SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 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, 1999
                          Commission File Number 1-8538

                             ASCENT ASSURANCE, INC.
             (Exact Name of Registrant as Specified in its Charter)

         DELAWARE                                         73-1165000
(State or Other Jurisdiction of         (I.R.S. Employer Identification Number)
Incorporation or Organization)

110 West Seventh Street, Fort Worth, Texas                        76102
(Address of Principal Executive Offices)                       (Zip Code)

               Registrant's Telephone Number, Including Area Code:
                                 (817) 878-3300

        Registrant's Shareholder and Investor Relations Telephone Number:
                                 (817) 877-3048

           Securities Registered Pursuant to Section 12(b) of the Act:

                                      None

           Securities Registered Pursuant to Section 12(g) of the Act:

                          Common Stock (par value $.01)

                        Warrants to purchase Common Stock

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 the definitive Proxy Statement or information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. X

Indicate  by check mark  whether  the  registrant  has filed all  documents  and
reports  required  to be  filed by  Section  12,  13 or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court.
Yes X      No__

The  aggregate  market  value of  voting  stock  held by  non-affiliates  of the
Registrant amounted to $15,843,750 as of March 24, 2000.

On March 29, 2000, 6,500,000 shares of Common Stock were outstanding.


<PAGE>
<TABLE>
<CAPTION>


                             ASCENT ASSURANCE, INC.

                          1999 FORM 10-K ANNUAL REPORT

                                TABLE OF CONTENTS
<S>                <C>                                                                                       <C>


                                                                PART I

  ITEM 1.           Business...................................................................................3

  ITEM 2.           Properties................................................................................10

  ITEM 3.           Legal Proceedings.........................................................................11

  ITEM 4.           Submission of Matters to a Vote of Security Holders.......................................11


                                                                PART II

  ITEM 5.           Market for the Registrant's Common Stock and Related Stockholder Matters..................12

  ITEM 6.           Selected Consolidated Financial Data......................................................13

  ITEM 7.           Management's Discussion and Analysis of Results of Operations and
                      Financial Condition.....................................................................15

  ITEM 7A.          Quantitative and Qualitative Disclosures About Market Risk................................25

  ITEM 8.           Financial Statements and Supplementary Data...............................................27

  ITEM 9.           Changes in and Disagreements with Accountants on Accounting
                      and Financial Disclosure................................................................76


                                                               PART III

ITEM 10.            Directors and Executive Officers of the Registrant........................................77

ITEM 11.            Executive Compensation....................................................................77

ITEM 12.            Security Ownership of Certain Beneficial Owners and Management............................77

ITEM 13.            Certain Relationships and Related Transactions............................................77


                                                                PART IV

ITEM 14.            Financial Statement Schedules, Exhibits and Reports on Form 8-K...........................78

</TABLE>

<PAGE>


                                     PART I


ITEM 1.  BUSINESS

GENERAL

Ascent Assurance,  Inc. ("Ascent"),  a Delaware company incorporated in 1982, is
an insurance holding company engaged in the development, marketing, underwriting
and  administration  of  medical  expense  and  supplemental   health  insurance
products,  primarily to  self-employed  individuals  and small business  owners.
Ascent adopted its corporate  name on March 24, 1999, the date its  predecessor,
Westbridge Capital Corp. ("Westbridge"),  emerged from Chapter 11 reorganization
proceedings. References herein to the "Company" shall mean for all periods on or
prior to March 31, 1999, Westbridge and its subsidiaries, and for all periods on
or after the close of business on March 31, 1999, Ascent and its subsidiaries.

The  Company's  revenues  result  primarily  from  premiums  and  fees  from the
insurance  products sold by its wholly owned  subsidiaries  National  Foundation
Life  Insurance  Company  ("NFL"),  Freedom  Life  Insurance  Company of America
("FLICA"),  National Financial Insurance Company ("NFIC") and American Insurance
Company of Texas ("AICT",  and together with NFL, NFIC and FLICA,  collectively,
the "Insurance  Subsidiaries") and marketed by NationalCare(R)  Marketing,  Inc.
("NCM"), also a wholly owned subsidiary. To a lesser extent, the Company derives
revenue from (i) commissions received from sales of unaffiliated products,  (ii)
telemarketing services, and (iii) printing services.

REORGANIZATION EFFECTIVE MARCH 24, 1999

On September  16, 1998,  Westbridge  commenced  its  reorganization  by filing a
voluntary  petition for relief under  Chapter 11, Title 11 of the United  States
Code in the United  States  Bankruptcy  Court for the District of Delaware  (the
"Bankruptcy  Court"),  along  with  a  disclosure  statement  (as  amended,  the
"Disclosure  Statement") and a proposed plan of reorganization (as amended,  the
"Plan").  The filing of the Disclosure  Statement and Plan culminated  months of
negotiations  between  Westbridge  and  an ad  hoc  committee  (the  "Creditors'
Committee")  of  holders  of its 11%  Senior  Subordinated  Notes  due 2002 (the
"Senior  Notes")  and its 7-1/2%  Convertible  Subordinated  Notes due 2004 (the
"Convertible Notes"). The Disclosure Statement was approved by entry of an order
by the Bankruptcy Court on October 30, 1998.  Following the approval of the Plan
by the holders of allowed  claims and equity  interests,  the  Bankruptcy  Court
confirmed  the Plan on December 17, 1998.  The Plan became  effective  March 24,
1999 (the "Effective Date"). On the Effective Date, Westbridge's  certificate of
incorporation  and by-laws  were  amended and  restated  in their  entirety  and
pursuant thereto,  Westbridge  changed its corporate name to "Ascent  Assurance,
Inc.".

The  following  summary of the Plan omits certain  information  set forth in the
Plan. Any statements  contained  herein  concerning the Plan are not necessarily
complete,  and in each such  instance  reference  is made to the Plan, a copy of
which is incorporated  by reference to Exhibit 2 of Westbridge's  Current Report
on Form 8-K which was filed  with the  Securities  and  Exchange  Commission  on
December  29,  1998.  Each such  statement  is qualified in its entirety by such
reference.  The Plan provided for the  recapitalization  of certain old debt and
equity  interests in Westbridge  and the issuance of new equity  securities  and
warrants. Key terms of the Plan included the following:

Cancellation  of  Existing  Securities.  Pursuant  to the  Plan,  the  following
securities of  Westbridge  were  canceled as of the  Effective  Date:  (i) $23.3
million  aggregate  principal amount and all accrued and unpaid interest on, the
Senior Notes, (ii) $77.3 million aggregate  principal amount and all accrued and
unpaid  interest  on, the  Convertible  Notes,  (iii)  $13.2  million  aggregate
liquidation  preference of and all accrued and unpaid dividends on, Westbridge's
Series A Convertible Redeemable Exchangeable Preferred Stock (the "Old Preferred
Stock"),  (iv)  Westbridge's  Common  Stock,  par value $.10 per share (the "Old
Common Stock"),  (v) all outstanding warrants to purchase Old Common Stock, (vi)
all  outstanding  unexercised  stock options to purchase Old Common  Stock,  and
(vii) all unvested grants of restricted Old Common Stock.


New  Equity  Capital  Structure.  Pursuant  to  Ascent's  Amended  and  Restated
Certificate of Incorporation, the total number of shares of capital stock Ascent
has the authority to issue is  30,040,000,  consisting  of 30,000,000  shares of
common  stock,  par value $.01 per share  (the "New  Common  Stock")  and 40,000
shares of preferred stock, par value $.01 per share, all of which are designated
Series A Convertible Preferred Stock (the "New Preferred Stock").

Distributions Under the Plan

Cash Distribution

To the holders of Senior Notes other than Credit Suisse First Boston Corporation
("CSFB"),  cash payments totaling approximately $15.2 million, which equaled the
total  Allowed 11% Senior Note Claims (as defined in the Plan) held by creditors
other than CSFB,  were  distributed  subject to  completion  of the  exchange of
securities  as  contemplated  by the Plan.  In order to provide the Company with
sufficient funds to make the cash distribution to the holders of the Allowed 11%
Senior  Notes  under the Plan,  an  affiliate  of CSFB  (the  "CSFB  Affiliate")
purchased all of the shares of the New Preferred  Stock which were not otherwise
distributed under the Plan.

Issuance of New Securities

Pursuant to the Plan and the purchase of New Preferred  Stock,  6,500,000 shares
of New  Common  Stock and 23,257  shares of New  Preferred  Stock  were  issued,
subject to the completion of the exchange  requirements  as  contemplated by the
Plan, on the Effective Date as follows:

*    To holders of general unsecured claims and Convertible Notes as of December
     10, 1998, 6,077,500 shares, and to management at the Effective Date, 32,500
     shares, or in aggregate 94% of the New Common Stock issued on the Effective
     Date.  Holders of general  unsecured claims and Convertible  Notes received
     their first distribution of shares in partial satisfaction and discharge of
     their allowed  claims in April 1999.  The second  distribution  was made in
     September  1999  and  the  remaining   shares  of  New  Common  Stock  were
     distributed in November 1999.

*    To holders of Old Preferred Stock as of December 10, 1998,  260,000 shares,
     or 4%, of the New Common  Stock issued on the  Effective  Date and Warrants
     ("New  Warrants") to purchase an additional  277,505 shares,  or 2%, of the
     New Common Stock issued on the Effective Date, on a fully diluted basis.

*    To holders of Old Common Stock as of December 10, 1998,  130,000 shares, or
     2%, of the New Common Stock issued on the  Effective  Date and New Warrants
     to purchase an additional  693,761  shares,  or 5%, of the New Common Stock
     issued on the Effective Date, on a fully diluted basis.  Fractional  shares
     of New  Common  Stock  were not issued in  connection  with the Plan.  As a
     result of this  provision,  certain holders of Old Common Stock received no
     distribution of New Common Stock or New Warrants under the Plan.

*    To the CSFB  Affiliate,  in respect of the Senior Notes owned by CSFB as of
     December 10, 1998, 8,090 shares of New Preferred Stock which, together with
     the 15,167  additional  shares of New Preferred Stock purchased by the CSFB
     Affiliate as described above, were convertible into 4,765,165 shares of the
     New Common Stock on March 24, 1999. As a result of the New Preferred  Stock
     received by the CSFB Affiliate,  together with the 3,093,998  shares of New
     Common Stock received by the CSFB  Affiliate in respect of the  Convertible
     Notes owned by CSFB,  the CSFB  Affiliate  beneficially  owned on March 24,
     1999 approximately  56.6% of the New Common Stock on an as converted basis,
     assuming  the exercise of all New Warrants and issuance of New Common Stock
     reserved  under the 1999 Stock  Option  Plan as  discussed  below.  The New
     Preferred  Stock has a stated  value of $1,000  per share and a  cumulative
     annual  dividend  rate of $102.50 per share payable in January of each year
     in cash or by the issuance of additional shares of New Preferred Stock. The
     New Preferred  Stock is convertible at any time into 204.8897 shares of New
     Common  Stock at an  initial  conversion  price of $4.88  per  share of New
     Common Stock, subject to customary anti-dilution adjustments.

Reservation of Additional New Common Stock

In  connection  with the New Warrants  described  above,  971,266  shares of New
Common Stock have been  reserved for issuance upon the exercise of New Warrants.
The New Warrants are exercisable at an initial exercise price of $9.04 per share
of New Common Stock, subject to customary  anti-dilution  adjustments,  and will
expire on March 24, 2004.

Pursuant to the Plan,  up to  1,251,685  shares,  or 10%,  of the fully  diluted
number of shares of New Common Stock  issued and  outstanding  on the  Effective
Date have been  reserved  for  issuance to employees  and  directors,  and up to
387,119 shares, or 3%, of the fully diluted number of shares of New Common Stock
issued on the  Effective  Date have been  reserved for issuance to the Company's
marketing  agents under the Company's 1999 Stock Option Plan, which was approved
by the Company's shareholders.


MARKETING DISTRIBUTION SYSTEM

The Insurance Subsidiaries are licensed to conduct business in 40 states and the
District of Columbia. Each of the following states accounted for more than 5% of
premium  revenue  for the year  ended  December  31,  1999:  Texas - 22 %, North
Carolina - 7%,  Tennessee - 7%,  Arkansas - 7%, and Florida - 5 %. During  1999,
new business was produced only in NFL and FLICA.  Premium revenue, in thousands,
for each of the Insurance Subsidiaries' is set forth below.
<TABLE>
<CAPTION>

                                                                  Year Ended December 31,
                                                      ------------------------------------------------
                                                          1999              1998             1997
                                                      -------------     -------------    -------------
<S>                                                  <C>               <C>              <C>
             FLICA:
                 First-year                           $    15,809       $     7,714      $     3,033
                 Renewal                                   14,938            11,769           11,605
                                                      -------------     -------------    -------------
                                                           30,747            19,483           14,638
                                                      -------------     -------------    -------------
             NFL:
                 First-year                                 1,594             6,206           19,364
                 Renewal                                   55,231            66,285           72,773
                                                      -------------     -------------    -------------
                                                           56,825            72,491           92,137
                                                      -------------     -------------    -------------
             AICT:
                 First-year                                    33             1,092            2,931
                 Renewal                                    7,516             9,467            9,753
                                                      -------------     -------------    -------------
                                                            7,549            10,559           12,684
                                                      -------------     -------------    -------------
             NFIC:
                 First-year                                    35             4,149           12,562
                 Renewal                                   21,163            29,035           29,076
                                                      -------------     -------------    -------------
                                                           21,198            33,184           41,638

                                                      =============     =============    =============
             Consolidated Premium Revenue             $   116,319       $   135,717      $   161,097
                                                      =============     =============    =============


</TABLE>


<PAGE>



NCM was formed in early 1998 and is the principal  distribution  channel for the
Insurance Subsidiaries products. NCM recruits agents as independent  contractors
who  market  the  Insurance  Subsidiaries'  products  on a  one-to-one  basis to
individuals who are either not covered under group insurance protection normally
available  to  employees  of business  organizations  or who wish to  supplement
existing coverage.

Agents'  sales  contacts  generally  result from leads  generated  either by the
Company's  telemarketing  subsidiary or through outside sources.  By utilizing a
predictive  automated  dialing  system,  the Company  believes  its wholly owned
telemarketing  subsidiary,  Precision Dialing Services,  Inc. ("PDS") is able to
generate a sufficient  number of quality  sales leads.  By providing  its agents
with these sales leads, the Company believes it can attract  experienced  agents
as well as new agents entering the business.

DESCRIPTION OF PRODUCTS

The  Company's  operations  are  comprised of one  segment,  Accident and Health
insurance,  which is comprised of various products  underwritten or reinsured by
the Insurance  Subsidiaries.  The Insurance  Subsidiaries' products are designed
with flexibility as to benefits, deductibles,  coinsurance and premium payments,
which can be adapted to meet regional  sales or  competitive  needs,  as well as
those of the  individual  policyholders.  Set forth  below is a  summary  of the
principal products currently underwritten by the Insurance Subsidiaries:

*    Medical  Expense  Products  - These  products  are  generally  designed  to
     reimburse insureds for eligible expenses incurred for hospital confinement,
     surgical expenses, physician services,  outpatient services and the cost of
     medicines.  The policies provide a number of options with respect to annual
     deductibles,   coinsurance  percentages,  maximum  benefits  and  stop-loss
     limits.  After the annual deductible is met, the insured is responsible for
     a  percentage  of  eligible  expenses up to a  specified  stop-loss  limit.
     Thereafter,  eligible expenses are covered by the Insurance Subsidiaries up
     to certain maximum aggregate policy limits.

     The Medical  Expense  products  are  individually  underwritten  based upon
     medical information  provided by the applicant prior to issue.  Information
     provided  in the  application  is  verified  with the  applicant  through a
     tape-recorded telephone conversation or through written correspondence.  In
     addition,  the  Insurance  Subsidiaries  new Medical  Expense  products are
     stringently  underwritten  and  include  a  para-med  examination  or other
     medical tests, depending on the age of the applicant. All such products are
     guaranteed  renewable  pursuant  to the Health  Insurance  Portability  and
     Accountability Act, 42 U.S.C. ss. 300 et seq. ("HIPAA").

*    Specified Disease Products - These products include indemnity  policies for
     hospital  confinement  and  convalescent  care for  treatment  of specified
     diseases and "event  specific"  policies,  which provide fixed  benefits or
     lump sum payments  upon  diagnosis of certain  types of internal  cancer or
     other catastrophic  diseases  ("Specified  Disease").  Benefits are payable
     directly to the insured  following  diagnosis of or treatment for a covered
     illness or injury.  The payments are designed to help reduce the  potential
     financial  impact of these  illnesses  or  injuries  and may be used at the
     policyholder's discretion for any purpose,  including offset of non-medical
     expenses  or  medical-related  expenses  not  covered  and  paid for by the
     policyholder's  other  health  insurance.  The amount of benefits  provided
     under the Specified  Disease products is not necessarily  reflective of the
     actual  cost  expected  to be  incurred  by the  insured as a result of the
     illness or injury.  Specified  Disease  products are  generally  guaranteed
     renewable by contract, but are exempt from HIPAA.

Historically,  the Insurance  Subsidiaries  have also underwritten a significant
amount of Medicare  Supplement  products  designed to provide  reimbursement for
certain expenses not covered by the Medicare program. During 1997, the Insurance
Subsidiaries  significantly  reduced the underwriting of these products in favor
of  marketing  the  Medicare  Supplement  products of other  insurers due to the
relatively low margins for these products.  The Insurance  Subsidiaries continue
to receive premiums on Medicare Supplement policies sold prior to that date.

See Item 7.  Management's  Discussion  and Analysis of Results of Operations and
Financial Condition for a discussion of premium revenue by product.

COMPETITION

The accident and health insurance  industry is highly competitive and includes a
large number of insurance  companies,  many of which have substantially  greater
financial  resources,  broader and more  diversified  product  lines,  favorable
ratings from A.M. Best Company,  Inc.  ("A.M.  Best") and larger staffs than the
Company.  Competitive  factors  applicable  to the  Company's  business  include
product mix, policy benefits,  service to  policyholders  and premium rates. The
Company  believes  that its current  benefits  and premium  rates are  generally
competitive  with those  offered by other  companies.  Management  believes that
service to  policyholders  and prompt and fair payment of claims  continue to be
important factors in the Company's ability to remain competitive.  The Insurance
Subsidiaries  are not currently rated with A.M. Best. The Company  believes that
its lack of an A.M.  Best  rating  is not a  significant  factor  affecting  its
ability to sell its products in the markets that it serves.

Private  insurers and voluntary and  cooperative  plans,  such as Blue Cross and
Blue Shield and HMOs, provide various alternatives for defraying hospitalization
and  medical  expenses.  Much of this  insurance  is  sold on a group  basis  to
employer  sponsored  groups.  The federal  and state  governments  also  provide
programs  for the payment of the costs  associated  with  medical  care  through
Medicare  and  Medicaid.   These  major  medical  programs   generally  cover  a
substantial  amount of the medical expenses incurred as a result of accidents or
illnesses.  The  Company's  Medical  Expense  products  are  designed to provide
coverage which is similar to these major medical insurance programs but are sold
primarily to persons not covered by an employer sponsored group.

The Company's  Specified Disease products are designed to provide coverage which
is supplemental to major medical  insurance and may be used to defray nonmedical
as well as medical  expenses.  Since these policies are sold to complement major
medical  insurance,  the Company  competes only  indirectly  with those insurers
providing major medical insurance,  however,  other insurers may expand coverage
in the future  which  could  reduce  future  sales  levels  and profit  margins.
Medicare  Supplement products are designed to supplement the Medicare program by
reimbursing for expenses not covered by such program. Future government programs
may reduce participation by private entities in such government programs.

In  addition  to product  and  service  competition,  there is also very  strong
competition  within the  accident  and health  insurance  market for  qualified,
effective  agents.  The recruitment and retention of such agents is important to
the success and growth of the Company's  business.  Management believes that the
Company is competitive  with respect to the  recruitment and training of agents.
However,  there can be no assurance that the Company will be able to continue to
recruit or retain qualified, effective agents.


REGULATION

General.  The Company and its Insurance  Subsidiaries  are subject to regulation
and supervision in all jurisdictions in which they conduct business. In general,
state insurance laws establish  supervisory  agencies with broad  administrative
powers relating to, among other things, the granting and revoking of licenses to
transact business,  regulation of trade practices,  premium rate levels, premium
rate increases,  licensing of agents,  approval of content and form of policies,
maintenance of specified  minimum  statutory  reserves and statutory capital and
surplus,  deposits  of  securities,  form  and  content  of  required  financial
statements,  nature of investments and limitations on dividends to stockholders.
The  purpose  of  such  regulation  and  supervision  is  primarily  to  provide
safeguards   for   policyholders   rather  than  to  protect  the  interests  of
stockholders.

The  Insurance  Subsidiaries'  health  insurance  products  are  subject to rate
regulation  by  state  insurance   departments,   which  generally  require  the
maintenance of certain  minimum loss ratios.  The states in which the Company is
licensed have the authority to change the minimum mandated statutory loss ratios
to which the Company is subject,  the manner in which these  ratios are computed
and the manner in which  compliance  with these ratios is measured and enforced.
Most states in which the Company writes health  insurance  products have adopted
the loss ratios  recommended  by the NAIC.  The Company is unable to predict the
impact of (i) any changes in the  mandatory  statutory  loss ratios  relating to
products  offered by the Company or (ii) any change in the manner in which these
minimums  are  computed  or  enforced  in the  future.  The Company has not been
informed by any state that it does not meet  mandated  minimum  ratios,  and the
Company  believes  that  it is in  compliance  with  all  such  minimum  ratios.
Similarly,  the  Company's  ability to increase its premium rates in response to
adverse loss ratios is subject to  regulatory  approval.  Failure to obtain such
approval  could  have a  material  adverse  effect  on the  Company's  business,
financial condition and results of operations.

Generally,  before the Company is permitted to market an insurance  product in a
particular state, it must obtain regulatory  approval from that state and adhere
to that  state's  insurance  laws and  regulations  which  include,  among other
things,  specific requirements  regarding the form, language,  premium rates and
policy benefits of that product.  Consequently,  although the Company's policies
generally provide for the same basic types and levels of coverage in each of the
states in which they are marketed,  the policies are not precisely  identical in
each state or other  jurisdiction  in which they are sold.  Such  regulation may
delay the  introduction  of new  products and may impede,  or impose  burdensome
conditions on, rate increases or other actions that the Company may wish to take
in order to  enhance  its  operating  results.  In  addition,  federal  or state
legislation  or  regulatory  pronouncements  may be enacted that may prohibit or
impose  restrictions on the ability to sell certain types of insurance  products
or impose other restrictions on the Company's operations.  For example,  certain
states in which the Company does business  have adopted NAIC model  statutes and
regulations  relating to market conduct  practices of insurance  companies.  Any
limitations  or other  restrictions  imposed  on the  Company's  market  conduct
practices by the  regulators of a state that has adopted the model  statutes and
regulations  may also be imposed by the  regulators  in other  states which have
adopted such statutes and  regulations.  No assurances  can be given that future
legislative  or  regulatory  changes  will not  adversely  affect the  Company's
business, financial condition or results of operations.

The  Insurance  Subsidiaries  are  subject  to  periodic  examinations  by state
regulatory  authorities as part of their routine  regulatory  oversight process.
Delaware and Mississippi are currently finalizing examinations of NFL and FLICA,
respectively.  Texas is  currently  conducting  examinations  of NFIC and  AICT.
Management does not expect the issuance of these  examination  reports to have a
material effect on the financial condition of the Company.

Many  states  have  enacted   insurance   holding   company  laws  that  require
registration  and  periodic  reporting  by  insurance   companies  within  their
jurisdictions.  Such legislation  typically places  restrictions on, or requires
prior notice or approval of,  certain  transactions  within the holding  company
system,  including,   without  limitation,   dividend  payments  from  insurance
subsidiaries  and the terms of loans and  transfers of assets within the holding
company structure.

NAIC  Accounting  Principles.  In 1998,  the NAIC  adopted the  Codification  of
Statutory  Accounting  Principles  guidance,  which  will  replace  the  current
Accounting  Practices and Procedures  manual as the NAIC's  primary  guidance on
statutory  accounting.  The  Codification  provides  guidance  for  areas  where
statutory accounting has been silent and changes current statutory accounting in
certain  areas.  The  insurance  departments  of the states of  domicile  of the
Company's insurance subsidiaries have adopted the Codification effective January
1, 2001.  The Company  does not expect the  Codification  to  materially  impact
statutory surplus.

Risk-Based  Capital.  The  NAIC's  Risk-Based  Capital  for Life  and/or  Health
Insurers Model Act ("the Model Act") provides a tool for insurance regulators to
determine  the levels of statutory  capital and surplus an insurer must maintain
in relation to its  insurance and  investment  risks and whether there is a need
for possible  regulatory  attention.  The Model Act (or similar  legislation  or
regulation)  has been adopted in states  where the  Insurance  Subsidiaries  are
domiciled.  The Model Act provides four levels of regulatory attention,  varying
with the ratio of the insurance company's total adjusted capital (defined as the
total of its statutory capital and surplus,  asset valuation reserve and certain
other  adjustments)  to its risk-based  capital  ("RBC").  If a company's  total
adjusted  capital  is less  than 100  percent  but  greater  than or equal to 75
percent of its RBC, or if a negative trend (as defined by the NAIC) has occurred
and total adjusted  capital is less than 125 percent of RBC (the "Company Action
Level"),  the company must submit a  comprehensive  plan aimed at improving  its
capital position to the regulatory  authority proposing corrective actions. If a
company's  total  adjusted  capital is less than 75 percent but greater  than or
equal to 50 percent of its RBC (the "Regulatory  Action Level"),  the regulatory
authority  will perform a special  examination of the company and issue an order
specifying the corrective  actions that must be followed.  If a company's  total
adjusted capital is less than 50 percent but greater than or equal to 35 percent
of its RBC (the "Authorized Control Level"),  the regulatory  authority may take
any action it deems  necessary,  including  placing the company under regulatory
control.  If a company's  total adjusted  capital is less than 35 percent of its
RBC (the "Mandatory  Control  Level"),  the regulatory  authority must place the
company under its control.  The Insurance  Departments of the States of Delaware
and  Mississippi  have each  adopted the NAIC's Model Act. At December 31, 1999,
total  adjusted  capital for NFL, a Delaware  domiciled  company,  and FLICA,  a
Mississippi domiciled company, exceeded the respective Company Action Levels.

The Texas Department of Insurance  ("TDI") has adopted its own RBC requirements,
the stated  purpose of which is to require a minimum level of statutory  capital
and surplus to absorb the financial,  underwriting  and investment risks assumed
by an insurer.  Texas' RBC requirements differ from those adopted by the NAIC in
two principal respects: (i) they use different elements to determine minimum RBC
levels in their  calculation  formulas  and (ii) they do not  stipulate  "Action
Levels" (like those adopted by the NAIC) where corrective  actions are required.
However,  the  Commissioner  of the TDI  does  have the  power  to take  similar
corrective  actions if a company does not maintain the required minimum level of
statutory  capital and  surplus.  NFIC and AICT are  domiciled in Texas and must
comply with Texas RBC  requirements.  At December 31, 1999,  AICT's RBC exceeded
the  minimum  level  prescribed  by the TDI;  however,  NFIC's RBC was below the
minimum level prescribed by the TDI.

As a result of the  statutory  losses  sustained by the  Insurance  Subsidiaries
since 1997, material  transactions are subject to the approval by the department
of insurance in each  domiciliary  state. In December 1997, NFIC, in response to
these losses as well as the projected  inability to meet RBC requirements,  took
appropriate  steps  to  voluntarily  cease  the  sale  and  underwriting  of new
business. In the second quarter of 1998, AICT significantly reduced the level of
sales and  underwriting of new business.  NFIC and AICT have also entered into a
voluntary  consent order,  pursuant to Article 1.32 of the Texas Insurance Code,
providing for the continued monitoring of the operations of NFIC and AICT by the
TDI. The Company has no current plans to underwrite new products in NFIC.

Dividends.  Dividends paid by the Insurance  Subsidiaries  are determined by and
subject to the  regulations of the insurance laws and practices of the insurance
departments  of their  respective  state of domicile.  NFL, a Delaware  domestic
company,  may not  declare or pay  dividends  from any source  other than earned
surplus without the Delaware  Insurance  Commissioner's  approval.  The Delaware
Insurance  Code defines  earned  surplus as the amount  equal to the  unassigned
funds as set forth in NFL's most recent  statutory  annual  statement  including
surplus  arising  from  unrealized  gains or  revaluation  of  assets.  Delaware
insurance  companies may generally pay ordinary  dividends or make distributions
of cash or other  property  within any twelve  month  period  with a fair market
value  equal  to or  less  than  the  greater  of  10%  of  surplus  as  regards
policyholders  as of the preceding  December 31 or the net gain from  operations
for the twelve month period  ending on the  preceding  December 31. During 2000,
NFL is  precluded  from  paying  dividends  without  the prior  approval  of the
Delaware Insurance Commissioner, as its earned surplus is negative. Further, NFL
has agreed to obtain prior approval for any future dividends.

NFIC and AICT, Texas domestic companies, may make dividend payments from surplus
profits or earned surplus  arising from its business.  The Texas  Insurance Code
defines earned  surplus as unassigned  surplus  excluding any unrealized  gains.
Texas life  insurance  companies may  generally  pay ordinary  dividends or make
distributions  of cash or other  property  within any twelve month period with a
fair market value equal to or less than the greater of 10% of surplus as regards
policyholders  as of the preceding  December 31 or the net gain from  operations
for the twelve month period  ending on the  preceding  December 31. Any dividend
exceeding  the  applicable  threshold is considered  extraordinary  and requires
prior  approval of the Texas  Insurance  Commissioner.  NFIC's and AICT's earned
surplus  is  negative,  and as such,  each  company  is  precluded  from  paying
dividends  during  2000  without  the  prior  approval  of the  Texas  Insurance
Commissioner.

FLICA, a Mississippi  domestic company may make dividend  payments only from its
actual  net  surplus  computed  as  required  by  law in  its  statutory  annual
statement.  Mississippi  life  insurance  companies  may  generally pay ordinary
dividends  or make  distributions  of cash or other  property  within any twelve
month period with a fair market value not exceeding the lesser of 10% of surplus
as regards  policyholders  as of the preceding  December 31 or the net gain from
operations for the twelve month period ending on the preceding  December 31. Any
dividend  exceeding the applicable  threshold  amount requires prior approval of
the Mississippi Insurance Commissioner. FLICA is precluded from paying dividends
to NFL during 2000  without  the prior  approval  of the  Mississippi  Insurance
Commissioner  as it  recorded  a net loss  from  operations  for the year  ended
December 31, 1999.

Guaranty  Associations.  The  Company  may be  required,  under the  solvency or
guaranty laws of most states in which it does business,  to pay  assessments (up
to prescribed  limits) to fund  policyholder  losses or liabilities of insurance
companies that become insolvent.  Non-affiliated  insurance company insolvencies
increase  the  possibility  that  such   assessments  may  be  required.   These
assessments  may be deferred or forgiven  under most guaranty laws if they would
threaten an  insurer's  financial  strength  and, in certain  instances,  may be
offset  against  future  premium  taxes.  The  incurrence  and  amount  of  such
assessments  may  increase in the future  without  notice.  The Company pays the
amount of such  assessments  as they are  incurred.  Assessments  that cannot be
offset  against future  premium taxes are charged to expense.  Assessments  that
qualify for offset against future premium taxes are  capitalized  and are offset
against such future premium taxes. As a result of such assessments,  the Company
paid approximately $78,000 during the year ended December 31, 1999.

Federal  Regulation.   Traditionally,  the  U.S.  Government  has  not  directly
regulated the insurance  business.  However,  the adoption of HIPAA,  as well as
other proposed federal initiatives,  impacts the insurance business in a variety
of ways. Current and proposed federal measures that may significantly affect the
insurance  industry  include  controls  on the  cost of  medical  care,  medical
entitlement programs (e.g.,  Medicare),  guaranteed renewability and portability
of certain coverage, and minimum solvency requirements for insurers.


EMPLOYEES

At December 31,  1999,  the Company  employed  475 persons.  The Company has not
experienced any work stoppages, strikes or business interruptions as a result of
labor disputes involving its employees,  and the Company considers its relations
with its employees to be good.


ITEM 2.  PROPERTIES

On May 1, 1998,  the Company moved its  principal  offices from 777 Main Street,
Fort Worth,  Texas, to 110 West Seventh Street, Fort Worth, Texas. The lease for
the new facility expires in April,  2003.  Westbridge  Printing  Services,  Inc.
("WPS"),  the  Company's  wholly  owned  printing  subsidiary  which  prints all
policies,  forms and  brochures of the  Insurance  Subsidiaries,  maintains  its
facility at 7333 Jack Newell Boulevard North, Fort Worth,  Texas,  under a lease
agreement which expires in October,  2005. The Company also leases certain sales
offices for its affiliated  marketing  agencies in Arizona and  California.  The
Company  believes that its leased  facilities  will meet its existing  needs and
that the leases can be renewed or replaced on reasonable terms if necessary.




<PAGE>


ITEM 3.  LEGAL PROCEEDINGS

Emergence from Chapter 11 Case

As more fully described in ITEM 1 - "Business,"  Westbridge's Plan was confirmed
by the Bankruptcy  Court on December 17, 1998 and, after the  satisfaction  of a
number of conditions, the Plan became effective on March 24, 1999.

In  connection  with the approval  and  effectiveness  of the Plan,  the Company
settled a putative  class  action  brought on behalf of certain  purchasers  and
sellers of Westbridge's Convertible Notes and Old Common Stock during the period
October 31, 1996 through October 31, 1997.

Other Legal Proceedings

In the normal  course of its  business  operations,  the  Company is involved in
various  claims  and  other  business  related  disputes.   In  the  opinion  of
management, the Company is not a party to any pending litigation the disposition
of which  would  have a  material  adverse  effect  on the  Company's  business,
financial position or its results of operations.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There  were no  matters  submitted  by the  Company  to a vote of  stockholders,
through the  solicitation of proxies or otherwise,  during the fourth quarter of
the fiscal year for which this report is filed.



<PAGE>


                                     PART II


ITEM 5.  MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCK-HOLDER MATTERS

Price Range of Publicly Traded Securities. The New Common Stock and New Warrants
are quoted on the over-the-counter  bulletin board ("OTC Bulletin Board"). Based
on the  distributions  made pursuant to the Plan, there were 6,500,000 shares of
New Common Stock and 971,266 New Warrants  outstanding as of March 29, 2000. The
high and low price listed for the New Common Stock and New Warrants reflects the
OTC Bulletin  Board closing bid prices since May 28, 1999. The closing bid price
on December 31, 1999 was $1.78.  There were  approximately  275  shareholders of
record on December 31, 1999, representing approximately 1,600 beneficial owners.

Until  September 16, 1998,  Westbridge's  Old Common Stock was traded on the New
York Stock Exchange ("NYSE"). As a result of the Chapter 11 filing, Westbridge's
Old Common  Stock was  delisted  from the NYSE and trading  commenced on the OTC
Bulletin Board.  The high and low stock price listed for Westbridge's Old Common
Stock  reflects the OTC Bulletin  Board  closing bid prices from  September  25,
1998, to March 23, 1999.  OTC Bulletin  Board bid prices,  as stated,  represent
inter-dealer  prices  without  adjustments  for retail  mark-ups,  mark-downs or
commissions and may not necessarily represent actual transactions.

OTC Bulletin Board
<TABLE>
<CAPTION>
                         Common Stock                      Warrants
                     High           Low              High             Low
<S>                <C>            <C>             <C>             <C>
Ascent 1999
Fourth Quarter      $ 1.813        $ 1.500         $ 0.250         $  0.010
Third Quarter         3.375          1.750           0.313            0.188
Second Quarter        3.625          2.000           0.500            0.250

Westbridge 1999
First Quarter          0.328         0.188

1998
Fourth Quarter         0.438         0.016
Third Quarter          0.563         0.016
Second Quarter         0.875         0.313
First Quarter          0.938         0.438

1997
Fourth Quarter         4.938         0.375
Third Quarter         10.625         4.563
Second Quarter        10.125         8.875
First Quarter         12.250         9.500
</TABLE>

Dividend Policy

The Company did not pay any cash  dividends on its Old Common Stock and does not
anticipate  declaring  or paying cash  dividends  on its New Common Stock in the
foreseeable future.

For information  concerning statutory limitations on the payment of dividends to
the  Company  by  the  Insurance  Subsidiaries  and  further  discussion  of the
Company's  results  of  operations  and  liquidity,  see ITEM 7 -  "Management's
Discussion and Analysis of Results of Operations and Financial Condition",  ITEM
1 - "Business -- Regulation",  and NOTE 10 - "Statutory  Capital And Surplus" to
the Company's Consolidated Financial Statements.


<PAGE>


ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA

The  information  set forth below was derived  from the  Consolidated  Financial
Statements  of the Company.  The  information  set forth below should be read in
conjunction  with ITEM 7 -  "Management's  Discussion and Analysis of Results of
Operations and Financial Condition" and the Consolidated Financial Statements of
the Company and related notes.
<TABLE>
<CAPTION>

                                              Nine Months
                                                Ended
    ASCENT ASSURANCE, INC.                 December 31, 1999    March 31, 1999
                                           -----------------    --------------
                                          (in thousands, except per share data)
<S>                                           <C>                   <C>
    Income Statement Data:
    Premiums                                   $ 86,371
    Total revenues                              105,972
    Net income                                    2,106
    Preferred stock dividends                     1,874
    Income applicable to common stockholders        232

    Earnings Per Share:
       Basic                                   $   0.04
       Diluted                                 $   0.04

    Weighted Average
      Shares Outstanding:
       Basic                                      6,500
       Diluted                                    6,510

    Balance Sheet Data:
    Cash and invested assets                   $115,303               $129,142
    Total assets                                163,690                169,795
    Policy liabilities                           95,895                 95,806
    Notes payable                                 7,162                  5,088
    Total liabilities                           116,649                119,435
    Redeemable convertible preferred stock(1)    23,257                 23,257
    Stockholders' equity                         23,784                 27,103

    Book Value Per Share:                      $   3.66               $   4.17
</TABLE>

(1) Consists of 23,257 shares of New Prefered Stock, which are convertible, at
the option of the holders thereof, into an aggregate of 4,765,120 shares of New
Common Stock at a conversion price of $4.88 per share of New Common Stock.


<PAGE>

<TABLE>
<CAPTION>


                                                  Three Months
                                                      Ended
WESTBRIDGE CAPITAL CORP.                            March 31,                        Year Ended December 31,
                                                  --------------   -----------------------------------------------------------------

                                                      1999           1998            1997          1996 (1)            1995
                                                  --------------   ---------     -------------   ------------       -----------
                                                                          (in thousands, except per share data)
<S>                                               <C>              <C>            <C>            <C>               <C>
Statement of Operations Data:
Premiums                                           $  29,948        $  135,717     $ 161,097      $ 156,780         $ 120,093
Total revenues                                        36,814           166,650       188,904        175,146           130,032
Extraordinary loss, net of
  income tax                                               -                 -         1,007              -               407
Net income (loss)                                        208           (22,285)      (97,144)         8,261             5,324
Preferred stock dividends                                  -               520         1,572          1,650             1,650
Income (loss) applicable to
  common stockholders                                    208           (22,805)      (98,716)         6,611             3,674

Earnings Per Share:
   Basic                                           $    0.03        $    (3.43)    $  (16.07)      $   1.11         $    0.64
   Diluted                                         $    0.03        $    (3.43)    $  (16.07)      $   0.97         $    0.63

Weighted Average
  Shares Outstanding:
   Basic                                               7,032             6,640         6,143          5,978             5,698
   Diluted                                             7,032             6,640         6,143          8,477             5,829

Balance Sheet Data:
Total cash and invested assets                                      $  131,708    $  148,442       $ 103,218        $ 111,516
Total assets                                                           169,741       202,856         220,716          200,999
Policy liabilities                                                      97,987       107,595          93,390           85,683
Notes payable                                                           95,715       102,547          40,560           35,071
Total liabilities                                                      219,886       229,274         152,813          138,194
Redeemable convertible preferred stock                                  11,935        19,000          20,000           20,000
Stockholders' (deficit) equity                                         (62,080)      (45,418)         47,903           42,805

</TABLE>
(1) Includes operations of FLICA's parent, FHC, from June 1, 1996.

<PAGE>


ITEM 7.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF RESULTS OF  OPERATIONS  AND
FINANCIAL CONDITION GENERAL

Ascent Assurance, Inc. ("Ascent"), adopted its corporate name on March 24, 1999,
the date its predecessor,  Westbridge Capital Corp.  ("Westbridge") emerged from
Chapter 11 reorganization proceedings.  For additional information regarding the
reorganization and adoption of fresh start accounting,  see Notes 1 and 2 to the
Consolidated  Financial  Statements included at Item 8. References herein to the
"Company"  shall mean for all periods on or prior to March 31, 1999,  Westbridge
and its  subsidiaries,  and for all periods on or after the close of business on
March 31, 1999, Ascent and its subsidiaries.

The following discussion provides  management's  assessment of financial results
and  material  changes  in  financial  position  for the  Company.  For a better
understanding  of this analysis,  reference  should be made to Item 1 - Business
and  to  Item  8  -  Financial   Statements  and  Supplementary   Data.  Certain
reclassifications  of prior  years'  amounts  have been made to conform with the
1997 presentation.

Statements  contained in this  analysis and  elsewhere in this document that are
not based on historical information are forward-looking statements and are based
on management's  projections,  estimates and  assumptions.  Management  cautions
readers   regarding  its   forward-looking   statements  (see   "Forward-Looking
Statements").

BUSINESS OVERVIEW

The Company  derives  its  revenue  primarily  from  premiums  and fees from its
accident and health  insurance  products and, to a significantly  lesser extent,
from commission,  service,  and investment  income.  The product lines currently
marketed and  underwritten by the Company's  insurance  subsidiaries are Medical
Expense products and Specified  Disease  products.  Medical Expense products are
generally  designed to reimburse  insureds for  eligible  expenses  incurred for
hospital confinement, surgical expenses, physician services, outpatient services
and the cost of medicines. Specified Disease products include indemnity policies
for  hospital  confinement  and  convalescent  care for  treatment  of specified
diseases and "event specific" policies, which provide fixed benefits or lump sum
payments  upon   diagnoses  of  certain  types  of  internal   cancer  or  other
catastrophic diseases.  Historically,  the Company's insurance subsidiaries have
also  underwritten a significant  amount of Medicare  Supplement  products.  The
underwriting of Medicare Supplement products was curtailed due to the relatively
low margins for these products.  Commission and service income is generated from
(i)  telemarketing   services,   (ii)  printing  services,   and  (iii)  renewal
commissions received by the Company for sales of insurance products underwritten
primarily  by  unaffiliated  managed  care  organizations  (such sales have been
significantly curtailed).


<PAGE>


OPERATING RESULTS

Results of operations  for Ascent are reported on a pro forma basis as if Ascent
and Westbridge adopted fresh start accounting on January 1, 1999 and operated as
a single entity for the year ended December 31, 1999. The operating  results for
1999 are compared to  Westbridge's  results of operations for the  corresponding
periods in 1998 and 1997. (In thousands except insurance operating ratios.)

<TABLE>
<CAPTION>
                                                                Pro Forma
                                                                  Ascent                       Westbridge
                                                             -----------------     ----------------------------------
                                                                   1999                 1998                1997
                                                             -----------------     ---------------    ---------------
<S>                                                            <C>                  <C>                <C>
Premiums                                                        $    116,319         $   135,717        $    161,097
Other                                                                  1,789                 589                   0
                                                             -----------------     ---------------    ---------------
Total insurance operating revenue                                    118,108             136,306             161,097

Benefits and claims                                                   87,498              99,419             136,866
Commissions                                                           12,429              19,353               6,260
Amortization of deferred policy acquisition costs                      1,764               4,411              30,873
Recognition of premium deficiency                                          -               4,948              64,952
General and administrative expense                                    20,609              23,636              26,620
Taxes, licenses and fees                                               4,481               5,216               5,995
                                                             -----------------     ---------------    ----------------
Total insurance operating expenses                                   126,781             156,983             271,566
                                                             -----------------     ---------------    ----------------
         Insurance operating results                                  (8,673)            (20,677)           (110,469)
                                                             -----------------     ---------------    ----------------

Fee and service income                                                15,543              16,191              16,700
Fee and service expenses                                              12,824              15,728              15,217
                                                             -----------------     ---------------    ----------------

         Fee and service results                                       2,719                 463               1,483
                                                             -----------------     ---------------    ----------------

Net investment income                                                  9,302              12,011              11,023
Net realized gain (loss) on investments                                 (167)              2,142                  84
Interest expense on notes payable                                       (403)               (881)             (1,255)
Interest expense on retired/canceled debt                                  -              (5,933)             (5,847)
Resolution of preconfirmation contingencies                            1,235                   -                   -
Reorganization expenses                                                    -              (9,179)             (4,424)
                                                             -----------------     ---------------    ----------------
         Income (loss) before income taxes                             4,013             (22,054)           (109,405)

Income tax (expense) benefit                                          (1,364)               (231)             13,268
                                                             -----------------     ---------------    ----------------

         Net income (loss)                                      $      2,649         $   (22,285)       $    (96,137)
                                                             =================     ===============    ================


Insurance operating ratios*
     Benefits and claims                                                75.2%               73.3%              85.0%
     Commissions                                                        10.7%               14.3%               3.9%
     Amortization of deferred policy acquisition costs                   1.5%                3.3%              19.2%
     Recognition of premium deficiency                                      -                3.6%              40.3%
     General and administrative expense                                 17.4%               17.4%              16.5%
     Taxes, licenses and fees                                            3.9%                3.8%               3.7%
</TABLE>

*Ratios are calculated as a percent of premium with the exception of the general
and  administrative  expense  ratio  which is  calculated  as a percent of total
insurance operating revenue.

Overview.  Income before  income taxes for the year ended  December 31, 1999 was
$4.0 million  compared to losses before income taxes of $22.0 million and $109.4
million  for the years  ended  December  31,  1998 and 1997,  respectively.  The
favorable trend in pre-tax income was attributable to:

*    The  improvement  in  insurance  operating  results  for  1999.   Insurance
     operating  results  for 1998 and 1997 were  adversely  impacted  by premium
     deficiency  charges of $4.9  million and $65.0  million,  respectively.  In
     addition,  1997 insurance  operating losses were increased by a high claims
     and benefit ratio attributable to unprofitable  business issued in 1996 and
     1997. The 1.9 percentage point increase in the benefit and claims ratio for
     1999 over 1998 was offset by decreases in the aggregate of other  insurance
     operating expenses.

*    Profitable   fee  and  service   results.   The   Company's   printing  and
     telemarketing  operations  generated profits during 1999 compared to losses
     realized in 1998 and 1997.

*    Non-recurring items expensed during 1998 and 1997 that were eliminated with
     the Company's  reorganization in 1999. Non-recurring items include interest
     expense on retired/canceled debt and reorganization expenses.

*    The  recognition of income  relative to the  resolution of  preconfirmation
     contingencies.  (See  Note 2 of the  Notes  to the  Consolidated  Financial
     Statements.)

The following narratives discuss the principal components of insurance operating
results and net investment income.

Premiums.  Premiums, in thousands, for each major product line are set below for
the year ended December 31:

                                  Pro Forma
                                    Ascent                Westbridge
                               ==============    =============================
                                    1999             1998             1997
                               ==============    =============    ============
Medical Expense:
First-year                       $  15,863        $  15,821         $  26,972
Renewal                             39,891           48,888            48,792
                                ------------     ------------      ------------
                                    55,754           64,709            75,764
                                ------------     ------------      ------------
Specified Disease:
First-year                           1,352            1,818             1,959
Renewal                             27,917           30,546            31,128
                                ------------     ------------      ------------
                                    29,269           32,364            33,087
                                ------------     ------------      ------------
Medicare Supplement:
First-year                              34            1,477             8,763
Renewal                             30,526           36,554            42,652
                                ------------     ------------      ------------
                                    30,560           38,031            51,415
                                ------------     ------------      ------------

Other                                  736              613               831
                                ------------     ------------      ------------

Consolidated Premium Revenue     $ 116,319        $ 135,717         $ 161,097
                                ============     ============      ============

Total premium revenue decreased $19.4 million (or 14.3%) for 1999 as compared to
1998 due to  decreases  in first year and renewal  premiums of $1.7  million (or
8.8%) and $17.7  million (or 15.2%),  respectively.  The  decrease in first year
premiums was primarily  attributable to the Company  discontinuing  sales of the
Medicare  Supplement  product line. The  cancellation of unprofitable  blocks of
business and decreased  persistency  resulting from the  implementation  of rate
increases  on less  profitable  blocks of  business  resulted  in the decline in
renewal premiums.

For 1998,  total premium  revenue  decreased $25.4 million (or 15.8%) from 1997.
The decrease was  principally  due to a decrease of $18.8  million (or 48.8%) in
first year  premiums as new  business  premium  writings  were  curtailed by the
Company as a result of the initiation of the Company's  reorganization.  Renewal
premiums  decreased  $6.6 million (or 5.4%).  Benefits and Claims.  Benefits and
claims  are  comprised  of claims  paid,  changes in claim  reserves  for claims
incurred  (whether  or not  reported)  and  changes  in  future  policy  benefit
reserves.  For 1999, the 1.9 percentage  point increase in the ratio of benefits
and claims to premium in comparison to 1998 was  principally  due to unfavorable
experience in the Major Medical line of business  partially  offset by favorable
trends in the Medicare  Supplement  line of business.  The Company  continues to
pursue  initiatives to reduce its benefits and claims to premium ratio including
the redesign of products,  increased production of profitable products,  premium
rate increases and elimination of unprofitable business.

For 1998,  benefits and claims as a percent of premium decreased 11.7 percentage
points from 1997. The decrease was attributable to the significant claim reserve
additions  during  1997  resulting  from  substantial  increases  in paid claims
experience on certain Medical Expense and Medicare Supplement products.

Commissions.  The 3.6  percentage  point decrease in the ratio of commissions to
premium improved  insurance  operating results by approximately $4.2 million for
1999 as compared to 1998. The improvement in the ratio of commissions to premium
is principally  attributable to declining  ultimate  commission  rates on closed
blocks of business and the lower  commission  rate structure  implemented in the
conversion  from a fragmented  general  agency  marketing  operation to a single
career agency force in mid-1998.

Commissions  as a percent of premium  increased 1998 over 1997 due to a decrease
in the amounts of commissions deferred and therefore, an increase in the amounts
expensed on a current basis.

Net Investment  Income.  Net investment income decreased $2.7 million (or 22.6%)
for 1999 as  compared to 1998 due to a 16.2%  decrease  in  invested  assets and
decreased interest income from agent receivables. Invested assets decreased as a
result of  payments  of  reorganization  costs  and the  reduction  of  premiums
received as a result of the elimination of unprofitable blocks of business.

For 1998,  investment  income  increased $1.0 million (or 9.0%) from 1997 due to
increases in interest income from agent receivables.

FINANCIAL CONDITION

Investments.  Investment  income  is an  important  source of  revenue,  and the
Company's  return on invested  assets has a material  effect on net income.  The
Company's  investment  policy  is  subject  to the  requirements  of  regulatory
authorities. In addition, certain assets are held on deposit in specified states
and invested in specified securities in order to comply with state law. Although
the Company  closely  monitors its  investment  portfolio,  available  yields on
newly-invested  funds  and  gains  or  losses  on  existing  investments  depend
primarily on general market conditions.  The Company's  investment  portfolio is
managed by Conseco Capital Management, Inc., a registered investment advisor.

Investment  policy is  determined  by the Board of  Directors of the Company and
each of the Insurance  Subsidiaries.  The Company's current investment policy is
to balance its portfolio between  long-term and short-term  investments so as to
achieve  long-term  returns  consistent  with the  preservation  of capital  and
maintenance  of adequate  liquidity to meet the payment of the Company's  policy
benefits  and claims.  The  current  schedule of the  Company's  invested  asset
maturities  corresponds with the Company's  expectations  regarding  anticipated
cash flow payments based on the Company's policy benefit and claim cycle,  which
the Company believes is medium term in nature.  The Company invests primarily in
fixed-income  securities  of the  U.S.  Government  and  its  related  agencies,
investment  grade   fixed-income   corporate   securities  and   mortgage-backed
securities.  Also, up to 7% of the Company's  fixed  maturity  securities may be
invested in higher yielding, non-investment grade securities.



<PAGE>


The following  table  provides  information  on the Company's  cash and invested
assets, in thousands, as of December 31:
<TABLE>
<CAPTION>

                                                                 Ascent            Westbridge
                                                             ---------------     --------------
                                                                   1999               1998
                                                               ------------        -----------

   <S>                                                         <C>                 <C>
    Cash and cash equivalents                                   $   5,110           $     278
                                                               ------------        ------------
    Fixed Maturities (at market value):
       U.S. Government and related agencies                        10,688              11,776
       State, county and municipal                                  1,867               1,586
       Finance                                                     23,950              31,919
       Public utilities                                             9,128              13,421
       Mortgage-backed                                              7,725               8,110
       All other corporate bonds                                   44,205              56,052
                                                               ------------        ------------
         Total Fixed Maturities                                    97,563             122,864
                                                               ------------        ------------
    Preferred stock                                                 1,313               2,575
    Other Invested Assets:
       Mortgage loans on real estate                                  124                 318
       Policy loans                                                   289                 280
       Short-term investments and certificates of deposit          10,904               5,393
                                                               ------------        ------------
         Total Other Invested Assets                               11,317               5,991
                                                               ------------        ------------

           Total Cash and Invested Assets                       $ 115,303           $ 131,708
                                                               ============        ============

</TABLE>
The  following  table  summarizes  consolidated  investment  results  (excluding
unrealized gains or losses) for the indicated year:
<TABLE>
<CAPTION>

                                                     Pro Forma
                                                      Ascent                 Westbridge
                                                  --------------    ---------------------------
                                                       1999             1998           1997
                                                  --------------    ------------    -----------
                                                          (in thousands, except percentages)
<S>                                                <C>               <C>             <C>
Net investment income (1)                           $  8,016          $ 9,500         $ 9,390
Net realized (loss) gain on investments                 (167)           2,142              84
Average gross annual yield on fixed maturities           7.2%             7.0%            7.7%
</TABLE>


(1) Excludes interest on receivables from agents of $1.3 million,  $2.5 million,
and $1.6  million  for the  years  ended  December  31,  1999,  1998  and  1997,
respectively.


<PAGE>


The following  table  indicates by rating the composition of the Company's fixed
maturity securities portfolio, excluding short-term investments and certificates
of deposit, at December 31, 1999:

                                          Market
                                          Value              %
                                       ------------      ---------
                                       (in thousands)
Ratings (1)

Investment grade:
  U.S. Government and agencies          $ 18,414            18.9
  AAA                                      1,865             1.9
  AA                                      10,277            10.5
  A                                       35,823            36.7
  BBB                                     29,732            30.5
Non-Investment grade:
  BB                                       1,133             1.2
  B and below                                319              .3
                                       -----------       ----------
    Total fixed maturity securities     $ 97,563           100.0
                                       ===========       ==========


(1)  Ratings are the lower of those assigned  primarily by Standard & Poor's and
     Moody's,  when  available,  and are shown in the table using the Standard &
     Poor's rating scale.  Unrated  securities are assigned ratings based on the
     applicable  NAIC  designation  or the rating  assigned to  comparable  debt
     outstanding of the same issuer.  NAIC 1 fixed maturity securities have been
     classified as "A" and NAIC 2 fixed maturity securities have been classified
     as "BBB".

The NAIC assigns  securities  quality  ratings and uniform  prices  called "NAIC
Designations,"  which are used by insurers when preparing their annual statutory
reports.   The  NAIC  assigns   designations  to   publicly-traded  as  well  as
privately-placed securities. The ratings assigned by the NAIC range from Class 1
(highest  quality  rating) to Class 6 (lowest quality  rating).  At December 31,
1999, 66.1%,  32.0% and 1.9% of the market value of the Company's fixed maturity
securities were rated NAIC 1, NAIC 2, and NAIC 3 and below, respectively.

The scheduled contractual maturities of the Company's fixed maturity securities,
excluding short-term investments and certificates of deposit, at December 31 are
shown in the table  below.  Expected  maturities  may  differ  from  contractual
maturities  because  borrowers may have the right to call or prepay  obligations
with or without penalties.
<TABLE>
<CAPTION>

                                                                 Ascent                   Westbridge
                                                                  1999                       1998
                                                      -----------------------       ------------------------
                                                         Market                        Market
                                                         Value           %             Value           %
                                                      ------------   ---------      ------------    --------
Scheduled Maturity                                                              (in thousands)

<S>                                                  <C>              <C>           <C>             <C>
Due in one year or less                               $  4,012           4.1         $   1,889         1.5
Due after one year through five years                   33,311          34.2            32,254        26.2
Due after five years through ten years                  26,367          27.0            41,959        34.2
Due after ten years                                     26,148          26.8            38,652        31.5
Mortgage-backed securities                               7,725           7.9             8,110         6.6
                                                      ----------     ---------       ----------     ---------
     Total fixed maturity securities                  $ 97,563         100.0         $ 122,864       100.0
                                                      ==========     =========       ===========    =========

</TABLE>



<PAGE>


Reserve Policy. The Company's reserves consist of two separate components: claim
reserves and policy  benefit  reserves.  Claim  reserves are  established by the
Company  for  benefit   payments   which  have  already  been  incurred  by  the
policyholder  but  which  have  not  been  paid by the  Company.  The  Company's
consulting  actuary  estimates  these  reserves  based upon an analysis of claim
inventories,  loss ratios and historical claim payment studies.  These estimates
are developed in the aggregate for claims incurred (whether or not reported).

Policy benefit reserves are established by the Company for benefit payments that
have not been incurred but which are estimated to be incurred in the future. The
policy  benefit  reserves  are  calculated  according  to the net level  premium
reserve  method and are equal to the  discounted  present value of the Company's
expected future policyholder  benefits minus the discounted present value of its
expected future net premiums.  These present value determinations are based upon
assumed fixed investment yields, the age of the insured(s) at the time of policy
issuance,   expected  morbidity  and  persistency  rates,  and  expected  future
policyholder benefits.  Except for purposes of reporting to insurance regulatory
authorities and for tax filing,  the Company's claim reserves and policy benefit
reserves  are  determined  in  accordance  with  generally  accepted  accounting
principles ("GAAP").

In determining the morbidity, persistency rate, claim cost and other assumptions
used in determining the Company's  policy benefit  reserves,  the Company relies
primarily upon its own benefit payment history and upon information developed in
conjunction  with  actuarial   consultants  and  industry  data.  The  Company's
persistency  rates have a direct impact upon its policy benefit reserves because
the  determinations  for this  reserve are, in part, a function of the number of
policies in force and expected to remain in force to maturity. If persistency is
higher or lower than expected,  future policyholder benefits will also be higher
or lower because of the different than expected number of policies in force, and
the policy benefit reserves will be increased or decreased accordingly.

The Company's  reserve  requirements are also  interrelated with product pricing
and profitability.  The Company must price its products at a level sufficient to
fund  its  policyholder  benefits  and  still  remain  profitable.  Because  the
Company's claim and policyholder  benefits represent the single largest category
of its operating expenses,  inaccuracies in the assumptions used to estimate the
amount of such benefits can result in the Company  failing to price its products
appropriately and to generate  sufficient  premiums to fund the payment thereof.
The sharp  increase in claim loss ratios  experienced  by the Company during the
second and third quarters of 1997 were  indicative of inadequate  pricing in the
Company's old Medical  Expense and Medicare  Supplement  products.  See ITEM 7 -
"Operating Results."

Because the discount  factor used in  calculating  the Company's  policy benefit
reserves is based upon the rate of return of the Company's  investments designed
to fund this reserve,  the amount of the reserve is dependent  upon the yield on
these  investments.  Provided that there is no material adverse  experience with
respect to these benefits, changes in future market interest rates will not have
an impact on the profitability of policies already sold. Because fluctuations in
future market interest rates affect the Company's yield on new investments, they
also affect the discount  factor used to establish,  and thus the amount of, its
policy benefit  reserves for new sales. In addition,  because an increase in the
policy  benefit  reserves  in any period is  treated  as an  expense  for income
statement  purposes,  market interest rate  fluctuations can directly affect the
Company's  profitability for policies sold in such period. It is not possible to
predict future market interest rate fluctuations.

In accordance  with GAAP,  the  Company's  actuarial  assumptions  are generally
fixed, and absent materially adverse benefit experience,  they are not generally
adjusted. The Company monitors the adequacy of its policy benefit reserves on an
ongoing  basis  by   periodically   analyzing  the  accuracy  of  its  actuarial
assumptions.  The adequacy of the Company's  policy benefit reserves may also be
impacted by the development of new medicines and treatment  procedures which may
alter the incidence  rates of illness and the treatment  methods for illness and
accident  (such  as  out-patient   versus   in-patient  care)  or  prolong  life
expectancy. Changes in coverage provided by major medical insurers or government
plans may also affect the  adequacy of the  Company's  reserves if, for example,
such  developments had the effect of increasing or decreasing the incidence rate
and per claim  costs of  occurrences  against  which  the  Company  insures.  An
increase in either the incidence rate or the per claim costs of such occurrences
could result in the Company  needing to post  additional  reserves,  which could
have a material adverse effect upon its business, financial condition or results
of operations.

The  Company's  Insurance  Subsidiaries  are required to report their results of
operations  and  financial  position  to state  regulatory  agencies  based upon
statutory accounting  practices ("SAP").  Under SAP, certain assumptions used in
determining  the policy  benefit  reserves,  such as claim costs and  investment
result  assumptions,  are often more conservative than those appropriate for use
by the Company under GAAP. In  particular,  SAP interest  rate  assumptions  for
investment  results are fixed by statute and are generally lower than those used
by the Company  under GAAP.  Another  significant  difference is that under SAP,
unlike  GAAP,  the Company is  required  to expense  all sales and other  policy
acquisition  costs as they are incurred rather than  capitalizing and amortizing
them over the expected  life of the policy.  The effect of this  requirement  is
moderated by the  allowance  under SAP of an accounting  treatment  known as the
"two year preliminary term" reserve valuation method. This reserve method allows
the Company to defer any accumulation of policy benefit reserves until after the
second policy year. The immediate  charge off of sales and acquisition  expenses
and the sometimes  conservative claim cost and other valuation assumptions under
SAP  generally  cause a lag  between the sale of a policy and the  emergence  of
reported  earnings.  Because  this  lag  can  reduce  the  Company's  gain  from
operations  on a SAP  basis,  it can have the effect of  reducing  the amount of
funds available for dividend distributions from the Insurance Subsidiaries.  See
ITEM 7 "Liquidity,  Capital  Resources  and Statutory  Capital and Surplus - The
Company."

Reinsurance.  As is customary in the insurance industry, the Company's Insurance
Subsidiaries  reinsure  portions of the coverage  provided to  policyholders  to
other  insurance  companies  on both an  excess of loss and  coinsurance  basis.
Cession of  reinsurance  is  utilized  by an insurer to limit its  maximum  loss
thereby providing a greater  diversification of risk and minimizing exposures on
larger  risks.  Reinsurance  does not  discharge  the primary  liability  of the
original insurer with respect to such insurance,  but the Company, in accordance
with prevailing  insurance industry practice,  reports reserves and claims after
adjustment for reserves and claims ceded to other companies through reinsurance.

The  Company,  through  NFL and  FLICA,  entered  into a 90%  Coinsurance  Funds
Withheld  Reinsurance  Agreement (the "Coinsurance  Agreement") with a reinsurer
effective  July  1,  1996 on the in  force  Cancer,  Heart  and  Intensive  Care
business.  The Coinsurance  Agreement  provided an initial ceding  commission of
$10.5  million,  of which $8.4 million was received in cash. On May 1, 1997, the
Coinsurance  Agreement was terminated and recaptured.  Consistent with the terms
of the agreement,  the unpaid portion of the initial ceding commission allowance
was repaid inclusive of interest at 15.0%. For the year ended December 31, 1997,
the amount repaid was  approximately  $8.6 million.  See NOTE 12 - "Reinsurance"
and NOTE 14 -  "Extraordinary  Item"  to the  Company's  Consolidated  Financial
Statements.

The  Company  generally  does  not  cede  risks  associated  with  its  Medicare
Supplement products.  However,  100% of the Company's risks under its Accidental
Death policies currently in force are reinsured.  The Company also reinsures its
risks under the Medical Expense  products on an excess of loss basis so that its
maximum  payment to any one  beneficiary  during any one-year  period is limited
($100,000  in 1999 and 1998) for any accident or illness.  In 1998,  NFL entered
into an excess  of loss  reinsurance  agreement  on a closed  block of  annually
renewable term life  insurance.  NFL's  retention  limit is $25,000 per year. No
other life  insurance  products  were  reinsured  during 1999,  1998 or 1997. In
accordance  with industry  practice,  the  reinsurance  agreements in force with
respect to these  policies are terminable by either party with respect to claims
incurred after the termination and expiration dates.

At  December  31,  1999,  $0.5  million  of the $2.3  million  recoverable  from
reinsurers  related to paid losses.  Of this balance,  all was recoverable  from
reinsurers rated "A" or higher by A.M. Best Company.



<PAGE>


LIQUIDITY, CAPITAL RESOURCES, AND STATUTORY CAPITAL AND SURPLUS

The Company.  The Company's principal assets consist of the capital stock of its
subsidiaries and invested assets.  Accordingly,  the Company's principal sources
of  funds  are  comprised  of  dividends,  advances  and  management  fees  from
non-insurance  company  subsidiaries,  and  tax  payments  under  a tax  sharing
agreement among the Company and its subsidiaries.  The Company's  principal uses
of cash are for capital contributions to its insurance  subsidiaries and general
and administrative  expenses.  The Company made capital  contributions  totaling
approximately  $5.9  million,  $5.7 million and $45.5  million to its  Insurance
Subsidiaries in 1999, 1998 and 1997,  respectively.  The Company expects to make
additional  contributions  to the  Insurance  Subsidiaries  in 2000  to  support
planned  growth in new business.  Dividends on Ascent's  redeemable  convertible
preferred  stock  may be paid in cash or by  issuance  of  additional  shares of
preferred stock, at the Company's  option.  Preferred stock dividends accrued at
December 31, 1999 were paid in January 2000 through issuance of 1,873 additional
shares of preferred  stock.  As of December 31, 1999,  Ascent had  approximately
$8.7 million in unrestricted cash and invested assets.

Dividends  paid by the Insurance  Subsidiaries  are determined by and subject to
the regulations of the insurance laws and practices of the insurance departments
of their respective state of domicile, see Item 1 - Business - Regulations. NFL,
a Delaware domestic company,  is precluded from paying dividends in 2000 without
the prior approval of the Delaware Insurance Commissioner, as its earned surplus
is negative.  Further,  NFL has agreed to obtain  prior  approval for any future
dividends.  NFIC and AICT,  Texas  domestic  companies,  are also precluded from
paying  dividends  during 2000 without the prior approval of the Texas Insurance
Commissioner as both companies earned surplus is negative.  FLICA, a Mississippi
domestic  company,  is precluded from paying  dividends  during 2000 without the
prior approval of the  Mississippi  Insurance  Commissioner as it recorded a net
loss from operations for the year ended December 31, 1999.

Insurance   Subsidiaries.   The  primary  sources  of  cash  for  the  Insurance
Subsidiaries  are premiums  and income on invested  assets.  Additional  cash is
periodically  provided  by  capital  contributions  from the  Company  (see "The
Company"  discussion  above)  and from the sale of  short-term  investments  and
could, if necessary,  be provided through the sale of long-term  investments and
blocks  of  business.  The  Insurance  Subsidiaries'  primary  uses for cash are
benefits  and claims,  commissions,  general and  administrative  expenses,  and
taxes, licenses and fees.

Inflation  will affect  claim costs on the  Company's  Medicare  Supplement  and
Medical Expense products.  Costs associated with a hospital stay and the amounts
reimbursed by the Medicare  program are each  determined,  in part, based on the
rate of inflation.  If hospital and other  medical costs that are  reimbursed by
the Medicare program increase,  claim costs on the Medicare  Supplement products
will  increase.  Similarly,  as the hospital and other medical  costs  increase,
claim costs on the  Medical  Expense  products  will  increase.  The Company has
somewhat   mitigated  its  exposure  to  inflation  by   incorporating   certain
limitations on the maximum  benefits which may be paid under its policies and by
filing for premium rate increases as necessary.

Consolidated.  The Company's  consolidated net cash used for operations  totaled
$2.6 million,  $8.0 million and $20.0  million for the years ended  December 31,
1999, 1998 and 1997,  respectively.  The decrease in cash used for operations in
1999  from 1998 was  primarily  due to a  decrease  in the cash  basis  ratio of
benefits and claims and expenses to premiums,  and a reduction in reorganization
costs paid. The decrease in cash used for  operations  between 1998 and 1997 was
primarily  the  result  of  (a)  amounts  remitted  to  reinsurers  during  1997
terminating certain reinsurance arrangements,  and (b) high paid claim levels in
1997 attributable to unprofitable blocks of business issued in 1996 and 1997.

Net cash  provided  by (used  for)  investing  activities  for the  years  ended
December 31, 1999, 1998 and 1997 totaled $6.4 million, $13.3 million and $(40.4)
million,  respectively.  Net cash  provided by investing  activities in 1999 and
1998  was  primarily  used  to  fund  the  Company's   operating  and  financing
activities. Further, the significant cash outflow to acquire investments in 1997
was  related  to the  investment  of the  net  proceeds  from  the  issuance  of
Westbridge's Convertible Notes.

Net cash  provided by (used for)  financing  activities  totaled  $1.0  million,
$(6.0) million and $60.4 million for the years ended December 31, 1999, 1998 and
1997,  respectively.  Cash flows for  financing  activities  for the years ended
December 31, 1999 and 1998 were  related to the net  borrowings  and  repayments
associated with the Company's Receivables Financing program (defined below). The
Company's  net financing  cash flow  increased in 1999 as a result of increasing
new business  production and related  agent's  balances.  Cash flows provided by
financing   activities   for  the  year  ended   December  31,  1997,   included
approximately  $70.0  million in cash  inflows  resulting  from the  issuance of
Westbridge's  Convertible  Notes that was offset,  in part,  by cash payments of
$7.0 million to retire a note payable  associated with a recaptured  reinsurance
agreement and $1.0 million to retire a note with a related party.

In the ordinary course of business, the Company advances commissions on policies
written by its general agencies and their agents.  The Company is reimbursed for
these advances from the commissions earned over the respective policy's life. In
the event  that  policies  lapse  prior to the time the  Company  has been fully
reimbursed, the general agency or the individual agents, as the case may be, are
responsible  for  reimbursing  the  Company for the  outstanding  balance of the
commission  advance.  For the years ended December 31, 1999,  1998 and 1997, the
Company has  recorded a net  provision  for  uncollectible  commission  advances
totaling $0.9 million, $0.6 million and $2.8 million, respectively.

The Company finances the majority of its obligations to make commission advances
through Ascent Funding Corporation  ("AFI"), an indirect wholly owned subsidiary
of Ascent.  On June 6, 1997,  AFI entered into a Credit  Agreement  (the "Credit
Agreement")  with  LaSalle  National  Bank  ("LaSalle").  This Credit  Agreement
provided AFI with a  three-year,  $20.0  million  revolving  loan  facility (the
"Receivables  Financing"),  the  proceeds  of which are used to  purchase  agent
advance  receivables  from the  Insurance  Subsidiaries  and certain  affiliated
marketing companies. AFI's obligations under the Credit Agreement are secured by
liens upon  substantially  all of AFI's  assets.  In August  1999,  the  Company
amended the Credit Agreement which reduced the revolving loan facility to a $7.5
million  facility.  In connection with this  commission  advancing  program,  at
December  31,  1999,  the  Company's  net  receivables  from  subagents  totaled
approximately  $7.1 million and approximately $3.9 million was outstanding under
the Credit Agreement.  The Credit Agreement terminates on June 5, 2001, at which
time the outstanding principal and interest thereunder will be due and payable.

The Company has guaranteed AFI's obligations under the Credit Agreement, and has
pledged all of the issued and  outstanding  shares of the capital  stock of AFI,
NFL and NFIC as collateral  for that guaranty (the  "Guaranty  Agreement").  The
Company's   obligations  under  the  Guaranty   Agreement   continue   following
confirmation  of the Plan.  As of the  Effective  Date,  there were no events of
default  under the Credit or Guaranty  Agreements.  See NOTE 5 to the  Company's
Consolidated Financial Statements.

In July 1999, Ascent Management,  Inc. ("AMI") received a $3.3 million term loan
facility  with LaSalle,  proceeds of which were used to fund system  replacement
costs. Advances under the term loan facility are secured by substantially all of
AMI's assets and the Guaranty Agreement.  Under the terms of the loan, principal
is payable in 60 equal monthly installments beginning January 31, 2000.
At December 31, 1999,  approximately $3.3 million was outstanding under the term
loan facility.

YEAR 2000 ISSUES

With the  change  to the year  2000,  the  Company  experienced  no  significant
interruptions  in its normal  business  processes and no disruptions to services
provided to its customers and agents.  For the twelve months ended  December 31,
1999,  the  Company  incurred  approximately  $.5 million in  incremental  costs
related to remediation of the Company's existing systems for the Year 2000.

The Company's  conversion effort to replace its existing  policyholder and claim
administration system with a new, more modern system continues.  At December 31,
1999,  this  replacement  effort was well under way. The Company  expects  total
charges related to the system  replacement to approximate  $5.4 million of which
the majority will be capitalized. For the twelve months ended December 31, 1999,
the Company incurred  approximately  $4.8 million of the projected total of $5.4
million in costs related to the system replacement. FORWARD-LOOKING STATEMENTS:

The Private  Securities  Litigation  Reform Act of 1995 provides a "safe harbor"
for  forward-looking  statements.  The  preceding  statements  and certain other
statements  contained  in  Item  1 -  "Business"  and  Item  7  -  "Management's
Discussion  and Analysis of Results of Operation and Financial  Condition",  are
forward-looking  statements.  These forward-looking  statements are based on the
intent,  belief or current expectations of the Company and members of its senior
management  team.  While the Company believes that its expectations are based on
reasonable  assumptions  within the bounds of its  knowledge of its business and
operations,  prospective  investors are cautioned that any such  forward-looking
statements  are not  guarantees  of future  performance,  and involve  risks and
uncertainties,  and  that  actual  results  may  differ  materially  from  those
contemplated by such forward-looking statements.

Important  factors known to management that could cause actual results to differ
materially  from those  contemplated by the  forward-looking  statements in this
Report include, but are not limited to:

*    the effect of economic and market conditions
*    further  adverse  developments  with  respect  to the  Company's  liquidity
     position or operations of the Company's various businesses
*    actions that may be taken by insurance regulatory authorities
*    adverse  developments  in the timing or results  of the  Company's  current
     strategic business plan
*    the  difficulty  in  controlling  health  care  costs and  integrating  new
     operations
*    the   ability  of  the   Company  to  realize   anticipated   general   and
     administrative   expense  savings  and  overhead   reductions  from  system
     replacement initiatives
*    the  ability  of  management   to  return  the   Company's   operations  to
     profitability
*    and the possible negative effects of prospective health care reform.

Subsequent  written or oral  statements  attributable  to the Company or persons
acting on its behalf are expressly qualified in their entirety by the cautionary
statements in this Report and those in the Company's  reports  previously  filed
with the SEC.  Copies of these filings may be obtained by contacting the Company
or the SEC.


ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's primary  objectives in managing its cash flows and investments are
to maximize  investment income and yield while preserving capital and minimizing
credit risks. To attain these objectives, investment policies and strategies are
developed using expected underwriting results, forecasted federal tax positions,
regulatory  requirements,  forecasted  economic  conditions  including  expected
fluctuations in interest rates and general market risks.

Market risk represents the potential for loss due to adverse changes in the fair
market value of financial  instruments.  The market  risks  associated  with the
financial   instruments  of  the  Company  primarily  relate  to  the  Company's
investment  portfolio that consists largely (84.6%) of fixed income  securities.
The   Company's   investment   portfolio  is  exposed  to  market  risk  through
fluctuations  in  interest  rates,  changes  in  credit  quality  and  principal
prepayments.

Interest  Rate  Risk.  Interest  rate risk is the price  sensitivity  of a fixed
income  security  to  changes in  interest  rates.  The  Company  evaluates  the
potential  changes in  interest  rates and market  prices  within the context of
asset  and  liability  management.   Asset  and  liability  management  involves
forecasting  the  payout  pattern  of  the  Company's  liabilities,   consisting
primarily of accident and health claim reserves,  to determine duration and then
matching the duration of the  liabilities  to fixed  income  investments  with a
similar duration.  Through active portfolio asset and liability management,  the
Company believes that interest rate risk is mitigated.

Credit Risk. The company  invests  primarily in  fixed-income  securities of the
U.S.  Government  and  its  related  agencies,   investment  grade  fixed-income
corporate securities and mortgage-backed  securities. (See Item 7 - Management's
Discussion  and Analysis of Results of Operations  and Financial  Conditions and
Note 3 -  "Investments"  to the Company's  Consolidated  Financial  Statements.)
Approximately 1.5% of the Company's  fixed-income portfolio is comprised of less
than investment grade securities.  The Company's  investment policy allows up to
7% of the Company's fixed maturity securities to be invested in higher yielding,
non-investment  grade  securities.  Due  to  the  overall  high  quality  of the
Company's investment  portfolio ("A" as rated by Standard & Poor's),  management
believes the Company has marginal risk with regard to credit quality.

PrePayment Risk.  Mortgage-backed securities investors are compensated primarily
for  prepayment  risk  rather  than  credit  quality  risk.  During  periods  of
significant  interest rate volatility,  the underlying  mortgages may repay more
quickly or more slowly than  anticipated.  If the repayment of principal  occurs
earlier than anticipated during periods of declining interest rates,  investment
income may decline due to the  reinvestment  of these funds at the lower current
market  rates.  To  manage  prepayment  risk,  the  Company  limits  the type of
mortgage-backed  structures  invested in and  restricts  the  portfolio's  total
exposure in  mortgage-backed  securities.  If the  repayment  occurs  later than
expected during periods of increasing  interest rates,  the cost of funds to pay
liabilities may increase due to the mismatching of assets and liabilities.

Sensitivity  Analysis.  The Company regularly conducts various analyses to gauge
the financial impact of changes in interest rate on its financial condition. The
ranges  selected in these  analyses  reflect  management's  assessment  as being
reasonably  possible over the succeeding  twelve-month  period. The magnitude of
changes modeled in the accompanying  analyses should, in no manner, be construed
as a prediction of future economic  events,  but rather,  be treated as a simple
illustration of the potential  impact of such events on the Company's  financial
results.

The sensitivity analysis of interest rate risk assumes an instantaneous shift in
a parallel  fashion  across the yield curve,  with  scenarios of interest  rates
increasing and decreasing 100 and 200 basis points from their levels at December
31, 1999, and with all other variables held constant.  A 100 and 200 basis point
increase  in market  interest  rates would  result in a pre-tax  decrease in the
market value of the Company's fixed income  investments of $4.7 million and $9.1
million,  respectively.  Similarly, a 100 and 200 basis point decrease in market
interest  rates would  result in a pre-tax  increase in the market  value of the
Company's   fixed  income   investments  of  $5.1  million  and  $10.5  million,
respectively.


<PAGE>


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Financial  Statements and Financial  Statement Schedules Covered by the
Following Report of Independent Accountants.
<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                          Number(s)

<S>                                                                                                          <C>
Reports of Independent Accountants............................................................................28-29

Financial Statements:

     Ascent Assurance, Inc. Consolidated Balance Sheets
         at December 31, 1999 and March 31, 1999.................................................................30

     Westbridge Capital Corp. Consolidated Balance Sheet
         at December 31, 1998....................................................................................31

     Ascent Assurance, Inc. Consolidated Statement of Income for the Nine Months
         Ended December 31, 1999.................................................................................32

     Westbridge Capital Corp. Consolidated Statements of Income for the Three Months
         Ended March 31, 1999 and Years Ended December 31, 1998 and 1997.........................................33

     Ascent Assurance, Inc. Consolidated Statement of Comprehensive
         Income for the Nine Months Ended December 31, 1999......................................................34

     Westbridge Capital Corp. Consolidated Statement of Comprehensive Income for the
         Three Months Ended March 31, 1999 and Years Ended December 31, 1998 and 1997............................35

     Ascent Assurance, Inc. Consolidated Statements of Changes in Stockholders'
         Equity for the Nine Months Ended December 31, 1999......................................................36

     Westbridge Capital Corp. Consolidated Statements of Changes in Stockholders' Equity for the
         Three Months Ended March 31, 1999 and Years Ended December 31, 1998 and 1997............................37

     Ascent Assurance, Inc. Consolidated Statement of Cash Flows for the
         Nine Months ended December 31, 1999.....................................................................38

     Westbridge Capital Corp. Consolidated Statement of Cash Flows for the
         Three Months Ended March 31, 1999 and Years Ended December 31, 1998 and 1997............................39

     Notes to The Consolidated Financial Statements...........................................................40-63

Financial Statement Schedules:

II.  Condensed Financial Information of Registrant............................................................64-73

III. Supplementary Insurance Information.........................................................................74

IV.  Reinsurance.................................................................................................75

V.   Valuation and Qualifying Accounts and Reserves..............................................................76
</TABLE>

All  other  Financial  Statement  Schedules  are  omitted  because  they are not
applicable or the required  information is shown in the Financial  Statements or
notes thereto.

<PAGE>


                        REPORT OF INDEPENDENT ACCOUNTANTS



To the Board of Directors
and Stockholders of
Ascent Assurance, Inc.

In our opinion, the consolidated financial statements listed in the accompanying
index present fairly, in all material respects, the financial position of Ascent
Assurance, Inc. and its subsidiaries at December 31, 1999 and March 31, 1999 and
the results of their  operations  and their cash flows for the nine months ended
December 31, 1999, in conformity with accounting  principles  generally accepted
in the United  States.  In addition,  in our opinion,  the  financial  statement
schedules  listed in the  accompanying  index  present  fairly,  in all material
respects,  the information  set forth therein when read in conjunction  with the
related  consolidated  financial  statements.  These  financial  statements  and
financial   statement   schedules  are  the   responsibility  of  the  Company's
management;  our  responsibility  is to express  an  opinion on these  financial
statements and financial  statement  schedules  based on our audit. We conducted
our audit of these  statements in accordance with auditing  standards  generally
accepted in the United States,  which 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,  assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall  financial  statement  presentation.  We believe that our
audit provides a reasonable basis for the opinion expressed above.

As discussed in Note 1 to the consolidated  financial statements,  the Company's
predecessor,  Westbridge  Capital Corp.,  filed a voluntary  petition for relief
under Chapter 11 of the Bankruptcy Code with the United States  Bankruptcy Court
for the  District  of Delaware on  September  16,  1998.  The  Bankruptcy  Court
confirmed  the Plan of  Reorganization  on December  17,  1998,  and,  after the
satisfaction  of a  number  of  conditions,  the Plan of  Reorganization  became
effective  on March  24,  1999  and the  company  emerged  from  bankruptcy.  In
connection with its emergence from Chapter 11, Westbridge  Capital Corp. changed
its corporate name to Ascent Assurance, Inc. and adopted fresh start accounting.


 /s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP
Dallas, Texas
March 29, 2000



<PAGE>


                        Report of Independent Accountants



To the Board of Directors
and Stockholders of
Westbridge Capital Corp. (now, Ascent Assurance, Inc.)


In our opinion, the consolidated financial statements listed in the accompanying
index  present  fairly,  in all material  respects,  the  financial  position of
Westbridge  Capital  Corp.  and its  subsidiaries  at December  31, 1998 and the
results of their  operations  and their cash  flows for the three  months  ended
March 31, 1999 and for each of the two years in the period  ended  December  31,
1998, in conformity with accounting  principles generally accepted in the United
States. In addition, in our opinion, the financial statement schedules listed in
the accompanying index present fairly, in all material respects, the information
set  forth  therein  when  read in  conjunction  with the  related  consolidated
financial  statements.   These  financial  statements  and  financial  statement
schedules are the responsibility of the Company's management; our responsibility
is to express an opinion on these financial  statements and financial  statement
schedules  based on our audits.  We conducted our audits of these  statements in
accordance  with auditing  standards  generally  accepted in the United  States,
which 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,  assessing the  accounting  principles
used and  significant  estimates made by management,  and evaluating the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for the opinion expressed above.

As  discussed in Note 1 to the  consolidated  financial  statements,  Westbridge
Capital  Corp.  filed a voluntary  petition for relief  under  Chapter 11 of the
Bankruptcy  Code with the United  States  Bankruptcy  Court for the  District of
Delaware on September  16, 1998.  The  Bankruptcy  Court  confirmed  the Plan of
Reorganization  on December 17, 1998, and, after the satisfaction of a number of
conditions,  the Plan of  Reorganization  became effective on March 24, 1999 and
the Company  emerged from  bankruptcy.  In connection  with its  emergence  from
Chapter  11,  Westbridge  Capital  Corp.  changed its  corporate  name to Ascent
Assurance, Inc. and adopted fresh start accounting.


/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP
Dallas, Texas
March 29, 2000



<PAGE>

<TABLE>
<CAPTION>

                                                        Ascent Assurance, Inc.
                                                      CONSOLIDATED BALANCE SHEETS

                                                 (in thousands, except per share data)

                                                                           December 31, 1999       March 31, 1999
                                                                          -------------------    -------------------
 <S>                                                                     <C>                    <C>
  Assets
  Investments:
       Fixed Maturities:
           Available-for-sale, at market value (amortized cost
           $103,436 and $116,352)                                         $        97,563        $       116,352
       Equity securities, at market (cost $1,365 and $2,275)                        1,313                  2,275
       Other investments                                                              413                    516
       Short-term investments                                                      10,904                  7,789
                                                                          -------------------    -------------------
                Total Investments                                                 110,193                126,932

  Cash                                                                              5,110                  2,210
  Accrued investment income                                                         2,030                  2,169
  Receivables from agents, net of allowance for doubtful
  accounts of $6,060 and $5,125                                                     7,062                  8,182
  Deferred policy acquisition costs                                                19,393                 15,039
  Deferred tax asset, net                                                           7,086                  7,347
  Property and equipment, net of accumulated depreciation of
  $1,546 and $3,556                                                                 6,272                  2,572
  Other assets                                                                      6,544                  5,344
                                                                          -------------------    -------------------
                Total Assets                                              $       163,690        $       169,795
                                                                          ===================    ===================

  Liabilities, Redeemable Convertible Preferred Stock and
      Stockholders' Equity
  Liabilities:
      Policy liabilities and accruals:
          Future policy benefits                                          $        57,119        $        54,738
          Claim reserves                                                           38,776                 41,068
                                                                          -------------------    -------------------
               Total Policy Liabilities and Accruals                               95,895                 95,806

  Accounts payable and other liabilities                                           13,592                 18,541
  Notes payable                                                                     7,162                  5,088
                                                                          -------------------    -------------------
               Total Liabilities                                                  116,649                119,435
                                                                          -------------------    -------------------

  Redeemable convertible preferred stock                                           23,257                 23,257
                                                                          -------------------    -------------------
  Stockholders' Equity:
      Common stock ($.01 par value, 30,000,000 shares  authorized;
      6,500,000 shares issued)                                                         65                     65
      Capital in excess of par value                                               27,338                 27,038
      Accumulated other comprehensive loss, net of tax                             (3,851)                     -
      Retained Earnings                                                               232                      -
                                                                          -------------------    -------------------
               Total Stockholders' Equity                                          23,784                 27,103
                                                                          -------------------    -------------------

               Total Liabilities, Redeemable Convertible
               Preferred Stock and Stockholders' Equity                   $       163,690        $       169,795
                                                                          ===================    ===================
</TABLE>


See Notes to Consolidated Financial Statements.


<PAGE>
<TABLE>
<CAPTION>


                                                       WESTBRIDGE CAPITAL CORP.
                                                     (now ASCENT ASSURANCE, INC.)
                                                      CONSOLIDATED BALANCE SHEET

                                                 (in thousands, except per share data)

                                                                                     December 31, 1998
                                                                                   --------------------
   <S>                                                                                <C>
    Assets
    Investments:
      Fixed Maturities:
        Available-for-sale, at market value (amortized cost
        $116,871)                                                                      $   122,864
      Equity securities, at market (cost $2,551)                                             2,575
      Other investments                                                                        598
      Short-term investments                                                                 5,393
                                                                                       ------------
            Total Investments                                                              131,430

    Cash                                                                                       278
    Accrued investment income                                                                2,372
    Receivables from agents, net of allowance for doubtful
    accounts of $5,176                                                                       9,860
    Deferred policy acquisition costs                                                       14,177
    Other assets                                                                            11,624
                                                                                       =============
            Total Assets                                                               $   169,741
                                                                                       =============

    Liabilities, Redeemable Convertible Preferred Stock and Stockholders' Deficit
    Liabilities:
       Policy liabilities and accruals:
          Future policy benefits                                                       $    53,871
          Claim reserves                                                                    44,116
                                                                                       -------------
             Total Policy Liabilities and Accruals                                          97,987

    Accounts payable and other liabilities                                                  14,807
    Accrued interest and dividends payable                                                  11,377
    Notes payable                                                                            6,192
    Senior subordinated notes, net of unamortized discount, due 2002                        19,523
    Convertible subordinated notes, due 2004                                                70,000
                                                                                       -------------
             Total Liabilities                                                             219,886
                                                                                       -------------

    Redeemable convertible preferred stock                                                  11,935
                                                                                       -------------

    Stockholders' Deficit:
        Common stock ($.10 par value, 30,000,000 shares authorized;
        7,035,809 shares issued)                                                               703
        Capital in excess of par value                                                      37,641
        Accumulated other comprehensive income, net of tax                                   3,911
        Deficit                                                                           (104,335)
                                                                                       -------------
             Total Stockholders' Deficit                                                   (62,080)
                                                                                       -------------
             Total Liabilities, Redeemable Convertible Preferred
             Stock and Stockholders' Deficit                                           $   169,741
                                                                                       =============

</TABLE>

             See the Notes to the Consolidated Financial Statements.

<PAGE>

<TABLE>
<CAPTION>

                                                        Ascent Assurance, Inc.
                                                   CONSOLIDATED STATEMENT OF INCOME

                                                 (in thousands, except per share data)

                                                                                          Nine Months
                                                                                             Ended
                                                                                       December 31, 1999
                                                                                     ---------------------
      <S>                                                                               <C>
       Revenues:
          Premiums:
            First-year                                                                   $        14,350
            Renewal                                                                               72,021
                                                                                         -----------------
                Total Premiums                                                                    86,371

          Net investment income                                                                    6,740
          Fee and service income                                                                  13,069
          Net realized loss on investments                                                          (208)
                                                                                         -----------------
                                                                                                 105,972
                                                                                         -----------------

       Benefits, claims and expenses:
          Benefits and claims                                                                     65,699
          Amortization of deferred policy acquisition costs                                        1,478
          Commissions                                                                             14,610
          General and administrative expenses                                                     18,483
          Taxes, licenses and fees                                                                 3,422
          Interest expense on notes payable                                                          284
          Resolution of preconfirmation contingencies                                             (1,235)
                                                                                         -----------------
                Total expenses                                                                   102,741
                                                                                         -----------------

       Income before income taxes                                                                  3,231
       Federal income tax expense                                                                 (1,125)
                                                                                         -----------------
                Net income                                                                         2,106

       Preferred stock dividends                                                                   1,874
                                                                                         -----------------
       Income applicable to common stockholders                                          $           232
                                                                                         =================

       Basic and diluted net income per common share                                     $           .04
                                                                                         =================

       Weighted average shares outstanding:
          Basic                                                                                    6,500
          Diluted                                                                                  6,510


</TABLE>

             See the Notes to the Consolidated Financial Statements.


<PAGE>
<TABLE>
<CAPTION>


                                                       WESTBRIDGE CAPITAL CORP.
                                                     (now Ascent Assurance, Inc.)
                                                   CONSOLIDATED STATEMENTS OF INCOME

                                                 (in thousands, except per share data)

                                                               Three Months
                                                                  Ended                      Year Ended
                                                                 March 31,                   December 31,
                                                              ---------------     ---------------------------------
                                                                   1999               1998               1997
                                                              ---------------     --------------    ---------------
<S>                                                              <C>              <C>               <C>
Revenues:
   Premiums:
     First-year                                                   $   3,121        $    19,161       $    37,890
     Renewal                                                         26,827            116,556           123,207
                                                                  -----------      -------------     -------------
         Total Premiums                                              29,948            135,717           161,097

   Net investment income                                              2,562             12,011            11,023
   Fee and service income                                             4,263             16,780            16,700
   Net realized gain on investments                                      41              2,142                84
                                                                  -----------      -------------     -------------
                                                                     36,814            166,650           188,904
                                                                  -----------      -------------     -------------
Benefits, claims and expenses:
   Benefits and claims                                               21,799             99,419           136,866
   Amortization of deferred policy acquisition costs                    286              4,411            30,873
   Commissions                                                        6,134             30,568            16,690
   General and administrative expenses                                6,635             28,149            31,407
   Reorganization expense                                                 -              9,179             4,424
   Recognition of premium deficiency                                      -              4,948            64,952
   Taxes, licenses and fees                                           1,059              5,216             5,995
   Interest expense on notes payable                                    119                881             1,255
   Interest expense on retired/cancelled debt                           507              5,933             5,847
                                                                  -----------      -------------     -------------
                                                                     36,539            188,704           298,309
                                                                  -----------      -------------     -------------

Income (loss) before income taxes and extraordinary item                275            (22,054)         (109,405)
Federal income tax (expense) benefit                                    (67)              (231)           13,268
                                                                  -----------      -------------     -------------
Income (loss) before extraordinary item                                 208            (22,285)          (96,137)
Extraordinary loss, net of tax                                            -                  -             1,007
                                                                  ===========      =============     ==============
   Net income (loss)                                              $     208        $   (22,285)      $   (97,144)
                                                                  ===========      =============     ==============

Preferred stock dividends                                                 -                520             1,572
                                                                  ===========      =============     ==============
Income (loss) applicable to common stockholders                   $     208        $   (22,805)      $   (98,716)
                                                                  ===========      =============     ==============

Basic and diluted net income per common share:
     Income (loss) before extraordinary item                      $     .03        $     (3.43)      $    (15.91)
     Extraordinary loss                                                   -                  -              (.16)
                                                                  ===========      =============     ==============
       Net income (loss)                                          $     .03        $     (3.43)      $    (16.07)
                                                                  ===========      =============     ==============

Weighted average shares outstanding:
   Basic                                                              7,032              6,640             6,143
   Diluted                                                            7,032              6,640             6,143


</TABLE>
             See the Notes to the Consolidated Financial Statements.


<PAGE>







                             ASCENT ASSURANCE, INC.
                 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

                                 (in thousands)


                                                               Nine Months
                                                                  Ended
                                                             December 31, 1999
                                                             -----------------

 Net income                                                       $   2,106
 Other comprehensive income (loss):
   Unrealized holding loss arising during period, net of tax         (3,956)
   Reclassification adjustment of gain on sales of investments
   included in net income, net of tax                                   105

                                                                  ===========
 Comprehensive loss                                               $  (1,745)
                                                                  ===========


             See the Notes to the Consolidated Financial Statements.






<PAGE>




<TABLE>
<CAPTION>
                                                       WESTBRIDGE CAPITAL CORP.
                                                     (now ASCENT ASSURANCE, INC.)
                                            CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                                            (in thousands)


                                                             Three Months
                                                                 Ended                        Year Ended
                                                               March 31,                     December 31,
                                                          ------------------    -------------------------------------
                                                                 1999                  1998                1997
                                                          ------------------    -----------------    ----------------
<S>                                                     <C>                   <C>                  <C>
  Net income (loss)                                       $       208           $    (22,285)        $    (97,144)
  Other comprehensive income (loss):
    Unrealized holding gain (loss) arising
    during period, net of tax                                  (1,959)                   534                3,690
    Reclassification adjustment of loss on sales
    of investments included in net income, net of tax             (27)                (1,272)                 (98)

                                                          ==================    =================    ================
  Comprehensive loss                                      $    (1,778)          $    (23,023)        $    (93,552)
                                                          ==================    =================    ================

</TABLE>

             See the Notes to the Consolidated Financial Statements.


<PAGE>

<TABLE>
<CAPTION>


                                                        ASCENT ASSURANCE, INC.
                                      CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                                                 (in thousands, except per share data)



                                                                           Accumulated                  Total
                                                              Capital         Other                     Stock
                                            Common Stock     in Excess    Comprehensive  Retained      holders'
                                          Shares    Amount  of Par Value       Loss      Earnings       Equity

<S>                                     <C>        <C>      <C>          <C>            <C>          <C>
Balance at March 31, 1999                6,500,000  $  65    $   27,038   $       -      $     -      $  27,103

  Net income                                                                                2,106         2,106
  Preferred stock dividend                                                                 (1,874)       (1,874)
  Other comprehensive loss, net of tax                                       (3,851)                     (3,851)
  Amortization of unearned compensation                                         300                         300
                                        ----------- -------  -----------  -----------    ---------    ----------
Balance at December 31, 1999             6,500,000  $  65    $   27,338   $  (3,851)     $    232     $  23,784
                                        =========== =======  ===========  ===========    =========    ==========
</TABLE>



             See the Notes to the Consolidated Financial Statements.


<PAGE>


<TABLE>
<CAPTION>


                                                       WESTBRIDGE CAPITAL CORP.
                                                     (now ASCENT ASSURANCE, INC.)
                                 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

                                                 (in thousands, except per share data)

                                                                                                                           Total
                                                                            Accumulated                                    Stock-
                                                                Capital        Other      Retained                        holders'
                                             Common Stock      in Excess   Comprehensive  Earnings     Treasury Stock     Equity
                                          Shares      Amount  of Par Value    Income      (Deficit)   Shares    Amount   (Deficit)
                                          ------      ------  ------------ -------------  ---------  --------  --------  ---------

<S>                                     <C>         <C>      <C>            <C>          <C>         <C>       <C>      <C>
Balance at December 31, 1996             6,039,994   $  604   $  29,226      $  1,057     $  17,186    28,600   $ (170)  $  47,903

Net loss                                                                                    (97,144)                       (97,144)
Preferred stock dividend                                                                     (1,572)                        (1,572)
Other comprehensive income, net of tax                                          3,592                                        3,592
Preferred stock converted to common        118,905       12         937                                                        949
Issuance of shares under stock
  option plans                              42,500        4         115                                                        119
Award and issuance of restricted shares     67,000        7       1,179                                                      1,186
Cancellation of treasury stock             (28,600)      (3)       (167)                              (28,600)     170           0
Shares purchased and canceled
  under stock option plans                 (44,360)      (4)       (447)                                                      (451)
                                        -----------  -------  ----------     ---------     ---------  --------  -------  ----------
Balance at December 31, 1997             6,195,439      620      30,843         4,649       (81,530)        -        -     (45,418)

Net loss                                                                                    (22,285)                       (22,285)
Preferred stock dividend                                                                       (520)                          (520)
Other comprehensive loss, net of tax                                             (738)                                        (738)
Preferred stock converted to common        840,071       83       6,982                                                      7,065
Other, net                                     299        -        (184)                                                      (184)
                                        -----------  -------  ----------     ---------     ---------  --------  -------  ----------
Balance at December 31, 1998             7,035,809      703      37,641         3,911      (104,335)        -        -     (62,080)

Net income                                                                                      208                            208
Other comprehensive loss, net of tax                                           (1,986)                                      (1,986)
Cancellation of old preferred stock                              11,935                      (3,088)                         8,847
Issuance of new preferred stock                                                                (477)                          (477)
Cancellation of old common stock        (7,035,809)    (703)                                                                  (703)
Issuance of new common stock             6,500,000       65      79,203                                                     79,268
Fresh start adjustments                                        (101,741)       (1,925)      107,692                          4,026
                                        ===========  =======  ==========     =========     =========  ========  =======  ==========
Balance at March 31, 1999                6,500,000   $   65   $  27,038      $      -      $      -         -   $    -   $  27,103
                                        ===========  =======  ==========     =========     =========  ========  =======  ==========
</TABLE>


             See the Notes to the Consolidated Financial Statements.


<PAGE>



                             ASCENT ASSURANCE, INC.
                      CONSOLIDATED STATEMENT OF CASH FLOWS

                                 (in thousands)

                                                              Nine Months
                                                                 Ended
                                                           December 31, 1999
                                                         --------------------
Cash Flows From Operating Activities:
  Net income                                               $          2,106
  Adjustments to reconcile net income to cash used
    for operating activities:

    Amortization of deferred policy acquisition costs                 1,478
    Additions to deferred policy acquisition costs                   (5,832)
    Decrease in receivables from agents                               1,120
    Increase in other assets                                         (1,061)
    Increase in policy liabilities and accruals                          89
    Decrease in accounts payable and accruals                        (4,949)
    Decrease in deferred income taxes, net                              261
    Other, net                                                        1,707
                                                          -------------------
Net Cash Used For Operating Activities                               (5,081)
                                                          -------------------

Cash Flows From Investing Activities:
  Proceeds from investments sold:
   Fixed maturities, called or matured                                1,132
   Fixed maturities, sold                                            17,096
   Other investments, sold or matured                                   873
   Cost of investments acquired                                      (9,001)
   Property and equipment purchased                                  (4,193)
                                                          -------------------
Net Cash Provided By Investing Activities                             5,907
                                                          -------------------

Cash Flows From Financing Activities:
  Issuance of notes payable                                           4,129
  Repayment of notes payable                                         (2,055)
                                                          -------------------
Net Cash Provided by Financing Activities                             2,074
                                                          -------------------
Increase in Cash During Period                                        2,900
Cash at Beginning of Period                                           2,210
                                                          ===================
Cash at End of Period                                      $          5,110
                                                          ===================


             See the Notes to the Consolidated Financial Statements.


<PAGE>


<TABLE>
<CAPTION>

                                                       WESTBRIDGE CAPITAL CORP.
                                                     (now ASCENT ASSURANCE, INC.)
                                                 CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                            (in thousands)


                                                                                   Three Months
                                                                                       Ended
                                                                                     March 31,          Year Ended December 31,
                                                                                  ----------------    --------------------------
                                                                                       1999                1998           1997
    <S>                                                                             <C>              <C>             <C>
     Cash Flows From Operating Activities:
        Net income (loss)                                                            $       208      $  (22,285)     $  (97,144)
        Adjustments to reconcile net income (loss)
          to cash provided by (used for) operating activities:
            Recognition of premium deficiency                                                  -           4,948          64,952
            Amortization of deferred policy acquisition costs                                286           4,411          30,873
            Additions to deferred policy acquisition costs                                (1,148)         (4,371)        (31,119)
            Decrease (increase) in receivables from agents                                 1,678          10,643          (2,192)
            (Increase) decrease in other assets                                           (1,007)            513           2,194
            (Decrease) increase in policy liabilities and accruals                        (2,181)         (9,608)         14,205
            Increase  in accounts payable and accruals                                     4,428           6,532           8,996
            Decrease in deferred income taxes, net                                        (1,070)              -         (10,299)
            Other, net                                                                     1,308           1,211            (440)
                                                                                     -------------    ------------    ------------

     Net Cash Provided By (Used For) Operating Activities                                  2,502          (8,006)        (19,974)
                                                                                     -------------    ------------    ------------

     Cash Flows From Investing Activities:
        Proceeds from investments sold:
          Fixed maturities, called or matured                                              2,215           7,531           9,469
          Fixed maturities, sold                                                           4,904          13,810          25,345
          Other investments, sold or matured                                                 139           8,913             867
          Cost of investments acquired                                                    (5,851)        (15,772)        (75,745)
          Other                                                                             (873)         (1,184)           (300)
                                                                                     -------------    ------------    ------------

     Net Cash Provided By (Used For) Investing Activities                                    534          13,298         (40,364)
                                                                                     -------------    ------------    ------------

     Cash Flows From Financing Activities:
        Retirement of senior subordinated debentures                                     (15,167)              -               -
        Issuance of preferred stock                                                       15,167               -               -
        Decrease (increase) in deferred debt costs                                             -             864          (1,230)
        Issuance of convertible subordinated notes                                             -               -          70,000
        Issuance of notes payable                                                            911           5,461          21,044
        Repayment of notes payable                                                        (2,015)        (12,369)        (29,154)
        Issuance of common stock                                                               -               -             140
        Purchase and cancellation of common stock                                              -               -            (445)
                                                                                     -------------    ------------    ------------
     Net Cash (Used For) Provided By Financing Activities                                 (1,104)         (6,044)         60,355
                                                                                     -------------    ------------    ------------
     Increase (decrease) increase in Cash During Period                                    1,932            (752)             17
     Cash At Beginning Of Period                                                             278           1,030           1,013
                                                                                     -------------    ------------    ------------
     Cash At End Of Period                                                           $     2,210      $      278      $    1,030
                                                                                     =============    ============    ============
</TABLE>



             See the Notes to the Consolidated Financial Statements.

<PAGE>


                             ASCENT ASSURANCE, INC.
                      (formerly, Westbridge Capital Corp.)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - REORGANIZATION EFFECTIVE MARCH 24, 1999

On September 16, 1998,  Westbridge Capital Corp.,  ("Westbridge")  commenced its
reorganization by filing a voluntary petition for relief under Chapter 11, Title
11 of the United  States  Code in the  United  States  Bankruptcy  Court for the
District of Delaware (the "Bankruptcy Court"), along with a disclosure statement
(as amended,  the "Disclosure  Statement") and a proposed plan of reorganization
(as  amended,  the  "Plan").  The filing of the  Disclosure  Statement  and Plan
culminated  months of  negotiations  between  Westbridge and an ad hoc committee
(the "Creditors' Committee") of holders of its 11% Senior Subordinated Notes due
2002 (the "Senior Notes") and its 7-1/2% Convertible Subordinated Notes due 2004
(the "Convertible  Notes"). The Disclosure Statement was approved by entry of an
order by the Bankruptcy Court on October 30, 1998. Following the approval of the
Plan by the holders of allowed claims and equity interests, the Bankruptcy Court
confirmed  the Plan on December 17, 1998.  The Plan became  effective  March 24,
1999 (the "Effective Date").

On the Effective Date,  Westbridge's  certificate of  incorporation  and by-laws
were amended and restated in their  entirety  and pursuant  thereto,  Westbridge
changed its corporate name to "Ascent  Assurance,  Inc." ("Ascent").  References
herein to the  "Company"  shall  mean for all  periods  on or prior to March 31,
1999, Westbridge and its subsidiaries, and for all periods on or after the close
of business on March 31, 1999, Ascent and its subsidiaries.

The  following  summary of the Plan omits certain  information  set forth in the
Plan. Any statements  contained  herein  concerning the Plan are not necessarily
complete,  and in each such  instance  reference  is made to the Plan, a copy of
which is incorporated  by reference to Exhibit 2 of Westbridge's  Current Report
on Form 8-K which was filed  with the  Securities  and  Exchange  Commission  on
December  29,  1998.  Each such  statement  is qualified in its entirety by such
reference.  The Plan provided for the  recapitalization  of certain old debt and
equity  interests in Westbridge  and the issuance of new equity  securities  and
warrants. Key terms of the Plan included the following:

Cancellation  of  Existing  Securities  Pursuant  to  the  Plan,  the  following
securities of  Westbridge  were  canceled as of the  Effective  Date:  (i) $23.3
million  aggregate  principal amount and all accrued and unpaid interest on, the
Senior Notes, (ii) $77.3 million aggregate  principal amount and all accrued and
unpaid  interest  on, the  Convertible  Notes,  (iii)  $13.2  million  aggregate
liquidation  preference of and all accrued and unpaid dividends on, Westbridge's
Series A Convertible Redeemable Exchangeable Preferred Stock (the "Old Preferred
Stock"),  (iv)  Westbridge's  Common  Stock,  par value $.10 per share (the "Old
Common Stock"),  (v) all outstanding warrants to purchase Old Common Stock, (vi)
all  outstanding  unexercised  stock options to purchase Old Common  Stock,  and
(vii) all unvested grants of restricted Old Common Stock.

New  Equity  Capital  Structure   Pursuant  to  Ascent's  Amended  and  Restated
Certificate of Incorporation, the total number of shares of capital stock Ascent
has the authority to issue is  30,040,000,  consisting  of 30,000,000  shares of
common  stock,  par value $.01 per share  (the "New  Common  Stock")  and 40,000
shares of preferred stock, par value $.01 per share, all of which are designated
Series A Convertible Preferred Stock (the "New Preferred Stock")



<PAGE>


Distributions Under the Plan

Cash Distribution

To the holders of Senior Notes other than Credit Suisse First Boston Corporation
("CSFB"),  cash payments totaling approximately $15.2 million, which equaled the
total  Allowed 11% Senior Note Claims (as defined in the Plan) held by creditors
other than CSFB,  were  distributed  subject to  completion  of the  exchange of
securities  as  contemplated  by the Plan.  In order to provide the Company with
sufficient funds to make the cash distribution to the holders of the Allowed 11%
Senior  Notes  under the Plan,  an  affiliate  of CSFB  (the  "CSFB  Affiliate")
purchased all of the shares of the New Preferred  Stock which were not otherwise
distributed under the Plan.

Issuance of New Securities

Pursuant to the Plan and the purchase of New Preferred  Stock,  6,500,000 shares
of New  Common  Stock and 23,257  shares of New  Preferred  Stock  were  issued,
subject to the completion of the exchange  requirements  as  contemplated by the
Plan, on the Effective Date as follows:

*    To holders of general unsecured claims and Convertible Notes as of December
     10, 1998 6,077,500 shares,  and to management at the Effective Date, 32,500
     shares, or in aggregate 94% of the New Common Stock issued on the Effective
     Date.  Holders of general  unsecured claims and Convertible  Notes received
     their first distribution of shares in partial satisfaction and discharge of
     the  allowed  claims in April  1999.  The second  distribution  was made in
     September  1999  and  the  remaining   shares  of  New  Common  Stock  were
     distributed in November 1999.

*    To holders of Old Preferred Stock as of December 10, 1998,  260,000 shares,
     or 4%, of the New Common  Stock issued on the  Effective  Date and Warrants
     ("New  Warrants") to purchase an additional  277,505 shares,  or 2%, of the
     New Common Stock issued on the Effective Date, on a fully diluted basis.

*    To holders of Old Common Stock as of December 10, 1998,  130,000  shares or
     2%, of the New Common Stock issued on the  Effective  Date and New Warrants
     to purchase an additional  693,761  shares,  or 5%, of the New Common Stock
     issued on the Effective Date, on a fully diluted basis.  Fractional  shares
     of New  Common  Stock  were not issued in  connection  with the Plan.  As a
     result of this  provision,  certain holders of Old Common Stock received no
     distribution of New Common Stock or New Warrants under the Plan.

*    To the CSFB  Affiliate,  in respect of the Senior Notes owned by CSFB as of
     December 10, 1998, 8,090 shares of New Preferred Stock which, together with
     the 15,167  additional  shares of New Preferred Stock purchased by the CSFB
     Affiliate as described  above, are convertible into 4,765,165 shares of the
     New Common Stock.  As a result of the New Preferred  Stock  received by the
     CSFB  Affiliate,  together  with the  3,093,998  shares of New Common Stock
     received by the CSFB Affiliate in respect of the Convertible Notes owned by
     CSFB, the CSFB Affiliate  beneficially owns approximately  56.6% of the New
     Common  Stock on an as  converted  basis,  assuming the exercise of all New
     Warrants  and issuance of New Common  Stock  reserved  under the 1999 Stock
     Option Plan as discussed  below. The New Preferred Stock has a stated value
     of $1,000 per share and a cumulative  annual  dividend  rate of $102.50 per
     share  payable  in  January  of each  year in  cash or by the  issuance  of
     additional  shares  of New  Preferred  Stock.  The New  Preferred  Stock is
     convertible  at any time into  204.8897  shares of New  Common  Stock at an
     initial conversion price of $4.88 per share of New Common Stock, subject to
     customary anti-dilution adjustments.



<PAGE>


Reservation of Additional New Common Stock

In  connection  with the New Warrants  described  above,  971,266  shares of New
Common Stock are reserved for issuance  upon the exercise of New  Warrants.  The
New Warrants are exercisable at an initial exercise price $9.04 per share of New
Common Stock, subject to customary anti-dilution adjustments, and will expire on
March 24, 2004.

Pursuant to the Plan,  up to  1,251,685  shares,  or 10%,  of the fully  diluted
number of shares of New Common Stock  issued and  outstanding  on the  Effective
Date are reserved for issuance to  employees  and  directors,  and up to 387,119
shares,  or 3%, of the fully diluted number of shares of New Common Stock issued
on the  Effective  Date are  reserved for  issuance to the  Company's  marketing
agents under the  Company's  1999 Stock  Option Plan,  which was approved by the
Company's shareholders.


NOTE 2 - SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  INCLUDING  FRESH  START
ACCOUNTING PRINCIPLES EFFECTIVE MARCH 31, 1999 FOR ASCENT

Basis of  Presentation.  The consolidated  financial  statements are prepared in
accordance with generally accepted  accounting  principles  ("GAAP") and include
the accounts of Ascent  Assurance,  Inc. and its  subsidiaries.  All significant
inter-company   accounts  and  transactions   have  been   eliminated.   Certain
reclassifications  of prior  years'  amounts  have been made to conform with the
1999 financial statement presentation.

Fresh Start Adjustments.  In accordance with the American Institute of Certified
Public  Accountants'  Statement  of  Position  90-7  ("SOP  90-7"),   "Financial
Reporting by Entities in Reorganization  Under the Bankruptcy Code," the Company
adopted fresh start reporting  effective  March 31, 1999.  Fresh start reporting
requires the new reporting entity created on the  reorganization  effective date
to  determine a  reorganization  book value.  The  reorganization  book value is
allocated  to the fair value of assets and  liabilities  similar to the purchase
method of  accounting  under  Accounting  Principles  Board Opinion No. 16. As a
result of the application of fresh start reporting,  the financial statements of
Ascent issued  subsequent to the adoption of fresh start  reporting  will not be
comparable  with those of  Westbridge  prepared  before  adoption of fresh start
accounting,  including the historical financial statements of Westbridge in this
annual report. With the adoption of fresh start accounting, the Company retained
a fiscal accounting year ended on December 31 of each year.

Ascent's  reorganization  book value was  determined  with the assistance of its
financial  advisors.  The  significant  factors  used  in the  determination  of
reorganization book value were analyses of industry, economic and overall market
conditions,  historical and projected  performance  of the Company,  and certain
financial analyses, including discounted future cash flows.



<PAGE>


The effects of the Plan and fresh start reporting on the Company's consolidated
balance sheet as of March 31, 1999 are as follows
(in thousands):
<TABLE>
<CAPTION>

                                        Westbridge      Issue New       Issue New        Fresh Start         Ascent
                                        03/31/1999    Preferred (a)     Common (b)     Adjustments(c)      03/31/1999
                                       -------------- -------------- ---------------- ------------------ ---------------
<S>                                   <C>            <C>            <C>              <C>                <C>
Assets
Total investments                      $   126,932    $              $                $                  $   126,932
Cash                                         2,210                                                             2,210
Accrued investment income                    2,169                                                             2,169
Agent receivables, net                       8,182                                                             8,182
Deferred policy acquisition costs           15,039                                                            15,039
Deferred tax asset, net                      1,070                                              6,277          7,347
Other assets                                13,504                         (3,088)             (2,500)         7,916
                                       -------------- -------------- ---------------- ------------------ ---------------

     Total assets                      $   169,106    $         -    $     (3,088)    $         3,777    $   169,795
                                       ============== ============== ================ ================== ===============

Liabilities, Preferred Stock & Equity
Policy liabilities and accruals        $    95,806    $              $                $                  $    95,806
Accounts payable and accruals               18,790                                               (249)        18,541
Notes payable                                5,088                                                             5,088
Accrued dividends                            1,304                         (1,304)                                 -
Accrued interest                            10,518         (3,257)         (7,261)                                 -
Senior subordinated notes, net              19,523        (19,523)                                                 -
Convertible subordinated notes              70,000                        (70,000)                                 -
                                       -------------- -------------- ---------------- ------------------ ---------------
     Total liabilities                     221,029        (22,780)        (78,565)               (249)       119,435

Old Series A preferred stock                11,935                        (11,935)                                 -
New Series A preferred stock                               23,257                                             23,257
                                       -------------- -------------- ---------------- ------------------ ---------------
     Total preferred stock                  11,935         23,257         (11,935)                  -         23,257

Old common stock                               703                           (703)                                 -
New common stock                                                                65                                65
Additional paid in capital                  37,641                          91,138           (101,741)        27,038
Accumulated other comprehensive
  income, net of tax                         1,925                                             (1,925)             -
Retained earnings                         (104,127)          (477)         (3,088)            107,692              -
                                       -------------- -------------- ---------------- ------------------ ---------------

     Total equity                          (63,858)          (477)          87,412              4,026         27,103
                                       -------------- -------------- ---------------- ------------------ ---------------
     Total liabilities, preferred
       stock and equity                $   169,106    $         -    $     (3,088)    $         3,777    $   169,795
                                       ============== ============== ================ ================== ===============

</TABLE>

(a)  Reflects issuance of 23,257 shares of New Preferred Stock to CSFB for $15.2
     million  in cash and  exchange  of  Senior  Notes  held by CSFB,  including
     accrued interest,  for $8.1 million.  Includes  simultaneous  retirement of
     Senior Notes held by holders other than CSFB,  including  accrued interest,
     for $15.2  million  and  write-off  of  unamortized  debt  discount of $0.5
     million.

(b)  Reflects  issuance of 6,500,000  shares of New Common Stock in exchange for
     Convertible  Notes, Old Preferred Stock, Old Common Stock and settlement of
     general unsecured claims. Includes 32,500 shares of New Common Stock issued
     to management on the Effective Date, and includes  write-off of unamortized
     debt issuance costs of $3.1 million.

(c)  Reflects  adjustments to record assets and liabilities at fair market value
     and to set retained earnings to zero.


<PAGE>


The following  significant  accounting  policies are applicable to the financial
statements of both Ascent and Westbridge, unless otherwise indicated.

Investments.   The  Company's   fixed   maturity   portfolio  is  classified  as
available-for-sale  and is carried at estimated market value.  Equity securities
(common and nonredeemable preferred stocks) are also carried at estimated market
value. With the application of fresh start reporting,  the Company's  marketable
securities  book values under GAAP were  adjusted to equal the market  values of
such securities at March 31, 1999. Accordingly, the stockholders' equity section
of Ascent's  March 31, 1999 fresh start balance sheet reflects a zero balance in
accumulated  other  comprehensive   income.   Changes  in  aggregate  unrealized
appreciation or depreciation on fixed maturity and equity securities  subsequent
to  March  31,  1999 are  reported  directly  in  stockholders'  equity,  net of
applicable  deferred  income  taxes  and,  accordingly,  will  have no effect on
current operations.

Deferred Policy Acquisition Costs ("DPAC").  Policy acquisition costs consisting
of commissions  and other policy issue costs,  which vary with and are primarily
related to the  production  of new  business,  are deferred and  amortized  over
periods  not to exceed  the  estimated  premium-paying  periods  of the  related
policies.  Also included in DPAC is the cost of insurance  purchased on acquired
business.  The  amortization  of these costs is based on  actuarially  estimated
future premium revenues,  and the amortization rate is adjusted  periodically to
reflect  actual  experience.  Projected  future  levels of premium  revenue  are
estimated using assumptions as to interest, mortality, morbidity and withdrawals
consistent  with  those  used  in  calculating  liabilities  for  future  policy
benefits.  No changes were made to DPAC  assumptions for purposes of fresh start
accounting.

Future Policy Benefits.  Liabilities for future policy benefits not yet incurred
are computed  primarily using the net level premium method  including  actuarial
assumptions  as  to  investment  yield,   mortality,   morbidity,   withdrawals,
persistency  and  other  assumptions  which  were  appropriate  at the  time the
policies were issued.  Assumptions used are based on the Company's experience as
adjusted to provide for possible adverse deviation.  Generally,  these actuarial
assumptions are fixed and, absent material adverse benefit  experience,  are not
adjusted.  No changes were made to such  actuarial  assumptions  for purposes of
fresh start accounting.

Claim  Reserves.  Claim reserves  represent the estimated  liabilities on claims
reported  plus claims  incurred  but not yet  reported.  These  liabilities  are
subject to the impact of future  changes in claim  experience.  As estimates are
revised,  any adjustments are reflected in current  operations.  No changes were
made to claim reserve estimates for purposes of fresh start accounting.

Federal  Income Taxes.  The Company  records income taxes based on the asset and
liability  approach,  which requires the recognition of deferred tax liabilities
and assets for the expected  future tax  consequence  of  temporary  differences
between the carrying  amounts and the tax basis of assets and  liabilities.  The
tax effect of future  taxable  temporary  differences  (liabilities)  and future
deductible temporary differences (assets) are separately calculated and recorded
when such  differences  arise.  A valuation  allowance,  reducing any recognized
deferred tax asset,  must be recorded if it is determined that it is more likely
than not that such  deferred  tax asset will not be  realized.  The deferred tax
asset at  December  31, 1999 is net of a valuation  allowance  of  approximately
$16.9 million related  principally to net operating loss carryforwards  ("NOLs")
of Ascent's operating subsidiaries.

In connection with its  reorganization,  the Company realized a non-taxable gain
from the extinguishment of certain indebtedness for tax purposes, since the gain
results from a reorganization under the Bankruptcy Code. However, the Company is
required to reduce certain tax attributes of the holding company,  including (i)
NOLs, (ii) certain tax credits, and (iii) tax bases in assets in an amount equal
to such a gain on extinguishment.

Resolution of Preconfirmation  Contingencies.  Preconfirmation contingencies are
disputed,  unliquidated or contingent  claims that are unresolved at the date of
the  confirmation  of the  plan  of  reorganization.  As  part  of  fresh  start
accounting,  the  Company  estimated  and  recorded  values for  preconfirmation
contingencies relative to the payment of professional fees and the collection of
receivables  from third  parties.  During the third quarter of 1999, the Company
favorably  resolved  such  preconfirmation  contingencies.  In  accordance  with
generally accepted accounting principles, the Company recognized $1.2 million of
income   relative  to  the   favorable   resolution   of  such   preconfirmation
contingencies.

Earnings  Per Share.  Under GAAP,  there are two measures of earnings per share:
"basic earnings per share" and "diluted  earnings per share." Basic earnings per
share is computed by dividing  income  available to common  shareholders  by the
weighted average number of common shares outstanding during the period.  Diluted
earnings  per  share  reflects  the  potential  dilution  that  could  occur  if
securities or other contracts to issue common stock were converted or exercised.
Diluted  weighted  average  shares exclude all  convertible  securities for loss
periods.

The following  tables reflect the calculation of basic and diluted  earnings per
share:

                                                                Ascent
                                                          -----------------
                                                          Nine Months Ended
                                                          December 31, 1999
                                                         --------------------
                                                          (Amounts in 000's,
                                                           except per share
                                                                amounts)

  Basic:
    Income available to common shareholders               $           232
                                                          =================
    Weighted average shares outstanding                             6,500
                                                          =================
    Basic earnings per share                              $          0.04
                                                          =================

  Diluted:
    Income available to common shareholders               $           232
                                                          =================
    Weighted average shares outstanding                             6,510
                                                          =================
    Diluted earnings per share                            $          0.04
                                                          =================

<TABLE>
<CAPTION>

                                                                                         Westbridge
                                                                ------------------------------------------------------
                                                                   Three Months
                                                                      Ended                      Year Ended
                                                                    March 31,                   December 31,
                                                                ----------------    ----------------------------------

                                                                      1999                1998               1997
                                                                ----------------     ---------------     -------------
                                                                       (Amounts in 000's, except per share amounts)
<S>                                                            <C>                  <C>                 <C>
Basic:
     Income (loss) available to common shareholders             $         208        $    (22,805)       $   (98,716)
                                                                ==============       ===============     =============
     Weighted average shares outstanding                                7,032               6,640              6,143
                                                                ==============       ===============     =============
     Basic earnings (loss) per share                            $        0.03        $      (3.43)       $    (16.07)
                                                                ==============       ===============     =============

Diluted:
     Income (loss) available to common shareholders             $         208        $    (22,805)       $   (98,716)
                                                                ==============       ===============     =============
     Weighted average shares outstanding                                7,032               6,640              6,143
                                                                ==============       ===============     =============
     Diluted earnings (loss) per share                          $        0.03        $      (3.43)       $    (16.07)
                                                                ==============       ===============     =============
</TABLE>

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  assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses  during the  reporting  period.  Actual  results  could
differ from those estimates.



<PAGE>


Recently  Issued  Accounting  Pronouncements.  In December  1997, the Accounting
Standards  Executive  Committee  ("AcSEC")  issued Statement of Position ("SOP")
97-3,  "Accounting  by Insurance  and Other  Enterprises  for  Insurance-Related
Assessments,"  which  provides  guidance  on  accounting  for  insurance-related
assessments.  The Company  adopted  SOP 97-3 on a  prospective  basis  effective
January 1, 1999. The adoption of SOP 97-3 did not have a material  impact on the
Company's results of operations, liquidity or financial position.

In March  1998,  AcSEC  issued SOP 98-1,  "Accounting  for the Costs of Software
Developed  or Obtained  for  Internal  Use," which  requires  capitalization  of
certain  costs after the date of  adoption  in  connection  with  developing  or
obtaining  software  for  internal  use.  The  Company  adopted  SOP  98-1  on a
prospective  basis  effective  January 1, 1999. The adoption of SOP 98-1 did not
have a material  impact on the  Company's  results of  operations,  liquidity or
financial position.

In 1998, the NAIC adopted the  Codification of Statutory  Accounting  Principles
guidance,  which will replace the current  Accounting  Practices and  Procedures
manual as the NAIC's primary guidance on statutory accounting.  The Codification
provides  guidance  for areas  where  statutory  accounting  has been silent and
changes current statutory accounting in certain areas. The insurance departments
of the states of domicile of the Company's  insurance  subsidiaries have adopted
the  Codification  effective  January 1, 2001.  The Company  does not expect the
Codification to materially impact statutory surplus.

In June,  1998,  the  FASB  issued  SFAS No.  133,  "Accounting  for  Derivative
Instruments and Hedging  Activities"  ("SFAS 133").  This statement is effective
for fiscal years  beginning after June 15, 2000. The  pronouncement  established
accounting and reporting standards for derivative instruments, including certain
derivative  instruments  embedded in other contracts and for hedging activities.
As the Company has not  participated  in derivative or hedging  activities,  the
Company's financial statements are not effected by SFAS 133.


<PAGE>


NOTE 3 - INVESTMENTS

Major categories of investment income are summarized as follows:
<TABLE>
<CAPTION>

                                                      Ascent                               Westbridge
                                                 -----------------     ----------------------------------------------------
                                                     Nine Months        Three Months
                                                  Ended December 31,   Ended March 31,        Year Ended December 31,
                                                 -----------------     ----------------   --------------------------------
                                                       1999                 1999                1998              1997
                                                 -----------------     ----------------    ---------------    -------------
                                                                              (in thousands)

<S>                                             <C>                   <C>                 <C>                <C>
Fixed maturities                                 $         5,368       $        2,125      $      8,754       $      8,268
Short-term investments                                       291                   86               708                891
Interest on receivables from agents                          941                  345             2,511              1,633
Other                                                        201                   73               351                468
                                                 -----------------     ----------------    ---------------    -------------
                                                           6,801                2,629            12,324             11,260
   Less: Investment expenses                                  61                   67               313                237
                                                 =================     ================    ===============    =============
   Net investment income                         $         6,740       $        2,562      $     12,011       $     11,023
                                                 =================     ================    ===============    =============
</TABLE>

Realized (loss) gain on investments are summarized as follows:
<TABLE>
<CAPTION>
                                                      Ascent                               Westbridge
                                                 -----------------     ----------------------------------------------------
                                                   Nine Months           Three Months
                                                  Ended December 31,    Ended March 31,        Year Ended December 31,
                                                 -----------------     -----------------    -------------------------------
                                                       1999                  1999               1998              1997
                                                 -----------------     ----------------    ---------------    -------------
                                                                              (in thousands)

<S>                                             <C>                   <C>                  <C>               <C>
Fixed maturities                                 $       (162)         $            40      $        403      $       535
Equity securities                                         (37)                       1             1,555             (385)
Other                                                      (9)                       -               184              (66)
                                                 =================     ================    ===============    =============
Realized (loss) gain on investments              $       (208)         $            41      $      2,142      $        84
                                                 =================     ================    ===============    =============
</TABLE>

Unrealized  (depreciation)  appreciation on investments is reflected directly in
stockholders'  equity as a component of accumulated other  comprehensive  (loss)
income and is summarized as follows:
<TABLE>
<CAPTION>

                                                               Ascent                         Westbridge
                                                        ----------------------  ------------------------------------------
                                                          Nine Months Ended     Three Months Ended          Year Ended
                                                             December 31,            March 31,              December 31,
                                                        ----------------------  ------------------------------------------
                                                                 1999                  1999                    1998
                                                        ----------------------  --------------------    ------------------
                                                                                  (in thousands)

<S>                                                    <C>                     <C>                     <C>
Balance at beginning of period                          $               -       $         3,911         $          4,649
Unrealized depreciation, net of tax, on fixed
   maturities available-for-sale                                   (3,817)               (1,840)                      54
Unrealized depreciation, net of tax
   tax, on equity securities and other investments                    (34)                 (146)                    (792)
Fresh start adjustment                                                  -                (1,925)                       -
                                                        ======================  ====================    ===================
Balance at end of period                                $          (3,851)      $             -         $          3,911
                                                        ======================  ====================    ===================
</TABLE>




<PAGE>


Estimated  market  values  represent  the  closing  sales  prices of  marketable
securities.  The amortized  cost and estimated  market values of  investments in
fixed maturities are summarized by category as follows:
<TABLE>
<CAPTION>

                                                         Ascent
--------------------------------------------------------------------------------------------------------------------------
                                                                           Gross             Gross            Estimated
                                                     Amortized          Unrealized         Unrealized          Market
December 31, 1999 Available-for-Sale                    Cost               Gains             Losses             Value
----------------------------------------------     ---------------     --------------    ---------------    --------------
                                                                               (in thousands)

<S>                                               <C>                 <C>               <C>                <C>
U.S. Government and governmental
    agencies and authorities                       $      11,113       $          -      $         425      $      10,688
States, municipalities, and political
    subdivisions                                           2,021                  -                154              1,867
Finance companies                                         25,220                  -              1,270             23,950
Public utilities                                           9,806                  -                678              9,128
Mortgage-backed securities                                 7,823                 57                155              7,725
All other corporate bonds                                 47,453                 26              3,274             44,205
                                                   ===============     ==============    ===============    ==============
Balance at December 31, 1999                       $     103,436       $         83      $       5,956      $      97,563
                                                   ===============     ==============    ===============    ==============
</TABLE>
<TABLE>
<CAPTION>

                                                         Ascent
--------------------------------------------------------------------------------------------------------------------------
                                                                           Gross             Gross            Estimated
                                                     Amortized          Unrealized         Unrealized          Market
March 31, 1999 Available-for-Sale                       Cost               Gains             Losses             Value
----------------------------------------------     ---------------     --------------    ---------------    --------------
                                                                               (in thousands)

<S>                                               <C>                 <C>               <C>                <C>
U.S. Government and governmental
    agencies and authorities                       $      11,271       $          -      $           -      $      11,271
States, municipalities, and political
    subdivisions                                           1,543                  -                  -              1,543
Finance companies                                         31,525                  -                  -             31,525
Public utilities                                          12,745                  -                  -             12,745
Mortgage-backed securities                                 7,349                  -                  -              7,349
All other corporate bonds                                 51,919                  -                  -             51,919
                                                   ===============     ==============    ===============    ==============
Balance at March 31, 1999                          $     116,352       $          -      $           -      $     116,352
                                                   ===============     ==============    ===============    ==============
</TABLE>
<TABLE>
<CAPTION>

                                                       Westbridge
--------------------------------------------------------------------------------------------------------------------------
                                                                           Gross             Gross            Estimated
                                                     Amortized          Unrealized         Unrealized          Market
1998 Available-for-Sale                                 Cost               Gains             Losses             Value
----------------------------------------------     ---------------     --------------    ---------------    --------------
                                                                               (in thousands)

<S>                                               <C>                 <C>               <C>                <C>
U.S. Government and governmental
    agencies and authorities                       $      11,145       $        644      $          13      $      11,776
States, municipalities, and political
    Subdivisions                                           1,490                 96                  -              1,586
Finance companies                                         30,441              1,549                 71             31,919
Public utilities                                          12,745                801                125             13,421
Mortgage-backed securities                                 7,834                284                  8              8,110
All other corporate bonds                                 53,216              3,346                510             56,052
                                                   ===============     ==============    ===============    ==============
Balance at December 31, 1998                       $     116,871       $      6,720      $         727      $     122,864
                                                   ===============     ==============    ===============    ==============
</TABLE>


<PAGE>


The   amortized   cost   and   estimated   market   value  of   investments   in
available-for-sale fixed maturities as of December 31, 1999, are shown below, in
thousands,   summarized  by  year  to  contractual   maturity.   Mortgage-backed
securities  are  listed   separately.   Expected   maturities  may  differ  from
contractual  maturities  because  borrowers may have the right to call or prepay
obligations with or without penalties.
<TABLE>
<CAPTION>
                                                                  Estimated
                                            Amortized               Market
                                              Cost                  Value
                                        -----------------     -----------------
                                                     (in thousands)

<S>                                    <C>                   <C>
Due in one year or less                 $       4,044         $        4,012
Due after one year through five years          34,580                 33,311
Due after five years through ten years         28,193                 26,367
Due after ten years                            28,796                 26,148
Mortgage-backed securities                      7,823                  7,725
                                        -----------------     -----------------
                                        $     103,436         $       97,563
                                        =================     =================
</TABLE>

A summary of unrealized  (depreciation)  appreciation  on  investments  in fixed
maturities and equity securities available-for-sale, which is reflected directly
in stockholders' equity as a component of accumulated other comprehensive (loss)
income, is as follows:
<TABLE>
<CAPTION>

                                                                   Ascent                          Westbridge
                                                    ----------------------------------------     ----------------
                                                       December 31,            March 31,           December 31,
                                                           1999                  1999                  1998
                                                    ------------------    -----------------     -----------------
                                                                          (in thousands)

<S>                                                <C>                   <C>                   <C>
Amortized cost                                      $       104,801       $    118,627          $    119,422
Estimated market value                                       98,876            118,627               125,439
                                                    ------------------    -----------------     -----------------

(Deficit) excess of market value to amortized
cost                                                         (5,925)                 -                 6,017
Estimated tax (benefit) provision                            (2,074)                 -                 2,106
                                                    ------------------    -----------------     -----------------
Unrealized (depreciation) appreciation, net of tax
                                                    $        (3,851)      $          -          $      3,911
                                                    ==================    =================     =================
</TABLE>


Proceeds from sales and maturities of  investments in fixed maturity  securities
were  approximately  $18.2 million for the nine months ended  December 31, 1999,
$7.1  million for the three  months  ended  March 31, 1999 and $25.1  million in
1998. Gross gains of $0.1 million and gross losses of $0.3 million were realized
on fixed  maturity  investment  sales during the nine months ended  December 31,
1999. Gross gains of $0.2 million and gross losses of $0.2 million were realized
on fixed maturity investment sales during the three months ended March 31, 1999.
Gross gains of $0.8 million and gross  losses of $0.4  million were  realized on
fixed maturity  investment  sales during 1998. The basis used in determining the
cost of securities sold was the specific identification method.

Included in fixed  maturities  at December  31, 1999 and 1998,  are  high-yield,
unrated or less than investment grade corporate debt securities  comprising less
than 1.3% and 3.2% of total cash and  invested  assets at December  31, 1999 and
1998, respectively.

Investment  securities on deposit with insurance  regulators in accordance  with
statutory  requirements  at December 31, 1999 and 1998 had a par value  totaling
$27.3 million and $28.2  million,  respectively.  At December 31, 1999 and 1998,
the Company had restricted cash and  investments  totaling $2.6 million and $2.5
million, respectively,  related to its receivables financing program (see NOTE 5
"Financing Activities").


<PAGE>


NOTE 4 - FUTURE POLICY BENEFITS

Future  policy  benefits for Accident and Health  insurance  products  have been
calculated using  assumptions  (which generally  contemplate the risk of adverse
deviation) for withdrawals, interest, mortality and morbidity appropriate at the
time the policies were issued.
The more material assumptions are as follows:

Withdrawals       Issues  through  1980 are based on industry  experience;  1981
                  through  1996  issues  are based on  industry  experience  and
                  Company  experience,  where  available.  Policies  acquired in
                  acquisitions  are based on  recent  experience  of the  blocks
                  acquired.

Interest          Issues  through  1980 are 6% graded to 4.5% in 25 years;  most
                  1981  through  1992  issues  are 10%  graded to 7% in 10 years
                  except for  certain  NationalCare  and  Supplemental  Hospital
                  Income  issues  which  are  8%  graded  to 6% in 8  years  and
                  LifeStyles  Products  which  are 9%  graded to 7% in 10 years.
                  1993 and later issues are 7% level.  Certain policies acquired
                  in 1992 are 6.4% level while other  policies  acquired in 1993
                  and 1994 are 6% level. Policies acquired in the acquisition of
                  NFIC and AICT are 7% level.

Mortality         Issues through 1980 use the 1955-1960  Ultimate Table;  issues
                  subsequent  to 1980  through 1992 use the  1965-1970  Ultimate
                  Table. 1993 and later issues use the 1975-1980 Ultimate Table.
                  Policies  acquired in acquisitions use the 1965-1970  Ultimate
                  Table.

Morbidity         Based on industry  tables  published  in 1974 by  Tillinghast,
                  Nelson  and  Warren,   Inc.,  as  well  as  other   population
                  statistics and morbidity studies.


NOTE 5 - FINANCING ACTIVITIES

Credit Arrangement. The Company finances the majority of its obligations to make
commission  advances  through Ascent Funding Inc.  ("AFI"),  an indirect  wholly
owned subsidiary.  On June 6, 1997,  Westbridge  Funding  Corporation,  now AFI,
entered into a Credit Agreement dated as of such date with LaSalle National Bank
(the  "Credit  Agreement").  See NOTE 14 -  "Extraordinary  Item."  This  Credit
Agreement provided AFI with a three-year,  $20.0 million revolving loan facility
(the "Receivables Financing"),  the proceeds of which are used to purchase agent
advance  receivables  from the  Insurance  Subsidiaries  and certain  affiliated
marketing companies. AFI's obligations under the Credit Agreement are secured by
liens upon  substantially  all of AFI's  assets.  In August  1999,  the  Company
amended the Credit  Agreement,  reducing the  revolving  loan facility to a $7.5
million  facility,  and extending the termination date to June 5, 2001 from June
5, 2000. As of December 31, 1999, $3.9 million was outstanding  under the Credit
Agreement  (weighted  average  interest  rate of 7.62%).  The  Company  incurs a
commitment fee on the unused portion of the Credit  Agreement at a rate of 0.50%
per annum. Interest of $0.3 million was expensed and paid in 1999.

AFI's obligations under the Credit Agreement have been guaranteed by Ascent (the
"Guaranty  Agreement"),  and the  Company  has  pledged  all of the  issued  and
outstanding  shares of the capital stock of AFI, NFL and NFIC as collateral  for
that  guaranty.  As of December 31, 1999,  there were no events of default under
the  Guaranty  or  Credit   Agreements,   which  were  amended  to  reflect  the
recapitalization of the Company.

In July 1999, Ascent  Management,  Inc. ("AMI") entered into a $3.3 million term
loan agreement with LaSalle,  secured by  substantially  all of AMI's assets and
the guarantee of Ascent.  Principal is payable in 60 equal monthly  installments
beginning January 31, 2000.
Interest of $98,000 was expensed and paid in 1999.


<PAGE>


Prior to the  Effective  Date of the Plan  (see  NOTE 1),  the  Company  had the
following debt securities outstanding:

Senior Notes. During the first quarter of 1995, the Company issued $20.0 million
aggregate  principal  amount of its Senior Notes,  due 2002, in an  underwritten
public  offering.  The Senior  Notes were  issued at par,  less an  underwriting
discount of 4%. Contractual  interest on the Senior Notes was payable in monthly
installments.  In November  1997,  the Company  suspended the scheduled  monthly
interest payments on these Senior Notes.

Accrued but unpaid  interest on the Senior Notes  through the Petition  Date was
approximately $2.1 million.  The Plan required the continued accrual of interest
on the Senior Notes from the Petition  Date to the Effective  Date.  Accrued but
unpaid  interest on the Senior Notes from the Petition Date to December 31, 1999
totaled approximately $0.6 million.  Contractual interest continued to accrue at
a rate of $6,111 per day from January 1, 1999 through the Effective Date.

As of the Effective  Date,  these Senior Notes were canceled,  extinguished  and
retired.  As more fully  described in NOTE 1, holders of Allowed 11% Senior Note
Claims held by creditors  other than CSFB received cash payments  totaling $15.2
million.

As more  fully  described  in NOTE 7, in  order  to  provide  the  Company  with
sufficient  funds to make the cash  distributions  to the holders of the Allowed
11% Senior  Notes under the Plan,  the  Company  entered  into a Stock  Purchase
Agreement with CSFB, a significant  noteholder,  pursuant to which CSFB, subject
to the  conditions  contained  therein,  purchased  all of the shares of the New
Preferred Stock which were not otherwise distributed under the Plan.

Convertible Notes.  During the second quarter of 1997, the Company completed the
sale of $70.0 million aggregate  principal amount of its Convertible  Notes, due
2004,  in  an  underwritten  public  offering.   Contractual   interest  on  the
Convertible Notes was payable in semi-annual  installments on May 1 and November
1 of each year,  commencing  November  1, 1997.  In November  1997,  the Company
suspended the scheduled  interest  payments on these  Convertible  Notes. At the
Petition Date,  approximately  $7.3 million of unpaid interest was accrued.  The
Company did not accrue interest on its Convertible Notes after the Petition Date
as it was unlikely  such  interest  would be paid under the Plan.  The amount of
contractual  interest that would have  otherwise  been accrued from the Petition
Date to December 31, 1998 totaled $2.7 million,  and such  contractual  interest
would have continued to accrue at $14,583 per day from January 1, 1999 until the
Effective Date.

As of the Effective Date, these  Convertible  Notes were canceled,  extinguished
and retired.  Holders of the  Convertible  Notes and allowed  general  unsecured
creditors received their pro rata share of 94% of the New Common Stock issued on
the Effective Date.

Total  interest paid on debt in 1998 and 1997 was $0.8 million and $3.0 million,
respectively.


<PAGE>


NOTE 6 - CLAIM RESERVES

The following table provides a reconciliation  of the beginning and ending claim
reserve balances, on a  gross-of-reinsurance  basis, for 1999, 1998 and 1997, to
the amounts reported in the Company's balance sheet:
<TABLE>
<CAPTION>

                                              Ascent                                 Westbridge
                                         ------------------    -------------------------------------------------------
                                            Nine Months         Three Months
                                               Ended                Ended
                                            December 31,           March 31,              Year Ended December 31,
                                         ------------------    ----------------     ----------------------------------
                                               1999                 1999                 1998               1997
                                         ------------------    ----------------     ---------------    ---------------

<S>                                     <C>                   <C>                  <C>                <C>
Balance at beginning of period (Gross)   $        41,068       $      44,116        $     51,784       $    39,186
  Less: reinsurance recoverables on
   claim reserves                                  1,871               1,765               2,955             1,456
                                         ------------------    ----------------     ---------------    ---------------
Net balance at beginning of period                39,197              42,351              48,829            37,730
Incurred related to:
  Current year                                    60,255              19,401              98,203           111,459
  Prior years                                      2,213               1,596                 (95)           22,512
                                         ------------------    ----------------     ---------------    ---------------
      Total incurred                              62,468              20,997              98,108           133,971
                                         ------------------    ----------------     ---------------    ---------------
Paid related to:
  Current year                                    47,300               5,277              67,911            77,168
  Prior years                                     17,090              18,874              36,675            45,704
                                         ------------------    ----------------     ---------------    ---------------
      Total paid                                  64,390              24,151             104,586           122,872
                                         ------------------    ----------------     ---------------    ---------------
Balance at end of period                          37,275              39,197              42,351            48,829
  Plus: reinsurance recoverables on
   claim reserves                                  1,501               1,871               1,765             2,955
                                         ==================    ================     ===============    ===============
Balance at end of period (Gross)         $        38,776       $      41,068        $     44,116       $    51,784
                                         ==================    ================     ===============    ===============
</TABLE>

Included in reinsurance  recoverables  on claim reserves is  approximately  $0.5
million,  $0.9 million, $0.7 million and $1.9 million relating to paid claims as
of  December  31,  1999,  March  31,  1999,  and  December  31,  1998 and  1997,
respectively.


NOTE 7 - PREFERRED STOCK

New  Preferred  Stock.  On March 24,  1999,  pursuant  to the Plan,  the Company
authorized  40,000 shares of non-voting  New  Preferred  Stock,  of which 23,257
shares are owned by CSFB (See NOTE 1).

The following summarizes the significant terms of the New Preferred Stock:

*    Stated value of $1,000 share.

*    Cumulative  annual  dividend rate of $102.50 per share payable  annually in
     arrears  on the last day of  January  in each year by  issuance  of cash or
     additional shares of New Preferred Stock.

*    Each share of New Preferred  Stock is convertible at any time into 204.8897
     shares of New  Common  Stock at an  initial  conversion  price of $4.88 per
     share, subject to customary anti-dilution adjustments.


The  New  Preferred  Stock  is  mandatorily  redeemable  in  cash  on the  fifth
anniversary  of the  Effective  Date in an amount  equal to the stated value per
share plus all accrued and unpaid dividends thereon to the date of redemption.

Effective  January 31,  2000,  the Company  declared a dividend in the amount of
$1,873,965 on preferred stock. The dividend was accrued at December 31, 1999 and
paid through the issue of 1,873 additional  shares of preferred stock and a $965
distribution of cash.


<PAGE>


Prior to the  Effective  Date of the Plan  (see  NOTE 1),  the  Company  had the
following preferred stock outstanding:

Old Preferred Stock

On April 12, 1994, the Company issued 20,000 shares of Old Preferred Stock, at a
price of $1,000  per  share.  The Old  Preferred  Stock was  issued in a private
placement  and was  subsequently  registered  with the  Securities  and Exchange
Commission  under a  registration  statement,  which was  declared  effective in
October 1994. The terms of the Old Preferred Stock included a cumulative  annual
dividend rate of 8.25%, subject to increase to 9.25%, upon non-compliance by the
Company with certain restrictions.

Seven  thousand  sixty-five  (7,065)  shares  of the Old  Preferred  Stock  were
converted  into shares of Old Common  Stock  during the year ended  December 31,
1998. The converted  shares of Old Preferred Stock had an aggregate  liquidation
preference of $7,065,000  and were  converted  into 840,071 shares of Old Common
Stock. Old Preferred Stock was convertible into 1,419,144 shares of Common Stock
as of December 31, 1998 at a conversion price of $8.41 per share.

One thousand  shares of the Company's Old Preferred  Stock were  converted  into
shares of Old Common  Stock,  par value  $.10 per  share,  during the year ended
December 31, 1997. The converted  shares of Old Preferred Stock had an aggregate
liquidation  preference of $1,000,000  and were converted into 118,905 shares of
Old Common Stock.

In November 1997, the Company  suspended the scheduled  dividend payments on its
Old Preferred  Stock.  The failure to declare and pay the scheduled  dividend on
the Old Preferred Stock constituted an event of  non-compliance  under the terms
of the Old Preferred Stock Agreement and resulted in an immediate  increase from
8.25%  to 9.25% in the rate at  which  dividends  accrued  on the Old  Preferred
Stock. At the Petition Date,  approximately  $1.3 million of cumulative,  unpaid
dividends  were  accrued.  The  Company  did  not  accrue  dividends  on its Old
Preferred  Stock after the Petition Date as it was unlikely such dividends would
be paid under the Plan.  The  amount of  contractual  dividends  that would have
otherwise  been accrued from the Petition Date to December 31, 1998 totaled $0.6
million, and such contractual dividends would have continued to accrue at $3,067
per day from January 1, 1999 until the Effective Date.

As of  the  Effective  Date,  shares  of  Old  Preferred  Stock  were  canceled,
extinguished and retired. Holders of Old Preferred Stock received their pro rata
share  of 4% of the New  Common  Stock  issued  on the  Effective  Date  and New
Warrants to purchase their pro rata share of up to 2% of the number of shares of
New Common  Stock  issued and  outstanding  on the  Effective  Date,  on a fully
diluted basis.




<PAGE>


NOTE 8 - DEFERRED POLICY ACQUISITION COSTS ("DPAC")

A summary of DPAC follows (in thousands):
<TABLE>
<CAPTION>

                                                 Ascent                               Westbridge
                                            ------------------    ----------------------------------------------------
                                            Nine Months Ended       Three Months
                                              December 31,             Ended
                                                                     March 31,            Year Ended December 31,
                                            ------------------    -----------------    ------------- --- -------------
                                                  1999                  1999               1998              1997
                                            ------------------    -----------------    -------------     -------------

<S>                                        <C>                   <C>                  <C>               <C>
Balance at beginning of period              $         15,039      $        14,177      $    19,165       $    83,871

Deferrals:
    Commissions                                        3,281                  555            3,339            27,933
    Issue Costs                                        2,551                  593            1,032             3,186
                                            ------------------    -----------------    -------------     -------------
                                                      20,871               15,325           23,536           114,990

Recognition of premium deficiency                          -                    -           (4,948)          (64,952)
Amortization expense                                  (1,478)                (286)          (4,411)          (30,873)

                                            ==================    =================    =============     =============
Balance at end of period                    $         19,393      $        15,039      $    14,177       $    19,165
                                            ==================    =================    =============     =============
</TABLE>

Recognition of Premium Deficiency.  During 1997, policy persistency  declined in
connection  with the  implementation  of certain rate  increases  together  with
intensified competitor solicitation of the Company's policyholders. These events
affected the future profit margins available to absorb  amortization of DPAC. As
a result of these adverse  changes,  the Company  undertook a revaluation of the
recoverability  of DPAC in the fourth  quarter of 1997.  Based on the results of
this  review  and the  impact  of  future  projected  premium  revenues  and the
discontinuance  of certain  lines of  business,  the Company  determined  that a
premium  deficiency for certain old lines of business existed as of December 31,
1997.

A premium  deficiency occurs when the projected present value of future premiums
associated  with these  policies  will not be  adequate  to cover the  projected
present value of future payments for benefits and related  amortization of DPAC.
GAAP requires the immediate  recognition of a premium deficiency by charging the
unamortized  DPAC to  expense.  Accordingly,  for the  quarter  and  year  ended
December  31,  1997,  the  Company  recorded  a  non-cash  charge to  expense of
approximately  $65.0 million and incurred a significant  loss for the year ended
December 31, 1997.  This adjustment had no impact on the Company's cash position
at December 31, 1997 nor did it affect the statutory  capital and surplus of the
Insurance Subsidiaries.

During  1998,  the  Company  continued  to  experience  adverse  loss ratios and
declining  persistency  on its  old  Medical  Expense  and  Medicare  Supplement
products,  although the loss ratios for 1998 reflected an improvement over 1997.
As a result of these factors, the Company undertook a further revaluation of the
recoverability  of DPAC in the third  quarter of 1998.  Based on the  results of
this  review,  the Company  determined  that an  additional  premium  deficiency
existed and recorded a non-cash charge to expense of approximately  $5.0 million
in the third  quarter of 1998.  This  adjustment  had no impact on the Company's
cash  position  or on  the  statutory  capital  and  surplus  of  the  Insurance
Subsidiaries.


NOTE 9 - INCOME TAXES

The  provision  for (benefit  from) income taxes is  calculated as the amount of
income  taxes  expected to be payable  for the current  year plus (or minus) the
deferred  income  tax  expense  (or  benefit)  represented  by the change in the
deferred income tax accounts at the beginning and end of the year. The effect of
changes in tax rates and federal  income tax laws are  reflected  in income from
continuing operations in the period such changes are enacted.

The tax effect of future taxable temporary differences  (liabilities) and future
deductible temporary differences (assets) are separately calculated and recorded
when such  differences  arise.  A valuation  allowance,  reducing any recognized
deferred tax asset,  must be recorded if it is determined that it is more likely
than not that such deferred tax asset will not be realized.

Taxes paid in 1999,  1998 and 1997 were  $80,000,  $1.1  million  and  $118,000,
respectively.  The Company and its wholly owned  subsidiaries,  other than NFIC,
AICT and FLICA,  file a consolidated  federal income tax return.  NFIC, AICT and
FLICA file separate federal income tax returns.

The provision for (benefit from) U.S. federal income taxes charged to continuing
operations was as follows:
<TABLE>
<CAPTION>

                                                 Ascent                                Westbridge
                                           -------------------    ------------------------------------------------------
                                           Nine Months Ended        Three Months
                                              December 31,              Ended
                                                                      March 31,             Year Ended December 31,
                                           -------------------    ------------------    --------------------------------
                                                  1999                  1999                1998              1997
                                           -------------------    ------------------    -------------     --------------
                                                                            (in thousands)

<S>                                       <C>                    <C>                   <C>               <C>
Current                                    $         (1,199)      $             67      $       231       $      (926)
Deferred                                              2,324                      -                -           (12,342)
                                           -------------------    ------------------    -------------     --------------
Total provision for (benefit from)
income taxes                               $          1,125       $             67      $       231       $   (13,268)
                                           ===================    ==================    =============     ==============
</TABLE>

Provision has not been made for state and foreign  income tax expense since such
expense is minimal. In addition, as described in NOTE 14 - "Extraordinary Item,"
the Company  recognized an extraordinary  loss of approximately $1.0 million for
the year  ended  December  31,  1997.  This  amount  has been  reflected  in the
accompanying financial statements, net of approximately $0.5 million in deferred
taxes.

The  differences  between  the  effective  tax rate and the  amount  derived  by
multiplying the (loss) income before income taxes by the federal income tax rate
for the Company's last three years was as follows:
<TABLE>
<CAPTION>

                                                 Ascent                                Westbridge
                                           -------------------    ------------------------------------------------------
                                               Nine Months           Three Months
                                                   Ended                Ended
                                               December 31,            March 31,             Year Ended December 31,
                                           -------------------    ------------------    --------------------------------
                                                   1999                  1999                1998              1997
                                           -------------------    ------------------    -------------     --------------
                                                                          (in thousands)

<S>                                       <C>                    <C>                   <C>               <C>
Statutory tax rate                                      34%                   34%             (34%)              (34%)
Unutilized loss carryforwards                            2%                   (9%)              31%               22%
Other items, net                                        (1%)                  (1%)               4%                -
                                           -------------------    ------------------    -------------     --------------
Effective tax rate                                      35%                   24%                1%              (12%)
                                           ===================    ==================    =============     ==============
</TABLE>



<PAGE>


Deferred  taxes are recorded for  temporary  differences  between the  financial
reporting  basis and the federal  income tax basis of the  Company's  assets and
liabilities.  The sources of these  differences  and the estimated tax effect of
each are as follows:
<TABLE>
<CAPTION>

                                                                 Ascent                            Westbridge
                                                --------------------------------------------    ------------------
                                                  December 31,              March 31,             December 31,
                                                      1999                     1999                   1998
                                               --------------------     -------------------     ------------------
<S>                                            <C>                      <C>                     <C>
Deferred Tax Assets:
   Deferred policy acquisition costs            $         2,970          $         4,632         $     5,035
   Policy reserves                                        4,150                    3,375               2,921
   Net operating loss carryforwards                      17,998                   18,524              28,149
   Other deferred tax assets                                964                     (415)              4,725
   Valuation allowance                                  (16,949)                 (16,949)            (36,449)
                                               --------------------     -------------------     ------------------
     Total deferred tax asset                             9,133                    9,167               4,381
                                               --------------------     -------------------     ------------------

Deferred Tax Liabilities
   Unrealized gain on investments                        (2,074)                       -               2,761
   Other deferred tax liabilities                         4,121                    1,820               1,620
                                               --------------------     -------------------     ------------------
     Total deferred tax liability                         2,047                    1,820               4,381
                                               --------------------     -------------------     ------------------

Net deferred tax asset                          $         7,086          $         7,347         $         -
                                               ====================     ===================     ==================
</TABLE>

As a result of the fresh start  reporting  (discussed at Note 2), a net deferred
tax asset of $7,347 was  established at March 31, 1999.  This deferred tax asset
was net of a valuation  allowance  of  approximately  $16.9  million for the tax
effect of all but $4.5 million of the Company's net  operating  loss  carryovers
($1.6 million net tax benefit at statutory rates), since it appeared more likely
than not that the excess  benefits would not be realized in future  periods.  At
December 31, 1999, net operating loss carryovers  included in total deferred tax
assets reflect the effects of current operations and miscellaneous adjustments.

Under the provisions of pre-1984 life insurance tax  regulations,  NFL was taxed
on the lesser of  taxable  investment  income or income  from  operations,  plus
one-half of any excess of income from operations over taxable investment income.
One-half  of the excess  (if any) of the income  from  operations  over  taxable
investment  income, an amount which was not currently subject to taxation,  plus
special deductions allowed in computing the income from operations,  were placed
in a special memorandum tax account known as the policyholders' surplus account.
The  aggregate  accumulation  in the account at December 31, 1999,  approximated
$2.5 million.  Federal  income taxes will become  payable on this account at the
then current tax rate when and to the extent that the account exceeds a specific
maximum,  or  when  and if  distributions  to  stockholders,  other  than  stock
dividends and other limited  exceptions,  are made in excess of the  accumulated
previously taxed income.  The Company does not anticipate any transactions  that
would cause any part of the amount to become taxable and, accordingly,  deferred
taxes  which  would  approximate  $0.9  million  have not been  provided on such
amount.

At  December  31, 1999 and 1998,  NFL has  approximately  $8.0  million and $7.8
million  in  its   shareholders   surplus  account  from  which  it  could  make
distributions  to the Company without  incurring any federal tax liability.  The
amount  of  dividends  which may be paid by NFL to the  Company  is  limited  by
statutory regulations.

At  December  31,  1999,  the  Company and its wholly  owned  subsidiaries  have
aggregate  net  operating  loss  carryforwards,  net of  bankruptcy  related tax
attribute  reductions of  approximately  $52.9 million for regular tax and $46.8
million for alternative minimum tax purposes,  which will expire in 2003 through
2014.




<PAGE>


NOTE 10 - STATUTORY CAPITAL AND SURPLUS

Under  the  applicable  laws of the  states  in which  insurance  companies  are
licensed,  the companies are required to maintain minimum amounts of capital and
surplus.  Under the laws of their  states of  domicile,  NFL  (Delaware),  FLICA
(Mississippi), NFIC (Texas), and AICT (Texas) are required to maintain aggregate
capital  and surplus of $.55  million,  $1.0  million,  $1.4  million,  and $1.4
million,  respectively.  The  following  states where the companies are licensed
require  greater  amounts of capital and  surplus:  California  $2.5  million of
capital  and $2.5  million of  surplus,  Washington  $4.8  million of  aggregate
capital and  surplus and  Nebraska  and  Tennessee  $1 million of capital and $1
million of surplus.  Accordingly,  the minimum  aggregate  statutory capital and
surplus  which NFL and NFIC must  each  maintain  is $5.0  million.  FLICA  must
maintain a minimum of $4.8  million  and AICT must  maintain  $2.0  million.  At
December 31, 1999,  aggregate statutory capital and surplus for NFL, FLICA, NFIC
and AICT was approximately $15.0 million,  $10.4 million,  $2.0 million and $3.6
million,  respectively.  Although  NFIC's  capital and surplus is less than $5.0
million at December  31,  1999,  NFIC  voluntarily  ceased  writing new business
effective  December 15, 1997.  Moreover,  NFIC's capital and surplus exceeds the
minimum  requirements  of its state of domicile,  Texas.  Statutory net (losses)
income for NFL,  FLICA,  NFIC and AICT for the year ended December 31, 1999 were
$(5.4) million,  $(5.0) million,  $(1.2) million and $.7 million,  respectively.
FLICA,  through its parent FHC, is wholly owned by NFL, and AICT is wholly owned
by NFIC.  Accordingly,  statutory capital and surplus of the parent includes the
statutory capital and surplus of the respective subsidiary.

Dividends  paid by the Insurance  Subsidiaries  are determined by and subject to
the regulations of the insurance laws and practices of the insurance departments
of their respective state of domicile. NFL, a Delaware domestic company, may not
declare or pay dividends from any source other than earned  surplus  without the
Delaware Insurance  Commissioner's approval. The Delaware Insurance Code defines
earned surplus as the amount equal to the unassigned funds as set forth in NFL's
most recent statutory annual statement including surplus arising from unrealized
gains or revaluation of assets.  Delaware insurance  companies may generally pay
ordinary  dividends or make  distributions  of cash or other property within any
twelve  month  period with a fair market value equal to or less than the greater
of 10% of surplus as regards  policyholders  as of the preceding  December 31 or
the net gain from operations for the twelve month period ending on the preceding
December 31. During 1999,  NFL is precluded  from paying  dividends  without the
prior approval of the Delaware  Insurance  Commissioner as its earned surplus is
negative.  Further,  NFL has  agreed to obtain  prior  approval  for any  future
dividends.  Effective  March 31,  1999,  the  Delaware  Department  of Insurance
approved  a  quasi  -  reorganization  of  the  Company's  surplus.   Under  the
reorganization,  the Company's  unassigned  surplus  deficit of $36,446,154  was
eliminated.  Likewise,  the  Company's  gross  paid in and  contributed  surplus
decreased by an equal amount.

NFIC and AICT, Texas domestic companies, may make dividend payments from surplus
profits or earned surplus  arising from its business.  The Texas  Insurance Code
defines earned  surplus as unassigned  surplus  excluding any unrealized  gains.
Texas life  insurance  companies may  generally  pay ordinary  dividends or make
distributions  of cash or other  property  within any twelve month period with a
fair market value equal to or less than the greater of 10% of surplus as regards
policyholders  as of the preceding  December 31 or the net gain from  operations
for the twelve month period  ending on the  preceding  December 31. Any dividend
exceeding  the  applicable  threshold is considered  extraordinary  and requires
prior  approval of the Texas  Insurance  Commissioner.  NFIC's and AICT's earned
surplus  is  negative,  and as such,  each  company  is  precluded  from  paying
dividends  during  1999  without  the  prior  approval  of the  Texas  Insurance
Commissioner.

FLICA, a Mississippi  domestic company, may make dividend payments only from its
actual  net  surplus  computed  as  required  by  law in  its  statutory  annual
statement.  Mississippi  life  insurance  companies  may  generally pay ordinary
dividends  or make  distributions  of cash or other  property  within any twelve
month period with a fair market value not exceeding the lesser of 10% of surplus
as regards  policyholders  as of the preceding  December 31 or the net gain from
operations for the twelve month period ending on the preceding  December 31. Any
dividend  exceeding the applicable  threshold  amount requires prior approval of
the Mississippi Insurance Commissioner. FLICA is precluded from paying dividends
to NFL during 1999  without  the prior  approval  of the  Mississippi  Insurance
Commissioner  as it  recorded  a net loss from  operations  for the year  ending
December 31, 1999.

Generally,  all states require insurance companies to maintain statutory capital
and surplus that is reasonable  in relation to their  existing  liabilities  and
adequate to their financial needs. Delaware, Texas and Mississippi also maintain
discretionary  powers relative to the declaration and payment of dividends based
upon an insurance company's financial position. In light of the statutory losses
incurred by the Insurance  Subsidiaries  during 1997 and 1998 and by NFL,  FLICA
and NFIC for 1999, the Company does not expect to receive any dividends from its
Insurance Subsidiaries for the foreseeable future.

In December 1992, the NAIC adopted the Risk-Based Capital for Life and/or Health
Insurers  Model Act  ("the  Model  Act").  The  Model  Act  provides  a tool for
insurance regulators to determine the levels of statutory capital and surplus an
insurer must  maintain in relation to its  insurance  and  investment  risks and
whether  there is a need for possible  regulatory  attention.  The Model Act (or
similar  legislation  or  regulation)  has been  adopted  in  states  where  the
Insurance  Subsidiaries  are  domiciled.  The Model Act provides  four levels of
regulatory  attention,  varying with the ratio of the insurance  company's total
adjusted  capital  (defined as the total of its  statutory  capital and surplus,
asset valuation reserve and certain other adjustments) to its risk-based capital
("RBC").  If a  company's  total  adjusted  capital is less than 100 percent but
greater  than or equal to 75  percent  of its RBC,  or if a  negative  trend (as
defined by the NAIC) has  occurred and total  adjusted  capital is less than 125
percent  of RBC  (the  "Company  Action  Level"),  the  company  must  submit  a
comprehensive  plan aimed at improving  its capital  position to the  regulatory
authority proposing corrective actions. If a company's total adjusted capital is
less than 75  percent  but  greater  than or equal to 50 percent of its RBC (the
"Regulatory  Action  Level"),  the  regulatory  authority will perform a special
examination of the company and issue an order specifying the corrective  actions
that must be followed.  If a company's  total  adjusted  capital is less than 50
percent  but  greater  than or equal to 35 percent  of its RBC (the  "Authorized
Control  Level"),  the  regulatory  authority  may  take  any  action  it  deems
necessary,  including  placing  the  company  under  regulatory  control.  If  a
company's  total  adjusted  capital  is less  than 35  percent  of its RBC  (the
"Mandatory  Control  Level"),  the  regulatory  authority must place the company
under its control.  The NAIC's  requirements  are  effective on a state by state
basis if, and when, they are adopted by the regulators in the respective states.
The Insurance  Departments of the States of Delaware and  Mississippi  have each
adopted the NAIC's Model Act. At December 31, 1999,  total adjusted  capital for
NFL, a Delaware domiciled company,  and FLICA, a Mississippi  domiciled company,
exceeded the respective Company Action Levels.

The Texas Department of Insurance  ("TDI") has adopted its own RBC requirements,
the stated  purpose of which is to require a minimum level of statutory  capital
and surplus to absorb the financial,  underwriting  and investment risks assumed
by an insurer.  Texas' RBC requirements differ from those adopted by the NAIC in
two principal respects: (i) they use different elements to determine minimum RBC
levels in their  calculation  formulas  and (ii) they do not  stipulate  "Action
Levels" (like those adopted by the NAIC) where corrective  actions are required.
However,  the  Commissioner  of the TDI  does  have the  power  to take  similar
corrective  actions if a company does not maintain the required minimum level of
statutory  capital and  surplus.  NFIC and AICT are  domiciled in Texas and must
comply with Texas RBC  requirements.  At December 31, 1999,  AICT's RBC exceeded
the  minimum  level  prescribed  by the TDI;  however,  NFIC's RBC was below the
minimum level prescribed by the TDI.

In December 1990, the Company and NFL entered into an agreement  under which NFL
issued  a  surplus  certificate  to the  Company  in  the  principal  amount  of
$2,863,000  in exchange  for  $2,863,000  of the  Company's  assets.  The unpaid
aggregate  principal under the surplus  certificate  bears interest at an agreed
upon  rate not to exceed  10% and is  repayable,  in whole or in part,  upon (i)
NFL's surplus  exceeding  $7,000,000,  exclusive of any surplus  provided by any
reinsurance  agreements and (ii) NFL receiving prior approval for repayment from
the Delaware  Insurance  Commissioner.  During 1993 and 1994,  NFL received such
approval and repaid $2,086,000 to the Company.  In 1999, with the prior approval
of the Delaware Insurance Commissioner,  NFL converted the remaining $776,961 of
the  surplus  debenture  to $600,000  of capital  stock and  $176,961 of paid in
surplus.

As a result of the  statutory  losses  sustained by the  Insurance  Subsidiaries
since 1997, material  transactions are subject to the approval by the department
of insurance in each  domiciliary  state. In December 1997, NFIC, in response to
these losses as well as the projected  inability to meet RBC requirements,  took
appropriate  steps  to  voluntarily  cease  the  sale  and  underwriting  of new
business. In the second quarter of 1998, AICT significantly reduced the level of
sales and  underwriting of new business.  NFIC and AICT have also entered into a
voluntary  consent order,  pursuant to Article 1.32 of the Texas Insurance Code,
providing for the continued monitoring of the operations of NFIC and AICT by the
TDI. The Company has no current plans to underwrite new products in NFIC.

The statutory  financial  statements of the Insurance  Subsidiaries are prepared
using  accounting  methods  which are  prescribed  or permitted by the insurance
department of the respective companies' state of domicile.  Prescribed statutory
accounting  practices  include a variety of  publications of the NAIC as well as
state laws,  regulations and general  administrative rules.  Permitted statutory
accounting practices encompass all accounting practices not so prescribed.


NOTE 11 - EMPLOYEE BENEFIT PLANS

In September  1986, the Company  established a retirement  savings plan ("401(k)
plan") for its employees.  As amended in August 1999, all employees are eligible
to participate in the 401(k) plan upon completion of six months of service.  The
401(k) plan is  qualified  under  Section  401(a) of the  Internal  Revenue Code
("IRC")  and the trust  established  to hold the  assets of the  401(k)  plan is
tax-exempt under Section 501(a) of the IRC. Ascent  Assurance,  Inc. is the plan
administrator,  and may amend, terminate or suspend contributions to the plan at
any  time  it may  deem  advisable.  Employees  who  elect  to  participate  may
contribute up to 10% of pre-tax compensation, including commissions, bonuses and
overtime.  The Company may make discretionary  contributions,  determined by the
Company's Board of Directors,  up to 50% of the employees'  first 3% of deferred
compensation.  Certain IRC required  limitations may be imposed for participants
who are  treated as "highly  compensated  employees"  for  purposes  of the IRC.
Participants vest 25% after one year of service, 50% after two years of service,
75% after three  years of service  and 100% after 4 years of  service.  Employee
contributions  are invested in any of ten investment  funds at the discretion of
the employee.  Generally,  the Company  contributions  are in the form of common
stock.  During the period of July 1998 through  December  1999, the Company made
cash contributions. The Company's contributions to the 401(k) plan in 1999, 1998
and 1997 approximated $123,000, $80,000 and $106,000, respectively.

The Company's incentive stock option plans adopted as of July 1, 1982, September
5, 1985, and March 26, 1992, and the Company's  restricted stock plan adopted as
of April 19, 1996,  have been canceled as of the Effective Date. All outstanding
grants  of  stock  options  or  restricted  stock  have  been   extinguished  as
contemplated by the terms of the Plan.

1999 Stock  Option  Plan.  Pursuant to the Plan (see NOTE 1), on March 24, 1999,
the Company's  Board of Directors  adopted the 1999 Stock Option Plan (the "1999
Plan")  in order to  further  and  promote  the  interest  of the  Company,  its
subsidiaries  and its  shareholders by enabling the Company and its subsidiaries
to  attract,   retain  and  motivate  employees,   non-employee   directors  and
consultants  (including  marketing  agents) or those who will become  employees,
non-employee  directors and consultants  (including  marketing  agents),  and to
align the interests of those individuals and the Company's  shareholders.  To do
this, the 1999 Plan offers equity-based  opportunities  providing such employees
and  consultants   with  a  proprietary   interest  in  maximizing  the  growth,
profitability and overall success of the Company and its subsidiaries.

The 1999 Plan became  effective  on the date of its  adoption by the Company and
will remain in effect until December 31, 2008, except with respect to awards (as
that term is defined in the 1999 Plan) then  outstanding,  unless  terminated or
suspended  by the Board of  Directors  at that time.  After such date no further
awards shall be granted under the 1999 Plan.

A summary of stock option  activity  for the year ended  December 31, 1999 is as
follows:

           Outstanding at January 1, 1999                           -
           Granted                                          1,106,750
           Exercised                                                -
           Forfeited / Cancelled                              (10,000)
                                                   =======================
           Outstanding at December 31, 1999                 1,096,750
                                                   =======================

The weighted average option exercise price was $2.88 for options  outstanding at
December 31, 1999.  The weighted  average  option  exercise  price was $2.85 and
$2.85, respectively, for options granted and forfeited during 1999.

The weighted  average fair value of options  granted during 1999 was $2.85.  The
fair value of each  option  grant is  estimated  on the date of grant  using the
Black-Scholes   option   pricing   model   with   the   following    significant
weighted-average  assumptions  used for  grants in 1999:  dividend  yield of 0%;
expected volatility of 1.142; risk free interest rate of 6.57%; expected life of
5 years.


Because the Company's employee stock options have characteristics  significantly
different  from those of traded  options,  and because  change 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.

Total  compensation  cost  recognized in the income  statement  for  stock-based
employee compensation awards was $300,471 for 1999.

If the fair value of the stock compensation granted had been accounted for under
FAS 123,  the pro forma net loss for the nine  months  ended  December  31, 1999
would have been  ($347,089),  or ($0.05)  per basic share or ($0.05) per diluted
share.  For purposes of pro forma  disclosure,  the estimated  fair value of the
stock  compensation is amortized to expense over the stock's vesting period. The
effect  on net  income  of the  stock  compensation  amortization  for the  year
presented  above is not likely to be  representative  of the effects on reported
net income for future years.

The following table summarizes  information about the stock options  outstanding
at December 31, 1999:


                            Weighted Average
                               Remaining
 Exercise       Number        Contractual         Weighted Average
  Prices     Outstanding         Life              Exercise Price
----------  -------------  -----------------    --------------------
  $0.01        335,700           9.25                    $0.01
  $3.00        135,000           2.25                    $3.00
  $4.39        626,050           9.25                    $4.39
           -------------  ------------------    --------------------
             1,096,750           8.39                     $2.88
           =============  ==================    ====================

There were no options exercisable at December 31, 1999.


NOTE 12 - REINSURANCE

The Insurance  Subsidiaries  cede  insurance to other insurers and reinsurers on
both life and accident and health business.  Reinsurance  agreements are used to
limit maximum losses and provide greater  diversity of risk. The Company remains
liable to  policyholders  to the extent the  reinsuring  companies are unable to
meet their  treaty  obligations.  Total  accident  and health  premiums  of $2.6
million,  $2.8 million, and $3.6 million, were paid to reinsurers in 1999, 1998,
and 1997,  respectively.  Face amounts of life  insurance in force  approximated
$31.7 million,  $37.5 million,  and $53.1 million at December 31, 1999, 1998 and
1997,  respectively.  In 1998,  NFL entered  into an excess of loss  reinsurance
agreement on a closed block of annually  renewable term life  insurance  whereby
NFL cedes claims in excess of $25,000 per year.  Premiums of $13,706 and $22,046
were  paid to the  reinsurer  for the year  ended  December  31,  1999 and 1998,
respectively.  No other life insurance products were reinsured during 1999, 1998
or 1997.

The  Company,  through  NFL and  FLICA,  entered  into a 90%  Coinsurance  Funds
Withheld Reinsurance Agreement (the "Agreement") with a reinsurer effective July
1, 1996 on the in force Specified  Disease business.  The Agreement  provided an
initial ceding  commission of $10.5 million,  of which $8.4 million was received
in cash.  This  ceding  commission  allowance  was to be  repaid,  inclusive  of
interest at 12.5%,  as statutory  profits  emerged from the  reinsured  block of
business.  For the year ended December 31, 1996, the repayment was $1.9 million.
The ceding  allowance  payable  for the year ended  December  31,  1996 was $8.6
million.  The Company  exercised  its option to  terminate  and  recapture  this
Agreement on April 1, 1997  consisting  of  approximately  $9.0 million in total
recapture costs  calculated at an interest rate of 15% less  approximately  $2.0
million  in  unearned  premium  reserves  due to NFL and  FLICA.  See  NOTE 14 -
"Extraordinary Item."

NOTE 13 - COMMITMENTS AND CONTINGENCIES

The Company's future minimum lease payments for non-cancelable operating leases,
relating  primarily to office facilities and data processing  equipment having a
remaining  term in excess of one year,  at December  31, 1999,  aggregated  $6.9
million.  The amounts due by year are as follows:  2000-$2.3 million;  2001-$1.6
million;   2002-$1.3  million;   2003-$0.8  million;   2004-$0.5  million;   and
thereafter-$0.4  million.  Aggregate rental expense included in the consolidated
financial  statements for all operating leases  approximated $2.4 million,  $3.2
million and $4.4 million in 1999, 1998 and 1997, respectively.

In the normal course of their business operations,  the Insurance  Subsidiaries,
continue to be involved in various claims,  lawsuits (alleging actual as well as
substantial  exemplary  damages)  and  regulatory  matters.  In the  opinion  of
management,  the disposition of these or any other legal matters will not have a
material  adverse  effect  on the  Company's  business,  consolidated  financial
position or results of operations.

The  Company's  Insurance  Subsidiaries  are subject to  extensive  governmental
regulation  and  supervision at both federal and state levels.  Such  regulation
includes premium rate levels, premium rate increases, policy forms, minimum loss
ratios,  dividend payments,  claims settlement,  licensing of insurers and their
agents,  capital  adequacy,   transfer  of  control,  and  amount  and  type  of
investments.  Additionally,  there are numerous health care reform proposals and
regulatory   initiatives  under   consideration  which  if  enacted  could  have
significant impact on the Company's results of operations.


NOTE 14 - EXTRAORDINARY ITEM

For the year ended  December 31, 1997,  the Company  recognized  an aggregate of
$1.0 million in  extraordinary  losses,  net of taxes. Of this amount,  (i) $0.6
million  resulted from the recognition of unamortized  financing fees associated
with the prepayment and refinancing of the Company's  revolving  credit facility
with Fleet  National Bank (See NOTE 5 - "Financing  Activities");  and (ii) $0.4
million  resulted from the  termination  and recapture of the block of reinsured
policies referred to in NOTE 12 - "Reinsurance."




<PAGE>


NOTE 15 - RECONCILIATION TO STATUTORY REPORTING

A  reconciliation  of capital  and  surplus  net income  (loss) as reported on a
statutory  basis  by the  Company's  Insurance  Subsidiaries  to  the  Company's
consolidated  GAAP  stockholders'  equity  (deficit) and net income (loss) is as
follows:
<TABLE>
<CAPTION>

                                                                                 Year Ended December 31,
                                                                  --------------------------------------------------
                                                                      1999              1998              1997
                                                                  -------------     -------------    ---------------
                                                                                    (in thousands)

<S>                                                              <C>              <C>              <C>
 Consolidated statutory capital and surplus                       $     16,990     $     17,937     $     21,592

    Deferred acquisition costs                                          19,393           14,177           19,165
    Future policy benefits and claims                                   (9,518)          (9,521)         (10,147)
    Unrealized gain or (loss) on investments, net of tax                (2,585)           3,037            3,446
    Income taxes                                                         3,363                -           (1,037)
    Nonadmitted assets                                                   1,490            2,123              832
    Asset valuation reserve                                                687              796            1,049
    Interest maintenance reserve                                         1,251            1,380            1,499
    Other                                                                 (273)             863              591
    Non-insurance subsidiaries and eliminations                         (7,014)         (92,872)         (82,408)

                                                                  -------------     -------------    ---------------
 GAAP stockholders' equity (deficit)                              $     23,784     $    (62,080)    $    (45,418)
                                                                  ==============   ==============   ================
</TABLE>
<TABLE>
<CAPTION>



                                                                                Year Ended December 31,
                                                                  ------------------------------------------------
                                                                      1999              1998              1997
                                                                  -------------     -------------    -------------
                                                                                     (in thousands)

<S>                                                             <C>               <C>              <C>
 Consolidated statutory net income                               $     (6,486)     $     (8,108)    $    (49,618)

    Deferred acquisition costs, net of amortization                     5,217               (41)             735
    Future policy benefits and claims                                     228               806            2,493
    Recognition of premium deficiency                                       -            (4,948)         (64,952)
    Coinsurance funds withheld reinsurance treaty                           -                 -            8,575
    Income taxes                                                       (4,366)            1,250           13,970
    Extraordinary item, net of tax                                          -                 -           (1,007)
    Other                                                                (384)             (468)            (676)
    Non-insurance subsidiaries and eliminations                         8,105           (10,776)          (6,664)

                                                                 -------------     --------------   --------------
 GAAP net income (loss)                                          $      2,314      $    (22,285)    $    (97,144)
                                                                 ============= =   ==============   ==============

</TABLE>



<PAGE>


NOTE 16 - QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

Summarized  quarterly  financial  information for each of the Company's last two
years of operations is as follows (in thousands, except per share data):
<TABLE>
<CAPTION>

                                                                                       Ascent
                                                                                     Quarter Ended
                                                                 -----------------------------------------------------
                                                                     June             September          December
                                                                     1999               1999               1999
                                                                 --------------     --------------    ----------------
<S>                                                             <C>                <C>               <C>
Premium income                                                   $    29,574        $    28,512       $    28,285
Net investment income                                                  2,333              2,222             2,185
Net realized loss on investments                                         (63)              (107)              (38)
Fee, service and other income                                          4,196              4,506             4,367
                                                                 --------------     --------------    ----------------
Total revenues                                                   $    36,040        $    35,133       $    34,799
                                                                 ==============     ==============    ================

Income before income taxes                                       $     1,622        $     1,071       $       538
Net income                                                             1,054                707               345
Preferred stock dividend                                                 647                596               631
Income (loss) applicable to common stockholders                          407                111              (286)
Earnings (loss) per share:
  Basic                                                          $      0.06        $      0.02       $     (0.04)
  Diluted                                                        $      0.06        $      0.02       $     (0.04)
</TABLE>
<TABLE>
<CAPTION>



                                                                                             Westbridge
                                                                                            Quarter Ended
                                                  -------------------------------------------------------------------------------
                                                      March             June           September         December        March
                                                      1998              1998             1998              1998          1999
                                                  ------------     -------------     -------------    -------------   -----------
<S>                                              <C>              <C>               <C>              <C>             <C>
Premium income                                    $   37,439       $    35,251       $    33,278      $   29,749      $  29,948
Net investment income                                  3,166             3,192             2,929           2,724          2,562
Net realized gains on investments                        262               267             1,576              37             41
Fee, service and other income                          4,236             4,155             4,215           4,174          4,263
                                                  ============     =============     =============    ============    ===========
Total revenues                                    $   45,103       $    42,865       $    41,998      $   36,684      $  36,814
                                                  ============     =============     =============    ============    ===========

(Loss) income before income taxes                     (5,725)           (3,629)           (6,663)         (6,037)           275
Net (loss) income                                     (4,966)            (3,149)          (6,907)         (7,263)           208
Preferred stock dividend                                 471               (62)              111               -              -
(Loss) income applicable to common stockholders       (5,437)           (3,087)           (7,018)         (7,263)           208
(Loss) earnings per share:
  Basic                                           $    (0.88)      $     (0.48)      $     (1.01)      $   (1.05)      $   0.03
  Diluted                                         $    (0.88)      $     (0.48)      $     (1.01)      $   (1.05)      $   0.03
</TABLE>




<PAGE>



                                   SCHEDULE II

                     ASCENT ASSURANCE, INC. (PARENT COMPANY)
                            CONDENSED BALANCE SHEETS

                                 (in thousands)


                                              December 31,        March 31,
                                            ---------------     -------------
                                                  1999              1999
                                            ---------------     -------------

Assets:
   Cash                                     $       4,027       $       658
   Short-term investments                           4,686             1,906
   Fixed maturities, at market value                    -             7,564
   Equity securities, at market value                   -               910
   Investment in consolidated subsidiaries         45,021            41,959
   Accrued investment income                            3               171
   Deferred tax assets                                646                 -
   Other assets                                        50                25
                                            ---------------     -------------
     Total Assets                           $      54,433       $    53,193
                                            ===============     =============
Liabilities:
   Dividends payable                        $       1,874        $        -
   Other liabilities                                5,518             2,833
                                            ---------------     -------------
     Total Liabilities                              7,392             2,833
                                            ---------------     -------------

Redeemable Convertible Preferred Stock             23,257            23,257
                                            ---------------     -------------

Stockholders' Equity:
   Common stock                                        65                65
   Capital in excess of par value                  27,338            27,038
   Accumulated other comprehensive loss,
     net of tax                                    (3,851)                -
   Retained Earnings                                  232                 -
                                            ---------------     -------------

     Total Stockholders' Equity                    23,784            27,103
                                            ---------------     -------------

       Total Liabilities, Redeemable
       Convertible Preferred Stock and
       Stockholders' Equity                 $      54,433        $   53,193
                                            ===============     =============



The financial  statement  should be read in  conjunction  with the  Consolidated
Financial Statements and the accompanying notes thereto.

<PAGE>


                                   SCHEDULE II

                    WESTBRIDGE CAPITAL CORP. (PARENT COMPANY)
                          (now Ascent Assurance, Inc.)
                             CONDENSED BALANCE SHEET

                                 (in thousands)


                                                         December 31,
                                                    ---------------------
                                                            1998
                                                    ---------------------

 Assets:
   Cash                                             $              482
   Short-term investments                                          503
   Fixed maturities, at market value                            10,433
   Equity securities, at market value                            1,010
   Investment in consolidated subsidiaries                      39,584
   Accrued investment income                                       213
   Other assets                                                  3,088
                                                    ---------------------
   Total Assets                                     $           55,313
                                                    =====================
 Liabilities:
   Senior subordinated notes, net                   $           19,523
   Convertible subordinated notes                               70,000
   Interest and dividends payable                               11,315
   Other liabilities                                             4,620
                                                    ---------------------
   Total Liabilities                                           105,458
                                                    ---------------------

   Redeemable Convertible Preferred Stock                       11,935
                                                    ---------------------

 Stockholders' Equity:
   Common stock                                                    703
   Capital in excess of par value                               37,641
   Accumulated other comprehensive income,
     net of tax                                                  3,911
   Deficit                                                    (104,335)
                                                    ---------------------

   Total Stockholders' Deficit                                 (62,080)
                                                    ---------------------

   Total Liabilities, Redeemable Convertible
     Preferred Stock and Stockholders' Deficit      $           55,313
                                                    =====================




The financial  statements  should be read in conjunction  with the  Consolidated
Financial Statements and the accompanying notes thereto.


<PAGE>


                                   SCHEDULE II

                     ASCENT ASSURANCE, INC. (PARENT COMPANY)
                          CONDENSED STATEMENT OF INCOME

                                 (in thousands)




                                                      Nine Months Ended
                                                         December 31,
                                                            1999
                                                     --------------------

 Net investment income                               $            509
 Realized losses on investments                                  (376)
 Intercompany income derived from:
   Interest on Surplus Certificates                                58
   Interest on advances to subsidiaries                            22
 Other income                                                       3
                                                     --------------------
                                                                  216
                                                     --------------------

 Resolution of preconfirmation contingencies                   (1,235)
 General and administrative expenses                             (237)
 Taxes, licenses and fees                                          (1)
 Interest expense                                                   -
                                                     --------------------
                                                               (1,473)
                                                     --------------------
 Income before income taxes and equity in
   undistributed net earnings of subsidiaries                   1,689
 Provision for income taxes                                      (629)
                                                     --------------------
                                                                2,318
 Equity in undistributed net loss of
   Subsidiaries                                                  (212)
                                                     --------------------

 Net income                                                     2,106

 Preferred stock dividends                                      1,874
                                                     --------------------

 Income applicable to common stockholders            $            232
                                                     ====================




The financial  statements  should be read in conjunction  with the  Consolidated
Financial Statements and the accompanying notes thereto.


<PAGE>

<TABLE>
<CAPTION>

                                                              SCHEDULE II

                                               WESTBRIDGE CAPITAL CORP. (PARENT COMPANY)
                                                     (now ASCENT ASSURANCE, INC.)
                                                    CONDENSED STATEMENTS OF INCOME

                                                            (in thousands)


                                                                   Three Months
                                                                      Ended
                                                                    March 31,              Year Ended December 31,
                                                                -------------------    ---------------------------------
                                                                       1999                 1998               1997
                                                                -------------------    ---------------     -------------

<S>                                                            <C>                    <C>                 <C>
Net investment income                                           $            209       $       1,090       $     1,579
Realized gains on investments                                                 12                 475               984
Intercompany income derived from:
  Interest on Surplus Certificates                                            20                  78                78
  Rental of leasehold improvements and equipment                               -                 397             1,926
Interest on advances to subsidiaries                                         110                 254               266
Other income                                                                   -                 121               228
                                                                -------------------    ---------------     -------------
                                                                             351               2,415             5,061
                                                                -------------------    ---------------     -------------

General and administrative expenses                                         (112)              2,319             4,349
Reorganization expense                                                         -               7,856             1,324
Taxes, licenses and fees                                                      24                  45               164
Interest expense                                                             507               5,933             5,846
                                                                -------------------    ---------------     -------------
                                                                             419              16,153            11,683
                                                                -------------------    ---------------     -------------
Loss before income taxes and equity in undistributed
  net earnings of subsidiaries and FHC                                       (68)            (13,738)           (6,622)
  (Benefit from) provision for income taxes                                    -                (235)            3,939
                                                                -------------------    ---------------     -------------
                                                                             (68)            (13,503)          (10,561)
Equity in undistributed net earnings (losses) of
  subsidiaries and FHC                                                       276              (8,782)          (86,419)
                                                                -------------------    ---------------     -------------
Income (loss) before extraordinary item                                      208             (22,285)          (96,980)

Extraordinary loss (1)                                                         -                   -               164
                                                                -------------------    ---------------     -------------
     Net income (loss)                                                       208             (22,285)          (97,144)

Preferred stock dividends                                                      -                 520             1,572
                                                                -------------------    ---------------     -------------

Income (loss) applicable to common stockholders                 $            208       $     (22,805)      $   (98,716)
                                                                ===================    ===============     =============
</TABLE>
(1) From early extinguishment of debt, net of income tax benefit of $85.


<PAGE>


                                   SCHEDULE II

                     ASCENT ASSURANCE, INC. (PARENT COMPANY)
                        STATEMENT OF COMPREHENSIVE INCOME

                                 (in thousands)


                                                             Nine Months
                                                                Ended
                                                             December 31,
                                                         -------------------
                                                                1999
                                                         -------------------

Net income                                               $          2,106
Other comprehensive income (loss):
  Unrealized holding loss arising during period,
    net of tax                                                       (245)
  Reclassification adjustment of loss on sales of
    investments included in net income, net of tax                    245

Other comprehensive loss on investment in subsidiaries:
  Unrealized holding loss arising during period,
    net of tax                                                     (3,711)
  Reclassification adjustment of loss on sales of
    investments included in net income, net of tax                   (140)
                                                         ====================
      Comprehensive loss                                 $         (1,745)
                                                         ====================


The financial  statements  should be read in conjunction  with the  Consolidated
Financial Statements and the accompanying notes thereto.


<PAGE>
<TABLE>
<CAPTION>



                                                              SCHEDULE II

                                               WESTBRIDGE CAPITAL CORP. (PARENT COMPANY)
                                                     (now ASCENT ASSURANCE, INC.)
                                                  STATEMENTS OF COMPREHENSIVE INCOME

                                                            (in thousands)


                                                               Three Months Ended
                                                                    March 31,                      December 31,
                                                               --------------------    -------------------------------------
                                                                      1999                   1998                1997
                                                               --------------------    -----------------    ----------------

<S>                                                           <C>                     <C>                  <C>
      Net income (loss)                                        $             208       $     (22,285)       $    (97,144)
      Other comprehensive income (loss):
        Unrealized holding (loss) gain arising
           during period, net of tax                                        (331)                  6               1,285
        Reclassification adjustment of gain
           on sales of investments included in net
           income, net of tax                                                 (8)               (308)               (640)

      Other comprehensive income (loss) on investment
        in subsidiaries:
        Unrealized holding (loss) gain arising during
           period, net of tax                                             (1,628)                528               2,405
        Reclassification adjustment of (gain) loss on
           sales of investments included in net
           income, net of tax                                                (19)               (964)                542
                                                               ====================    =================    ================
      Comprehensive loss                                       $          (1,778)      $     (23,023)       $    (93,552)
                                                               ====================    =================    ================

</TABLE>

The financial  statements  should be read in conjunction  with the  Consolidated
Financial Statements and the accompanying notes thereto.

<PAGE>




<TABLE>
<CAPTION>

                                                              SCHEDULE II

                                                ASCENT ASSURANCE, INC. (PARENT COMPANY)
                                             STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

                                                 (in thousands, except per share data)



                                                                                       Accumulated                      Total
                                                                        Capital           Other                         Stock
                                               Common Stock            in Excess      Comprehensive      Retained      holders'
                                           Shares       Amount        of Par Value        Loss           Earnings       Equity

<S>                                      <C>         <C>            <C>              <C>               <C>          <C>
Balance at March 31, 1999                 6,500,000   $      65      $     27,038     $         -       $      -     $   27,103

Net income                                                                                                 2,106          2,106
Preferred stock dividend                                                                                  (1,874)        (1,874)
Other comprehensive loss on investment
  in subsidiaries                                                                          (3,851)                       (3,851)
Amortization of unearned compensation                                         300                                           300
                                        ============  ===========    ==============   ===============   ==========   ============
Balance at December 31, 1999              6,500,000   $      65      $     27,338     $    (3,851)      $    232     $   23,784
                                        ============  ===========    ==============   ===============   ==========   ============
</TABLE>
The financial  statements  should be read in conjunction  with the  Consolidated
Financial Statements and the accompanying notes thereto.
<PAGE>

<TABLE>
<CAPTION>

                                                              SCHEDULE II

                                 WESTBRIDGE CAPITAL CORP.(now ASCENT ASSURANCE, INC.) (PARENT COMPANY)
                                        STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

                                                 (in thousands, except per share data)

                                                                              Accumulated                               Total
                                                                                 Other                                  Stock-
                                                                  Capital    Comprehensive Retained                     holders'
                                               Common Stock      in Excess      Income     Earnings   Treasury Stock    Equity
                                            Shares     Amount   of Par Value    (Loss)     (Deficit)  Shares  Amount   (Deficit)
                                            ------     ------   ------------  ------------ ---------  ------  ------   ---------

<S>                                      <C>          <C>      <C>           <C>          <C>        <C>     <C>      <C>
Balance at December 31, 1996               6,039,994   $  604   $  29,226     $    1,057   $ 17,186   28,600  $(170)   $ 47,903

Net loss                                                                                    (97,144)                    (97,144)
Preferred stock dividend                                                                     (1,572)                     (1,572)
Other comprehensive income, net of tax                                               645                                    645
Other comprehensive income on
investments in subsidiaries, net of tax                                            2,947                                  2,947
Preferred stock converted to common          118,905       12         937                                                   949
Issuance of shares under stock
option plans                                  42,500        4         115                                                   119
Award and issuance of restricted shares       67,000        7       1,179                                                 1,186
Cancellation of treasury stock               (28,600)      (3)       (167)                           (28,600)   170           0
Shares purchased and canceled
under stock option plans                     (44,360)      (4)       (447)                                                 (451)
                                         ------------- -------- ------------  ------------ ---------- -------  ------  ----------
Balance at December 31, 1997               6,195,439      620      30,843          4,649    (81,530)       -      -     (45,418)

Net loss                                                                                    (22,285)                    (22,285)
Preferred stock dividend                                                                       (520)                       (520)
Other comprehensive loss, net of tax                                                (302)                                  (302)
Other comprehensive loss on
investments in subsidiaries, net of tax                                             (436)                                  (436)
Preferred stock converted to common          840,071       83       6,982                                                 7,065
Other, net                                       299        -        (184)                                                 (184)
                                         ------------- -------- -----------   ------------ ---------- -------  ------- ----------
Balance at December 31, 1998               7,035,809      703      37,641           3,911  (104,335)       -       -    (62,080)

Net income                                                                                      208                         208
Other comprehensive loss, net of tax                                                 (339)                                 (339)
Other comprehensive loss on
investments in subsidiaries, net of tax                                            (1,647)                               (1,647)
Cancellation of old preferred stock                                11,935                    (3,088)                      8,847
Issuance of new preferred stock                                                                (477)                       (477)
Cancellation of old common stock          (7,035,809)    (703)                                                             (703)
Issuance of new common stock               6,500,000       65      79,203                                                79,268
Fresh start adjustments                                          (101,741)        (1,925)    107,692                      4,026
                                         ============= ======== ===========   ============  =========  ======= ======= ==========
Balance at March 31, 1999                  6,500,000   $   65   $  27,038     $        -    $      -        -  $   -   $ 27,103
                                         ============= ======== ===========   ============  =========  ======= ======= ==========
</TABLE>

The financial  statements  should be read in conjunction  with the  Consolidated
Financial Statements and the accompanying notes thereto.
<PAGE>


                                   SCHEDULE II

                     ASCENT ASSURANCE, INC. (PARENT COMPANY)
                  CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                             STATEMENT OF CASH FLOWS

                                 (in thousands)


                                                            Nine Months
                                                              Ended
                                                            December 31,
                                                       ---------------------
                                                                1999
                                                       ---------------------

Cash Flows From Operating Activities:
  Net income                                           $           2,106
  Adjustments to reconcile net income to cash
   provided by operating activities:
  Equity in undistributed net income of subsidiaries                 212
  Accrued investment income                                          168
  Increase in other assets                                          (671)
  Increase in other liabilities                                    2,685
  Dividends received from subsidiaries                               300
  Other, net                                                      (2,263)
                                                       ---------------------
Net Cash Provided By Operating Activities                          2,537
                                                       ---------------------

Cash Flows From Investing Activities:
  Proceeds from sale of fixed maturity investments                 3,938
  Cost of fixed maturity investments acquired                       (699)
  Proceeds from sale of equity securities                            873
  Net change in short term investments                            (2,780)
  Capital contributions to subsidiaries                             (500)
                                                       ---------------------
Net Cash Provided by Investing Activities                            832
                                                       ---------------------

Cash Flows From Financing Activities:
  Net Cash Provided By Financing Activities                            -
                                                       ---------------------
Increase in Cash during the period                                 3,369
Cash at beginning of period                                          658
                                                       =====================
Cash at end of period                                  $           4,027
                                                       =====================



The financial  statements  should be read in conjunction  with the  Consolidated
Financial Statements and the accompanying notes thereto.
<PAGE>

<TABLE>
<CAPTION>


                                                              SCHEDULE II

                                               WESTBRIDGE CAPITAL CORP. (PARENT COMPANY)
                                                     (now ASCENT ASSURANCE, INC.)
                                             CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                                                        STATEMENT OF CASH FLOWS

                                                            (in thousands)


                                                                          Three Months
                                                                              Ended
                                                                            March 31,               Year Ended December 31,
                                                                         ----------------     ------------------------------------
                                                                              1999                 1998                1997
                                                                         ----------------     ---------------     ----------------

      <S>                                                               <C>                   <C>                 <C>

       Cash Flows From Operating Activities:
          Net income (loss)                                              $        208          $   (22,285)        $   (97,144)
          Adjustments to reconcile net income (loss) to cash
            used for operating activities:
          Equity in undistributed net (income) loss of subsidiaries              (276)               8,782              86,419
          Depreciation expense                                                      -                   89                 422
          Accrued investment income                                                42                   75                (238)
          Decrease (increase) in other assets                                   3,063               (1,062)             (2,485)
          (Decrease) increase in other liabilities                            (13,102)               6,263                 665
          Increase in interest and dividend payable                                 -                5,934               2,874
          Other, net                                                            9,589                  595               2,980
                                                                         ----------------     ---------------     ----------------
            Net Cash Used For Operating Activities                               (476)              (1,609)             (6,507)
                                                                         ----------------     ---------------     ----------------

       Cash Flows From Investing Activities:
          Proceeds from sale of investments                                     2,455                5,176              42,268
          Cost of investments acquired                                              -                    -             (57,366)
          Net change in short term investments                                 (1,403)               1,811              (1,192)
          Additions to leasehold improvements and equipment,
            net of retirements                                                       -                 (27)               (349)
          (Increase) decrease in other assets                                        -                (283)                288
          Capital contributions to subsidiaries                                  (400)              (6,321)            (43,105)
                                                                         ----------------     ---------------     ----------------
            Net Cash Provided by (Used For) Investing Activities                  652                  356             (59,456)
                                                                         ----------------     ---------------     ----------------

       Cash Flows From Financing Activities:
          Retirement of senior subordinated debentures                        (15,167)                   -                   -
          Issuance of preferred stock                                          15,167                    -                   -
          Decrease (increase) in other assets                                       -                  732              (1,914)
          Issuance of convertible notes                                             -                    -              70,000
          Retirement of note payable                                                -                    -              (1,103)
          Issuance of common stock                                                  -                    -                 140
          Purchase and cancellation of common stock                                 -                    -                (276)
                                                                         ----------------     ---------------     ----------------
            Net Cash Provided By Financing Activities                               -                  732              66,847
                                                                         ----------------     ---------------     ----------------
            Increase (decrease) in Cash During the Period                         176                 (521)                884
            Cash at Beginning of Period                                           482                1,003                 119
                                                                         ================     ===============     ================
            Cash at End of Period                                        $        658          $       482         $     1,003
                                                                         ================     ===============     ================

</TABLE>

The financial  statements  should be read in conjunction  with the  Consolidated
Financial Statements and the accompanying notes thereto.
<PAGE>

<TABLE>
<CAPTION>


                                                             SCHEDULE III

                                                  SUPPLEMENTARY INSURANCE INFORMATION

                                                            (in thousands)


                                                        Other
                                                        Policy
                               Deferred                 Claims                           Benefits  Amortization
                                Policy       Future      and                     Net       and      of Policy     Other
                              Acquisition    Policy    Benefits     Premium   Investment  Claims   Acquisition  Operating  Premiums
Segment                          Costs      Benefits   Payable      Revenue     Income   Expense      Costs     Expenses   Written*
--------------------------    -----------  ----------  --------    ---------  ---------- --------- ------------ ---------  --------
Ascent Assurance, Inc.
<S>                          <C>          <C>         <C>         <C>        <C>       <C>        <C>          <C>         <C>
Nine Months ended
  December 31, 1999:
Insurance operations          $  19,393    $  57,119   $ 38,776    $  86,371  $  5,223  $ 65,699   $    1,478   $ 26,488    $38,599
Other activities                      -            -          -            -     1,008         -            -     10,549
Corporate (parent company)            -            -          -            -       509         -            -     (1,473)
                              ==========   ==========  =========   ========== ========= =========  ===========  ==========
     Total                    $  19,393    $  57,119   $ 38,776    $  86,371  $  6,740  $ 65,699   $    1,478   $ 35,564
                              ==========   ==========  =========   ========== ========= =========  ===========  ==========

Westbridge Capital Corp.

Three Months ended
  March 31, 1999:
Insurance operations          $  15,039    $  54,738    $ 41,068   $  29,948  $  1,987  $  21,799  $      286   $ 10,402    $ 9,366
Other activities                      -            -           -           -       366          -           -      3,633
Corporate (parent company)            -            -           -           -       209          -           -        419
                              ==========   ==========   =========  ========== ========= ========== ===========   ========
     Total                    $  15,039    $  54,738    $ 41,068   $  29,948  $  2,562  $  21,799  $      286   $ 14,454
                              ==========   ==========   =========  ========== ========= ========== ===========   ========

Year ended December 31, 1998:
Insurance operations          $  14,177    $  53,871    $ 44,116   $ 135,717  $  8,314  $  99,419  $    4,411   $ 44,447    $31,216
Other activities                      -            -           -           -     2,607          -           -     24,274
Corporate (parent company)            -            -           -           -     1,090          -           -     16,153
                              ==========   ==========   =========  ========== ========= ========== ===========  =========
     Total                    $  14,177    $  53,871    $ 44,116   $ 135,717  $ 12,011  $  99,419  $    4,411   $ 84,874
                              ==========   ==========   =========  ========== ========= ========== ===========  =========

Year ended December 31, 1997:
Insurance operations          $  19,165    $  55,811    $ 51,784   $ 161,097  $  7,325  $ 136,866  $   30,873   $ 91,633    $73,611
Other activities                      -            -           -           -     1,547          -           -     27,564
Corporate (parent company)            -            -           -           -     2,151          -           -     11,373
                              ==========   ==========   =========  ========== ========= ========== ===========  =========
     Total                    $  19,165    $  55,811    $ 51,784   $ 161,097  $ 11,023  $ 136,866  $   30,873   $130,570
                              ==========   ==========   =========  ========== ========= ========== ===========  =========

</TABLE>

*Premiums Written--Amounts do not apply to life insurance.


<PAGE>


<TABLE>
<CAPTION>

                                                              SCHEDULE IV
                                                              REINSURANCE

                                                  (in thousands, except percentages)


                                                                                      Assumed                            Percentage
                                                                  Ceded to             From                               of Amount
                                                 Gross              Other              Other              Net              Assumed
                                                 Amount           Companies          Companies           Amount            to Net
                                             ---------------    --------------     --------------    ---------------    -----------
<S>                                         <C>                <C>                <C>               <C>
                  ASCENT ASSURANCE, INC.
Nine months ended December 31, 1999:
Life insurance in force                      $     38,184       $     6,465        $          -      $     31,719                 -
                                             ===============    ==============     ==============    ===============
Premiums:
   Life                                      $        396       $        12        $          -      $        384                 -
   Accident and health                             86,794             1,849               1,042            85,987             1.21%
                                             ---------------    --------------     --------------    ---------------
       Total premiums                        $     87,190       $     1,861        $      1,042      $     86,371             1.21%
                                             ===============    ==============     ==============    ===============

                 WESTBRIDGE CAPITAL CORP.
Three months ended March 31, 1999:
Life insurance in force                      $     43,157       $     7,072        $          -      $     36,085                 -
                                             ===============    ==============     ==============    ===============
Premiums:
   Life                                      $        147       $         2        $          -      $        145                 -
   Accident and health                             30,041               722                 484            29,803             1.62%
                                             ---------------    --------------     --------------    ---------------
       Total premiums                        $     30,188       $       724        $        484      $     29,948             1.62%
                                             ===============    ==============     ==============    ===============

Year ended December 31, 1998:
Life insurance in force                      $     44,815       $     7,275        $          -      $     37,540                 -
                                             ===============    ==============     ==============    ===============
Premiums:
   Life                                      $        664       $        22        $          -      $        642                 -
   Accident and health                            136,291             2,812               1,596           135,075             1.18%
                                             ---------------    --------------     --------------    ---------------
       Total premiums                        $    136,955       $     2,834        $      1,596      $    135,717             1.18%
                                             ===============    ==============     ==============    ===============

Year ended December 31, 1997:
Life insurance in force                      $     53,065       $         -        $          -      $     53,065                 -
                                             ===============    ==============     ==============    ===============
Premiums:
   Life                                      $        832       $         -        $          -      $        832                 -
   Accident and health                            161,865             3,635               2,035           160,265             1.27%
                                             ---------------    --------------     --------------    ---------------
       Total premiums                        $    162,697       $     3,635        $      2,035      $    161,097             1.26%
                                             ===============    ==============     ==============    ===============
</TABLE>




<PAGE>


<TABLE>
<CAPTION>
                                   SCHEDULE V

                 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

                                 (in thousands)


                                                                Additions
                                                                 Charged                                                 Balance
                                              Balance at            to                                                      at
                                              Beginning         Costs and          Deductions                             End of
                                              of Period          Expenses        (Charge Offs)          Other*            Period
                                             -------------     -------------    -----------------    -------------     -----------
<S>                                        <C>               <C>              <C>                  <C>               <C>
             ASCENT ASSURANCE, INC.

Nine months ended December 31, 1999:
Allowance for doubtful agents' balances     $      5,125      $        123     $     (1,356)        $      2,168      $      6,060
                                            =============     =============    =================    =============     =============

            WESTBRIDGE CAPITAL CORP.

Three months ended March 31, 1999:
Allowance for doubtful agents' balances     $      5,176      $        195     $       (246)        $          -      $      5,125
                                            =============     =============    =================    =============     =============

Year ended December 31, 1998:
Allowance for doubtful agents' balances     $      4,531      $        645     $          -         $          -      $      5,176
                                            =============     =============    =================    =============     =============

Year ended December 31, 1997:
Allowance for doubtful agents' balances     $      1,729      $      2,802     $          -         $          -      $      4,531
                                            =============     =============    =================    =============     =============
</TABLE>



* Represents reclassification of allowance netted against receivable.


ITEM  9.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE

None.




<PAGE>


                                    PART III


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information  relating to directors and executive officers is incorporated herein
by reference to "Election of Directors" and "Certain  Information  Regarding the
Executive  Officers" from the Company's  definitive proxy statement for the 2000
Annual Meeting of Stockholders, which will be filed on or before April 30, 2000.


ITEM 11.  EXECUTIVE COMPENSATION

Executive  Compensation  is  incorporated  herein by  reference  to "Election of
Directors  --  Executive  Compensation"  from  the  Company's  definitive  proxy
statement for the 2000 Annual Meeting of Stockholders, which will be filed on or
before April 30, 2000.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information  pertaining to security  ownership of certain  beneficial owners and
management is incorporated  herein by reference to "Principal  Stockholders" and
"Election of Directors -- Security  Ownership of Management"  from the Company's
definitive  proxy statement for the 2000 Annual Meeting of  Stockholders,  which
will be filed on or before April 30, 2000.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information  pertaining  to certain  relationships  and related  transaction  is
incorporated  herein by reference to "Principal  Stockholders"  and "Election of
Directors"  from the Company's  definitive  proxy  statement for the 2000 Annual
Meeting of Stockholders, which will be filed on or before April 30, 2000.



<PAGE>


                                     PART IV


ITEM 14.  FINANCIAL STATEMENT SCHEDULES, EXHIBITS AND REPORTS ON FORM 8-K

(a)      The documents set forth below are filed as part of this report.

(1)  Financial Statements:

Reference  is made to ITEM 8,  "Index  to  Financial  Statements  and  Financial
Statement Schedules."

(2)  Financial Statement Schedules:

Reference  is made to ITEM 8,  "Index  to  Financial  Statements  and  Financial
Statement Schedules."

All  other  schedules  are  omitted  because  they  are not  applicable,  or not
required,  or because the  required  information  is  included in the  financial
statements or notes thereto.

(3)  Exhibits:

The following  exhibits are filed herewith.  Exhibits  incorporated by reference
are indicated in the parentheses following the description.

2.1  First  Amended Plan of  Reorganization  of Westbridge  Capital Corp.  Under
     Chapter  11  of  the  Bankruptcy   Code,  dated  as  of  October  30,  1998
     (incorporated  by reference to Exhibit 2 to the Company's Form 8-K filed on
     September 21, 1998).

2.2  Amended  Disclosure  Schedule   Accompanying  the  First  Amended  Plan  of
     Reorganization  of  Westbridge  Capital  Corp.  under  Chapter  11  of  the
     Bankruptcy  Code  (incorporated  by reference to Exhibit 2 to the Company's
     Form 8-K filed on September 21, 1998).

2.3  Findings  of Fact,  Conclusions  of Law,  and  Order  confirming  the First
     Amended Plan of  Reorganization  of Westbridge  Capital Corp. dated October
     30,  1998,  as  modified  (incorporated  by  reference  to Exhibit 2 to the
     Company's Form 8-K filed on December 29, 1998).

3.1  Second  Amended and Restated  Certificate of  Incorporation  of the Company
     filed  with  the   Secretary  of  State  of  Delaware  on  March  24,  1999
     (incorporated  by reference to Exhibit 3.1 to the Company's  Form 8-A filed
     on March 25, 1999).

3.2  Amended and Restated By-Laws of the Company, effective as of March 24, 1999
     (incorporated  by reference to Exhibit 3.2 to the Company's  Form 8-A filed
     on March 25, 1999).

4.1  Form of Common Stock Certificate  (incorporated by reference to Exhibit 4.1
     to the Company's Form 8-A filed on March 25, 1999).

4.2  Form of Warrant  Certificate,  included  in the Form of  Warrant  Agreement
     (incorporated  by reference to Exhibit 4.2 to the Company's  Form 8-A filed
     on March 25, 1999).

4.3  Form of Warrant  Agreement dated as of March 24, 1999,  between the Company
     and LaSalle  National Bank, as warrant agent  (incorporated by reference to
     Exhibit 4.3 to the Company's Form 8-A filed on March 25, 1999).

4.4  Form of Preferred Stock  Certificate  (incorporated by reference to Exhibit
     4.4 to the Company's Annual Report on Form 10-K for the year ended December
     31, 1998).

10.1 Credit  Agreement  dated  as of June 6,  1997  between  Westbridge  Funding
     Corporation and LaSalle National Bank (incorporated by reference to Exhibit
     10.1 to the Company's  Quarterly  Report on Form 10-Q for the quarter ended
     June 30, 1997).

10.2 Guaranty  Agreement dated as of June 6, 1997 by Westbridge Capital Corp. in
     favor of LaSalle  National Bank  (incorporated by reference to Exhibit 10.2
     to the Company's  Quarterly  Report on Form 10-Q for the quarter ended June
     30, 1997).

10.3 Pledge  Agreement  dated as of June 6, 1997  between  Westbridge  Marketing
     Corporation and LaSalle National Bank (incorporated by reference to Exhibit
     10.3 to the Company's  Quarterly  Report on Form 10-Q for the quarter ended
     June 30, 1997).

10.4 Security  Agreement  dated as of June 6, 1997  between  Westbridge  Funding
     Corporation  for the  benefit of LaSalle  National  Bank  (incorporated  by
     reference to Exhibit 10.4 to the  Company's  Quarterly  Report on Form 10-Q
     for the quarter ended June 30, 1997).

10.5 Second Amended and Restated Receivables Purchase and Sale Agreement,  dated
     as of June 6, 1997 between  National  Foundation  Life  Insurance  Company,
     National Financial Insurance Company,  American Insurance Company of Texas,
     Freedom  Life  Insurance  Company  of  America,   and  Westbridge   Funding
     Corporation  (incorporated  by reference  to Exhibit 10.5 to the  Company's
     Quarterly Report on Form 10-Q for the quarter ended June 30, 1997).

10.6 Amended and Restated Non-Insurance Company Sellers Receivables Purchase and
     Sale Agreement,  dated as of June 6, 1997 between  American Senior Security
     Plans, L.L.C.,  Freedom Marketing,  Inc., Health Care-One Insurance Agency,
     Health Care-One  Marketing  Group,  Inc.,  LSMG,  Inc.,  Senior Benefits of
     Texas,  Inc.,  and  Westbridge  Marketing   Corporation   (incorporated  by
     reference to Exhibit 10.6 to the  Company's  Quarterly  Report on Form 10-Q
     for the quarter ended June 30, 1997).

10.7 Lock-Up Agreement, dated as of September 16, 1998, by and among the Company
     and Credit Suisse First Boston  Corporation  (incorporated  by reference to
     Exhibit 10.1 to the Company's Form 8-K filed on September 21, 1998).

10.8 Stock  Purchase  Agreement,  dated as of September  16,  1998,  between the
     Company  and  Credit  Suisse  First  Boston  Corporation  (incorporated  by
     reference to Exhibit 10.2 to the Company's  Form 8-K filed on September 21,
     1998).

10.9 Employment  Agreement,  dated as of September  15,  1998,  by and among the
     Company,   Westbridge   Management   Corp.  and  Mr.  Patrick  J.  Mitchell
     (incorporated  by reference to Exhibit 10.3 to the Company's Form 8-K filed
     on September 21, 1998).

10.10Employment  Agreement  dated as of  September  15,  1998,  by and among the
     Company,   Westbridge   Management   Corp.   and  Mr.  Patrick  H.  O'Neill
     (incorporated  by reference to Exhibit 10.4 to the Company's Form 8-K filed
     on September 21, 1998).

10.11First  Amendment and Waiver to Credit  Agreement among  Westbridge  Funding
     Corporation, Westbridge Capital Corp. and LaSalle National Bank dated as of
     September  8, 1998  (incorporated  by  reference  to  Exhibit  10.11 to the
     Company's Annual Report on Form 10-K for the year ended December 31, 1998).

10.12First  Amendment to Guaranty  Agreement  dated as of March 24, 1999 between
     Westbridge Capital Corp. in favor of LaSalle National Bank (incorporated by
     reference to Exhibit 10.12 to the Company's  Annual Report on Form 10-K for
     the year ended December 31, 1998).

10.13Registration  Rights  Agreement  dated as of March  24,  1999  between  the
     Company and Special Situations Holdings, Inc. - Westbridge (incorporated by
     reference to Exhibit 10.13 to the Company's  Annual Report on Form 10-K for
     the year ended December 31, 1998).

10.141999  Stock  Option  Plan  dated  as of March  24,  1999  (incorporated  by
     reference to the Company's  Schedule 14A filed with the Commission on April
     30, 1999).

10.15Installment  Note Agreement dated July 20, 1999 between Ascent  Management,
     Inc. and LaSalle Bank National  Association  (incorporated  by reference to
     Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the quarter
     ended September 30, 1999).

10.16Second  Amendment to Credit  Agreement dated August 12, 1999 between Ascent
     Funding,  Inc.  and LaSalle  Bank  National  Association  (incorporated  by
     reference to Exhibit 10.5 to the  Company's  Quarterly  Report on Form 10-Q
     for the quarter ended September 30, 1999).

10.17Second  Amendment to Guaranty  Agreement dated July 20, 1999 between Ascent
     Assurance,  Inc. and LaSalle Bank  National  Association  (incorporated  by
     reference to Exhibit 10.6 to the  Company's  Quarterly  Report on Form 10-Q
     for the quarter ended September 30, 1999).

21.1* List of Subsidiaries of Ascent Assurance, Inc.

24.1* Consent of PricewaterhouseCoopers LLP

27.1* Financial Data Schedule.

(b)  Report on Form 8-K.

         The  Registrant  filed a Report  on Form 8-K dated  March  25,  1999 in
         response to Item 5, Other Events,  to report its emergence on March 24,
         1999 from the Chapter 11 Case commenced on September 16, 1998.

         The  Registrant  filed a Report on Form 8-K dated  December 29, 1998 in
         response  to  Item  3,  Bankruptcy  or  Receivership,   to  report  the
         confirmation of its First Amended Plan of  Reorganization  (the "Plan")
         under Chapter 11 of Title 11 of the United States  Bankruptcy  Court in
         the District of Delaware.  In conjunction with this filing, the Company
         submitted a copy of the Confirmation Order with accompanying  exhibits,
         including a copy of the Plan as confirmed.




------------------------
*        Filed Herewith.



<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, on the 29th day of March,
2000.



                                             ASCENT ASSURANCE, INC.

                                    /s/ Cynthia B. Koenig
                                        Cynthia B. Koenig
                             Senior Vice President and Chief Financial Officer
                                (Principal Financial and Accounting Officer)


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 and on the date indicated.


<TABLE>
<CAPTION>
SIGNATURE                                         TITLE                                       DATE
---------------------------------- ------------------------------------------- ------------------------

<S>                                             <C>                                         <C>
 /s/ Patrick J. Mitchell                          Director, Chairman of the Board             March 29, 2000
--------------------------
(Patrick J. Mitchell)                             and Chief Executive Officer
                                                  (Principal Executive Officer)


 /s/ John H. Gutfreund                            Director                                    March 29, 2000
(John H. Gutfreund)

 /s/ Richard H. Hershman                          Director                                    March 29, 2000
(Richard H. Hershman)

 /s/ Michael A. Kramer                            Director                                    March 29, 2000
(Michael A. Kramer)

 /s/ Robert A. Peiser                             Director                                    March 29, 2000
(Robert A. Peiser)

 /s/ James K. Steen                               Director                                    March 29, 2000
(James K. Steen)

 /s/ Paul E. Suckow                               Director                                    March 29, 2000
(Paul E. Suckow)

</TABLE>




<PAGE>


                                INDEX OF EXHIBITS




Exhibit
Number   Description of Exhibit

21.1*           List of Subsidiaries of Ascent Assurance, Inc.

24.1*           Consent of PricewaterhouseCoopers LLP

27.1*           Financial Data Schedule.






* Filed Herewith


<PAGE>


<TABLE>
<CAPTION>
                                  Exhibit 21.1


                     SUBSIDIARIES OF ASCENT ASSURANCE, INC.


<S>                                                                                                 <C>
               Percentage Subsidiary                                                                 Ownership

  1.           National Foundation Life Insurance Company (Delaware)                                    100%

  2.           American Insurance Company of Texas (Texas)                                              100%

  3.           National Financial Insurance Company (Texas)                                             100%

  4.           Freedom Life Insurance Company of America (Mississippi)                                  100%

  5.           Freedom Holding Company (Kentucky)                                                       100%

  6.           Ascent Funding, Inc. (Delaware)                                                          100%

  7.           Foundation Financial Services, Inc. (Nevada)                                             100%

  8.           NationalCare(R) Marketing, Inc. (Delaware)                                                 100%

  9.           Westbridge Printing Services, Inc. (Delaware)                                            100%

10.            Ascent Management, Inc. (Delaware)                                                       100%

11.            Ascent Financial, Inc. (Delaware)                                                        100%

12.            Precision Dialing Services, Inc. (Delaware)                                              100%

13.            Senior Benefits, LLC (Arizona)                                                           100%

14.            American Senior Security Plans, LLC (Delaware)                                           100%

15.            Health Care-One Marketing Group, Inc. (Texas)                                            80%

16.            LifeStyles Marketing Group, Inc. (Delaware)                                              100%

17.            Health Care-One Insurance Agency, Inc. (California)                                      50%

18.            Pacific Casualty Company, Inc. (Hawaii)                                                  100%

</TABLE>




<PAGE>


                                  Exhibit 24.1


                       CONSENT OF INDEPENDENT ACCOUNTANTS


We  hereby  consent  to the  incorporation  by  reference  in this  Registration
Statement  on Form  S-8  (No.  333-82155)  of  Ascent  Assurance,  Inc.  and its
subsidiaries  of our reports dated March 29, 2000,  appearing on pages 28 and 29
of this Form 10-K.






 /s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP
Dallas, Texas
March 29, 2000