UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    Form 10-Q


[X] QUARTERLY  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF  1934.

                For the quarterly period ended September 30, 1996

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934.

     For the transition period from ________ to ________

                         Commission file number 1-11716



                                  BANKERS LIFE
                               HOLDING CORPORATION


         Delaware                                       No. 51-0342500
   ----------------------                       -------------------------------
   State of Incorporation                       IRS Employer Identification No.



      222 Merchandise Mart Plaza
       Chicago, Illinois  60654                           (312) 396-6000
---------------------------------------                   --------------
 Address of principal executive offices                      Telephone


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 [ ]



      Shares of common stock outstanding as of November 1, 1996: 49,425,590



<PAGE>
<TABLE>
<CAPTION>



                                              PART 1 - FINANCIAL INFORMATION

ITEM 1.         FINANCIAL STATEMENTS.

                                     BANKERS LIFE HOLDING CORPORATION AND SUBSIDIARIES

                                                CONSOLIDATED BALANCE SHEET
                                      (Dollars in millions, except per share amount)

                                                                                        September 30,       December 31,
                                                                                            1996                1995
                                                                                            ----                ----
                                                                                         (unaudited)          (audited)
                                                         ASSETS
<S>                                                                                        <C>                  <C>   
Investments:
   Actively managed fixed maturity securities at fair value (amortized cost:
     1996 - $3,303.8; 1995 - $3,176.4)...............................................      $3,204.7             $3,252.3
   Mortgage loans....................................................................           4.7                  5.2
   Credit-tenant loans ..............................................................         106.9                 88.9
   Policy loans......................................................................          47.8                 47.3
   Short-term investments............................................................          36.9                 42.8
   Investments in American Life Holdings, Inc........................................         194.8                 68.0
   Other invested assets.............................................................          43.0                 10.4
                                                                                           --------             --------

       Total investments.............................................................       3,638.8              3,514.9

Accrued investment income............................................................          51.2                 49.5
Accounts receivable and uncollected premiums.........................................          47.7                 43.9
Reinsurance receivables..............................................................          34.7                 29.9
Cost of policies purchased...........................................................         532.1                515.6
Cost of policies produced............................................................         335.4                244.2
Goodwill (net of accumulated amortization: 1996 - $25.1; 1995 - $17.5)...............         373.6                369.3
Other assets.........................................................................          19.8                 17.9
                                                                                           --------             --------

     Total assets....................................................................      $5,033.3             $4,785.2
                                                                                           ========             ========

                                           LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
   Insurance liabilities.............................................................      $3,374.7             $3,265.7
   Income tax liabilities............................................................          23.1                 59.8
   Investment borrowings.............................................................         112.8                 28.1
   Notes payable.....................................................................         418.1                301.5
   Other liabilities.................................................................          90.9                 98.2
                                                                                           --------             --------

       Total liabilities.............................................................       4,019.6              3,753.3
                                                                                           --------             --------

Shareholders' equity:
   Common stock and additional paid-in capital (par value $.001; 500,000,000
     shares authorized; shares issued and outstanding: 1996 - 49,425,210;
     1995 - 50,597,758)..............................................................         734.0                748.8
   Unrealized appreciation (depreciation) of securities:
     Fixed maturity securities (net of applicable deferred income taxes:
       1996 - $(16.4); 1995 - $13.1).................................................         (27.9)                46.7
     Other invested assets (net of applicable deferred income taxes:
       1996 - $.3; 1995 - ($.1)).....................................................            .6                  (.2)
   Retained earnings.................................................................         307.0                236.6
                                                                                           --------             --------

       Total shareholders' equity....................................................       1,013.7              1,031.9
                                                                                           --------             --------

       Total liabilities and shareholders' equity....................................      $5,033.3             $4,785.2
                                                                                           ========             ========

               The accompanying notes are an integral part of the
                       consolidated financial statements.

</TABLE>
                                                             2

<PAGE>
<TABLE>
<CAPTION>



                                     BANKERS LIFE HOLDING CORPORATION AND SUBSIDIARIES

                                           CONSOLIDATED STATEMENT OF OPERATIONS
                                      (Dollars in millions, except per share amounts)

                                                        (unaudited)

                                                                 Three months ended       Nine months        Six months
                                                                    September 30,            ended              ended
                                                                 -------------------     September 30,        June 30,
                                                                 1996           1995          1996              1995
                                                                 ----           ----     -------------        ---------
                                                                                                            (prior basis)
<S>                                                              <C>           <C>        <C>                   <C>    
Revenues:
   Insurance policy income..................................     $317.8        $316.4     $  961.8              $620.9
   Investment activity:
     Net investment income .................................       65.3          62.0        191.0               126.3
     Net trading income (losses)............................         .6           (.3)        (1.4)                2.5
     Net realized gains.....................................         .6           1.1          5.9                13.2
   Restructuring income.....................................         -             -          16.0                  -
   Equity in earnings of American Life Holdings, Inc........        1.8           1.4          5.9                 1.6
   Other income (loss)......................................       (1.6)         (4.6)        (3.0)                2.4
                                                                 ------        ------     --------              ------

     Total revenues.........................................      384.5         376.0      1,176.2               766.9
                                                                 ------        ------     --------              ------

Benefits and expenses:
   Insurance policy benefits ...............................      229.4         231.3        715.2               477.8
   Amortization related to operations.......................       34.4          31.4         90.0                61.0
   Amortization related to realized gains...................         .2            .1          5.6                 7.0
   Interest expense on annuities and financial products.....       20.6          19.0         60.8                38.0
   Interest expense on notes payable........................        5.4           7.5         18.1                16.1
   Interest expense on investment borrowings................        1.8           1.0          4.1                 3.4
   Other operating costs and expenses.......................       41.1          37.5        115.8                69.7
                                                                -------        ------     --------              ------

     Total benefits and expenses............................      332.9         327.8      1,009.6               673.0
                                                                -------        ------     --------              ------

     Income before income tax and extraordinary charge......       51.6          48.2        166.6                93.9
Income tax expense..........................................       19.4          17.5         62.2                33.7
                                                                -------        ------     --------              ------

     Income before extraordinary charge.....................       32.2          30.7        104.4                60.2
Extraordinary charge on extinguishment of debt, net
   of income tax benefit....................................         .1            -          10.1                  -
                                                                -------        ------      -------              ------

     Net income.............................................    $  32.1        $ 30.7      $  94.3               $60.2
                                                                =======        ======      =======              ======

Earnings per common share:
     Weighted average common shares outstanding............. 49,495,683    52,296,461   49,526,405          52,819,415
                                                             ==========    ==========   ==========          ==========

     Income per share before extraordinary charge...........       $.65         $.59         $2.11               $1.14
     Extraordinary charge...................................        -            -             .20                 -
                                                                   ----         ----         -----               -----

     Net income ............................................       $.65         $.59         $1.91               $1.14
                                                                   ====         ====         =====               =====










               The accompanying notes are an integral part of the
                       consolidated financial statements.

</TABLE>
                                                            3

<PAGE>
<TABLE>
<CAPTION>



                                     BANKERS LIFE HOLDING CORPORATION AND SUBSIDIARIES

                                      CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                                                   (Dollars in millions)

                                                        (unaudited)


                                                                            Nine months     Three months     Six months
                                                                               ended            ended           ended
                                                                           September 30,    September 30,      June 30,
                                                                                1996             1995            1995
                                                                                ----             ----            ----
                                                                                                             (prior basis)
<S>                                                                         <C>                 <C>            <C>    
Common stock and additional paid-in capital:
   Balance, beginning of period........................................     $   748.8           $773.5         $ 371.1
       Cost of shares acquired and effectively retired.................         (27.7)           (25.8)             -
       Amounts related to stock options and employee benefit plans.....           2.2               -              1.1
       Adjustment of balance due to push down accounting...............          10.7              9.8           401.3
                                                                            ---------           ------         -------

   Balance, end of period..............................................     $   734.0           $757.5         $ 773.5 (a)
                                                                            =========           ======         =======    

Net unrealized   appreciation   (depreciation)  of  securities:
   Fixed  maturity securities:
       Balance, beginning of period....................................     $    46.7           $ (7.6)        $(121.8)
          Change in net unrealized appreciation (depreciation).........         (74.4)            22.9           121.7
          Adjustment of balance due to push down accounting............           (.2)             (.1)           (7.5)
                                                                            ---------           ------         -------

       Balance, end of period..........................................     $   (27.9)          $ 15.2         $  (7.6) (a)
                                                                            =========           ======         =======     

   Other invested assets:
       Balance, beginning of period....................................     $     (.2)          $  9.9         $   1.3
          Change in net unrealized appreciation .......................            .8             (9.1)            8.5
          Adjustment of balance due to push down accounting............            -                -               .1
                                                                            ---------           ------         -------

       Balance, end of period..........................................     $      .6           $   .8         $   9.9 (a)
                                                                            =========           ======         =======

Retained earnings:
   Balance, beginning of period........................................     $   236.6           $188.4         $ 227.6
       Net income......................................................          94.3             30.7            60.2
       Dividends on common stock.......................................         (22.3)            (8.0)          (15.8)
       Adjustment of balance due to push down accounting...............          (1.6)            (1.3)          (83.6)
                                                                            ---------           ------         -------

   Balance, end of period..............................................     $   307.0           $209.8         $ 188.4 (a)
                                                                            =========           ======         =======    

          Total shareholders' equity...................................     $ 1,013.7           $983.3         $ 964.2 (a)
                                                                            =========           ======         =======    

<FN>

(a)    Period end balances reflect the adoption of a new accounting basis.
</FN>












               The accompanying notes are an integral part of the
                       consolidated financial statements.

</TABLE>
                                                           4

<PAGE>
<TABLE>
<CAPTION>



                                     BANKERS LIFE HOLDING CORPORATION AND SUBSIDIARIES

                                           CONSOLIDATED STATEMENT OF CASH FLOWS
                                                   (Dollars in millions)

                                                        (unaudited)


                                                                            Nine months     Three months      Six months
                                                                               ended            ended            ended
                                                                           September 30,    September 30,      June 30,
                                                                               1996             1995              1995
                                                                               ----             ----              ----
                                                                                                             (prior basis)
<S>                                                                        <C>                 <C>             <C>
Cash flows from operating activities:
   Net income............................................................  $     94.3          $  30.7         $   60.2
   Adjustments to reconcile net income to net cash provided by operating
     activities:
       Extraordinary charge on extinguishment of debt (before income tax)        15.5               -                -
       Amortization and depreciation.....................................        97.1             32.0             69.4
       Income taxes......................................................        (6.9)           (14.9)            (5.1)
       Insurance liabilities.............................................        32.2              3.7             23.9
       Interest credited to insurance liabilities........................        60.8             19.0             38.0
       Fees charged to insurance liabilities.............................       (17.2)            (5.9)           (10.7)
       Accrual and amortization of investment income.....................         (.4)            (3.8)           (12.4)
       Deferral of cost of policies produced.............................      (110.0)           (35.2)           (79.2)
       Other liabilities.................................................       (21.6)            (9.1)            10.5
       Realized (gains) and trading (income) losses on investments.......        (4.5)             (.8)           (15.7)
       Other, net........................................................         1.7              6.2              3.1
                                                                           ----------          -------         --------

         Net cash provided by operating activities.......................       141.0             21.9             82.0
                                                                           ----------          -------         --------

Cash flows from investing activities:
   Sales of investments..................................................     1,851.7            248.5            472.3
   Maturities and redemptions............................................        84.6             26.7             34.9
   Purchase of additional common shares of American Life
     Holdings, Inc. .....................................................      (140.0)             -                -
   Purchases of investments..............................................    (2,113.8)          (279.3)          (678.7)
   Other   ..............................................................         (.7)             (.5)             4.3
                                                                           ----------          -------         --------

         Net cash used by investing activities...........................      (318.2)            (4.6)          (167.2)
                                                                           ----------          -------         --------

Cash flows from financing activities:
   Issuance of common stock..............................................         2.2              -                1.1
   Issuance of notes payable.............................................       459.1              -                -
   Payments on notes payable.............................................      (358.3)             -              (16.0)
   Repurchase of common stock............................................       (27.7)           (25.8)             -
   Dividends paid on common stock........................................       (22.3)            (8.0)           (15.8)
   Deposits to insurance liabilities.....................................       175.9             58.6            156.8
   Withdrawals from insurance liabilities................................      (142.3)           (41.1)           (89.1)
   Investment borrowings.................................................        84.7            (17.5)            56.3
                                                                           ----------          -------         --------

         Net cash provided (used) by financing activities................       171.3            (33.8)            93.3
                                                                           ----------          -------         --------

         Net increase (decrease) in short-term investments...............        (5.9)           (16.5)             8.1

Short-term investments, beginning of period..............................        42.8             96.8             88.7
                                                                           ----------          -------         --------

Short-term investments, end of period....................................  $     36.9          $  80.3          $  96.8
                                                                           ==========          =======          =======



               The accompanying notes are an integral part of the
                       consolidated financial statements.
</TABLE>

                                                           5

<PAGE>


                BANKERS LIFE HOLDING CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)



     The  following  notes should be read in  conjunction  with the notes to the
consolidated  financial  statements  contained  in the 1995 Form 10-K of Bankers
Life Holding Corporation.

     SIGNIFICANT ACCOUNTING POLICIES

     Organization and Basis of Presentation

     The  consolidated   financial   statements  include  Bankers  Life  Holding
Corporation  ("we" or "BLH") and its direct and indirect  wholly owned insurance
subsidiaries,   all  of  which  are  collectively  referred  to  hereinafter  as
"Bankers." Insurance subsidiaries include: Bankers Life and Casualty Company and
its wholly owned  subsidiary,  Certified  Life Insurance  Company  (collectively
"BLC") and their parent,  Bankers Life  Insurance  Company of Illinois  ("BLI").
Bankers  markets  health and life  insurance and annuity  products  primarily to
senior  citizens  through  approximately  200 branch  offices  and 3,200  career
agents.  Intercompany  transactions have been eliminated in  consolidation.  The
unaudited  consolidated  financial  statements  have been prepared in accordance
with  the  instructions  to  Form  10-Q  and,  therefore,  do  not  include  all
disclosures required by generally accepted accounting principles. However, these
statements  include all adjustments  (consisting only of normal recurring items)
necessary to present fairly the Company's  financial position and the results of
operations  on  a  basis  consistent  with  that  of  prior  audited   financial
statements.

     In preparing  financial  statements in conformity  with generally  accepted
accounting  principles,  we are required to make estimates and assumptions  that
significantly  affect various reported amounts.  For example, we use significant
estimates and assumptions in calculating the cost of policies produced, the cost
of policies purchased,  goodwill, insurance liabilities,  liabilities related to
litigation,  guaranty fund assessment accruals and deferred income taxes. If our
future experience differs  materially from these estimates and assumptions,  our
financial statements could be affected.

     On August 26, 1996, Conseco,  Inc.  ("Conseco")  announced its intention to
merge  with  BLH,  in  a  transaction  under  which  Conseco  will  acquire  the
outstanding  shares of BLH that  Conseco  does not already  own. In the intended
merger,  each of the 4.7  million  outstanding  shares of BLH  common  stock not
already  owned by Conseco  would be  converted  into the right to receive $25 in
Conseco  common  stock.  BLH would be merged  into  Conseco.  Completion  of the
transaction,  which  is  subject  to  review  by  the  Securities  and  Exchange
Commission of the  information to be submitted to shareholders of BLH describing
the terms of the merger and their  appraisal  rights,  is  expected  to occur in
early 1997.

     During the first six months of 1995,  Conseco purchased 12.8 million shares
of BLH representing 24 percent of the then outstanding shares of BLH, increasing
its  ownership  in BLH to 85  percent.  During the last six months of 1995,  BLH
repurchased  2.2 million  shares of its common stock at a cost of $42.1 million.
Conseco's ownership in BLH was 88 percent at December 31, 1995. During the first
quarter of 1996, BLH  repurchased 1.3 million shares at a cost of $27.7 million,
increasing Conseco's ownership in BLH to 90.5 percent.

     As a result of Conseco's  significant  ownership interest in Bankers, a new
basis of accounting under the "push down" method was adopted  effective June 30,
1995.  Under this method,  our assets and  liabilities  were revalued to reflect
Conseco's  cost  basis,  which is based on the fair  values of such  assets  and
liabilities on the dates Conseco's  ownership  interests were acquired.  The new
accounting basis was reflected in the  consolidated  balance sheet and statement
of shareholders'  equity at June 30, 1995, and is reflected in the statements of
operations and cash flows for periods  subsequent to June 30, 1995. As a result,
our assets and  liabilities  included in the  September  30, 1996,  consolidated
balance sheet represent the following  combination of values: (i) the portion of
our net assets acquired by Conseco in the November 1992 acquisition is valued as
of that acquisition  date; (ii) the portion acquired in September 1993 is valued
as of that date;  (iii) the portion acquired during 1995 and 1996 (including the
increase in Conseco's  ownership as a result of BLH's common stock  repurchases)
is  valued  as of the date of their  purchases;  and (iv) the  portion  owned by
minority  interests  is  valued  based on a  combination  of (i)  above  and the
historical bases of net assets acquired in the November 1992 acquisition.


                                                             6

<PAGE>


                BANKERS LIFE HOLDING CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)



     The  effect of the use of push down  accounting  as a result of our  common
stock  repurchases  during the first  quarter of 1996 is as follows  (dollars in
millions):
<TABLE>
<CAPTION>
                                                                                      Debit
                                                                                    (Credit)
                                                                                    --------
              <S>                                                                  <C>   
              Cost of policies purchased........................................   $   9.0
              Cost of policies produced.........................................      (5.0)
              Goodwill..........................................................       7.2
              Insurance liabilities.............................................      (1.4)
              Income tax liabilities............................................      (1.1)
              Notes payable.....................................................       (.5)
              Other liabilities.................................................        .7
              Common stock and additional paid-in capital.......................     (10.7)
              Net unrealized appreciation of securities.........................        .2
              Retained earnings.................................................       1.6
</TABLE>

     Certain  amounts in the 1995  financial  statements  were  reclassified  to
conform with the 1996 presentation.

     ADJUSTMENT TO ACTIVELY MANAGED FIXED MATURITIES

     At September 30, 1996, we adjusted  several balance sheet accounts to carry
actively managed fixed maturity securities at fair value as follows:
<TABLE>
<CAPTION>

                                                                                     Effect of fair value
                                                                       Balance      adjustment on actively
                                                                       before            managed fixed        Reported
                                                                     adjustment       maturity securities      amount
                                                                     ----------       -------------------      ------
                                                                                     (Dollars in millions)
<S>                                                                  <C>                 <C>                 <C>
Actively managed fixed maturity securities.......................    $3,303.8              $(99.1)           $3,204.7
Investments in American Life Holdings, Inc.......................       192.4                 2.4               194.8
Cost of policies purchased.......................................       497.4                34.7               532.1
Cost of policies produced........................................       319.1                16.3               335.4
Income tax liabilities ..........................................        40.9               (17.8)               23.1
Unrealized depreciation of fixed maturity securities.............         -                 (27.9)              (27.9)
</TABLE>

     CHANGES IN NOTES PAYABLE

     We can  borrow up to $400  million  under  our  revolving  credit  facility
(including a competitive bid facility in the aggregate principal amount of up to
$100 million).  Any borrowings are due in 2001 and accrue  interest at a rate of
LIBOR plus an applicable margin of 50 or 75 basis points, depending on the ratio
of our debt to our  consolidated  net worth. The actual weighted average rate at
September 30, 1996, was 6.0 percent,  and the total principal  balance  borrowed
under the revolving  credit  agreement was $388.0 million.  The revolving credit
agreement contains a number of covenants,  including prohibitions or limitations
on indebtedness,  liens, mergers,  acquisitions,  sales of assets outside of the
normal  course of our  business and certain  transactions  with  affiliates.  In
connection  with  entering  into the new credit  facility in February  1996,  we
repaid the existing $110.0 million  principal  balance due under the bridge loan
facility.

     On September 30, 1996,  borrowings under the credit facility were increased
to finance  Bankers'  additional  investment  in American  Life  Holdings,  Inc.
("ALH"). See "Investments in American Life Holdings, Inc."




                                                             7

<PAGE>


                BANKERS LIFE HOLDING CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)



     In March 1996, we completed a tender offer pursuant to which $148.3 million
principal balance of our 13 percent senior  subordinated  notes were repurchased
for  $173.2  million.  The  repurchased  notes  had a  carrying  value of $157.8
million.  In the first quarter of 1996, we reported an  extraordinary  charge of
$10.0 million (net of applicable income tax) as a result of the repurchase.  The
repurchase was made using the proceeds from the revolving  credit  facility.  In
conjunction  with the tender  offer,  holders of the senior  subordinated  notes
consented  to  amendments  to the  indenture  for such  notes  which  eliminated
substantially all restrictive  covenants,  including covenants which limited our
ability to pay dividends, incur additional indebtedness, repurchase common stock
and make certain investments.  During the second quarter of 1996, we repurchased
$.1  million  par value of our 13 percent  senior  subordinated  notes,  with no
material loss realized.

     CHANGES IN CAPITAL STOCK

     In January  1996,  we completed  the share  repurchase  program  originally
announced in April 1994 and expanded in August 1995. During 1995, we repurchased
2,240,000  shares  for $42.1  million.  During  the first  quarter  of 1996,  we
repurchased 1,272,248 shares for $27.7 million.

     See "Organization and Basis of Presentation"  above for a discussion of the
change in basis resulting from Conseco's  increased ownership of Bankers and the
adoption of the "push down" method of accounting.

     During the first nine  months of 1996,  we issued  99,700  shares of common
stock upon the exercise of stock options.

     INVESTMENTS IN AMERICAN LIFE HOLDINGS, INC.

     We participated in Conseco Capital Partners II, L.P. ("Partnership II"), an
investment  partnership formed by Conseco.  In conjunction with Partnership II's
September 29, 1994  acquisition of ALH, we: (i) indirectly  acquired 3.2 percent
of ALH's  common stock ("ALH  stock")  through a $1.8  million  limited  partner
capital  contribution to Partnership  II; (ii) directly  acquired 9.1 percent of
ALH stock for $5.1 million;  and (iii) directly  acquired 25,926 shares of ALH's
1994  Series PIK  Preferred  Stock  (stated  value  $1,000 per share)  ("ALH PIK
Preferred") for $20.8 million. On November 30, 1995, we: (i) indirectly acquired
additional  shares of ALH stock through a $1.0 million  limited  partner capital
contribution to Partnership II; and (ii) directly acquired  additional shares of
ALH stock for $3.0 million. After the November 1995 transactions,  we had a 12.5
percent direct and indirect common equity interest in ALH.

     On  September  30, 1996:  (i) Conseco and its  subsidiaries  completed  the
purchase of all of the shares of ALH stock not  previously  owned by Conseco and
its  subsidiaries  (including  the purchase of 6,086,957  shares of ALH stock by
Bankers for $140.0  million);  (ii)  Partnership  II  distributed  ALH shares to
Conseco  and its  subsidiaries,  representing  their  ownership  interest in ALH
through  Partnership  II  (including  the  distribution  of  376,021  shares  to
Bankers);  and (iii)  Conseco  purchased  additional  newly issued shares of ALH
stock. After the September 30, 1996 transactions, we own 7,707,799 shares of ALH
stock,  representing  40.8 percent of all outstanding  common stock of ALH. Such
common  shares held by us had a cost of $150.9  million and a carrying  value of
$165.5 million at September 30, 1996.

     Effective  September  30,  1996,  ALH repaid the $125.0  million  principal
amount  outstanding under its senior credit facility using the proceeds from its
sale  of  newly  issued  shares  to  Conseco.  This  repayment  resulted  in  an
extraordinary charge ($.1 million was our share) in the third quarter of 1996.

     ALH's PIK  Preferred  pays  annual  dividends  of 13 percent in  additional
shares of like-kind  stock through 2006.  Thereafter,  dividends will be paid in
cash at an annual rate of 15 percent.  Our investment in ALH's PIK Preferred had
a cost  (including  the value of  dividends  paid in  like-kind  stock) of $24.2
million and a carrying value of $29.3 million at September 30, 1996.



                                                             8

<PAGE>


                BANKERS LIFE HOLDING CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)



     RELATED PARTY TRANSACTIONS

     Effective  January 1, 1996,  the home office  employees  of Bankers  became
employees of Conseco.  The services  formerly provided by such employees are now
provided by Conseco. Fees for these services and services provided by Conseco in
1996 and prior periods  (including  data  processing,  executive  management and
investment  management  services)  are based on  negotiated  rates or  Conseco's
direct and directly allocable costs plus a 10 percent margin. Total fees paid to
Conseco  were $90.4  million and $12.0  million  during the first nine months of
1996 and 1995, respectively.



                                                             9

<PAGE>



                BANKERS LIFE HOLDING CORPORATION AND SUBSIDIARIES



     ITEM 2.    MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                RESULTS OF OPERATIONS.


     RESULTS OF OPERATIONS

     Financial data for periods subsequent to June 30, 1995 reflect the adoption
of a new basis of accounting under the "push down" method and, accordingly, data
for the 1995  period  may not be  comparable  with  data  for the  1996  period.
Significant  accounting  adjustments recorded as a result of the adoption of the
new basis are described in the notes to the consolidated financial statements in
our 1995 Form  10-K.  Additional  adjustments  as a result of our  common  stock
purchases  during the first  quarter of 1996 are  described  in the notes to the
consolidated  financial statements included in this Form 10-Q. These adjustments
affect the comparability of operating data principally by replacing a portion of
amortization expense for the cost of policies produced with amortization expense
for  the  cost  of  policies  purchased  and  goodwill,   which  have  different
amortization assumptions and bases.

     Nine months Ended September 30, 1996 Compared to  the 1995 Periods Combined
     (Six Months Ended June 30, 1995, and Three Months Ended September 30, 1995)

     Insurance  policy income increased 2.6 percent,  to $961.8 million,  in the
first nine months of 1996 as a result of  increases in Medicare  supplement  and
long-term care premiums,  which were largely offset by the anticipated  decrease
in comprehensive major medical product premiums resulting from prior steps taken
to improve the profitability of this product.

     Net investment  income  increased 1.4 percent,  to $191.0  million,  in the
first nine  months of 1996.  Average  invested  assets  (amortized  cost  basis)
increased  to $3.5  billion  in 1996 from $3.4  billion  in 1995 while the yield
earned on  average  invested  assets  declined  to 7.3  percent in 1996 from 7.5
percent in 1995.  Cash flows  received  during 1995 and the first nine months of
1996  (including  cash flows from the sales of  investments)  were  invested  in
lower-yielding securities due to the general decline in interest rates. Invested
assets grew as a result of operations.

     Restructuring  income in 1996  represents  the gain realized as a result of
the sale of  Bankers'  investment  in Noble  Broadcast  Group,  Inc.,  a private
company that owns and operates 12 radio stations.

     Net realized  gains and net trading income  (losses)  often  fluctuate from
period to period.  Bankers sold $1.9 billion of investments  (principally  fixed
maturity  securities)  in the  first  nine  months of 1996,  compared  to $720.8
million in 1995 generating net realized gains of $5.9 million and trading losses
of $1.4  million in 1996,  compared to net realized  gains of $20.3  million and
trading  income of $2.2 million in 1995.  Net  realized  gains in the first nine
months  of  1995  also  included:  (i)  a  $2.2  million  writedown  of  certain
exchange-rate-linked  securities as a result of foreign  currency  fluctuations;
and (ii) a $3.8 million writedown of a corporate security as a result of changes
in conditions  which caused Bankers to conclude that a decline in the fair value
of the security was other than  temporary.  There were no such writedowns in the
first nine months of 1996.

     Selling  securities at a gain and  reinvesting the proceeds at lower yields
may, absent other management action,  tend to decrease future investment yields.
We believe,  however,  that the  following  factors  would  mitigate the adverse
effect of such  decreases  on net  income:  (i)  Bankers  recognizes  additional
amortization of the cost of policies purchased and the cost of policies produced
in the same period as the gain in order to reflect reduced future yields thereby
reducing  such  amortization  in future  periods  (see  amortization  related to
realized gains below);  (ii) Bankers can reduce  interest rates credited to some
products thereby  diminishing the effect of the yield decrease on the investment
spread; and (iii) the investment  portfolio grows as a result of reinvesting the
realized gains.

     Other income  (loss) is comprised  primarily of experience  rating  refunds
related to certain  blocks of business which  fluctuate  based on the experience
realized on such contracts.

     Insurance policy benefits increased .9 percent,  to $715.2 million,  in the
first  nine  months of 1996.  Such  increase  reflects  improved  experience  in
comparison to 1995 on increased business on which benefits are incurred.


                                                            10

<PAGE>


                BANKERS LIFE HOLDING CORPORATION AND SUBSIDIARIES


     Amortization related to operations  (consisting of amortization of the cost
of policies purchased, the cost of policies produced and goodwill) decreased 2.6
percent,  to $90.0  million,  in the first  nine  months  of 1996.  Amortization
related to operations in 1996  reflects the different  amortization  assumptions
and bases as a result of adopting a new basis of accounting.

     Cost of policies  produced  represents the cost (primarily  commissions and
certain  costs of policy  issuance  and  underwriting)  which varies with and is
primarily  related  to  the  production  of new  business.  Costs  deferred  may
represent  amounts  paid in the period  the new  business  is  written  (such as
underwriting costs and first-year  commissions) or in periods after the business
is written (such as commissions paid in subsequent years in excess of the lowest
ultimate  commission  paid each  period the policy is in force,  (the  "ultimate
commission  rate")).  Cost of  policies  purchased  represents  the  portion  of
Conseco's cost to acquire  Bankers that is  attributable to the right to receive
cash flows from insurance contracts in force at the acquisition dates.

     We expensed some costs  incurred  after the adoption of the new  accounting
basis on policies  issued prior to such date,  which  otherwise  would have been
deferred had it not been for the change in accounting  basis  (because they vary
with and are primarily  related to the  production of the acquired  interests in
policies).  Such costs are primarily  comprised of certain  commissions  paid in
excess of the ultimate commission rate which totaled  approximately $5.3 million
and have been included in operating  expenses in the nine months ended September
30, 1996.  However,  such amounts were  considered  in  determining  the cost of
policies purchased and related amortization.

     Amortization related to realized gains fluctuates as a result of the change
in realized gains discussed above.

     Interest expense on annuities and financial products increased 6.7 percent,
to $60.8 million in the first nine months of 1996  primarily due to the increase
in annuity liabilities. The weighted average crediting rate for Bankers' annuity
liabilities,  excluding  interest  bonuses  guaranteed for the first year of the
annuity contract, was 5.5 percent at September 30, 1996 and 1995.

     Interest expense on notes payable decreased 23 percent, to $18.1 million in
the first nine months of 1996 due to the reduction in interest expense resulting
from the  repurchase  of $148.3  million  principal  balance of BLH's 13 percent
senior  subordinated  notes in March 1996 using the proceeds  from our revolving
credit  facility.  The weighted  average  interest rate on borrowings  under the
revolving credit facility for the first nine months of 1996 was 6.0 percent.

     Interest expense on investment  borrowings did not fluctuate  materially in
the 1996 and 1995 periods.  Bankers' average  investment  borrowings were $102.7
million  and  $106.3  million  in the  first  nine  months  of  1996  and  1995,
respectively,  and interest rates paid on such  borrowings  during these periods
were comparable.

     Income tax expense increased 21 percent, to $62.2 million in the first nine
months of 1996 primarily due to the increase in pretax income. The effective tax
rates of 37 percent  for 1996 and 36 percent  for 1995  exceeded  the  statutory
corporate income tax rate (35 percent)  primarily because goodwill  amortization
is not deductible for federal income tax purposes.

     Extraordinary  charge in the first nine months of 1996 represents:  (i) the
$10.0 million loss  recognized  on the early  extinguishment  of $148.3  million
principal balance of BLH's 13 percent senior subordinated notes and (ii) the $.1
million loss recognized on the early  extinguishment  by ALH of borrowings under
its senior credit facility.

     Third Quarter of 1996 Compared to the Third Quarter of 1995

     Insurance  policy  income  increased .4 percent,  to $317.8  million in the
third quarter of 1996 consistent  with the explanation  above for the nine month
periods.

     Net investment income increased 5.3 percent,  to $65.3 million in the third
quarter of 1996.  Average  invested assets  (amortized cost basis)  increased to
$3.7 billion in 1996 from $3.4 billion in 1995 while the yield earned on average
invested  assets  declined to 7.4 percent in 1996 from 7.5 percent in 1995.  The
reduction in the yield earned and the increase in invested assets are consistent
with the explanation above for the nine month periods.


                                                        11

<PAGE>


                BANKERS LIFE HOLDING CORPORATION AND SUBSIDIARIES


     Net realized  gains and net trading income  (losses)  often  fluctuate from
period to period. Bankers sold $722.6 million of investments  (principally fixed
maturity securities) in the third quarter of 1996, compared to $248.5 million in
1995  generating  net  realized  gains of $.6 million  and trading  gains of $.6
million in 1996,  compared  to net  realized  gains of $4.9  million and trading
losses of $.3 million in 1995.  Net realized  gains in the third quarter of 1995
also  included a $3.8 million  writedown of a corporate  security as a result of
changes in conditions which caused the Company to conclude that a decline in the
fair  value  of the  security  was  other  than  temporary.  There  were no such
writedowns in the third quarter of 1996.

     Other income  (loss) is comprised  primarily of experience  rating  refunds
related to certain  blocks of business which  fluctuate  based on the experience
realized on such contracts.

     Insurance  policy benefits  decreased .8 percent,  to $229.4 million in the
third quarter of 1996,  reflecting slightly improved experience in comparison to
1995 on increased business in force on which benefits are incurred.

     Amortization  related to operations increased 9.6 percent, to $34.4 million
in the third  quarter  of 1996.  Amortization  related to  operations  primarily
reflects an increase in business inforce.

     Amortization related to realized gains fluctuates as a result of the change
in realized gains discussed above.

     Interest expense on annuities and financial products increased 8.4 percent,
to $20.6 million in the third  quarter of 1996  primarily due to the increase in
annuity liabilities consistent with the explanation for the nine month  periods.

     Interest expense on notes payable decreased 28 percent,  to $5.4 million in
the third  quarter of 1996.  Such decrease is  consistent  with the  explanation
above for the nine month periods.

     Interest expense on investment borrowings in the third quarters of 1996 and
1995 primarily  reflects changes in investment  borrowing  activities.  Bankers'
average investment borrowings were $121.6 million and $67.2 million in the third
quarters of 1996 and 1995, respectively.

     Income tax  expense  increased  11  percent  to $19.4  million in the third
quarter of 1996  primarily due to the increase in pretax  income.  The effective
tax rates of 38 percent for 1996 and 36 percent for 1995  exceeded the statutory
corporate income tax rate (35 percent)  primarily because goodwill  amortization
is not deductible for federal income tax purposes.

     Extraordinary  charge  in the third  quarter  of 1996  represents  the loss
recognized on the early  extinguishment  by ALH of  borrowings  under its senior
credit facility.

SALES

     In accordance with generally accepted accounting principles,  the insurance
policy  income  shown  on our  consolidated  statement  of  operations  consists
primarily of premiums we receive on policies  which have life  contingencies  or
morbidity  features.  For annuity  contracts  without such features,  accounting
rules dictate that premiums  collected are not reported as revenues,  but rather
as deposits to insurance  liabilities.  We recognize revenues for these products
in the form of investment income and surrender or other charges.


                                                        12

<PAGE>
                BANKERS LIFE HOLDING CORPORATION AND SUBSIDIARIES

     Premiums  collected for the third quarter of 1996 were $378.6  million,  of
which $64.8 million were recorded as deposits to policy liability accounts. This
compares to $357.7 million  collected and $58.6 million  recorded as deposits to
policy liability  accounts in the third quarter of 1995.  Premiums collected for
the nine months of 1996 were  $1,136.5  million,  of which  $175.9  million were
recorded as deposits to policy  liability  accounts.  This  compares to $1,143.7
million collected and $215.4 million recorded as deposits to liability  accounts
in the first nine months of 1995.  Collected  premiums  by premium  type were as
follows:
<TABLE>
<CAPTION>

                                                                 Three months ended        Nine months ended
                                                                    September 30,             September 30,
                                                                --------------------       ------------------
                                                                1996            1995       1996          1995
                                                                ----            ----       ----          ----
                                                                             (Dollars in millions)
<S>                                                               <C>          <C>      <C>          <C>
Individual health
   Medicare supplement......................................      $150.3       $135.3   $   463.0    $   441.2
   Long-term care...........................................        49.3         39.7       142.2        116.8
   Other....................................................        18.9         21.8        59.1         71.9
                                                                  ------       ------   ---------    ---------

       Total individual health..............................       218.5        196.8       664.3        629.9
Annuities...................................................        60.4         57.6       169.0        208.3
Individual life.............................................        24.8         23.2        73.3         71.5
Group and other.............................................        74.9         80.1       229.9        234.0
                                                                  ------       ------   ---------    ---------

       Total................................................      $378.6       $357.7    $1,136.5     $1,143.7
                                                                  ======       ======    ========     ========
</TABLE>

     Medicare  supplement  premiums increased 11 percent in the third quarter of
1996 and increased 4.9 percent in the first nine months of 1996, compared to the
same periods in 1995. Such premiums  accounted for 41 percent of total collected
premiums  in 1996,  compared to 39 percent in 1995.  The number of new  Medicare
supplement  policies sold in the first nine months of 1996 totaled 33,777,  down
30 percent  compared to the first nine months of 1995.  Annualized  new business
premiums  from such new sales  totaled $32.8 million in the first nine months of
1996, compared to $43.4 million in the first nine months of 1995. The decline in
new Medicare  supplement  premiums reflects  continued price competition and the
efforts of Bankers' agents to conserve existing policies.

     Long-term  care premiums  increased 24 percent in the third quarter of 1996
and increased 22 percent in the first nine months of 1996,  compared to the same
periods in 1995.  Such  premiums  accounted  for 13  percent of total  collected
premiums in 1996,  compared to 10 percent in 1995. The continued  growth in this
product line reflects new product introductions, the competitiveness of Bankers'
products,  the success of agent  cross-selling  activities,  increased  consumer
awareness  and  demand and  improved  persistency  on a larger  basis of renewal
premiums.  Annualized  premiums  from new sales were $32.1  million in the first
nine months of 1996, up 9.2 percent over the same period in 1995.

     Annuity  premiums  increased  4.9 percent in the third  quarter of 1996 and
decreased  19  percent in the first nine  months of 1996,  compared  to the same
periods in 1995.  Industry  wide  annuity  sales have been  negatively  affected
during 1996 and the last half of 1995 by lower interest  rates,  which have made
competing products relatively more attractive.

     Collected  premiums  for other  individual  health  policies  decreased  13
percent in the third  quarter of 1996 and decreased 18 percent in the first nine
months of 1996,  compared to the same periods in 1995.  The decrease,  which was
anticipated,  follows steps taken previously to improve the profitability of the
comprehensive major medical product included in this category.

     LIQUIDITY AND CAPITAL RESOURCES

     Changes in the  consolidated  balance sheet between  December 31, 1995, and
September 30, 1996,  reflect:  (i) the growth in Bankers' assets and liabilities
from operating  activities;  (ii) the  additional  investment in ALH ; (iii) the
notes  payable and capital stock  transactions;  (iv) the increase in investment
borrowings; (v) the change in the net unrealized appreciation  (depreciation) of
fixed  maturity  securities;  and (vi) the  change in basis  resulting  from the
increase in Conseco's  ownership of Bankers during the first quarter of 1996 and
the use of the "push down" method of accounting.

     Excluding the mark-to-market adjustment, the book value per share of common
stock was $21.07 at September 30, 1996, and $19.47 at December 31, 1995; and the
ratio of debt to shareholders'  equity was 40 percent at September 30, 1996, and
31

                                                        13

<PAGE>


                BANKERS LIFE HOLDING CORPORATION AND SUBSIDIARIES


percent at December 31, 1995. Including the mark-to-market  adjustment, the book
value per share of common stock was $20.51 at September 30, 1996,  and $20.39 at
December 31, 1995; and the ratio of debt to shareholders'  equity was 41 percent
at September 30, 1996, and 29 percent at December 31, 1995.

     Dividends  declared on common stock for the nine months ended September 30,
1996 were $0.45 per share.

     INVESTMENTS

     At September 30, 1996, the amortized cost and estimated fair value of fixed
maturity securities (all of which were actively managed) were as follows:
<TABLE>
<CAPTION>

                                                                            Gross          Gross         Estimated
                                                           Amortized     unrealized     unrealized         fair
                                                             cost           gains         losses           value
                                                             ----           -----         ------           -----
                                                                           (Dollars in millions)
<S>                                                       <C>             <C>            <C>            <C>    
United States Treasury securities and obligations of
   United States government corporations and agencies..    $   41.3        $  .1          $  1.2        $   40.2
Obligations of states and political subdivisions.......         9.6           .1              .1             9.6
Debt securities issued by foreign governments..........        28.6           .1             1.3            27.4
Public utility securities..............................       467.5           .7            30.5           437.7
Other corporate securities.............................     1,742.6         10.5            46.7         1,706.4
Mortgage-backed securities.............................     1,014.2           .8            31.6           983.4
                                                           --------        -----          ------        --------

       Total...........................................    $3,303.8        $12.3          $111.4        $3,204.7
                                                           ========        =====          ======        ========
</TABLE>

     The following  table sets forth the  investment  ratings of fixed  maturity
securities at September 30, 1996 (designated  categories include securities with
"+" or  "-"  modifiers).  The  category  assigned  is the  highest  rating  by a
nationally  recognized  statistical rating  organization or, as to $34.2 million
fair value of fixed  maturity  securities  not rated by such  firms,  the rating
assigned by the National Association of Insurance  Commissioners  ("NAIC").  For
the  purposes of this table,  NAIC Class 1  securities  are  included in the "A"
rating; Class 2, "BBB"; Class 3, "BB"; and Classes 4-6, "B and below":
<TABLE>
<CAPTION>

                                                                        Percent of
                                                                ---------------------------
                                                                   Fixed           Total
                            Investment rating                   maturities      investments
                            -----------------                   ----------      -----------
                   <S>                                             <C>             <C>
                   AAA...............................              37%             32%
                   AA................................              10               9
                   A  ...............................              21              19
                   BBB...............................              25              22
                                                                  ---             ---

                      Investment-grade...............              93              82
                                                                  ---             ---

                   BB................................               6               5
                   B and below.......................               1               1
                                                                  ---             ---

                      Below investment-grade.........               7               6
                                                                  ---             ---

                   Total actively managed
                      fixed maturities...............             100%             88%
                                                                  ===              ==
</TABLE>

     At September 30, 1996, our below  investment  grade fixed maturities had an
amortized cost of $211.6 million and estimated fair value of $209.8 million.

     The  Company's  investment  portfolio is subject to the risk of declines in
realizable  value. We attempt to mitigate this risk through the  diversification
and active management of our portfolio.  As of September 30, 1996, there were no
fixed maturity securities about which we had serious doubts as to the ability of
the issuer to comply with the  contractual  terms of its obligations on a timely
basis.

     During the first nine months of 1995,  Bankers recorded realized losses for
investment  writedowns  as  follows:  (i) a $2.2  million  writedown  of certain
exchange-rate-linked  securities as a result of foreign  currency  fluctuations;
and (ii) a $3.8 million

                                                        14

<PAGE>


                BANKERS LIFE HOLDING CORPORATION AND SUBSIDIARIES


writedown  of a corporate  security as a result of changes in  conditions  which
caused Bankers to conclude that a decline was other than temporary.  Bankers had
no exchange-rate-linked securities at September 30, 1996.

     Sales of investments  (principally  fixed maturity  securities)  during the
first nine months of 1996,  generated  proceeds of $1.9 billion and net realized
gains of $5.9 million and trading  losses of $1.4 million.  Sales of investments
during the first nine months of 1995  generated  proceeds of $.7 billion and net
realized gains of $20.3 million and trading income of $2.2 million.

     Investments in mortgage-backed  securities at September 30, 1996,  included
collateralized   mortgage   obligations   ("CMOs")   of   $464.8   million   and
mortgage-backed  pass-through  securities of $518.6 million. CMOs are securities
backed by pools of pass-through  securities and/or mortgages that are segregated
into sections or "tranches".  These securities provide for sequential retirement
of principal, rather than the retirement of principal on a pro rata basis, which
return occurs on  pass-through  securities  through  regular  monthly  principal
payments.

     The yield  characteristics of mortgage-backed  securities differ from those
of traditional fixed income  securities.  Interest and principal  payments occur
more frequently,  often monthly,  and mortgage-backed  securities are subject to
risks associated with variable prepayments. Prepayment rates are influenced by a
number of factors  which  cannot be  predicted  with  certainty,  including  the
relative  sensitivity of the mortgages backing the assets to changes in interest
rates,  a variety of economic,  geographic  and other  factors and the repayment
priority of the securities in the overall securitization structures.

     In  general,  prepayments  on the  underlying  mortgage  loans,  and on the
securities  backed by these  loans,  increase  when  prevailing  interest  rates
decline  significantly  below the interest rates on such loans.  Mortgage-backed
securities  purchased at a discount to par will  experience an increase in yield
when the  underlying  mortgages  prepay  faster than  expected.  Mortgage-backed
securities  purchased at a premium to par that prepay  faster than expected will
incur a reduction in yield.  When  interest  rates  decline,  the proceeds  from
prepayments  are likely to be  reinvested  at lower  rates than the  Company was
earning on the prepaid securities.  As interest rates rise, prepayments decrease
because fewer underlying mortgages are refinanced. When this occurs, the average
maturity and duration of the mortgage-backed  securities  increase.  This lowers
the yield on  mortgage-backed  securities  purchased  at a  discount,  since the
discount is  realized as income at a slower  rate,  and  increases  the yield on
those  purchased  at a  premium,  as  a  result  of a  decrease  in  the  annual
amortization of the premium.

     The following table sets forth the par value,  amortized cost and estimated
fair  value of  investments  in  mortgage-backed  securities  including  CMOs at
September 30, 1996, summarized by interest rates on the underlying collateral:
<TABLE>
<CAPTION>

                                                                        Par           Amortized         Estimated
                                                                       value            cost           fair value
                                                                       -----            ----           ----------
                                                                                (Dollars in millions)
<S>                                                                  <C>               <C>                <C>
Below 7 percent...............................................       $  524.1          $  512.5           $491.9
7 percent - 8 percent.........................................          420.5             416.8            407.8
8 percent - 9 percent.........................................           66.0              66.7             66.2
9 percent and above...........................................           17.9              18.2             17.5
                                                                     --------          --------           ------

     Total mortgage-backed securities.........................       $1,028.5          $1,014.2           $983.4
                                                                     ========          ========           ======
</TABLE>



                                                        15

<PAGE>
                BANKERS LIFE HOLDING CORPORATION AND SUBSIDIARIES


    The amortized  cost and estimated fair value of  mortgage-backed  securities
including  CMOs at September 30, 1996,  summarized by type of security,  were as
follows:
<TABLE>
<CAPTION>
                                                                                                         Estimated fair value
                                                                                                        ------------------------ 
                                                                                                                   Percent of
                                                                                    Amortized                    fixed maturity
Type                                                                                   cost             Amount     securities
----                                                                                   ----             ------     ----------
                                                                                        (Dollars in millions)
<S>                                                                                 <C>                 <C>             <C>   
Pass-throughs and sequential and targeted amortization classes                      $  642.3            $620.7          19%
Planned amortization classes and accretion directed bonds.....                         328.4             319.5          10
Subordinated classes..........................................                          43.5              43.2           1
                                                                                    --------            ------         ---

                                                                                    $1,014.2            $983.4          30%
                                                                                    ========            ======          ==
</TABLE>

     Pass-throughs and sequential and targeted amortization classes have similar
prepayment  variability.  Pass-throughs  have  historically  provided  the  best
liquidity   in   the   mortgage-backed    securities   market   and   the   best
price/performance  ratio when interest rates are volatile. This type of security
is also  frequently  used as collateral in the  dollar-roll  market.  Sequential
classes pay in a strict sequence; all principal payments received by the CMO are
paid to the  sequential  tranches in order of  priority.  Targeted  amortization
classes provide a modest amount of prepayment protection when prepayments on the
underlying  collateral  increase from those assumed at pricing;  they thus offer
slightly better call protection than sequential classes or pass-throughs.

     Planned  amortization and targeted  amortization classes are protected from
prepayment risk; the risk is absorbed by subordinated classes.  Subordinated CMO
classes have both prepayment and credit risk. The subordinated  classes are used
to lend credit enhancement to the senior securities and as such, both prepayment
and credit risk  associated  with this class are generally  higher than that of
the senior securities.  The credit risk of subordinated  classes is derived from
the negative  leverage of owning a small  percentage of the underlying  mortgage
loan collateral  while bearing a majority of the risk of loss due to homeowners'
defaults.

     Reverse repurchase agreements and dollar-roll transactions are entered into
to increase  return on investments  and improve  liquidity.  These  transactions
generally terminate after 30 days and are accounted for as short-term borrowings
collateralized by pledged securities with book values approximately equal to the
loan value.  Such borrowings  averaged  approximately  $102.7 million during the
first nine months of 1996,  compared to approximately  $106.3 million during the
same period of 1995.

     STATUTORY INFORMATION

     Bankers'  life  insurance  subsidiaries  are  required to follow  statutory
accounting   practices  ("SAP")  prescribed  or  permitted  by  state  insurance
regulators.  SAP differs in many respects  from  generally  accepted  accounting
principles.  After appropriate  eliminations of intercompany accounts,  Bankers'
life  insurance  subsidiaries  reported  combined  statutory net income of $50.3
million for the nine months ended September 30, 1996, and the following  amounts
on their combined balance sheet at that date (dollars in millions):
<TABLE>


        <S>                                                                                     <C>
         Statutory capital and surplus (a)..........................................            $339.3
         Asset valuation reserve ("AVR") (b)........................................              31.4
         Interest maintenance reserve ("IMR") (b)...................................              62.2
                                                                                                ------

              Total.................................................................            $432.9
                                                                                                ======

<FN>
     (a) In connection with the acquisition of its life insurance  subsidiaries,
         BLH increased the capital of BLI by providing $500.0 million of cash in
         exchange  for a  surplus  debenture.  As  required  by  the  regulatory
         authorities,  the  remaining  unpaid  principal  of $400.0  million  at
         September 30, 1996 ($430.0 million at December 31, 1995), is considered
         a part of  statutory  capital and surplus of BLI.  BLI made a scheduled
         principal payment of $30.0 million plus accrued interest on the surplus
         debenture on March 29, 1996.

  
                                                        16

<PAGE>


                                 BANKERS LIFE HOLDING CORPORATION AND SUBSIDIARIES


     (b) Statutory accounting practices classify certain segregated  portions of
         surplus, called AVR and IMR,  as   liabilities.  The purpose  of  these
         accounts  is to  stabilize  statutory  net income and   surplus against
         fluctuations in the market value and  creditworthiness of  investments.
         The IMR captures all  realized  investment  gains and losses  resulting
         from  changes  in   interest    rates  and    provides  for  subsequent
         amortization of such amounts into statutory  net  income  on  a   basis
         reflecting  the  remaining  life of the  assets  sold. The AVR captures
         investment   gains and  losses  related  to changes in creditworthiness
         and is also  adjusted  each  year  based on  a  formula  related to the
         quality and loss experience of the investment portfolio.
</FN>
</TABLE>

     Statutory  regulations  restrict  the amount of capital and surplus of life
insurance  subsidiaries  that may be  transferred  to the  parent in the form of
dividends,  loans or advances.  Payments to BLH by BLI of principal and interest
on the surplus  debenture may be made by BLI from its available  funds only when
the Illinois  Department  of Insurance  ("DOI") is satisfied  that the financial
condition  of BLI  warrants  that  action.  Such  approval  may not be  withheld
provided the surplus of BLI exceeds,  after such payment,  approximately  $128.0
million.  BLI's statutory surplus at September 30, 1996, was $339.3 million. All
dividend  payments  by BLI are  subject to prior  written  approval  of the DOI.
During  the nine  months  ended  September  30,  1996,  BLI  paid  extraordinary
dividends of $35.0 million to BLH.

     BLI's  ability to service its  obligation  under the surplus  debenture  is
dependent  upon its ability to receive  dividends and tax sharing  payments from
BLC. BLC may,  upon prior notice to the DOI, pay  dividends in any  twelve-month
period up to the greater  of: (i)  statutory  net income for the prior year;  or
(ii) 10 percent of  statutory  capital and surplus at the end of the prior year.
Additionally,  as a  condition  to its 1992  acquisition,  BLC agreed not to pay
dividends if, immediately after such payment, BLC's ratio of adjusted capital to
risk-based  capital ("RBC") would be less than 100 percent.  Calculations  using
the RBC formula  indicate that BLC's adjusted capital was greater than twice its
total  RBC at  September  30,  1996.  Dividends  in excess  of  maximum  amounts
prescribed by the state statutes may not be paid without DOI approval.  BLC paid
regular  dividends to BLI of $59.6 million during the first nine months of 1996.
During the  remainder  of 1996,  BLC may pay  additional  dividends  up to $26.4
million without DOI approval.




                                                        17

<PAGE>


                BANKERS LIFE HOLDING CORPORATION AND SUBSIDIARIES


                           PART II - OTHER INFORMATION

     ITEM 6.          EXHIBITS AND REPORTS ON FORM 8-K.

        a)    Exhibits

              11  Computation of Earnings Per Share

              27  Financial Data Schedule

        b)    Reports on Form 8-K

              No reports on Form 8-K were filed  during the three  months  ended
              September 30, 1996.



                                                        18

<PAGE>




                                   SIGNATURE

     Pursuant to the  requirements  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.



                        BANKERS LIFE HOLDING CORPORATION



Dated: November 13, 1996                 By:  /s/ ROLLIN M. DICK
                                              ------------------
                                              Rollin M. Dick
                                              Executive Vice President and
                                               Chief Financial Officer
                                               (authorized officer and principal
                                               financial officer)