---------------------

By:  Robert J. Voight, Executive Vice President            October 1, 1996

--------------------------------------------------------------------------------



                                      -109-
<PAGE>


SCHEDULE C


SECRETARY'S CERTIFICATE

     I, Patricia Ann DeVita,  the Secretary of Lincoln  Security Life  Insurance
Company (the "Corporation"), a Corporation organized and existing under the laws
of the State of New York , hereby certify that each of the following officers of
the Corporation,  acting singly,  is authorized in the name and on behalf of the
Corporation,  to give  instructions to General Re/New  England Asset Management,
Inc.  ("Manager") with respect to any and all matters,  including investment and
reinvestment of securities,  pertaining to the Investment  Management  Agreement
between  the  Corporation  and  Manager,  and to execute and deliver any and all
documents and to take any and all other action to carry out the purposes of said
Investment Management  Agreement.  I further certify that the specimen signature
set forth next to the names of such officers,  is the true and genuine signature
of such persons.

Name of Officer     Title                                  Signature


Robert J. Voight    Executive Vice President               /s/ Robert J. Voight
----------------    ------------------------               --------------------




Richard D. Mocarski Vice President, Controller & Treasurer /s/Richard D.Mocarski
------------------- -------------------------------------  ---------------------





     This  Certificate  shall be in effect  from the date hereof  until  written
notice is given on behalf of the Corporation to terminate or revise it.

     IN WITNESS WHEREOF, I set my hand and seal of the corporation.



                   Patricia Ann DeVita                            October 1,1996
                   -------------------------------                --------------
                   Secretary                                      Date


(Corporate Seal)



                                      -110-
<PAGE>


                                                                   Exhibit 10.23

                         INVESTMENT ACCOUNTING AGREEMENT

     THIS INVESTMENT ACCOUNTING AGREEMENT,  (the "Agreement"),  dated as of this
first day of August,  1996,  (the "Effective  Date"),  is by and between Conning
Asset Management  Company  ("Conning") and  Security-Connecticut  Life Insurance
Company, (the "Company" and collectively, "the Parties").

     WHEREAS,  the Company  and/or  other  investment  advisors  retained by the
Company,  ("Advisors"),  intend to manage a portion or all of the  securities of
the Company held in the Custody Accounts (as defined herein);

     WHEREAS,   the  Company  desires  Conning  to  provide  certain  investment
accounting services,  ("Investment  Accounting  Services"),  and data conversion
assistance  services   substantially  in  accordance  with  the  terms  of  this
Agreement; and

     WHEREAS,  the Company has requested that Conning provide the aforementioned
Investment  Accounting Services and certain data conversion  assistance services
to the Company and Conning desires to accept such duties and responsibilities.

     NOW THEREFORE,  in  consideration  of the foregoing and the mutual promises
recited below, the parties agree as follows:

1.   DEFINITIONS.  The following  terms used  in this Agreement  shall  have the
     meanings ascribed to them below:

     "Advisor"  shall have the meaning set forth in the first WHEREAS  clause of
     this Agreement; provided, that, Conning is given at least fifteen (15) days
     prior  written  notice by the  Company of any  additions  or  deletions  of
     Advisors.

     "Allocation"  shall  mean that  portion  of the  Assets  that is  initially
     allocated to an Advisor and transferred to a Custody Account.

     "Assets" shall mean those assets held in the Custody Accounts.

     "Business  Day" shall  mean end of day on which  Advisor,  Conning  and the
     Custodian, as applicable,  are open for business, except as otherwise noted
     in this Agreement.

     "Custodian"  shall mean the bank and such other  custodians  as the Company
     may from time to time  designate in writing to Conning as custodians of all
     or part of the Assets.

     "Custody   Account(s)"  shall  mean  the  custody  accounts  at  the  bank,
     securities held directly by the Company and such other custody  accounts as
     the Company may designate in writing to Conning as the custody accounts for
     the deposit of its securities of the Company.

2.   INVESTMENT  ACCOUNTING  SERVICES.   Conning  shall,  as  of  the  Effective
     Date, assume  responsibility  for and  provide to the Company,  and  to its
     advisors  and designees,  which shall be designated to Conning in  writing,
     certain  investment  accounting  services  set forth in Schedule  2 of this
     Agreement,  provided  that:  the Company  and each  Advisor shall  promptly
     provide to  Conning all information  reasonably  requested by  Conning with
     respect to  the purchase, sale, investment,  re-investment  and supervision
     of  that  portion of the  Company's  Assets  managed by  such person and in
     furtherance  of  this   requirement,   the  Company  shall  authorize   the
     Custodians to allow  Conning on-line access to  view the Company's  account
     activity.


                                      -111-
<PAGE>


     With respect to each Custody Account, each Advisor and the Company shall be
     solely  responsible  for:  (i)  buying,  selling,  exchanging,  converting,
     modifying or otherwise  trading in any  securities in the Custody  Account;
     (ii) selecting the brokers,  dealers and currency merchants to execute each
     such  transaction;  and (iii)  placing  orders  for the  execution  of such
     securities transactions with or through such brokers, dealers or issuers.

     The Company shall be responsible for: (i) coordinating  communication among
     Conning,  the  Custodian and each  applicable  Advisor,  of all  respective
     trades and  settlement  activity;  (ii)  filing any  settlement  claims and
     making payment of any claims filed against the Company;  (iii) representing
     the Company's interest in any class action suit and/or any other litigation
     relating to or involving the invested  assets of the Company  arising after
     the Effective  Date;  (iv)  coordinating  and  controlling  any movement of
     assets  between  portfolios  not  relating  to  trades  and  resolving  any
     discrepancies  related to the  movement of such assets;  and (v)  notifying
     Conning of all such asset movement activity.

3.   DATA  ACCESS.  Conning  agrees  to  provide  the  Company  access   to  the
     Company's  investment  accounting data  maintained in  Conning's  automated
     systems via ASCII  download or other format  agreed to by  the Company  and
     Conning.

     In the event that the Company  requests  on-line  read-only  access to such
     accounting  data on Conning's  automated  accounting  system,  Conning will
     assist the Company and make such  modifications to its systems  environment
     to permit such access, providing that Conning shall not be required to make
     any modifications  which Conning determines is not practicable and provides
     written  notice to the Company of such  determination.  The  Company  shall
     reimburse  Conning  promptly for the reasonable  cost of all  modifications
     made pursuant to this section.

4.   FEES.  Conning's fee for  performing  services under  this Agreement  shall
     be  determined  and paid  as shown in  Schedule 1 of  the  Agreement.  Such
     fee shall begin to accrue  upon completion of installation  and  conversion
     to  Conning  which  will be deemed  to have been  completed  on  October 1,
     1996.  This   fee  will  be  billed  quarterly  in  arrears  and   will  be
     calculated  based on the  book value of total  reported  assets  at the end
     of each  calendar  quarter.  All  partial  quarters will be prorated.  Book
     value shall  be determined by Conning in consultation  with  the Company in
     accordance with Statutory Accounting Principles.

     In addition to the compensation  calculated and paid in accordance with the
     fee schedule,  the Company shall be obligated to pay all  applicable  sales
     taxes,  if any,  assessed  in  connection  with the  investment  accounting
     services,  conversion  assistance  and other special  services  rendered by
     Conning  hereunder.  The Company shall reimburse Conning within thirty (30)
     days of receipt of Conning's  invoice for expenses  directly related to the
     NAIC  asset  valuation  system  ("SVO")  annual  licensing  fee  and to the
     provision of investment accounting services under this Agreement.

5.   AUTHORIZED PERSONS.  In addition  to the  individuals  authorized to act in
     connection  with   specific   matters   covered  by   this  Agreement,   as
     contemplated by  particular  provisions of this  Agreement,  the  President
     and/or  Treasurer  of  the  Company  or  their  designees,  which  will  be
     designated  to Conning  in writing by  the Company,  shall be authorized to
     make and  communicate  to Conning on behalf of the Company,  any  decisions
     or  instructions  pertaining  to this  Agreement,  and Conning  may rely on
     and act  upon a  communication  purporting  to be from any of  such persons
     or designees.

6.   TERM AND  TERMINATION.  This  Agreement  will  commence  on  the  effective
     date  specified  on  the  Execution  Page  of  this  Agreement   and  shall
     continue  in force  for a period  of at least  three  years and  thereafter
     shall  be  automatically  renewed  for  additional  one year  terms on each
     anniversary of  the effective date,  unless  terminated  earlier  according
     to  the provisions of this Agreement.  This Agreement  may be terminated by
     either party at any  time upon 90 days prior  written  notice  to the other
     party


                                      -112-
<PAGE>


     In the event of termination by the Company without cause within three years
     of the Effective Date,  Conning shall be paid a termination fee which shall
     be $80,000 as of the Effective  Date,  and which fee will be reduced by the
     amount of $2,200 for each month  thereafter  during which this Agreement is
     in  effect.   This  termination  fee  is  to  compensate  Conning  for  the
     installation and conversion that is not being charged for.

     Upon the  termination  without  cause of this  Agreement,  the fees payable
     hereunder per Schedule 1 shall be pro-rated to the date of termination  and
     such  fees  shall be paid by the  Company  to  Conning  promptly  following
     receipt of an invoice therefor. If the Company terminates this contract for
     cause no termination  fee will be payable.  For purposes of this paragraph,
     the  material  breach  of  this  Agreement,  gross  negligence  or  willful
     misconduct shall be considered cause.

     Upon  termination of this Agreement,  the payment of the final fee shall be
     contingent upon the timely  completion of installation  and conversion to a
     subsequent  provider to Conning not to exceed 90 days of written  notice of
     termination.

7.   NOTICES. All notices and other communications hereunder shall be in writing
     and  shall be  sufficient  if (i)  delivered  by  overnight  delivery  by a
     nationally  recognized air courier service; or (ii) mailed by registered or
     certified mail,  return receipt  requested,  postage prepaid,  addressed as
     follows:


     A.   Notices to the Company shall be delivered to:

          Security-Connecticut Corporation
          20 Security Drive
          Avon, CT 06001

          Telefax No:  (860) 674-7612
          Attention:  Richard D. Mocarski, Vice President, Controller and
          Treasurer


     B.   Notices to Conning shall be sent or delivered to:

          Conning Asset Management Company
          CityPlace II
          185 Asylum Street
          Hartford, CT 06103

          Telefax No. (860) 520-1253
          Attention:  Fred M. Schpero, Vice President

The parties may by like notice,  designate  any future or  different  address or
telefax  number to which  subsequent  notices shall be sent. Any notice shall be
deemed given when received.

8.   AUDITING.  The  Company  shall  have  the  right to  audit  all  books  and
     records  directly  pertaining  to  the  performance  of  services  for  the
     Company only  by  Conning pursuant to this Agreement,  and to obtain copies
     of such  books  and  records as its  auditors  may  reasonably  request  in
     connection  with such audit,  provided  that  the Company gives  reasonable
     notice  of the  audit,  reviews  the  books and  records  during  Conning's
     normal   business  hours,   and  promptly   reimburses   Conning   for  any
     reasonable  costs of  photocopying  or  delivering  copies  of   books  and
     records.


                                     -113-
<PAGE>


9.   CONFIDENTIALITY.   Conning  agrees  that   the   information  and   reports
     furnished  pursuant to this  Agreement  marked  as  confidential  shall  be
     treated  as  confidential  unless  available  through other  public sources
     and shall not  be disclosed to third parties  except as specified  pursuant
     to  the  terms  of this  Agreement  or  by law.  The  Company  agrees  that
     reports  furnished  by Conning to  the Company  will  not be  disclosed  by
     the  Company  to  third  parties,  provided   that  the  Company  shall  be
     permitted to disclose  all information  required  to be disclosed  pursuant
     to  financial  reporting  requirements or  by law.  Conning may disclose to
     its clients the fact that the Company is a client of Conning.

10.  GOVERNING  LAW.  This  Agreement  shall  be governed  by and  construed  in
     accordance with the internal laws of the State of New York.

11.  LIMITATION OF  LIABILITY;  INDEMNIFICATION.  (a) Neither  Conning  nor  any
     of  its shareholders,  officers, directors or employees shall  be liable to
     the  Company,  or to  the  Board  of  Directors  of  the  Company  for  (i)
     mistakes  of judgment,  mistakes of law or any  act or omission suffered or
     taken by any such person, or  for losses due to  any such mistakes,  act or
     omission  (including,   without  limitation,   any  losses  that   may   be
     sustained  in  connection  with  the  performance  of Conning  on behalf of
     the Company),  except to  the extent such  liability or losses  result from
     the (A) willful  misconduct,  bad  faith or  negligence  of such  person or
     (B) reckless  disregard  by Conning of  obligations  and duties under  this
     Agreement,  (ii) the  willful  misconduct,  negligence or bad  faith of any
     independent  representative,  consultant,  independent  contractor, broker,
     agent  or other  person who is  selected,  engaged or  retained by  Conning
     on behalf of the  Company  in  the  performance  of  this  Agreement  or in
     connection  herewith,  unless  such   person  was  in  a  negligent  manner
     selected, engaged or retained by Conning.

     Nothing herein shall constitute a restriction or waiver of any rights under
     federal or state securities laws.

12.  SEVERABILITY.  In the event that any one or more of the  provisions of this
     Agreement  shall,  for  any  reason,  be  held to be  invalid,  illegal  or
     unenforceable in any respect,  or becomes  inconsistent with any applicable
     rule or law, such invalidity, illegality, unenforceability or inconsistency
     shall not affect any other provision of this Agreement.

13.  COMPLETE  AGREEMENT.  This Agreement together  with the  attached schedules
     embodies  the entire  agreement and  understanding  between Conning and the
     Company and  supersedes all prior agreements  and  understandings  relating
     to the subject matter hereof.

14.  AMENDMENT.  This  Agreement  may only  be  amended  or revised in  writing,
     signed by both parties.

15.  HEADINGS.  The headings of  the parts of this  Agreement  are for  purposes
     of reference  only and shall  not limit or otherwise  affect the meaning of
     this Agreement.

16.  ASSIGNMENT.  This  Agreement  may  not be assigned  by either  party to any
     other organization without the prior written approval of the other.

17.  NON-WAIVER. No failure of either party to exercise any power or right given
     either party hereunder or to insist upon strict  compliance by either party
     with its obligations hereunder, and no custom or practice of the parties at
     variance with the terms hereof, shall constitute a waiver of either party's
     right to demand exact  compliance  with the terms  hereof.  A waiver of the
     breach of one provision of this  Agreement  shall not be deemed a waiver of
     any other provision of this Agreement.

18.  RELIANCE ON  INFORMATION.  Conning  shall  be  entitled  to  rely,  without
     independent  verification,  on   the  accuracy   and  completeness  of  all
     information   furnished   to  it  by  the  Company  or   the  Advisors   in
     furtherance  of  this  Agreement,  and   on  all  information  obtained  by
     Conning  from   third  parties   reasonably   believed  by  Conning  to  be
     reliable.  Conning  shall  not be  responsible  for  any  loss  or  expense
     relating to  the accuracy of the  information  contained  in trade  tickets
     or  other  reports  furnished  by  the  Company or its  Advisors to Conning
     pursuant to Section 2 hereof.


                                     -114-
<PAGE>


19.  FORCE  MAJEURE.  Neither  party  shall  be  considered  in  default  in the
     performance of its obligations under this Agreement, to the extent that the
     performance  of any such  obligation  is  prevented or delayed by any cause
     which is beyond the reasonable  control and without the fault or negligence
     of such party.

20   SURVIVAL.  The  provisions  of paragraph  9, 10  and  11 shall  survive any
     termination of this Agreement.

21.  ARBITRATION  CLAUSE. Any dispute,  controversy  or claim  which relates to,
     arises out  of or is connected  with  this  Agreement,  including,  without
     limitation,    the   creation,   validity,   interpretation,   breach    or
     termination  of this Agreement,  and which  has not been mutually  resolved
     by the  parties shall,  on the written demand  by either party to the other
     party,  be  determined and settled in Hartford,  Connecticut  by a panel of
     three arbitrators  in accordance with the Commercial  Arbitration  Rules of
     the American Arbitration Association.



     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

                                  Conning Asset Management Company

                                               /s/Mark E. Hansen
                                               ------------------------------
                                  By:          Mark E. Hansen
                                  Title:       Executive Vice President



                                  Security-Connecticut Life Insurance Company


                                               /s/Richard D. Mocarski
                                               ------------------------------
                                  By:          Richard D. Mocarski
                                  Title:       Vice President, Controller and
                                               Treasurer



                                      -115-
<PAGE>


                                   Schedule 1

                       ATTACHED TO AND FORMING PART OF THE
                         INVESTMENT ACCOUNTING AGREEMENT
                    DATED AS OF THIS FIRST DAY OF AUGUST 1996

                                     BETWEEN

                        CONNING ASSET MANAGEMENT COMPANY

                                       AND

                   SECURITY-CONNECTICUT LIFE INSURANCE COMPANY


================================================================================



Conning's  annual  fee as  described  in Section 4 of this  Agreement  is stated
below:


     .0175  percent of the book value of the assets stated in Schedules D1, D2.1
and D2.2 of the statutory statements filed by the Company.



                                      -116-
<PAGE>


                                   Schedule 2


                       ATTACHED TO AND FORMING PART OF THE
                         INVESTMENT ACCOUNTING AGREEMENT
                    DATED AS OF THIS FIRST DAY OF AUGUST 1996

                                     BETWEEN

                        CONNING ASSET MANAGEMENT COMPANY

                                       AND

                   SECURITY-CONNECTICUT LIFE INSURANCE COMPANY

================================================================================



                         Investment Accounting Services

     Pursuant to the Agreement,  Conning shall provide the following  Investment
Accounting Services:

A.   Trade  Processing.  Conning shall provide to the Company and  each  Advisor
     services regarding input of securities trades subject to the following:

     (1)  Conning shall review trade tickets furnished by the Company and/or its
          Advisors to determine  whether  they include all items of  information
          concerning  security  trades  that  must  be  completed  by the  party
          effecting a trade in order to allow Conning to perform the  investment
          accounting  services  set  forth in this  Agreement  (e.g.  FASB  115,
          ratings,  purchase  PSA).  Simultaneously  with  booking a  securities
          trade,  Conning shall make a determination of the accounting treatment
          for such trade under GAAP, statutory, and tax principles provided that
          the Company  shall retain  ultimate  responsibility  for the financial
          impact of this  determination.  In addition,  Conning shall notify the
          Company  of any  information  which has not been  completed  and shall
          request the Company or the Advisor to complete any such information.

     (2)  Conning may require the addition or deletion of items to be  completed
          on trade tickets or of other forms necessary to process the securities
          trades as warranted by changes in investment  accounting  practices or
          systems by giving  each  Advisor and the  Company  seven (7)  Business
          Days' written notice of its further requirements.

     (3)  Conning  shall file  all required  registrations and applications with
          the SVO and apply for private placement numbers as necessary.

     (4)  Conning shall maintain separate records of Advisors' trades on both an
          Advisor and a cumulative basis.



                                      -117-
<PAGE>


B.   Reconciliation  Services.  Conning shall  endeavor  to update,  verify  and
     reconcile   the   information  on   the  Company's   investment   portfolio
     contained  in  Conning's  securities  accounting  system  and  the  reports
     provided  to  the  Company  therefrom  with the records and  reports of the
     Company's Custodian  and each Advisor concerning  the Company's  investment
     portfolio.   Discrepancies  and  unreconciled   items  shall   promptly  be
     brought  to the  attention  of  the  Company  and  the  effecting  Advisor.
     Ultimate  resolution  of  discrepancies  and  unreconciled  items  shall be
     made by Conning with assistance from the Company only when required.

C.   Income  Processing.  Conning shall  provide the following  services to  the
     Company,  monthly (except  as provided  otherwise  herein) or  as requested
     by the Company and agreed  to by Conning,  on an  aggregate  and  a Custody
     Account  basis,  as applicable:  (i) daily  reporting of cash flow expected
     to  be  available  for  reinvestment  arising from  principal  and interest
     payments  due on  securities  that  are  recorded on  Conning's  securities
     accounting  system   as  part  of   the  Company's  investment   portfolio,
     together    with    book/income    projections;    (ii)   processing    and
     reconciliation  of  income  and   principal  due/received  as   payment  on
     securities that  are recorded  on Conning's  securities  accounting  system
     as  part  of the  Company's  investment  portfolio  against the records and
     reports of  the Company's  custodians  concerning the  Company's investment
     portfolio;  (iii)  notifying  the Company  and  the  applicable  Advisor of
     past  due  income  and/or  principal,  and   undertaking   the  preliminary
     investigation  with respect  thereto;  (iv) will  provide to  the Custodian
     such  documentation  as  the  Custodian  should  request  relating  to such
     past  due  income  and/or  principal;  and (v) in  those  cases  where  the
     Custodian has  no such  responsibility,  filing the appropriate  claims for
     past due income and/or principal.

D.   Services,  Data Base and Report Distribution.  In furtherance of its duties
     and responsibilities hereunder, Conning shall provide to the Company and/or
     its  designees,  as  applicable,  reports and services  provided  that, the
     Company and each Advisor shall promptly  provide to Conning all information
     reasonably  requested  by  Conning  with  respect  to the  purchase,  sale,
     investment,  reinvestment  and supervision of that portion of the Company's
     investment portfolio managed by such person.

E.   Outside  Services.  To the extent  that  Conning  charges  the  Company for
     such   services,  Conning  shall  obtain  prior  approval  by  the  Company
     regarding   the  use of  outside  data   services  (for  pricing,  dividend
     accruals, involuntary  corporate actions, ratings, etc.).

F.   System  Releases  and  Enhancements.  Conning  shall  endeavor  to add  new
     releases and/or  enhancements to  the investment  accounting  systems  used
     by  Conning  to   provide   the   services   hereunder   to   the   Company
     substantially  similar  to those added to  the  systems  used by Conning in
     the  ordinary  course of  its provision of investment  accounting  services
     to   clients   with   similar   investment    portfolios   and   accounting
     requirements,  provided  that, (i) in  the reasonable  judgment of Conning,
     such  releases  or  enhancements  are  necessary   or  desirable   for  the
     provision  of such  services  and (ii) the Company  shall  pay such amounts
     for  such  nonstandard  upgrade and enhancement  services which  are agreed
     upon with Conning.

G.   Regulatory  Examinations,  Retention  of  Records.  Conning  shall  provide
     such  information  and  assistance  as  required  to  insurance  regulatory
     examiners  authorized  by  the Company to examine  the data  maintained  by
     Conning  on behalf of  the Company  concerning  its  investment  portfolio.
     Upon  termination  of   this  Agreement,  all  trade  authorization   files
     relating  to the investment  accounting  services  provided  hereunder will
     be  inventoried  and  sent to the Company.  Conning  shall maintain for the
     time  period  required  by   the  Advisors  Act  and  make   available  for
     inspection  and  duplication  by  the  Company or  its  agents  (reasonably
     satisfactory to Conning) at  the Company's expense all  records  pertaining
     to  the   investment   accounting  services   provided  hereunder  and  not
     delivered to the Company.

H.   Monthly   Investment   Transaction  /  Income  /  General  Ledger  Summary.
     Preliminary entries, excluding market valuations, will be made available to
     the Company,  no later than 1:00 pm on the third business day following the
     last day of each  calendar  month,  by Conning  with final  entries and any
     potential  revisions  made available to the Company by Conning by the close
     of the fifth business day following the last day of each calendar month.


                                      -118-
<PAGE>


I.   Market Valuation of Assets. Not later than five (5) Business Days following
     the last day of each calendar  month,  Conning will deliver  monthly market
     valuation reports of the Reported Assets using appropriate outside services
     and internal valuation analysis approved by the Company.

J.   Fixed  Income/Equity  Portfolio.  Listed  below  are  the  standard  report
     categories  which  are to be  prepared  for  the  Company by  Conning.  All
     reports may  be provided  monthly,  quarterly  and  annually,  or  on an as
     needed basis,  depending  on the Company's  needs and may be in  hard copy,
     text file, or ASCII formats.

     Standard Report Categories

     1.  Domestic Accounting
     2.  Foreign Accounting
     3.  Accounting Control and Exception Reports
     4.  Regulatory
     5.  Tax
     6.  Planning & Forecasting
     7.  Financial & Management
     8.  Compliance
     9.  Performance


K.   Reporting   Requirements.   Conning  shall  provide  to  the  Company  such
     information  as  the  Company  shall  reasonably  request  relating  to its
     investment  portfolio  which  is  necessary  for  the  Company  to  fulfill
     reporting requirements of any regulatory bodies, rating agencies and taxing
     authorities.  Conning will maintain FASB 115  classification  reports based
     upon  information  received  from the  Company  and its  Advisors  and will
     provide FASB 91 updates quarterly.


                                      -119-
<PAGE>


                                                                   Exhibit 10.24

                         INVESTMENT ACCOUNTING AGREEMENT

     THIS INVESTMENT ACCOUNTING AGREEMENT,  (the "Agreement"),  dated as of this
first day of August,  1996,  (the "Effective  Date"),  is by and between Conning
Asset  Management  Company  ("Conning")  and  Lincoln  Security  Life  Insurance
Company, (the "Company" and collectively, "the Parties").

     WHEREAS,  the Company  and/or  other  investment  advisors  retained by the
Company,  ("Advisors"),  intend to manage a portion or all of the  securities of
the Company held in the Custody Accounts (as defined herein);

     WHEREAS,   the  Company  desires  Conning  to  provide  certain  investment
accounting services,  ("Investment  Accounting  Services"),  and data conversion
assistance  services   substantially  in  accordance  with  the  terms  of  this
Agreement; and

     WHEREAS,  the Company has requested that Conning provide the aforementioned
Investment  Accounting Services and certain data conversion  assistance services
to the Company and Conning desires to accept such duties and responsibilities.

     NOW THEREFORE,  in  consideration  of the foregoing and the mutual promises
recited below, the parties agree as follows:

1.   DEFINITIONS.  The  following terms  used in this  Agreement  shall have the
     meanings ascribed to them below:

     "Advisor"  shall have the meaning set forth in the first WHEREAS  clause of
     this Agreement; provided, that, Conning is given at least fifteen (15) days
     prior  written  notice by the  Company of any  additions  or  deletions  of
     Advisors.

     "Allocation"  shall  mean that  portion  of the  Assets  that is  initially
     allocated to an Advisor and transferred to a Custody Account.

     "Assets" shall mean those assets held in the Custody Accounts.

     "Business  Day" shall  mean end of day on which  Advisor,  Conning  and the
     Custodian, as applicable,  are open for business, except as otherwise noted
     in this Agreement.

     "Custodian"  shall mean the bank and such other  custodians  as the Company
     may from time to time  designate in writing to Conning as custodians of all
     or part of the Assets.

     "Custody   Account(s)"  shall  mean  the  custody  accounts  at  the  bank,
     securities held directly by the Company and such other custody  accounts as
     the Company may designate in writing to Conning as the custody accounts for
     the deposit of its securities of the Company.

2.   INVESTMENT  ACCOUNTING  SERVICES.  Conning shall, as of the Effective Date,
     assume  responsibility for and provide to the Company,  and to its advisors
     and  designees,  which shall be designated  to Conning in writing,  certain
     investment  accounting  services set forth in Schedule 2 of this Agreement,
     provided  that:  the Company and each  Advisor  shall  promptly  provide to
     Conning all information reasonably requested by Conning with respect to the
     purchase,  sale, investment,  re-investment and supervision of that portion
     of the Company's  Assets  managed by such person and in furtherance of this
     requirement,  the Company shall  authorize the  Custodians to allow Conning
     on-line access to view the Company's account activity.


                                      -120-
<PAGE>


     With respect to each Custody Account, each Advisor and the Company shall be
     solely  responsible  for:  (i)  buying,  selling,  exchanging,  converting,
     modifying or otherwise  trading in any  securities in the Custody  Account;
     (ii) selecting the brokers,  dealers and currency merchants to execute each
     such  transaction;  and (iii)  placing  orders  for the  execution  of such
     securities transactions with or through such brokers, dealers or issuers.

     The Company shall be responsible for: (i) coordinating  communication among
     Conning,  the  Custodian and each  applicable  Advisor,  of all  respective
     trades and  settlement  activity;  (ii)  filing any  settlement  claims and
     making payment of any claims filed against the Company;  (iii) representing
     the Company's interest in any class action suit and/or any other litigation
     relating to or involving the invested  assets of the Company  arising after
     the Effective  Date;  (iv)  coordinating  and  controlling  any movement of
     assets  between  portfolios  not  relating  to  trades  and  resolving  any
     discrepancies  related to the  movement of such assets;  and (v)  notifying
     Conning of all such asset movement activity.

3.   DATA ACCESS.  Conning agrees to provide the Company access to the Company's
     investment  accounting data maintained in Conning's  automated  systems via
     ASCII download or other format agreed to by the Company and Conning.

     In the event that the Company  requests  on-line  read-only  access to such
     accounting  data on Conning's  automated  accounting  system,  Conning will
     assist the Company and make such  modifications to its systems  environment
     to permit such access, providing that Conning shall not be required to make
     any modifications  which Conning determines is not practicable and provides
     written  notice to the Company of such  determination.  The  Company  shall
     reimburse  Conning  promptly for the reasonable  cost of all  modifications
     made pursuant to this section.

4.   FEES.  Conning's fee for performing  services under this Agreement shall be
     determined and paid as shown in Schedule 1 of the Agreement. Such fee shall
     begin to accrue upon completion of  installation  and conversion to Conning
     which will be deemed to have been  completed  on October 1, 1996.  This fee
     will be billed  quarterly  in arrears and will be  calculated  based on the
     book value of total  reported  assets at the end of each calendar  quarter.
     All partial  quarters  will be prorated.  Book value shall be determined by
     Conning in  consultation  with the  Company in  accordance  with  Statutory
     Accounting Principles.

     In addition to the compensation  calculated and paid in accordance with the
     fee schedule,  the Company shall be obligated to pay all  applicable  sales
     taxes,  if any,  assessed  in  connection  with the  investment  accounting
     services,  conversion  assistance  and other special  services  rendered by
     Conning  hereunder.  The Company shall reimburse Conning within thirty (30)
     days of receipt of Conning's  invoice for expenses  directly related to the
     NAIC  asset  valuation  system  ("SVO")  annual  licensing  fee  and to the
     provision of investment accounting services under this Agreement.

5.   AUTHORIZED  PERSONS.  In addition to the  individuals  authorized to act in
     connection with specific matters covered by this Agreement, as contemplated
     by particular provisions of this Agreement,  the President and/or Treasurer
     of the Company or their  designees,  which will be designated to Conning in
     writing by the Company,  shall be  authorized  to make and  communicate  to
     Conning on behalf of the Company, any decisions or instructions  pertaining
     to this  Agreement,  and Conning  may rely on and act upon a  communication
     purporting to be from any of such persons or designees.

6.   TERM AND  TERMINATION.  This  Agreement will commence on the effective date
     specified on the Execution  Page of this  Agreement  and shall  continue in
     force  for a  period  of at  least  three  years  and  thereafter  shall be
     automatically  renewed for additional one year terms on each anniversary of
     the effective date, unless  terminated  earlier according to the provisions
     of this Agreement.  This Agreement may be terminated by either party at any
     time upon 90 days prior written notice to the other party


                                      -121-
<PAGE>


     In the event of termination by the Company without cause within three years
     of the Effective Date,  Conning shall be paid a termination fee which shall
     be $20,000 as of the Effective  Date,  and which fee will be reduced by the
     amount of $550 for each month thereafter  during which this Agreement is in
     effect.  This termination fee is to compensate Conning for the installation
     and conversion that is not being charged for.

     Upon the  termination  without  cause of this  Agreement,  the fees payable
     hereunder per Schedule 1 shall be pro-rated to the date of termination  and
     such  fees  shall be paid by the  Company  to  Conning  promptly  following
     receipt of an invoice therefor. If the Company terminates this contract for
     cause no termination  fee will be payable.  For purposes of this paragraph,
     the  material  breach  of  this  Agreement,  gross  negligence  or  willful
     misconduct shall be considered cause.

     Upon  termination of the Agreement,  the payment of  the final fee shall be
     contingent upon the timely  completion of installation  and conversion to a
     subsequent  provider to Conning not to exceed 90 days of written  notice of
     termination.

7.   NOTICES. All notices and other communications hereunder shall be in writing
     and  shall be  sufficient  if (i)  delivered  by  overnight  delivery  by a
     nationally  recognized air courier service; or (ii) mailed by registered or
     certified mail,  return receipt  requested,  postage prepaid,  addressed as
     follows:


     A.   Notices to the Company shall be delivered to:

          Lincoln Security Life Insurance Company
          20 Security Drive
          Avon, CT 06001

          Telefax No:  (860) 674-7612
          Attention:  Richard D. Mocarski, Vice President, Controller and
          Treasurer


     B.   Notices to Conning shall be sent or delivered to:

          Conning Asset Management Company
          CityPlace II
          185 Asylum Street
          Hartford, CT 06103

          Telefax No. (860) 520-1253
          Attention:  Fred M. Schpero, Vice President

The parties may by like notice,  designate  any future or  different  address or
telefax  number to which  subsequent  notices shall be sent. Any notice shall be
deemed given when received.

8.   AUDITING.  The Company  shall have the right to audit all books and records
     directly  pertaining to the performance of services for the Company only by
     Conning pursuant to this Agreement,  and to obtain copies of such books and
     records as its  auditors may  reasonably  request in  connection  with such
     audit,  provided  that the Company  gives  reasonable  notice of the audit,
     reviews the books and records during  Conning's  normal business hours, and
     promptly  reimburses  Conning for any reasonable  costs of  photocopying or
     delivering copies of books and records.

9.   CONFIDENTIALITY.  Conning agrees that the information and reports furnished
     pursuant  to this  Agreement  marked as  confidential  shall be  treated as
     confidential unless available through other public sources and shall not be
     disclosed to third  parties  except as  specified  pursuant to the terms of
     this  Agreement  or by law. The Company  agrees that  reports  furnished by
     Conning  to the  Company  will not be  disclosed  by the  Company  to third
     parties,  provided  that the Company  shall be  permitted  to disclose  all
     information  required  to be  disclosed  pursuant  to  financial  reporting
     requirements  or by law.  Conning may disclose to its clients the fact that
     the Company is a client of Conning.


                                     -122-
<PAGE>


10.  GOVERNING  LAW.  This  Agreement  shall be  governed  by and  construed  in
     accordance with the internal laws of the State of New York.

11.  LIMITATION OF LIABILITY;  INDEMNIFICATION.  (a) Neither  Conning nor any of
     its shareholders,  officers,  directors or employees shall be liable to the
     Company,  or to the Board of  Directors  of the Company for (i) mistakes of
     judgment,  mistakes of law or any act or omission  suffered or taken by any
     such  person,  or for  losses  due to any such  mistakes,  act or  omission
     (including,  without  limitation,  any  losses  that  may be  sustained  in
     connection  with the  performance  of  Conning  on behalf of the  Company),
     except to the extent such  liability or losses  result from the (A) willful
     misconduct,  bad  faith  or  negligence  of  such  person  or (B)  reckless
     disregard by Conning of obligations and duties under this  Agreement,  (ii)
     the  willful  misconduct,  negligence  or  bad  faith  of  any  independent
     representative,  consultant, independent contractor, broker, agent or other
     person who is  selected,  engaged or  retained  by Conning on behalf of the
     Company in the  performance  of this  Agreement or in connection  herewith,
     unless such person was in a negligent manner selected,  engaged or retained
     by Conning.

     Nothing herein shall constitute a restriction or waiver of any rights under
     federal or state securities laws.

12.  SEVERABILITY.  In the event that any one or more of the  provisions of this
     Agreement  shall,  for  any  reason,  be  held to be  invalid,  illegal  or
     unenforceable in any respect,  or becomes  inconsistent with any applicable
     rule or law, such invalidity, illegality, unenforceability or inconsistency
     shall not affect any other provision of this Agreement.

13.  COMPLETE  AGREEMENT.  This Agreement  together with the attached  schedules
     embodies the entire  agreement and  understanding  between  Conning and the
     Company and supersedes all prior agreements and understandings  relating to
     the subject matter hereof.

14.  AMENDMENT. This Agreement may only be amended or revised in writing, signed
     by both parties.

15.  HEADINGS.  The headings of the parts of this  Agreement are for purposes of
     reference only and shall not limit or otherwise  affect the meaning of this
     Agreement.

16.  ASSIGNMENT. This Agreement may not be assigned by either party to any other
     organization without the prior written approval of the other.

17.  NON-WAIVER. No failure of either party to exercise any power or right given
     either party hereunder or to insist upon strict  compliance by either party
     with its obligations hereunder, and no custom or practice of the parties at
     variance with the terms hereof, shall constitute a waiver of either party's
     right to demand exact  compliance  with the terms  hereof.  A waiver of the
     breach of one provision of this  Agreement  shall not be deemed a waiver of
     any other provision of this Agreement.

18.  RELIANCE  ON  INFORMATION.  Conning  shall be  entitled  to  rely,  without
     independent   verification,   on  the  accuracy  and  completeness  of  all
     information  furnished to it by the Company or the Advisors in  furtherance
     of this Agreement,  and on all  information  obtained by Conning from third
     parties reasonably believed by Conning to be reliable. Conning shall not be
     responsible  for any  loss  or  expense  relating  to the  accuracy  of the
     information  contained in trade tickets or other  reports  furnished by the
     Company or its Advisors to Conning pursuant to Section 2 hereof.

19.  FORCE  MAJEURE.  Neither  party  shall  be  considered  in  default  in the
     performance of its obligations under this Agreement, to the extent that the
     performance  of any such  obligation  is  prevented or delayed by any cause
     which is beyond the reasonable  control and without the fault or negligence
     of such party.

20   SURVIVAL.  The  provisions  of  paragraph  9, 10 and 11 shall  survive  any
     termination of this Agreement.

21.  ARBITRATION  CLAUSE.  Any dispute,  controversy  or claim which relates to,
     arises  out of or is  connected  with this  Agreement,  including,  without
     limitation, the creation, validity,  interpretation,  breach or termination
     of this Agreement,  and which has not been mutually resolved by the parties
     shall,  on the  written  demand by  either  party to the  other  party,  be
     determined  and  settled  in  Hartford,  Connecticut  by a panel  of  three
     arbitrators  in accordance  with the  Commercial  Arbitration  Rules of the
     American Arbitration Association.


                                      -123-
<PAGE>




     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

                                  Conning Asset Management Company

                                               /s/Mark E. Hansen
                                               ----------------------
                                  By:          Mark E. Hansen
                                  Title:       Executive Vice President



                                  Lincoln Security Life Insurance Company


                                               /s/Richard D. Mocarski
                                               ----------------------
                                  By:          Richard D. Mocarski
                                  Title:       Vice President, Controller and
                                               Treasurer



                                      -124-
<PAGE>


                                   Schedule 1

                       ATTACHED TO AND FORMING PART OF THE
                         INVESTMENT ACCOUNTING AGREEMENT
                    DATED AS OF THIS FIRST DAY OF AUGUST 1996

                                     BETWEEN

                        CONNING ASSET MANAGEMENT COMPANY

                                       AND

                     LINCOLN SECURITY LIFE INSURANCE COMPANY


================================================================================



Conning's  annual  fee as  described  in Section 4 of this  Agreement  is stated
below:


     .0175  percent of the book value of the assets stated in Schedules D1, D2.1
and D2.2 of the statutory statements filed by the Company.



                                      -125-
<PAGE>


                                   Schedule 2


                       ATTACHED TO AND FORMING PART OF THE
                         INVESTMENT ACCOUNTING AGREEMENT
                    DATED AS OF THIS FIRST DAY OF AUGUST 1996

                                     BETWEEN

                        CONNING ASSET MANAGEMENT COMPANY

                                       AND

                     LINCOLN SECURITY LIFE INSURANCE COMPANY

================================================================================



                         Investment Accounting Services

     Pursuant to the Agreement,  Conning shall provide the following  Investment
Accounting Services:

A.   Trade  Processing.  Conning  shall  provide to the Company and each Advisor
     services regarding input of securities trades subject to the following:

     (1)  Conning shall review trade tickets furnished by the Company and/or its
          Advisors to determine  whether  they include all items of  information
          concerning  security  trades  that  must  be  completed  by the  party
          effecting a trade in order to allow Conning to perform the  investment
          accounting  services  set  forth in this  Agreement  (e.g.  FASB  115,
          ratings,  purchase  PSA).  Simultaneously  with  booking a  securities
          trade,  Conning shall make a determination of the accounting treatment
          for such trade under GAAP, statutory, and tax principles provided that
          the Company  shall retain  ultimate  responsibility  for the financial
          impact of this  determination.  In addition,  Conning shall notify the
          Company  of any  information  which has not been  completed  and shall
          request the Company or the Advisor to complete any such information.

     (2)  Conning may require the  addition or deletion of items to be completed
          on trade tickets or of other forms necessary to process the securities
          trades as warranted by changes in investment  accounting  practices or
          systems by giving  each  Advisor and the  Company  seven (7)  Business
          Days' written notice of its further requirements.

     (3)  Conning shall file all required  registrations  and applications  with
          the SVO and apply for private placement numbers as necessary.

     (4)  Conning shall maintain separate records of Advisors' trades on both an
          Advisor and a cumulative basis.


                                      -126-
<PAGE>


B.   Reconciliation  Services.  Conning  shall  endeavor  to update,  verify and
     reconcile the information on the Company's  investment  portfolio contained
     in Conning's  securities  accounting system and the reports provided to the
     Company  therefrom with the records and reports of the Company's  Custodian
     and  each  Advisor   concerning   the   Company's   investment   portfolio.
     Discrepancies  and  unreconciled  items  shall  promptly  be brought to the
     attention of the Company and the effecting Advisor.  Ultimate resolution of
     discrepancies  and  unreconciled  items  shall  be  made  by  Conning  with
     assistance from the Company only when required.

C.   Income  Processing.  Conning shall  provide the  following  services to the
     Company,  monthly (except as provided  otherwise herein) or as requested by
     the Company and agreed to by Conning, on an aggregate and a Custody Account
     basis,  as  applicable:  (i) daily  reporting  of cash flow  expected to be
     available for reinvestment arising from principal and interest payments due
     on securities that are recorded on Conning's  securities  accounting system
     as part of the Company's  investment  portfolio,  together with book/income
     projections;  (ii)  processing and  reconciliation  of income and principal
     due/received  as payment  on  securities  that are  recorded  on  Conning's
     securities  accounting system as part of the Company's investment portfolio
     against the records and reports of the Company's custodians  concerning the
     Company's  investment  portfolio;  (iii)  notifying  the  Company  and  the
     applicable Advisor of past due income and/or principal, and undertaking the
     preliminary  investigation  with respect thereto;  (iv) will provide to the
     Custodian such  documentation  as the Custodian  should request relating to
     such past due income  and/or  principal;  and (v) in those  cases where the
     Custodian has no such  responsibility,  filing the  appropriate  claims for
     past due income and/or principal.

D.   Services,  Data Base and Report Distribution.  In furtherance of its duties
     and responsibilities hereunder, Conning shall provide to the Company and/or
     its  designees,  as  applicable,  reports and services  provided  that, the
     Company and each Advisor shall promptly  provide to Conning all information
     reasonably  requested  by  Conning  with  respect  to the  purchase,  sale,
     investment,  reinvestment  and supervision of that portion of the Company's
     investment portfolio managed by such person.

E.   Outside  Services.  To the extent that Conning charges the Company for such
     services,  Conning shall obtain prior approval by the Company regarding the
     use of outside data services (for pricing,  dividend accruals,  involuntary
     corporate actions, ratings, etc.).

F.   System  Releases  and  Enhancements.  Conning  shall  endeavor  to add  new
     releases and/or  enhancements to the investment  accounting systems used by
     Conning to provide the  services  hereunder  to the  Company  substantially
     similar to those  added to the  systems  used by  Conning  in the  ordinary
     course of its provision of investment  accounting  services to clients with
     similar investment portfolios and accounting  requirements,  provided that,
     (i) in the reasonable  judgment of Conning,  such releases or  enhancements
     are  necessary or desirable for the provision of such services and (ii) the
     Company shall pay such amounts for such nonstandard upgrade and enhancement
     services which are agreed upon with Conning.

G.   Regulatory  Examinations,  Retention of Records. Conning shall provide such
     information  and assistance as required to insurance  regulatory  examiners
     authorized  by the  Company to examine  the data  maintained  by Conning on
     behalf of the Company concerning its investment portfolio. Upon termination
     of this Agreement, all trade authorization files relating to the investment
     accounting  services provided hereunder will be inventoried and sent to the
     Company.  Conning  shall  maintain  for the  time  period  required  by the
     Advisors Act and make  available  for  inspection  and  duplication  by the
     Company or its agents (reasonably satisfactory to Conning) at the Company's
     expense  all  records  pertaining  to the  investment  accounting  services
     provided hereunder and not delivered to the Company.

H.   Monthly   Investment   Transaction  /  Income  /  General  Ledger  Summary.
     Preliminary entries, excluding market valuations, will be made available to
     the Company,  no later than 1:00 pm on the third business day following the
     last day of each  calendar  month,  by Conning  with final  entries and any
     potential  revisions  made available to the Company by Conning by the close
     of the fifth business day following the last day of each calendar month.


                                     -127-
<PAGE>


I.   Market Valuation of Assets. Not later than five (5) Business Days following
     the last day of each calendar  month,  Conning will deliver  monthly market
     valuation reports of the Reported Assets using appropriate outside services
     and internal valuation analysis approved by the Company.

J.   Fixed  Income/Equity  Portfolio.  Listed  below  are  the  standard  report
     categories which are to be prepared for the Company by Conning. All reports
     may be provided monthly,  quarterly and annually, or on an as needed basis,
     depending on the  Company's  needs and may be in hard copy,  text file,  or
     ASCII formats.

     Standard Report Categories

     1.  Domestic Accounting
     2.  Foreign Accounting
     3.  Accounting Control and Exception Reports
     4.  Regulatory
     5.  Tax
     6.  Planning & Forecasting
     7.  Financial & Management
     8.  Compliance
     9.  Performance


K.   Reporting   Requirements.   Conning  shall  provide  to  the  Company  such
     information  as  the  Company  shall  reasonably  request  relating  to its
     investment  portfolio  which  is  necessary  for  the  Company  to  fulfill
     reporting requirements of any regulatory bodies, rating agencies and taxing
     authorities.  Conning will maintain FASB 115  classification  reports based
     upon  information  received  from the  Company  and its  Advisors  and will
     provide FASB 91 updates quarterly.



                                      -128-
<PAGE>


                                                                   Exhibit 10.25


                         FORM OF PARTICIPATION AGREEMENT
                                     BETWEEN
          LINCOLN NATIONAL LIFE INSURANCE COMPANY AND/OR AFFILIATES AND
                   SECURITY-CONNECTICUT LIFE INSURANCE COMPANY

     This Sale and Participation Agreement ("Agreement") is made as of September
30, 1993, by and between Lincoln National Life Insurance Company  ("Seller") and
Security-Connecticut   Life  Insurance  Company  ("Purchaser"),   a  Connecticut
corporation whose address is 20 Security Drive, Avon, Connecticut 06001.

                                    RECITALS

     WHEREAS,  Seller has made or acquired a loan in the amount of Four  Million
One  Hundred  Fifty  Thousand  Dollars  ($4,150,000.00)  (the  "Loan")  to  (the
"Borrower"), a general partnership,  with respect to a real estate project known
as , on the  terms  and  conditions  set  forth in Loan  Documents  (as  defined
herein); and

     WHEREAS,  Seller and Purchaser entered into that certain Loan Participation
Agreement  dated  May 13,  1993 (the  "Original  Agreement")  whereby  Purchaser
purchased  from  Seller and Seller sold to  Purchaser,  subject to the terms and
provisions set forth therein, an undivided interest in the Loan; and

     WHEREAS,  Seller and  Purchaser  which to amend and  restate  the  Original
Agreement  so that from and after the date  hereof the terms and  provisions  of
this  Agreement  shall  supersede  and replace the Original  Agreement and shall
fully  govern all of the  rights,  privileges  and  obligations  of the  parties
hereto; and

     WHEREAS, Seller and Purchaser have agreed to share their interests Pro Rata
and Ratably (as  defined  herein) in the Loan,  Loan  Documents  and  Collateral
securing the Loan.

     NOW,  THEREFORE,  in  consideration  of the foregoing,  and of the sale and
purchase of Purchaser's  Interest,  and of the mutual covenants  hereinafter set
forth, the parties hereto agree as follows:

     1.  Definitions.  The following  capitalized  terms used in this  Agreement
shall have the meanings set forth below:

Collateral             All  collateral  securing  payment of  the  Loan  or  any
                       guaranty therefor.

Loan                   The loan to Borrower evidenced by the Loan Documents.

Loan                   Documents The loan agreement,  note, security  documents,
                       guaranties and all other documents  executed or delivered
                       in connection  with the Loan.

Pro Rata and/or        In   proportion  to  Purchaser's  Interest  and  Seller's
Ratably                Interest


                                     -129-
<PAGE>


Purchase Date          The effective date of this Agreement.

Purchaser's            Interest  An  undivided   interest  in   the  Loan,  Loan
                       Documents  and   all   Collateral,   which   interest  is
                       presently equal to  Two Million  Dollars  ($2,000,000.00)
                       of the Loan, and which  represents and  shall represent a
                       48% undivided interest  therein.

Seller's               Interest  An  undivided   interest  in   the  Loan,  Loan
                       Documents   and  all   Collateral,   which   interest  is
                       presently   equal  to  Two  Million  One   Hundred  Fifty
                       Thousand Dollars  ($2,150,000.00) of the Loan, and  which
                       represents and shall represent  a 52% undivided  interest
                       therein.

     2. Loan.  Seller has made or acquired the Loan to Borrower on substantially
the terms and conditions set forth in the Loan Documents.

     3. Sale and Participation.

          (a)  Subject to the terms and  conditions  of this  Agreement,  Seller
hereby sells to Purchaser the Purchaser's Interest.

          (b)  Seller's  Interest  and  Purchaser's  Interest  shall be  Ratably
concurrent  undivided interests  and  neither Purchaser's Interest  nor Seller's
Interest shall have priority over the other.

          (c)  Purchaser  shall  be the  owner  of  Purchaser's  Interest.  This
Agreement constitutes a sale of  Purchaser's Interest on a nonrecourse basis and
shall in no way be construed  as a loan by  Purchaser  to Seller or  as creating
any  fiduciary   relationship  or  other  relationship   whatsoever  beyond  the
contractual undertakings  set forth in this  Agreement.  Purchaser's Interest is
an  equitable  interest  in the  Loan, Loan  Documents  and  the  Collateral  as
contemplated by Section 541(d)of the Bankruptcy Code (11 U.S.C. Section 541(d)).

          (d) Seller has  previously  delivered to  Purchaser  true and complete
copies  of  all  Loan  Documents,  together  with  any  appropriate  filing  and
recordation data as reflected in the records of Seller.

          (e) Purchaser will not communicate with Borrower concerning Loan, Loan
Documents, or Collateral.

     4. Reports, Collections and Expenses.

          (a) Whenever Seller receives a payment of principal, interest, premium
(if any) or other payment, in connection  with Loan or Collateral, Seller  shall
promptly  pay  over  to Purchaser in  the  kind  of funds  received  by  Seller,
Purchaser's Pro  Rata  share  of such  amounts, less  the deduction, if  any, of
Purchaser's Pro Rata share of any disbursements which have been made or expenses
which  have  been  incurred  by  Seller  as  hereinafter  provided.

          (b) In the event of a failure  of  Borrower  or any  guarantor  to pay
taxes,  assessments,  insurance premiums,  claims against  the Collateral or any
other amount required to be paid by any of the Loan  Documents,  or in the event
that it is otherwise, in the sole discretion of Seller, desirable to protect and
preserve Collateral,  Seller may, but shall not be obligated to, advance amounts
necessary to pay the same, and Purchaser will reimburse  Seller for  Purchaser's
Pro Rata share of the amount  thereof  immediately upon receiving notice thereof
from Seller.


                                     -130-
<PAGE>


          (c)  Purchaser  shall,  on receiving  notice from Seller,  immediately
deliver  to  Seller,  Purchaser's  Pro  Rata  share  of any  costs  or  expenses
including,  without  limitation,  attorneys' fees  reasonably  incurred or to be
incurred  by Seller  in  connection  with the  administration  of the Loan,  the
enforcement   of  the  Loan  or  the  Loan  Documents  and  the  protection  and
preservation of the Collateral.

     5. Servicing.

          (a) Seller  shall  service  the Loan,  and shall take or refrain  from
taking action with respect thereto,  as Seller would normally do with respect to
loans solely for its own account.

          (b)  Purchaser  shall have the right to examine and make copies of all
original Loan Documents at any reasonable  time during  Seller's normal business
hours.

          (c) Seller  shall  deliver  to  Purchaser  copies of annual  financial
statements of Borrower and copies of all other financial  statements required by
the Loan Documents  promptly  following  Seller's  receipt  thereof,  but Seller
assumes no responsibility with respect to the authenticity,  validity,  accuracy
or completeness thereof.

          (d) Seller shall hold any escrows for tax, insurance or other purposes
for its benefit and the benefit of Purchaser, Pro Rata.

          (e) Seller may employ an agent of its choosing for the  administration
of any or all of Seller's obligations under this Agreement.

     6. Modification and Waiver.  Notwithstanding  anything in this agreement or
in the Loan  Documents to the  contrary,  Seller  reserves the right in Seller's
sole  discretion,  in each instance,  and without prior notice to Purchaser,  to
agree to the  modification,  waiver or  release  of any of the terms of the Loan
Documents,  to  consent to any  action or  failure  to act by  Borrower,  and to
exercise or refrain from  exercising  any powers or rights which Seller may have
under or in respect of Loan  Documents  or any  Collateral,  including,  without
limitation,  the right to enforce or refrain from  enforcing the  obligations of
Borrower and of any person liable for the payment of Loan or the  performance of
any Loan  Documents,  except that Seller shall not,  without  Purchaser's  prior
consent,  exercise any such rights which would increase the principal balance of
the Loan,  except through the  capitalization  of interest or expenses  advanced
pursuant to the authority of the Loan Documents.

     7. Default and Enforcement.

          (a) Upon  learning of the  existence of any event or  condition  which
would  constitute a default or event of default under any Loan Document,  Seller
may take action,  or refrain from taking  action as Seller may  determine in its
sole  discretion.  Seller shall have exclusive  discretion to enforce or refrain
from enforcing Loan  Documents.  Purchaser shall share the costs and expenses of
such action and any proceedings Ratably.


                                     -131-
<PAGE>


          (b) If,  as the  result  of any  default  under  the  Loan  Documents,
Collateral is acquired by foreclosure, deed in lieu of foreclosure or otherwise,
title shall,  as  determined  by Seller,  be taken in Seller's  name alone or in
Seller's and  Purchaser's  names jointly or in the name of a  corporation  which
will  hold,  manage,  operate,   improve,  complete  and  attempt  to  sell  the
Collateral.  Seller shall make all decisions  with respect to, and the agreement
of  Purchaser  shall not be required for matters and  decisions  relating to the
management, operation, improvement, completion and disposition of Collateral and
any  capital  expenditures  with  respect  to  Collateral.  Purchaser  shall  be
responsible  for its Pro Rata share of any expenses and shall be distributed its
Pro Rata  Share of any  surplus  funds  generated  by  Collateral  as Seller may
determine.

          (c) It is the  intention of the parties  that all amounts  received by
either of them on account of the Loan shall be shared Pro Rata.  Therefore,  for
example,  should  Borrower make any payment  directly to Purchaser  intending to
prefer  Purchaser  over  Seller in  repayment  of the Loan,  the  payment  shall
nevertheless be applied Pro Rata between Seller and Purchaser.

     8. Risks and Standard of Care.

          (a)  Purchaser  acknowledges  that it has  become  a party  hereto  in
reliance upon its own  independent  investigation  of the  Borrower's  financial
condition and  creditworthiness  to the extent deemed  necessary or advisable by
Purchaser  and not in  reliance  on any  information,  representation  or advice
provided  by  Seller.   Purchaser  further  acknowledges  that  Purchaser  will,
independently  and without  reliance on Seller and based on such  documents  and
information as Purchaser deems appropriate at the time, continue to make its own
credit decisions in connection with this Agreement.

          (b) The sole  responsibility of Seller shall be to administer the Loan
with  the  same  care  it  exercises  on  loans  solely  for  its  own  account.
Notwithstanding any other provision hereof, Seller and its officers,  directors,
attorneys, employees and agents shall not be liable to Purchaser or to any other
person for any error of judgment or for any action or failure to act,  including
such party's own  negligence,  except for such party's own gross  negligence  or
willful misconduct.

          (c) Without limiting the generality of the foregoing,  Seller: (i) may
consult with legal counsel (including  Borrower's  counsel),  independent public
accountants and other experts selected by Seller and shall not be liable for any
action taken or omitted in good faith by Seller in accordance with the advice of
such counsel,  accountants or experts; (ii) makes no warranty or representation,
express or implied, and shall not be responsible for any statement,  warranty or
representation  made in or in  connection  with  the Loan  Documents  or for the
financial condition or business affairs of Borrower or any person liable for the
payment of Loan or  performance  of Loan Documents or for the existence or value
of any  Collateral;  (iii)  shall  not be  responsible  for the  performance  or
observance of any term,  covenant or condition of the Loan Documents on the part
of Borrower and shall not have any duty to inspect the  Collateral,  property or
books and records of Borrower;  (iv) makes no warranty or  representation as to,
and  shall  not be  responsible  for,  the due  execution,  legality,  accuracy,
completeness, legal effect, validity, enforceability, genuineness, authenticity,
sufficiency or  collectability  of the Loan Documents or Collateral or any other
matter;  and (v) shall incur no liability  under or in respect of Loan Documents
or Collateral by acting on any notice,  consent,  certificate or other document,
instrument  or writing  (which may be by  telegram,  cable,  telex,  telecopy or
comparable  transmission)  believed  by Seller in good  faith to be  genuine  or
signed or sent by the proper person.


                                     -132-
<PAGE>


     9 Assignments.

          (a)  Purchaser  shall not encumber,  assign or otherwise  transfer its
interest in the Loan, the Loan Documents or this  Agreement,  or any part of any
of the  foregoing,  or its duties and  obligations  hereunder,  absent the prior
written consent of Seller,  which may withhold or grant such consent in its sole
discretion.

          (b)  Seller  may sell  additional  participations  in all or a part of
Seller's Interest, without notice to Purchaser.  Seller may assign its legal and
equitable interest in the Loan in full to any party at any time. Purchaser shall
be  promptly  notified  of any such  complete  assignment,  which  shall be made
expressly  subject  to the  rights of  Purchaser.  Seller  shall have no further
responsibility  to Purchaser  following a complete  assignment of Seller's legal
and equitable interests in the Loan.

          (c)  Subject  to  the  foregoing,  all  of the  terms,  covenants  and
conditions of this Agreement shall inure to the benefit of, and be binding upon,
the successors and permitted assigns of Seller and Purchaser.

     10. Rights to Purchase.  Seller shall have the right,  on ten (10) business
days' prior written notice to Purchaser,  to purchase Purchaser's Interest for a
purchase price equal to Purchaser's then-existing principal interest in the Loan
on the date of such purchase plus accrued  interest  thereon through the date of
such purchase. This Agreement shall thereupon terminate; provided, however, that
the  provisions  of paragraph 11 hereof shall remain in full force and effect as
to  matters  relating  to the period of  Purchaser's  ownership  of  Purchaser's
Interest.

     11.  Indemnification.  Purchaser  hereby  agrees to indemnify  Seller,  its
officers, directors,  attorneys, employees and agents, for its Pro Rata share of
any loss, liability, claim or expense, including attorneys' fees, arising out of
any action taken or to be taken by Seller, its officers,  directors,  attorneys,
employees  and agents or any other matter  whatsoever  with respect to the Loan,
Collateral  or Loan  Documents,  except for any such  matters  arising from such
party's gross negligence or willful misconduct.

     12.  Purchaser's  Default.  In the event that  Purchaser  fails to make any
payment to Seller in accordance with this  Agreement,  Purchaser shall be deemed
to be in default  under this  Agreement.  Seller  shall be  entitled to the full
amount of all payments  and  recoveries  from the Borrower or any other  obligor
and/or the Collateral until such time as the outstanding principal amount of the
amount due Seller from  Purchaser  and all interest (at the same rate charged on
the Loan) and other sums due thereon have been repaid in full.

     13.  Confidentiality of Borrower Information.  Purchaser agrees to maintain
in confidence all financial information and other information regarding Borrower
or Seller that  Purchaser  may  receive  with  respect to the Loan,  and to make
disclosure  thereof to third  parties only  pursuant to legal  process (of which
Seller shall be given prompt notice and an opportunity to respond) or disclosure
requirements of government regulators.


                                     -133-
<PAGE>


     14. Responses from Purchaser.  Should Seller ask in writing for Purchaser's
opinion on a possible course of action with respect to the Loan or Collateral at
any time, Purchaser shall be deemed to have endorsed the proposed conduct unless
Purchaser states objections in writing within ten (10) days. This provision does
not  evidence or create an  obligation  on Seller to consult  with or obtain the
consent of  Purchaser  as to any matter  except as  expressly  required  in this
Agreement.

     15.  Investment   Representation.   Purchaser  represents  to  Seller  that
Purchaser has acquired the Purchaser's  Interest for investment only and without
an intention to sell or otherwise distribute the Purchaser's Interest.

     16. Miscellaneous.

          (a) Neither the  execution of this  Agreement,  nor the sharing in the
Loan or Collateral  or the Loan  Documents,  nor any  agreements to share in the
profits or losses resulting from the  transaction,  is intended to be, nor shall
it be construed to be the  formation of a partnership  or joint venture  between
Seller and Purchaser or create a fiduciary  relationship  or other  relationship
beyond the contractual obligations expressly set forth herein.

          (b) This Agreement  supersedes any prior negotiations,  discussions or
communications between Seller and Purchaser and constitutes the entire agreement
of Seller and  Purchaser  with respect to the Loan,  the Loan  Documents and the
Collateral and shall survive any foreclosure of Collateral.

          (c) Seller,  Purchaser and their  affiliates may accept deposits from,
lend money to, act as trustee under  indentures for and generally  engage in any
kind of business with the  Borrower,  any person who may do business with or own
securities of the Borrower, or any affiliate or subsidiary of the Borrower,  all
without any duty to account  therefor  to the other party  hereto or to disclose
such financial accommodations.

          (d) Seller and Purchaser  each shall advise the other with  reasonable
promptness  if it  becomes  aware of facts  constituting  a default  or event of
default under the Loan Documents.

          (e) Any  notice or demand to be given  under this  Agreement  shall be
duly and properly  given if  delivered  personally  or sent by private  delivery
service for next business-day delivery or mailed,  postage prepaid, to the party
entitled to such notice or demand at the  address  set forth  above,  or at such
other address as such party may, from time to time, specify in writing and shall
be effective when actually received by such party.

          (f) The headings  contained in this Agreement are for convenience only
and shall not affect the interpretation of any provision hereof.

          (g) This Agreement and the rights and duties described herein shall be
governed by, and  interpreted in accordance  with the internal laws of the State
of Indiana.

          (h) This  Agreement and the duties and  obligations  contained  herein
shall be,  except as  otherwise  provided in  paragraph 9 above,  solely for the
benefit of the parties hereto and no third party shall have any rights hereunder
as a third party beneficiary or otherwise.


                                     -134-
<PAGE>


          (i) Purchaser represents and warrants to Seller, and Seller represents
and  warrants  to  Purchaser,  that it has the power and  authority  to execute,
deliver and perform this Agreement.

          (j) In the event of any dispute  hereunder,  the parties shall attempt
in good faith to resolve by mediation any dispute  arising out of or relating to
this Agreement. Either party may initiate a mediation proceeding by a request in
writing to the other party. Thereupon,  both parties will be obligated to engage
in  mediation,  to be conducted in accordance  with the CPR Model  Procedure for
Mediation of Business  Disputes as then in effect.  Should  litigation  arise in
connection  with this  Agreement,  the  prevailing  party  shall be  entitled to
recover  from the  other  any costs and  expenses,  including  attorneys'  fees,
incurred  in  enforcing  this  Agreement  and the duties of the other  contained
herein.

          (k) This Agreement may be executed in several counterparts, and by the
parties hereto on separate counterparts, each of which is an original but all of
which together shall constitute one document.

          (l) Notwithstanding  any other provision hereof,  Purchaser shall have
no interest in any  property,  goods or interest of Borrower or any other person
liable for payment of Loan or  performance of Loan  Documents,  now or hereafter
taken as  collateral  for any other loans or extensions of credit made to or for
Borrower or any such person by Seller or acquired by Seller,  or in any property
now or hereafter  in Seller's  possession  or control,  or in any deposit now or
hereafter held by Seller or other indebtedness now or hereafter owing to Seller,
which may be or become Collateral for or otherwise available for payment of Loan
or performance of Loan Documents by reason of any cross-collateralization or any
general description of secured obligations  contained in any mortgage,  security
agreement  or other  agreement,  instrument  or document  held by Seller,  or by
reason of the right to setoff,  counterclaim  or otherwise,  except that if such
property, deposit or indebtedness,  or proceeds thereof, shall, in Seller's sole
discretion,  be applied in reduction of amounts owing under Loan Documents, then
Purchaser shall be entitled to share Ratably in such application.


                                     -135-
<PAGE>


     IN WITNESS WHEREOF, The parties hereto each has caused this Agreement to be
executed  by its duly  authorized  officer  all as of the day and year first set
forth above.

SELLER:                              Lincoln National Life Insurance Company

                                     By:  Lincoln National Investment
                                          Management Company, attorney-in-fact


                                     By_________________________________________



PURCHASER:                           Security-Connecticut Life Insurance Company


                                     By_________________________________________







                                     -136-

<PAGE>


                                                                   EXHIBIT 23.01









               CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS



We consent to the incorporation by reference in the Registration Statement (Form
S-8 No.  33-74408)  pertaining  to the  1993  Stock  Incentive  Plan  and in the
Registration   Statement   (Form   S-8   No.   33-74410)   pertaining   to   the
Security-Connecticut  Corporation  Savings and Profit Sharing Plan of our report
dated February 23, 1997, with respect to the consolidated  financial  statements
and schedule of  Security-Connecticut  Corporation included in the Annual Report
(Form 10-K) for the year ended December 31, 1996.








                                                               ERNST & YOUNG LLP
Hartford, Connecticut
March 17, 1997



                                      -137-