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, 2000
                          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 $9,750,000 as of March 29, 2001.

On March 29, 2001, 6,500,000 shares of Common Stock were outstanding.


<PAGE>





                             ASCENT ASSURANCE, INC.

                          2000 FORM 10-K ANNUAL REPORT

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

<S>        <C>                                                                           <C>
                                     PART I
ITEM 1.    Business                                                                        2

ITEM 2.    Properties                                                                      9

ITEM 3.    Legal Proceedings                                                               9

ITEM 4.    Submission of Matters to a Vote of Security Holders                             9

                                     PART II

ITEM 5.    Market for the Registrant's Common Stock and Related Stockholder Matters       10

ITEM 6.    Selected Consolidated Financial Data                                           11

ITEM 7.    Management's Discussion and Analysis of Results of Operations and
              Financial Condition                                                         13

ITEM 7A.   Quantitative and Qualitative Disclosures About Market Risk                     24

ITEM 8.    Financial Statements and Supplementary Data                                    26

ITEM 9.    Changes in and Disagreements with Accountants on Accounting
              and Financial Disclosure                                                    72

                                    PART III

ITEM 10.   Directors and Executive Officers of the Registrant                             73

ITEM 11.   Executive Compensation                                                         73

ITEM 12.   Security Ownership of Certain Beneficial Owners and Management                 73

ITEM 13.   Certain Relationships and Related Transactions                                 73

                                     PART IV

ITEM 14.   Financial Statement Schedules, Exhibits and Reports on Form 8-K                74
</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  life  and  health  insurance
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) telemarketing services, (ii)
printing  services  and  (iii)  renewal  commissions  for  prior  year  sales of
unaffiliated insurance products.

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, 2000:  Texas - 20 %, Florida -
11%,  North  Carolina - 6%,  Tennessee - 6% and  Arkansas - 6%.  During 2000 and
1999, new business was produced only in NFL and FLICA,  with FLICA  underwriting
approximately  88% of new policies  issued.  In April 2000, NFL began reinsuring
60% of the risk  under  new major  medical  policies  issued  by FLICA.  Premium
revenue, in thousands, for each Insurance Subsidiary is set forth below.
<TABLE>
<CAPTION>

                                          Year Ended December 31,
                                ------------------------------------------
                                    2000           1999            1998
<S>                            <C>             <C>            <C>
                                -----------    -----------     -----------
 FLICA:
      First-year                $  19,804      $  15,809       $   7,714
      Renewal                      23,516         14,938          11,769
                                -----------    -----------     -----------
                                   43,320         30,747          19,483
                                -----------    -----------     -----------
 NFL:
      First-year                   10,676          1,594           6,206
      Renewal                      44,796         55,231          66,285
                                -----------    -----------     -----------
                                   55,472         56,825          72,491
                                -----------    -----------     -----------
 NFIC:
      First-year                        -              -           4,149
      Renewal                      15,093         21,198          29,035
                                -----------    -----------     -----------
                                   15,093         21,198          33,184
                                -----------    -----------     -----------
 AICT:
      First-year                        -              -           1,092
      Renewal                       5,519          7,549           9,467
                                -----------    -----------     -----------
                                    5,519          7,549          10,559
 Other:
      First-year                      504              -               -
      Renewal                           -              -               -
                                -----------    -----------     -----------
                                      504              -               -
                                -----------    -----------     -----------
 Consolidated Premium Revenue   $ 119,908      $ 116,319       $ 135,717
                                ===========    ===========     ===========
</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.  The principal products currently marketed by NCM and underwritten by
the Insurance Subsidiaries are all medical expense reimbursement policies. These
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.  The principal product
groups  currently  underwritten  by the Insurance  Subsidiaries  are  summarized
below:

Comprehensive  major medical 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. All such products are guaranteed  renewable pursuant to
the Health Insurance  Portability and  Accountability  Act, 42 U.S.C. ss. 300 et
seq. ("HIPAA").

Hospital/surgical  major  medical  products  - These  products  are  similar  to
comprehensive  major  medical  products  except  that  benefits  are  limited to
hospital/surgical  services (services such as routine well care physician visits
and prescription drugs are excluded) and deductibles and coinsurance  provisions
are generally higher. All such products are guaranteed renewable pursuant to the
Health Insurance  Portability and Accountability  Act, 42 U.S.C. ss. 300 et seq.
("HIPAA").

Supplemental  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.  Benefits are payable directly to the insured  following
diagnosis of or treatment  for a covered  illness or injury.  Specified  disease
products are  generally  guaranteed  renewable by contract,  but are exempt from
HIPAA.

Major medical products comprise  approximately 95% of new business sales.  These
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  major  medical  products
currently   underwritten   by  the  Insurance   Subsidiaries   are   stringently
underwritten  and  include  a  para-med  examination  or  other  medical  tests,
depending on the age of the applicant.

Prior to 1998, the Insurance  Subsidiaries also underwrote  Medicare  Supplement
products  designed to provide  reimbursement for certain expenses not covered by
the Medicare program. 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.



<PAGE>


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 major medical 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  supplemental  specified  disease products are designed to provide
coverage  which is  supplemental  to major medical  insurance and may be used to
defray non-medical 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  National   Association  of  Insurance
Commissioners  ("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. 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.

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.

Effective September 28, 2000, NFL and FLICA changed their state of incorporation
from Delaware and Mississippi, respectively, to the state of Texas. As a result,
the Insurance  Subsidiaries are all Texas domestic  companies and are subject to
regulation under Texas insurance laws. The Texas Department of Insurance adopted
the  NAIC's  RBC Model Act  during  2000.  NFL's and  FLICA's  statutory  annual
statements for the year ended December 31, 2000 filed with the Texas  Department
of Insurance  reflected total adjusted capital in excess of Company Action Level
RBC; however,  FLICA did not meet the negative trend test. Due to adverse claims
experience  for major medical  products,  FLICA  required an additional  capital
contribution  in April 2001 to maintain  Company  Action  Level RBC at March 31,
2001 (see "Liquidity,  Capital Resources,  and Statutory Capital and Surplus" at
Item 7).

In 1998,  NFIC and AICT  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 Texas  Department  of  Insurance  in
response to losses sustained in 1997 and 1998 as well as the projected inability
to meet RBC requirements. Both NFIC and AICT ceased the sale and underwriting of
new business in 1998. At December 31, 2000,  AICT's RBC exceeded  Company Action
Level RBC; however,  NFIC's RBC only exceeded Authorized Control Level RBC. Both
NFIC and AICT are in compliance with the terms of the voluntary consent order.

Premium  Writing  Ratios.  Under  Florida  Statutes  Section  624.4095,  Florida
licensed  insurance  companies'  ratio of actual  or  projected  annual  written
premiums to current or projected  surplus with  regards to  policyholders  ("the
premium  writing  ratio")  may not  exceed  specified  levels  for gross and net
written  premiums as defined by the  statute.  If a company  exceeds the premium
writing ratio,  the Florida  Department of Insurance shall suspend the company's
certificate  of authority in Florida or establish by order  maximum gross or net
annual  premiums to be written by the company  consistent  with  maintaining the
ratios  specified.  At December 31, 2000,  the premium  writing ratio for FLICA,
which currently  underwrites  insurance policies in Florida,  exceeded the limit
mandated by Florida law. In April 2001,  FLICA  received  the  required  capital
contribution to meet the Florida premium writing ratio. As FLICA produces 88% of
the Company's new business and approximately 40% of its new business  production
is in the state of Florida,  maintaining  the  ability to write new  business in
Florida  is a  significant  factor  in  the  Company's  current  business  plan.
Continued  adverse  claims  experience  for major medical  products could have a
material  adverse  impact on FLICA's  ability to  maintain  compliance  with the
Florida  premium  writing ratio and a material  adverse  effect on the Company's
business (see "Liquidity,  Capital Resources, and Statutory Capital and Surplus"
at Item 7).

Dividends.  Dividends paid by the Insurance  Subsidiaries  are determined by and
subject to the  regulations  of the  insurance  laws and  practices of the Texas
Department  of  Insurance.  The Texas  Insurance  Code  allows  life and  health
insurance  companies to make dividend  payments  from surplus  profits or earned
surplus  arising  from its  business.  Earned  surplus is defined as  unassigned
surplus  excluding  any  unrealized  gains.  Texas  life  and  health  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. Dividends  exceeding the applicable
threshold are  considered  extraordinary  and require the prior  approval of the
Texas Insurance Commissioner.

The Insurance  Subsidiaries  are  precluded  from paying  dividends  during 2001
without prior  approval of the Texas  Insurance  Commissioner  as the companies'
earned  surplus is negative.  On September 30, 2000,  NFL  transferred  its 100%
ownership of FLICA to Ascent through an extraordinary  dividend  approved by the
Texas Department of Insurance.

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 $77,000 during the year ended December 31, 2000.

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.

The Financial Services Modernization Act of 1999 (the "Gramm-Leach-Bliley  Act",
or "GLBA")  contains  privacy  provisions  and  introduces new controls over the
transfer  and  use  of  individuals'   nonpublic   personal  data  by  financial
institutions,  including  insurance  companies,  insurance  agents  and  brokers
licensed by state insurance regulatory  authorities.  Numerous pieces of federal
and state  legislation  aimed at  protecting  the privacy of nonpublic  personal
financial and health  information  are pending.  The privacy  provisions of GLBA
became  effective in November 2000, but required  compliance  with GLBA has been
deferred  and is optional  until July 1, 2001.  By July 1, 2001,  the Company is
required  to  provide  written  notice of its  privacy  practices  to all of the
Company's  insureds.  In addition,  the Company must  provide  insureds  with an
opportunity  to state their  preferences  regarding  the  Company's use of their
non-public personal information.

GLBA provides that there is no federal preemption of a state's insurance related
privacy laws if the state law is more  stringent  than the privacy rules imposed
under GLBA.  Pursuant to the  authority  granted  under GLBA to state  insurance
regulatory  authorities  to  regulate,  the  National  Association  of Insurance
Commissioners has recently  promulgated a new model regulation called Privacy of
Consumer Financial and Health Information  Regulation.  Numerous state insurance
authorities  are  expected to adopt this model  regulation  before July 1, 2001,
while some states must pass legislative  reforms to allow  implementation of new
state  privacy rules  pursuant to GLBA.  At the present time,  the impact of the
privacy  provisions  of GLBA or any state privacy  legislation  on the Company's
financial condition or results of operations is not estimable.

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 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:

|X|  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.

|X|  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.

|X|  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.

|X|  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.

EMPLOYEES

At December 31,  2000,  the Company  employed  650 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

The Company's  principal  offices are located at 110 West Seventh  Street,  Fort
Worth,  Texas.  The lease for this facility expires in April,  2003.  Westbridge
Printing  Services,  Inc.,  the  Company's  wholly  owned  printing  subsidiary,
maintains its facility at 7333 Jack Newell Boulevard North,  Fort Worth,  Texas,
under a lease  agreement  which  expires in  October,  2005.  Precision  Dialing
Services,  the Company's wholly owned  telemarketing  subsidiary,  maintains its
facility at 9550  Forest  Lane,  Dallas,  Texas  under a lease  agreement  which
expires in December,  2003. 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.

ITEM 3 - 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 STOCKHOLDER MATTERS

Price  Range of Publicly  Traded  Securities.  The  Company's  Common  Stock and
Warrants  are  quoted on the  over-the-counter  bulletin  board  ("OTC  Bulletin
Board").  There  were  6,500,000  shares of Common  Stock and  971,266  Warrants
outstanding  as of March 27, 2001.  The high and low price listed for the Common
Stock and Warrants  reflects the OTC Bulletin Board closing bid prices since May
28, 1999, the initial trading date of the Company's securities.  The closing bid
price on December 31, 2000 was $1.00.  There were approximately 298 shareholders
of record on December  31, 2000,  representing  approximately  1,450  beneficial
owners.

OTC Bulletin Board
<TABLE>
<CAPTION>
                              Common Stock Warrants
                                High Low High Low

2000
<S>                  <C>      <C>           <C>      <C>
Fourth Quarter       $2.375   $0.813        $0.120   $0.016
Third Quarter         3.125    1.250         0.150    0.020
Second Quarter        3.125    1.625         0.250    0.040
First Quarter         2.875    1.688         0.250    0.040

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
</TABLE>

Dividend Policy

The Company does not anticipate declaring or paying cash dividends on its 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
11 - "Statutory  Capital And Surplus" to the  Company's  Consolidated  Financial
Statements at Item 8.


<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>

                                                                    ASCENT ASSURANCE, INC.

                                                     Year Ended       Nine Months Ended
                                                  December 31, 2000   December 31, 1999     March 31, 1999
                                                  -----------------   ------------------   ----------------
                                                             (in thousands, except per share data)

Statement of Operations Data:
<S>                                                  <C>                  <C>              <C>
Premiums                                             $ 119,908            $  86,371
Total revenues                                         149,586              105,972
(Loss) income before income taxes                      (12,939)               3,231
Net (loss) income (3)                                  (18,942)               2,106
Preferred stock dividends                                2,576                1,874
(Loss) income applicable to common shareholders        (21,518)                 232

(Loss) Earnings Per Share(3):
      Basic                                          $   (3.31)           $    0.04
      Diluted                                        $   (3.31)           $    0.04

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

Balance Sheet Data:
Cash and invested assets                             $ 112,235            $ 115,303           $ 129,142
Total assets                                           160,478              163,690             169,795
Policy liabilities                                     104,084               95,895              95,806
Notes payable(1)                                         8,947                7,162               5,088
Total liabilities                                      128,698              116,649             119,435
Redeemable convertible preferred stock(2)               27,705               23,257              23,257
Stockholders' equity                                     4,075               23,784              27,103

Book Value Per Share(3)                              $     .63             $   3.66           $    4.17
</TABLE>

(1)  In April 2001, the Company borrowed an additional $11,000.  See "Liquidity,
     Capital Resources, and Statutory Capital and Surplus" at Item 7.

(2)  At December 31, 2000,  consists of 27,705  shares of New  Preferred  Stock,
     which are  convertible,  at the  option  of the  holders  thereof,  into an
     aggregate of 5,676,469  shares of New Common Stock at a conversion price of
     $4.88 per share of New Common Stock.

(3)  Net loss for the year ended December 31, 2000 includes a non-cash charge of
     $10.4  million  related to an increase in the deferred tax asset  valuation
     allowance which increased loss per share and decreased book value per share
     by $(1.60).


<PAGE>








                                                    WESTBRIDGE CAPITAL CORP.
<TABLE>
<CAPTION>

                                              Three
                                              Months
                                              Ended
                                             March 31,            Year Ended December 31,
                                            ----------    -----------------------------------------
                                               1999           1998           1997         1996 (1)
                                            ----------    -----------    -----------    -----------
                                                     (in thousands, except per share data)
Statement of Operations Data:
<S>                                         <C>           <C>            <C>            <C>
Premiums                                    $ 29,948      $ 135,717      $ 161,097      $ 156,780
Total revenues                                36,814        166,650        188,904        175,146
Extraordinary loss, net of
       income tax                                  -              -          1,007              -
Net income (loss)                                208        (22,285)       (97,144)         8,261
Preferred stock dividends                          -            520          1,572          1,650
Income (loss) applicable to
       common stockholders                       208        (22,805)       (98,716)         6,611

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

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

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

</TABLE>



<PAGE>


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

GENERAL

Business Overview. 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 2 and 4 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  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)  telemarketing  services,  (ii)  printing  services,  and (iii)
renewal  commissions  received by the Company for prior year sales of  insurance
products for unaffiliated insurance carriers.

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
2000 presentation.

Forward-Looking Statements.  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.  The Private  Securities  Litigation  Reform Act of 1995  provides a
"safe harbor" for forward-looking  statements.  Various 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:

|X|  further adverse claims  experience or other events adversely  impacting the
     Company's liquidity position,
|X| actions that may be taken by insurance regulatory  authorities,  |X| adverse
developments in the timing or results of the Company's current
     strategic  business plan to return operations to profitability by improving
     claims experience and reducing overhead expenses,
|X|  the loss of key personnel,
|X|  and the  effect of  changing  economic  and market  conditions,  especially
     medical expense inflation and health care reform initiatives.

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.


<PAGE>


OPERATING RESULTS

Results of operations  for Ascent are reported for 2000 and 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 2000 and 1999 are  compared to  Westbridge's  results of
operations for the corresponding  period in 1998. (In thousands except insurance
operating ratios.)
<TABLE>
<CAPTION>

                                                                       Pro Forma
                                                         Ascent         Ascent      Westbridge
                                                      -----------    -----------    -----------
                                                          2000           1999          1998
                                                      -----------    -----------    -----------
<S>                                                   <C>            <C>            <C>
Premiums                                              $ 119,908      $ 116,319      $ 135,717
Other                                                     3,335          1,789            589
                                                      -----------    -----------    -----------
Total insurance operating revenue                       123,243        118,108        136,306

Benefits and claims                                     101,940         87,498         99,419
Commissions                                              17,969         16,264         22,692
(Increase) decrease in deferred acquisition costs        (6,818)        (5,216)            40
Recognition of premium deficiency                         1,500              -          4,948
General and administrative expense                       28,284         23,345         24,668
Taxes, licenses and fees                                  4,540          4,481          5,216

                                                      -----------    -----------    -----------
Total insurance operating expenses                      147,415        126,372        156,983
                                                      -----------    -----------    -----------
       Insurance operating results                      (24,172)        (8,264)       (20,677)
                                                      -----------    -----------    -----------

Fee and service income                                   17,056         15,543         16,191
Fee and service expenses                                 14,481         13,233         15,728
                                                      -----------    -----------    -----------

       Fee and service results                            2,575          2,310            463
                                                      -----------    -----------    -----------

Net investment income                                     9,741          9,302         12,011
Net realized (loss) gain on investments                    (454)          (167)         2,142
Interest expense on notes payable                          (629)          (403)          (881)
Interest expense on retired/canceled debt                     -              -         (5,933)
Resolution of pre-confirmation contingencies                  -          1,235              -
Reorganization expenses                                       -              -         (9,179)
                                                      -----------    -----------    -----------

       (Loss) income before income taxes                (12,939)         4,013        (22,054)

Income tax benefit (expense)                             (6,003)        (1,364)          (231)
                                                      -----------    -----------    -----------

       Net (loss) income                              $ (18,942)     $   2,649      $ (22,285)
                                                      ===========    ===========    ===========

Insurance operating ratios*
       Benefits and claims                                 85.0%          75.2%          73.3%
       Commissions                                         15.0%          14.0%          16.7%
       Increase in deferred acquisition costs              (5.7%)         (4.5%)          -
       Recognition of premium deficiency                    1.3%            -             3.6%
       General and administrative expense                  22.9%          19.8%          18.1%
       Taxes, licenses and fees                             3.8%           3.9%           3.8%
</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. For the year ended December 31, 2000, the loss before income taxes was
$(12.9) million  compared to income before income taxes of $4.0 million for 1999
and a loss  before  income  taxes of  $(22.1)  million  for  1998.  The  pre-tax
operating  loss for 2000 was  attributable  to losses  from the Group  Preferred
Provider  Organization  ("GPPO")  product,  the principal  major medical product
marketed  by FLICA  from  1998 to July 2000  which  represented  32% of  premium
revenue for 2000.  Such  pre-tax  loss  includes a non-cash  premium  deficiency
charge of $(1.5) million.  As discussed below, losses from the GPPO product were
principally driven by higher than expected claims frequency. Management believes
that  significant rate increase actions will reduce losses from the GPPO product
in 2001.  Due to losses from the GPPO  product,  FLICA has required  significant
capital  contributions during 2000 and 2001 to comply with statutory capital and
surplus  requirements.  Continued adverse claims experience for the GPPO product
could  have a  material  adverse  impact  on  FLICA's  ability  to meet  minimum
statutory  capital  and  surplus  requirements  and  maintain  its new  business
production at current levels (see  "Liquidity,  Capital  Resources and Statutory
Capital and Surplus" and Item 1 - Business, "Regulation").

In July 2000,  the Company  began  marketing a new major  medical  policy in all
significant  marketing  regions.  The new major  medical  policy is  designed to
produce a substantially  lower benefits and claims to premium ratio than the old
GPPO product.  Management  believes  that the new major medical  policy has been
well  accepted  by the  Company's  career  agency  force.  At  March  31,  2001,
annualized  premiums  in force  for the new  major  medical  policy  were  $13.8
million.

As a result of the fourth quarter losses from the old GPPO product,  the Company
has reported a  cumulative  pre-tax loss since the fresh start date of March 31,
1999.  Principally  as a  result  of  this  cumulative  pre-tax  loss  position,
generally  accepted  accounting  principles  ("GAAP")  require  that a valuation
allowance be provided for any net deferred tax asset. Accordingly, an additional
deferred tax asset  valuation  allowance  of $10.4  million was  established  at
December 31, 2000 which resulted in the Company  reporting income tax expense of
$6 million for the year ended  December 31, 2000 (see below and Note  11-"Income
Taxes"  to the  Company's  Consolidated  Financial  Statements  at Item 8.) This
adjustment had no impact on the Company's cash position at December 31, 2000 and
did not impact statutory capital and surplus of the Insurance Subsidiaries.

In comparing 1999 to 1998, operating results for 1998 were adversely impacted by
premium  deficiency  charges of $4.9  million,  reorganization  expenses of $9.2
million and interest expense on retired / canceled debt of $5.9 million.

The following narratives discuss the principal components of insurance operating
results.

Premiums.  The Insurance  Subsidiaries'  premium revenue is derived  principally
from the  following  medical  expense  reimbursement  products:  major  medical,
supplemental  specified disease and Medicare supplement.  Major medical 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.  Supplemental  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.  Prior to 1998, the Insurance Subsidiaries also
underwrote Medicare supplement products and continue to receive renewal premiums
from such policies.  Premium revenue, in thousands,  for each major product line
is set forth below:


<PAGE>


<TABLE>
<CAPTION>

                                                     Pro Forma
                                       Ascent          Ascent        Westbridge
                                    -----------     -----------     -----------
                                        2000            1999            1998
                                    -----------     -----------     -----------
Major medical:
<S>                                 <C>             <C>             <C>
First-year                          $  28,082       $  15,863       $  15,821
Renewal                                37,632          39,891          48,888
                                    -----------     -----------     -----------
                                       65,714          55,754          64,709
                                    -----------     -----------     -----------

Supplemental specified disease:
First-year                              1,394           1,352           1,818
Renewal                                26,287          27,917          30,546
                                    -----------     -----------     -----------
                                       27,681          29,269          32,364
                                    -----------     -----------     -----------

Medicare supplement:
First-year                                  -              34           1,477
Renewal                                23,927          30,526          36,554
                                    -----------     -----------     -----------
                                       23,927          30,560          38,031
                                    -----------     -----------     -----------
Other                                   2,586             736             613
                                    -----------     -----------     -----------
Consolidated Premium Revenue        $ 119,908       $ 116,319       $ 135,717
                                    ===========     ===========     ===========
</TABLE>


Total premiums increased by $3.6 million,  or 3.1%, for 2000 as compared to 1999
as new business  production  exceeded the expected  decline in renewal  premiums
from older,  closed blocks of business.  Major medical products comprised 95% of
new business sales for 2000 and represented 55% of consolidated  premium revenue
for 2000 as compared to 48% for 1999 and 1998.  Premiums related to the old GPPO
major  medical  product were $38.2  million,  $17.5 million and $3.2 million for
2000, 1999 and 1998,  respectively.  The Company began implementing  significant
rate increases on the old GPPO product in July 2000 and anticipates implementing
additional significant rate increases in 2001.

For 2000, approximately 88% of new business was underwritten by FLICA. Continued
adverse claims experience for the old GPPO product could have a material adverse
impact  on  FLICA's  ability  to meet  minimum  statutory  capital  and  surplus
requirements  and maintain its new business  production  at current  levels (see
"Liquidity,  Capital  Resources and Statutory  Capital and Surplus" and Item 1 -
Business, "Regulation").

For 1999,  premiums  decreased  $19.4  million,  or 14.3%,  from 1998 due to the
discontinuance  of the  sale  of  the  Medicare  supplement  product  line,  the
cancellation  of  blocks  of  business  and  decreased   persistency   from  the
implementation of premium rate increases.

Benefits and Claims.  Benefits and claims are comprised of (1) claims paid,  (2)
changes in claim reserves for claims incurred (whether or not reported), and (3)
changes in future policy benefit  reserves.  The ratio of consolidated  benefits
and  claims  to  consolidated  premiums  increased  to  85.0%  for  2000,  a 9.8
percentage point increase as compared to 1999. This increase in the benefits and
claim ratio increased  consolidated pre-tax losses for 2000 by $11.8 million for
2000. In the fourth quarter of 2000, claims payments exceeded  historical levels
due to full  implementation  of the Company's new claims data processing  system
which was converted to in May 2000. As a result,  the pending  claims  inventory
was significantly  reduced at December 31, 2000 and the Company  determined that
the benefits and claim ratio for the old GPPO product was  substantially  higher
than  expected.  Adverse  claims  experience  for the old GPPO  product  was due
primarily to higher than expected claims frequency, particularly for young women
and children. The increase in expected benefits and claim ratio for the old GPPO
product  resulted  in a  consolidated  claims and  benefit  ratio for the fourth
quarter of 2000 of 99.8% (see "Financial Condition - Claims Reserves").

Continued  adverse  claims  experience  for the old GPPO  product  could  have a
material adverse impact on FLICA's ability to meet minimum statutory capital and
surplus  requirements  (see "Liquidity,  Capital Resources and Statutory Capital
and Surplus").

For 1999, the 1.9 percentage  point increase in the ratio of benefits to premium
in comparison to 1998 was principally  attributable to unfavorable experience in
the major medical line of business  partially offset by favorable  experience in
the Medicare supplement line of business.

Commissions.  For 2000, the  commissions to premium ratio increased from 1999 by
1.0  percentage  point as a result of the  increase  in the  amount of new major
medical premiums and change in business mix. Commissions as a percent of premium
decreased  for 1999 as compared to 1998  principally  due 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.

General and administrative expense.  General and administrative expense for 2000
increased  over 1999  principally  due to increased new business  production and
non-recurring  expenses  related  to the  implementation  in  May,  2000  of the
Company's new policy administration and claims data processing systems.

Recognition of premium  deficiency.  In general,  a premium deficiency exists if
the  present  value of future cash flows plus  future  policy  benefit and claim
reserves at the  calculation  date is negative or less than net deferred  policy
acquisition costs. The calculation of future cash flows includes  assumptions as
to future rate increases and persistency.  The Company  routinely  evaluates the
recoverability  of deferred  acquisition  costs in  accordance  with GAAP.  As a
result of fourth quarter losses for the old GPPO product, the Company determined
that a premium  deficiency of $1.5 million  existed at December 31, 2000 related
to medical expense  reimbursement  products issued subsequent to the fresh start
date of March 31, 1999.  Accordingly,  deferred  policy  acquisition  costs were
reduced by $1.5 million at December 31, 2000.

Net Investment  Income.  Net investment income increased $0.4 million,  or 4.7%,
for 2000 as compared to 1999 due to an increase in interest  income  relative to
agent balance  receivables.  For 1999,  net  investment  income  decreased  $2.7
million,  or 22.6%,  from 1998 due to 16.2%  decrease  in  invested  assets  and
decreased  interest  income  from agent  balance  receivables.  Invested  assets
decreased  as a result of  payments of  reorganization  costs and  reduction  of
premiums  received  as a result of the  elimination  of  unprofitable  blocks of
business.


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 5% of the Company's  fixed  maturity  securities may be
invested in higher yielding, non-investment grade securities.

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

                                                                Ascent Assurance
                                                        ------------------------------
                                                            2000             1999
                                                        -------------    -------------

<S>                                                     <C>              <C>
Cash and cash equivalents                               $    2,658       $    5,110
                                                        -------------    -------------
Fixed Maturities (at market value):
     U.S. Government and related agencies                   10,462           10,688
     State, county and municipal                             1,982            1,867
     Finance                                                23,445           23,950
     Public utilities                                        6,787            9,128
     Mortgage-backed                                        13,302            7,725
     All other corporate bonds                              44,612           44,205
                                                        -------------    -------------
        Total Fixed Maturities                             100,590           97,563
                                                        -------------    -------------
Preferred stock                                              1,335            1,313
Other Invested Assets:
     Mortgage loans on real estate                              56              124
     Policy loans                                              342              289
     Short-term investments and certificates of deposit      7,254           10,904
                                                        -------------    -------------
        Total Other Invested Assets                          7,652           11,317
                                                        -------------    -------------
           Total Cash and Invested Assets               $  112,235       $  115,303
                                                        =============    =============

</TABLE>


The  following  table  summarizes  consolidated  investment  results  (excluding
unrealized gains or losses) for the indicated year:

<TABLE>
<CAPTION>
                                                                       Pro Forma
                                                   Ascent         Ascent       Westbridge
                                                 ----------     ----------     ----------
                                                    2000           1999           1998
                                                 ----------     ----------     ----------

<S>                                              <C>            <C>            <C>
Net investment income (1)                         $ 7,805        $ 8,016        $ 9,500
Net realized (loss) gain on investments              (454)          (167)         2,142
Average gross annual yield on fixed maturities        7.2%           7.2%           7.0%

</TABLE>


<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, 2000:
<TABLE>

<CAPTION>

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

Investment grade:
<S>                                        <C>                 <C>
     U.S. Government and agencies          $   22,754          22.6
     AAA                                        2,885           2.9
     AA                                         8,305           8.3
     A                                         38,552          38.3
     BBB                                       27,168          27.0
Non-Investment grade:
     BB                                           674           0.7
     B and below                                  252           0.2
                                          ------------     ------------
        Total fixed maturity securities   $  100,590          100.0
                                          ============     ============
</TABLE>


(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,
2000, 70.4%,  27.0% and 2.6% 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>

                                                    2000                       1999
                                         -------------------------   -------------------------
                                             Market                     Market
                                              Value         %            Value           %
                                         ------------  -----------   ------------  -----------
Scheduled Maturity                                            (in thousands)
------------------

<S>                                      <C>                 <C>     <C>                 <C>
Due in one year or less                  $    7,073          7.0     $   4,012           4.1
Due after one year through five years        28,877         28.7        33,311          34.2
Due after five years through ten years       26,327         26.2        26,367          27.0
Due after ten years                          25,011         24.9        26,148          26.8
Mortgage-backed securities                   13,302         13.2         7,725           7.9
                                         ------------  -----------   ------------  -----------
    Total fixed maturity securities      $  100,590        100.0     $  97,563         100.0
                                         ============  ===========   ============  ===========
</TABLE>

Deferred Tax Asset. As of December 31, 2000, the Company has reported cumulative
pre-tax losses since the fresh start date of March 31, 1999.  Realization of the
Company's  deferred  tax asset is  dependent  upon the  return of the  Company's
operations  to  profitability.  Pre-tax  losses  during  2000  were  principally
attributable  to  adverse  claims  experience  for the old  GPPO  major  medical
product. Management believes that the GPPO product losses can be reduced through
rate increase management. However, under applicable GAAP literature, projections
of  future  profitability  are  significantly  discounted  when  evaluating  the
recoverability  of deferred tax assets and do not overcome the negative evidence
of  cumulative  losses.  Accordingly,  the Company  increased  its  deferred tax
valuation  allowance  by $10.4  million to $18.3  million to fully  reserve  the
remaining  net  deferred  tax asset as of December  31,  2000.  Applicable  GAAP
literature further provides that the deferred tax asset valuation  allowance may
be eliminated  once the Company is no longer in a cumulative  loss position,  as
defined.

Claims  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.  Claim reserves  totaled $42.7 million at December 31,
2000 as  compared  to $38.8  million  at  December  31,  1999.  The  process  of
estimating  claim  reserves  involves the active  participation  of  experienced
actuarial  consultants  with input from the  underwriting,  claims,  and finance
departments.  The inherent uncertainty in estimating claim reserves is increased
when significant changes occur. Examples of such changes include: (1) changes in
economic  conditions;  (2)  changes  in state or federal  laws and  regulations,
particularly  insurance reform measures;  (3) changes in production  sources for
existing lines of business;  (4) writings of significant  blocks of new business
and (5)  significant  changes  in claims  payment  patterns.  As a result of the
implementation of a new claims  administration system in May 2000, the Company's
claims payment pattern  accelerated in the fourth quarter of 2000 which resulted
in a  significant  reduction in pending  claims  inventory at December 31, 2000.
This significant  change in the claims payment pattern has greatly increased the
inherent  uncertainty in estimating claim reserves at December 31, 2000. Because
claim reserves are estimates,  management  monitors  reserve adequacy over time,
evaluating new information as it becomes  available and adjusting claim reserves
as necessary. Such adjustments are reflected in current operations.

Management   considers  many  factors  when  setting  reserves  including:   (1)
historical trends; (2) current legal  interpretations of coverage and liability;
(3) loss  payments  and pending  levels of unpaid  claims;  and (4) product mix.
Based on these  considerations,  management believes that adequate provision has
been made for the  Company's  claim  reserves.  Actual  claims paid may deviate,
perhaps substantially, from such reserves.

Future Policy Benefit  Reserves.  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 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  policy benefit 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  2000 was  indicative  of  inadequate  pricing in the  Company's
principal major medical product marketed through June 2000.

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  (see  "Liquidity,  Capital  Resources  and Statutory  Capital and
Surplus").

Reinsurance.  As is customary in the insurance industry, the Company's Insurance
Subsidiaries   reinsure,   or  cede,   portions  of  the  coverage  provided  to
policyholders  to other  insurance  companies  on both an  excess  of loss and a
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 reinsures its risks under its major medical policies on an excess of
loss basis so that its net payments on any one life insured under the policy are
limited  for any one  calendar  year  to  $100,000.  Risks  under  its  Medicare
Supplement policies are not reinsured.  The Company's risks under its Accidental
Death  policies  are one  hundred  percent  (100%)  reinsured.  Under  its  life
insurance  reinsurance  agreement,  FLICA and NFL retains fifty percent (50%) of
the  coverage  amount of each of its life  insurance  policies  in force up to a
maximum of $65,000. NFL reinsures, through an excess of loss reinsurance treaty,
a closed  block of  annually  renewable  term  life  insurance  policies.  NFL's
retention limit is $25,000 per year. In accordance with industry  practice,  the
reinsurance  arrangements 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,  2000,  $1.5  million  of the $2.5  million  recoverable  from
reinsurers  related to paid losses.  Of this balance,  all was recoverable  from
reinsurers rated "A" or higher by the A.M. Best Company.

Statutory  Accounting  Practices.   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  return  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 "Liquidity,  Capital Resources and Statutory Capital
and Surplus").


LIQUIDITY, CAPITAL RESOURCES, AND STATUTORY CAPITAL AND SURPLUS

Ascent.   Ascent's  principal  assets  consist  of  the  capital  stock  of  its
subsidiaries and invested assets.  Accordingly,  Ascent's  principal  sources of
funds are comprised of dividends and advances from  non-insurance  subsidiaries.
The  Company's  principal  uses of cash  are for  capital  contributions  to its
Insurance  Subsidiaries  and general and  administrative  expenses.  The Company
funded capital contributions  totaling approximately $8.15 million, $5.9 million
and  $5.7  million  to  its  Insurance  Subsidiaries  in  2000,  1999  and  1998
respectively.  As of December 31, 2000, Ascent had approximately $4.3 million in
unrestricted  cash and invested  assets.  In February 2001,  Ascent  contributed
$4.25 million to FLICA.

During the first quarter of 2001, the Company  determined that continued adverse
claims  experience  for the old GPPO product  (see  "Operating  Results")  would
require  Ascent  to make  capital  contributions  to  FLICA in  excess  of those
originally  planned.  Ascent obtained debt financing (see below) and contributed
an additional  $11 million to FLICA in April 2001 to enable FLICA to maintain an
RBC Ratio greater than Company Action Level at March 31, 2001 and to comply with
the Florida premium writing ratio regulation (see "Business- Regulation" at Item
1).  If  the  adverse  claims  experience  for  the  old  GPPO  product  exceeds
management's  current  estimates,  Ascent  would be required to make  additional
capital  contributions to FLICA in excess of those currently projected for 2001.
Additional  financing  would be  required  by  Ascent  in order to make any such
"excess" contributions. As a result, continued adverse claims experience for the
old GPPO product or for other  products  written by the  Insurance  Subsidiaries
could have a material adverse effect on Ascent's liquidity and capital resources
and, due to potential  restrictions  on the ability of FLICA to  underwrite  new
policies, its results of operations.

Ascent  received  debt  financing  for  the  $11  million  capital  contribution
described  above  from a loan  made by Credit  Suisse  First  Boston  Management
Corporation,  which is an  affiliate  of Special  Situations  Holdings,  Inc. --
Westbridge (Ascent's largest stockholder). The credit agreement relating to that
loan provided  Ascent with total loan  commitments  of $11 million (all of which
has been drawn).  The loan bears interest at a rate of 12% per annum and matures
in April,  2004.  Absent any  acceleration  following  an event of default,  the
Company may elect to pay interest in kind by issuance of additional  notes.  The
credit  agreement  relating  to the loan  provides  for a  facility  fee of $1.5
million which is payable upon maturity or upon a change in control,  as defined.
Ascent's obligations are secured, pursuant to a guarantee and security agreement
and  pledge  agreements,  by  substantially  all of the assets of Ascent and its
subsidiaries  (excluding the capital stock and the assets of AICT,  FLICA,  NFL,
NFIC, NCM, Ascent Funding  Corporation and Ascent Management,  Inc., some or all
of which is pledged as collateral for receivables  financing  described  below).
Ascent's  subsidiaries  (other than those  listed  above)  have also  guaranteed
Ascent's  obligations under the credit agreement and the loan. Continued adverse
claims  experience  for the old GPPO  product  could result in events of default
under the credit agreement and related agreements.

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.
In December  2000,  the  Company  paid  preferred  stock  dividends  through the
issuance  of  2,575  additional  shares  of  preferred  stock.  Preferred  stock
dividends  accrued  at  December  31,  1999 were paid in  January  2000  through
issuance of 1,873 additional shares of preferred stock.

Insurance   Subsidiaries.   The  primary   source  of  cash  for  the  Insurance
Subsidiaries are premiums,  sales and maturity of invested assets and investment
income  while the primary  uses of cash are  benefits  and claims,  commissions,
general  and  administrative   expenses  and  taxes,  licenses  and  fees.  Cash
contributions  of $8.15  million  and  $15.25  million  were  funded in 2000 and
through April 2001,  respectively,  by Ascent to its Insurance  Subsidiaries  to
maintain  capital and surplus (see  "Ascent"  discussion  above).  The Company's
Insurance  Subsidiaries have recorded combined statutory losses of $17.0 million
for 2000 as compared to $6.5 million for 1999.  The increased  statutory  losses
resulted from 1) higher than expected claims and benefits for the old GPPO major
medical product (see "Operating Results") and 2) costs associated with increased
new business  production which must be expensed under statutory  accounting (for
GAAP, such costs are deferred and amortized as related premiums are recorded).

Dividends  paid by the Company's  Insurance  Subsidiaries  are determined by and
subject to the  regulations of the insurance laws and practices of the insurance
department of the state of domicile  ("Business -  Regulations"  at Item 1). The
Insurance  Subsidiaries  are precluded from paying dividends during 2001 without
the prior approval of the Texas Insurance  Commissioner as the Companies' earned
surplus is negative.

Inflation will affect claim costs on the Company's Medicare supplement and major
medical  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 major  medical  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
$4.9  million,  $2.6 million and $8.0  million for the years ended  December 31,
2000, 1999 and 1998,  respectively.  The increase in cash used for operations in
2000 as compared to 1999 is primarily due to an increase in the cash basis ratio
of benefits and claims to premiums and increases in general expenses relative to
the  implementation  of the  Company's  policy  administration  and claims  data
processing  systems.  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.

Net cash provided by investing activities for the years ended December 31, 2000,
1999  and  1998  totaled  $0.6   million,   $6.4  million  and  $13.3   million,
respectively.  Net cash  provided by investing  activities  in 1999 and 1998 was
primarily used to fund the Company's operating and financing activities.

Net cash provided by (used for) financing activities totaled $1.8 million,  $1.0
million and $(6.0) million for the years ended December 31, 2000, 1999 and 1998,
respectively.   Financing   activities  during  2000  include  $2.9  million  in
borrowings and $0.6 million in repayments  related to the Company's  Receivables
Financing Program (defined below), and $0.5 million in repayments related to the
term loan  facility.  Financing  activities  during 1999 include $3.3 million in
borrowings on the term loan  facility,  and $0.8 million in borrowings  and $3.2
million in repayments  related to the Company's  Receivables  Financing Program.
Cash flows for financing  activities for 1998 were related to the net borrowings
and repayments  associated with the Company's Receivables Financing program. The
Company's  net  financing  cash flow  increased  in 2000 and 1999 as a result of
increasing new business production and related agent's balances.

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.  As of December 31, 2000 and 1999, the Company's  allowance
for  uncollectable  commission  advances  was $3.7  million  and  $6.1  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. AFI has entered into a Credit Agreement (the "Credit Agreement") with
LaSalle Bank, NA ("LaSalle")  which  currently  provides AFI with a $7.5 million
revolving loan facility (the "Receivables Financing"), the proceeds of which are
used to  purchase  agent  advance  receivables  from  FLICA and NFL and  certain
affiliated  marketing  companies.  Effective  September  30,  2000,  the  Credit
Agreement was amended to extend the  termination  date to June 5, 2002, at which
time  the  outstanding  principal  and  interest  will  be due and  payable.  In
connection with this commission  advancing program,  at December 31, 2000, AFI's
net  receivables  from  subagents  totaled   approximately   $8.7  million  with
approximately $6.2 million outstanding under the Credit Agreement.

AFI's  obligations  under  the  Credit  Agreement  are  secured  by  liens  upon
substantially all of AFI's assets.  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,  FLICA and NFIC as collateral  for that
guaranty (the "Guaranty Agreement").  As of April 17, 2001, there were no events
of default under the Credit or Guaranty Agreements.  However,  continued adverse
claims  experience for the old GPPO major medical product could result in events
of default under the Guaranty Agreement, Credit Agreement and term loan facility
discussed below.

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, 2000,  approximately  $2.8 million was  outstanding  under the term
loan facility.

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 (91.8%) 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 4 -  "Investments"  to the Company's  Consolidated  Financial  Statements.)
Approximately  0.9% of the  Company's  fixed-income  portfolio  market  value is
comprised of less than investment  grade  securities.  The Company's  investment
policy allows up to 5% 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, 2000, 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 $4.4 million and $8.5
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  $4.6  million  and  $9.5  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                                                           27-28

Financial Statements:

Ascent Assurance, Inc. Consolidated Balance Sheets at December 31, 2000 and 1999                29

Ascent Assurance, Inc. Consolidated Statements of Operations for the Year
   Ended December 31, 2000 and the Nine Months Ended December 31, 1999                          30

Westbridge Capital Corp. Consolidated Statements of Operations for the Three Months
   Ended March 31, 1999 and the Year Ended December 31, 1998                                    31

Ascent Assurance, Inc. Consolidated Statements of Comprehensive Income for the
   Year Ended December 31, 2000 and the Nine Months Ended December 31, 1999                     32

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

Ascent Assurance, Inc. Consolidated Statements of Changes in Stockholders' Equity for
   the Year Ended December 31, 2000 and the Nine Months Ended December 31, 1999                 34

Westbridge Capital Corp. Consolidated Statements of Changes in Stockholders' Equity for
   the Three Months Ended March 31, 1999 and the Year Ended December 31, 1998                   35

Ascent Assurance, Inc. Consolidated Statements of Cash Flows for the Year Ended
   December 31, 2000 and the Nine Months Ended December 31, 1999                                36

Westbridge Capital Corp. Consolidated Statements of Cash Flows for the Three Months
   Ended March 31, 1999 and the Year Ended December 31, 1998                                    37

Notes to the Consolidated Financial Statements                                               38-60

Financial Statement Schedules:

II.  Condensed Financial Information of Registrant                                           61-69

III. Supplementary Insurance Information                                                        70

IV.  Reinsurance                                                                                71

V.   Valuation and Qualifying Accounts and Reserves                                             72
</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, 2000 and December 31, 1999,
and the  results  of their  operations  and their  cash flows for the year ended
December 31, 2000 and nine months ended  December  31, 1999 in  conformity  with
accounting  principles  generally  accepted in the United States of America.  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 of America,  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 our opinion.




/s/ PricewaterhouseCoopers LLP
Dallas, TX
April 17, 2001



<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 results of operations and
cash flows of Westbridge Capital Corp. and its subsidiaries for the three months
ended March 31, 1999 and for the year 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>


                             ASCENT ASSURANCE, INC.
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                       Year Ended
                                                                      December 31,
                                                                 2000             1999
                                                              -----------      -----------
Assets                                                   (in thousands, except per share data)
------
Investments:
  Fixed Maturities:
     Available-for-sale, at market value (amortized cost
<S>                                                        <C>              <C>
        $104,081 and $103,436)                                $ 100,590        $  97,563
  Equity securities, at market (cost $1,365)                      1,335            1,313
  Other investments                                                 398              413
  Short-term investments                                          7,254           10,904
                                                              -----------      -----------
            Total Investments                                   109,577          110,193

Cash                                                              2,658            5,110
Accrued investment income                                         1,965            2,030
Receivables from agents, net of allowance for doubtful
  accounts of $3,711 and $6,060                                   8,737            7,062
Deferred policy acquisition costs                                24,711           19,393
Deferred tax asset, net                                              -            7,086
Property and equipment, net of accumulated depreciation
  of $2,683 and $1,546                                            6,375            6,272
Other assets                                                      6,455            6,544
                                                              -----------      -----------
        Total Assets                                          $ 160,478        $ 163,690
                                                              ===========      ===========


Liabilities, Redeemable Convertible Preferred Stock and Stockholders' Equity
Liabilities:
  Policy liabilities and accruals:
    Future policy benefits                                     $  61,306       $  57,119
    Claim reserves                                                42,778          38,776
                                                               -----------     -----------
      Total Policy Liabilities and Accruals                      104,084          95,895

Accounts payable and other liabilities                            15,667          13,592
Notes payable                                                      8,947           7,162
                                                               -----------     -----------
        Total Liabilities                                        128,698         116,649
                                                               -----------     -----------

Redeemable convertible preferred stock                            27,705          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                                  27,620          27,338
  Accumulated other comprehensive loss, net of tax                (2,324)         (3,851)
  Retained Earnings                                              (21,286)            232
                                                               -----------     -----------
        Total Stockholders' Equity                                 4,075          23,784
                                                               -----------     -----------

        Total Liabilities, Redeemable Convertible
          Preferred Stock and Stockholders' Equity             $ 160,478       $ 163,690
                                                               ===========     ===========
</TABLE>

             See the Notes to the Consolidated Financial Statements.


<PAGE>


                             ASCENT ASSURANCE, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>


                                                              Year             Nine Months
                                                             Ended                Ended
                                                       December 31, 2000    December 31, 1999
                                                       -----------------    -----------------
Revenues:                                               (in thousands, except per share data)
  Premiums:
<S>                                                      <C>                  <C>
     First-year                                          $   30,984           $   14,350
     Renewal                                                 88,924               72,021
                                                         ------------         ------------
        Total Premiums                                      119,908               86,371

  Net investment income                                       9,741                6,740
  Fee and service income                                     20,391               13,069
  Net realized loss on investments                             (454)                (208)
                                                         ------------         ------------
        Total Revenue                                       149,586              105,972
                                                         ------------         ------------

Benefits, claims and expenses:
  Benefits and claims                                       101,940               65,699
  Increase in deferred acquisition costs                     (6,818)              (4,354)
  Commissions                                                25,010               17,891
  General and administrative expenses                        35,159               21,034
  Recognition of premium deficiency                           1,500                    -
  Taxes, license and fees                                     5,105                3,422
  Interest expense on notes payable                             629                  284
  Resolution of pre-confirmation contingencies                    -               (1,235)
                                                         ------------         ------------
        Total Expenses                                      162,525              102,741

(Loss) income before income taxes                           (12,939)               3,231
Federal income tax benefit (expense)                         (6,003)              (1,125)
                                                         ------------         ------------
        Net (Loss) Income                                   (18,942)               2,106

Preferred stock dividends                                     2,576                1,874
                                                         ------------         ------------
(Loss) income applicable to common stockholders          $  (21,518)          $      232
                                                         ============         ============

Basic and diluted net (loss) income per common share     $    (3.31)          $     0.04
                                                         ============         ============

Weighted average shares outstanding:
  Basic                                                       6,500                6,500
                                                         ============         ============
  Diluted                                                     6,500                6,510
                                                         ============         ============
</TABLE>

             See the Notes to the Consolidated Financial Statements.


<PAGE>


                            WESTBRIDGE CAPITAL CORP.
                          (now ASCENT ASSURANCE, INC.)
                      CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>



                                                    Three Months             Year
                                                        Ended               Ended
                                                    March 31, 1999     December 31, 1998
                                                  -----------------    -----------------
Revenues:                                          (in thousands, except per share data)
  Premiums:
<S>                                               <C>                  <C>
    First-year                                    $       3,121        $      19,161
    Renewal                                              26,827              116,556
                                                  -----------------    -----------------
       Total Premiums                                    29,948              135,717

  Net investment income                                   2,562               12,011
  Fee and service income                                  4,263               16,780
  Net realized loss on investments                           41                2,142
                                                  -----------------    -----------------
       Total Revenue                                     36,814              166,650
                                                  -----------------    -----------------

Benefits, claims and expenses:
  Benefits and claims                                    21,799               99,419
  Increase in deferred acquisition costs                   (862)                  40
  Commissions                                             6,688               33,907
  General and administrative expenses                     7,229               29,181
  Reorganization expense                                      -                9,179
  Recognition of premium deficiency                           -                4,948
  Taxes, licenses and fees                                1,059                5,216
  Interest expense on notes payable                         119                  881
  Interest expense on retire/cancelled debt                 507                5,933
                                                  -----------------    -----------------
       Total Expenses                                    36,539              188,704

Income (loss) before income taxes                           275              (22,054)
Federal income tax expense                                  (67)                (231)
                                                  -----------------    -----------------
       Net Income (Loss)                          $         208        $     (22,285)

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

Basic and diluted net income per common share     $        0.03        $       (3.43)
                                                  =================    =================

Weighted average shares outstanding:
   Basic                                                  7,032                6,640
                                                  =================    =================
   Diluted                                                7,032                6,640
                                                  =================    =================
</TABLE>

             See the Notes to the Consolidated Financial Statements.


<PAGE>


                             ASCENT ASSURANCE, INC.
                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


<TABLE>
<CAPTION>

                                                Year             Nine Months
                                               Ended                Ended
                                         December 31, 2000    December 31, 1999
                                         -----------------    -----------------
                                                     (in thousands)
<S>                                      <C>                  <C>
Net (loss) income                        $     (18,942)       $       2,106
Other comprehensive income (loss):
 Unrealized holding loss arising
   during period, net of tax                     1,227               (3,956)
 Reclassification adjustment of gain
   on sales of investments included
   in net income, net of tax                       300                  105
                                         -----------------    -----------------
Comprehensive Loss                       $     (17,415)       $      (1,745)
                                         =================    =================
</TABLE>

             See the Notes to the Consolidated Financial Statements.



<PAGE>


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


<TABLE>
<CAPTION>

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

                                           -----------------    -----------------
Comprehensive Loss                         $     (1,778)        $     (23,023)
                                           =================    =================
</TABLE>

             See the Notes to the Consolidated Financial Statements.




<PAGE>








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

                      (in thousands, except per share data)

<TABLE>
<CAPTION>

                                                                                    Accumulated
                                                                      Capital          Other         Retained          Total
                                                Common Stock         in Excess     Comprehensive     (Deficit)      Stockholders'
                                                ------------
                                             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
                                          ===========   =========    ============    ============    ===========    =============


  Net loss                                                                                             (18,942)         (18,942)
  Preferred stock dividend                                                                              (2,576)          (2,576)
  Other comprehensive income, net of tax                                                  1,527                           1,527
  Amortization of unearned compensation                                     282                                             282
                                          -----------   ---------    ------------    -------------   -----------    -------------
Balance at December 31, 2000               6,500,000    $    65      $   27,620      $   (2,324)     $ (21,286)     $     4,075
                                          ===========   =========    ============    =============   ===========    =============
</TABLE>



             See the Notes to the Consolidated Financial Statements.







<PAGE>







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

                      (in thousands, except per share data)
<TABLE>


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

<S>                                      <C>          <C>          <C>             <C>             <C>           <C>
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 STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>


                                                                Year             Nine Months
                                                                Ended               Ended
                                                          December 31, 2000    December 31, 1999
                                                          -----------------    -----------------
Cash Flow From Operating Activities:                      (in thousands, except per share data)
<S>                                                       <C>                  <C>
  Net (loss) income                                       $      (18,942)      $        2,106
  Adjustments to reconcile net income to cash used for
     operating activities:
        Recognition of premium deficiency                          1,500                    -
        Decrease in accrued investment income                         65                  139
        Increase in deferred acquisition costs                    (6,818)              (4,354)
        (Increase) decrease in receivables from agents            (1,675)               1,120
        Decrease (increase) in other assets                           88               (1,200)
        Increase in policy liabilities and accruals                8,189                   89
        Increase (decrease) in accounts payable and
            accruals                                               2,075               (4,949)
        Decrease in deferred income taxes, net                     7,086                  261
        Other, net                                                 3,557                1,707
                                                           ----------------    -----------------
Net Cash Used For Operating Activities                            (4,875)              (5,081)
                                                           ----------------    -----------------

Cash Flow From Investing Activities:
   Purchases of fixed maturity investments                       (55,678)              (9,001)
   Sales of fixed maturity investments                            49,463               17,096
   Maturities and calls of fixed maturity investments              4,631                1,132
   Net decrease in short term and other investments                3,665                  873
   Property and equipment purchased                               (1,443)              (4,193)
                                                           ----------------    -----------------
Net Cash Provided By Investing Activities                            638                5,907
                                                           ----------------    -----------------

Cash Flow From Financing Activities:
  Issuance of notes payable                                        2,873                4,129
  Repayment of notes payable                                      (1,088)              (2,055)
                                                           ----------------    -----------------
Net Cash Provided By Financing Activities                          1,785                2,074
                                                           ----------------    -----------------

Increase (Decrease) In Cash During Period                         (2,452)               2,900
Cash At Beginning Of Period                                        5,110                2,210
                                                           ----------------    -----------------
Cash At End Of Period                                      $       2,658       $        5,110
                                                           ================    =================
</TABLE>


             See the Notes to the Consolidated Financial Statements.


<PAGE>


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

<TABLE>
<CAPTION>


                                                              Three Months            Year
                                                                 Ended               Ended
                                                             March 31, 1999     December 31, 1998
                                                           -----------------    -----------------
Cash Flows From Operating Activities:                       (in thousands, except per share data)
<S>                                                        <C>                  <C>
  Net income (loss)                                        $         208        $     (22,285)
  Adjustments to reconcile net income (loss) to cash
    provided by (used for) operating activities:
      Recognition of premium deficiency                                -                4,948
      (Increase) decrease in deferred acquisition costs             (862)                  40
      Decrease in receivables from agents                          1,678               10,643
      (Increase) decrease in other assets                         (1,007)                 513
      Decrease in policy liabilities and accruals                 (2,181)              (9,608)
      Increase in accounts payable and accruals                    4,428                6,532
      Decrease in deferred income taxes, net                      (1,070)                   -
      Other, net                                                   1,308                1,211
                                                           -----------------    ----------------
Net Cash Provided By (Used For) Operating Activities               2,502               (8,006)
                                                           -----------------    ----------------

Cash Flows From Investing Activities:
  Proceeds from investments sold:
    Fixed maturities, called or matured                            2,215                7,531
    Fixed maturities, sold                                         4,904               13,810
    Other investments, sold or matured                               139                8,913
    Cost of investments acquired                                  (5,851)             (15,772)
    Other                                                           (873)              (1,184)
                                                           -----------------    ----------------
Net Cash Provided By (Used For) Investing Activities                 534               13,298
                                                           -----------------    ----------------

Cash Flows From Financing Activities:
  Retirement of senior subordinated debentures                   (15,167)                   -
  Issuance of preferred stock                                     15,167                    -
  Decrease in deferred debt costs                                      -                  864
  Issuance of notes payable                                          911                5,461
  Repayment of notes payable                                      (2,015)             (12,369)
                                                           -----------------    ----------------
Net Cash Used For Financing Activities                            (1,104)              (6,044)
                                                           -----------------    ----------------
Increase (Decrease) In Cash During Period                          1,932                 (752)
Cash At Beginning Of Period                                          278                1,030
                                                           -----------------    ----------------
Cash At End Of Period                                      $       2,210        $         278
                                                           =================    ================

</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 - DESCRIPTION OF BUSINESS

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 (see Note 4).  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)  telemarketing  services,  (ii)  printing  services,  and (iii)
renewal  commissions  received by the Company for prior year sales of  insurance
products underwritten by unaffiliated insurance carriers.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of  Presentation.  The consolidated  financial  statements are prepared in
accordance with accounting  principles  generally  accepted in the United States
("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 2000 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 (see Note 4). 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>

                                        Westbridge     Issue New      Issue New      Fresh Start        Ascent
                                        03/31/1999   Preferred (a)    Common (b)   Adjustments (c)    03/31/1999
                                       ------------  -------------  -------------  ---------------  --------------
Assets
<S>                                    <C>           <C>            <C>           <C>                <C>
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.

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.  No changes were made to
claim reserve estimates for purposes of fresh start  accounting.  The process of
estimating  claim  reserves  involves the active  participation  of  experienced
actuarial  consultants  with input from the  underwriting,  claims,  and finance
departments.  The inherent uncertainty in estimating claim reserves is increased
when significant changes occur. Examples of such changes include: (1) changes in
economic  conditions;  (2)  changes  in state or federal  laws and  regulations,
particularly  insurance reform measures;  (3) changes in production  sources for
existing lines of business;  (4) writings of significant  blocks of new business
and (5)  significant  changes  in claims  payment  patterns.  As a result of the
implementation of a new claims  administration system in May 2000, the Company's
claims payment pattern  accelerated in the fourth quarter of 2000 which resulted
in a  significant  reduction in pending  claims  inventory at December 31, 2000.
This significant  change in claims payment pattern has  significantly  increased
the inherent  uncertainty  in  estimating  claim  reserves at December 31, 2000.
Because claim reserves are estimates,  management monitors reserve adequacy over
time,  evaluating new  information as it becomes  available and adjusting  claim
reserves as necessary. Such adjustments are reflected in current operations.

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, 2000 is fully reserved as discussed at Note 11.

In connection with its  reorganization,  the Company realized a non-taxable gain
from the extinguishment of certain indebtedness for tax purposes, since the gain
resulted from a  reorganization  under the  Bankruptcy  Code.  As a result,  the
Company was required to reduce certain tax attributes of Ascent Assurance, Inc.,
including (i) NOLs,  (ii) certain tax credits,  and (iii) tax bases in assets in
an amount equal to the 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:
<TABLE>
<CAPTION>

                                                            Year                  Nine Months
                                                           Ended                     Ended
               Ascent Assurance, Inc.                December 31, 2000         December 31, 1999
                                                     -----------------         -----------------
                                                     (Amounts in 000's, except per share amounts)

Basic:
<S>                                                  <C>                       <C>
  (Loss) income available to common shareholders     $      (21,518)           $          232
                                                     =================         =================
  Weighted average shares outstanding                         6,500                     6,500
                                                     =================         =================
  Basic (loss) earnings per share                    $        (3.31)           $         0.04
                                                     =================         =================

Diluted:
  (Loss) income available to common shareholders     $      (21,518)           $          232
                                                     =================         =================
  Weighted average shares outstanding                         6,500                     6,510
                                                     =================         =================
  Diluted (loss) earnings per share                  $        (3.31)           $         0.04
                                                     =================         =================

</TABLE>
<TABLE>
<CAPTION>


                                                        Three Months                 Year
                                                           Ended                    Ended
              Westbridge Capital Corp.                 March 31, 1999          December 31, 1998
                                                     -----------------         -----------------


Basic:
<S>                                                  <C>                       <C>
  Income (loss) available to common shareholders     $          208            $      (22,805)
                                                     =================         =================
  Weighted average shares outstanding                         7,032                     6,640
                                                     =================         =================
  Basic earnings (loss) per share                    $         0.03            $        (3.43)
                                                     =================         =================

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

Recently  Issued  Accounting  Pronouncements.  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 (as amended by
SFAS No. 137,  "Accounting For Derivative  Instruments  and Hedging  Activities,
Deferral of the  Effective  Date of SFAS No. 133, an amendment of SFAS No. 133")
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 affected by SFAS 133.

In March 2000,  the FASB  issued FASB  Interpretation  No. 44,  "Accounting  for
Certain  Transactions  Involving Stock  Compensation - an  interpretation of APB
Opinion No. 25" ("FIN 44").  The Company  adopted FIN 44 on a prospective  basis
effective July 1, 2000. The adoption of FIN 44 did not have a material impact on
the Company's results of operations, liquidity or financial position.

NOTE 3 - FINANCING OBTAINED IN APRIL 2001

During the first quarter of 2001, the Company  determined that continued adverse
claims  experience  for  the  Group  Preferred  Provider  Organization  ("GPPO")
product,  the principal  product  marketed by the Company from 1998 through June
2000,  would require Ascent to make capital  contributions to FLICA in excess of
those  originally  planned.  Ascent  obtained  debt  financing  (see  below) and
contributed  an additional $11 million to FLICA in April 2001 to enable FLICA to
maintain an RBC Ratio greater than Company Action Level at March 31, 2001 and to
comply with the Florida premium  writing ratio  regulation (see Note 12). To the
extent that the  adverse  claims  experience  for the old GPPO  product  exceeds
management's  current  estimates,  Ascent  would be required to make  additional
capital  contributions to FLICA in excess of those currently projected for 2001.
Additional  financing  would be  required  by  Ascent  in order to make any such
"excess"  contributions.  Management  believes  that  significant  rate increase
actions will reduce losses from the GPPO product in 2001.

In April 2001,  Ascent  received  debt  financing  for the $11  million  capital
contribution  described  above from a loan made by Credit  Suisse  First  Boston
Management  Corporation,  which is an affiliate of Special Situations  Holdings,
Inc. -- Westbridge (Ascent's largest stockholder). The credit agreement relating
to that loan provided Ascent with total loan  commitments of $11 million (all of
which has been  drawn).  The loan bears  interest at a rate of 12% per annum and
matures in April 2004.  Absent any  acceleration  following an event of default,
the Company may elect to pay interest in kind by issuance of  additional  notes.
The credit  agreement  relating to the loan  provides for a facility fee of $1.5
million which is payable upon maturity or upon a change in control,  as defined.
Ascent's obligations are secured, pursuant to a guarantee and security agreement
and  pledge  agreements,  by  substantially  all of the assets of Ascent and its
subsidiaries  (excluding the capital stock and the assets of AICT,  FLICA,  NFL,
NFIC, NCM, Ascent Funding  Corporation and Ascent Management,  Inc., some or all
of which is pledged as collateral to LaSalle Bank NA ("LaSalle") for receivables
financing - see Note 8.  Ascent's  subsidiaries  (other than those listed above)
have also guaranteed  Ascent's  obligations  under the credit  agreement and the
loan. In connection with the $11 million loan,  LaSalle waived certain events of
default  and  amended  various  agreements  related  to  receivables   financing
described at Note 8. Debt covenants  under the credit  agreement  related to the
$11 million loan are substantially similar to those under the LaSalle receivable
financing arrangements.

NOTE 4 - 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")

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:

|X|  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.

|X|  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.

|X|  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.

|X|  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.

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.

<PAGE>


NOTE 5 - INVESTMENTS

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

                                         Ascent Assurance, Inc.          Westbridge Capital Corp.
                                     -----------------------------    -----------------------------
                                         Year         Nine Months     Three Months        Year
                                        Ended           Ended            Ended           Ended
                                              December 31,              March 31,     December 31,
                                          2000            1999            1999            1998
                                          ----            ----            ----            ----

<S>                                  <C>             <C>              <C>             <C>
Fixed maturities                     $    7,088      $    5,368       $    2,125      $    8,754
Short-term investments                      741             291               86             708
Interest on receivables from agents       1,936             941              345           2,511
Other                                       189             201               73             351
                                     -------------   -------------    -------------   -------------
                                          9,954           6,801            2,629          12,324

      Less: Investment expenses             213              61               67             313
                                     -------------   -------------    -------------   -------------
      Net investment income          $    9,741      $    6,740       $    2,562      $   12,011
                                     =============   =============    =============   =============
</TABLE>

Realized (loss) gain on investments are summarized as follows:
<TABLE>
<CAPTION>

                                         Ascent Assurance, Inc.          Westbridge Capital Corp.
                                     -----------------------------    -----------------------------
                                          Year        Nine Months      Three Months       Year
                                         Ended          Ended             Ended          Ended
                                             December 31,               March 31,     December 31,
                                          2000           1999              1999           1998
                                          ----           ----              ----           ----

<S>                                  <C>             <C>              <C>             <C>
Fixed maturities                     $     (454)     $     (162)      $       40      $      403
Equity securities                             -             (37)               1           1,555
Other                                         -              (9)               -             184
                                     -------------   -------------    -------------   -------------
Realized (loss) gain on investments  $     (454)     $     (208)      $       41      $    2,142
                                     =============   =============    =============   =============
</TABLE>


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

<TABLE>
<CAPTION>

                                                       Ascent                  Westbridge
                                            ------------------------------    -------------
                                                  Year        Nine Months     Three Months
                                                 Ended           Ended           Ended
                                                      December 31,              March 31,
                                                 2000            1999             1999
                                                 ----            ----             ----

<S>                                         <C>             <C>               <C>
Balance at beginning of period              $   (3,851)     $         -       $    3,911
Unrealized depreciation, net of tax, on
  fixed maturities available-for-sale            1,513           (3,817)          (1,840)
Unrealized depreciation, net of tax, on
  equity securities and other investments           14              (34)            (146)
Fresh start adjustment                               -                -           (1,925)
                                            -------------   --------------    -------------
Balance at end of period                    $   (2,324)     $    (3,851)      $        -
                                            =============   ==============    =============
</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>

                                                           Gross          Gross         Estimated
                                          Amortized     Unrealized      Unrealized        Market
December 31, 2000 Available-for-Sale         Cost          Gains          Losses          Value
------------------------------------         ----          -----          ------          -----
                                                                (in thousands)
U.S. Government and governmental
<S>                                     <C>             <C>             <C>             <C>
  agencies and authorities              $    10,415     $       74      $       27      $   10,462
States, municipalities, and political
  subdivisions                                2,013              -              31           1,982
Finance companies                            23,891             63             509          23,445
Public utilities                              7,091              8             312           6,787
Mortgage-backed securities                   13,328             28              54          13,302
All other corporate bonds                    47,343            143           2,874          44,612
                                        -------------   -------------   -------------   ------------
Balance at December 31, 2000            $   104,081     $      316      $    3,807      $  100,590
                                        =============   =============   =============   ============
</TABLE>
<TABLE>
<CAPTION>

                                                            Gross           Gross       Estimated
                                          Amortized      Unrealized      Unrealized       Market
December 31, 1999 Available-for-Sale        Cost            Gains          Losses         Value
------------------------------------        ----            -----          ------         -----
                                                               (in thousands)
U.S. Government and governmental
<S>                                     <C>             <C>             <C>             <C>
  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, 2000            $   103,436     $       83      $    5,956      $   97,563
                                        =============   =============   =============   ============
</TABLE>


The   amortized   cost   and   estimated   market   value  of   investments   in
available-for-sale fixed maturities as of December 31, 2000, 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                    $    7,120       $    7,073
Due after one year through five years          29,223           28,877
Due after five years through ten years         27,244           26,327
Due after ten years                            27,166           25,011
Mortgage-backed securities                     13,328           13,302
                                           ------------     ------------
                                           $  104,081       $  100,590
                                           ============     ============
</TABLE>




<PAGE>


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>


                                                       December 31,     December 31,
                                                           2000            1999
                                                           ----            ----
                                                              (in thousands)
<S>                                                    <C>              <C>
Amortized cost                                         $  105,446       $  104,801
Estimated market value                                    101,925           98,876
                                                       -------------    -------------
(Deficit) excess of market value to amortized cost         (3,521)          (5,925)
Estimated tax (benefit) provision                          (1,197)          (2,074)
                                                       -------------    -------------
Unrealized (depreciation) appreciation, net of tax     $   (2,324)      $   (3,851)
                                                       =============    =============
</TABLE>

At December 31, 2000, the estimated tax benefit related to unrealized investment
losses has been fully reserved (see Note 11).

Proceeds from sales and maturities of  investments in fixed maturity  securities
were  approximately  $54.1 million for the year ended  December 31, 2000,  $18.2
million for the nine months  ended  December  31, 1999 and $7.1  million for the
three months ended March 31, 1999.  Gross gains of $0.3 million and gross losses
of $0.7 million were realized on fixed  maturity  investment  sales during 2000.
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.
The basis  used in  determining  the cost of  securities  sold was the  specific
identification method.

Included in fixed  maturities  at December  31, 2000 and 1999,  are  high-yield,
unrated or less than  investment  grade  corporate  debt  securities  comprising
approximately  0.9% and 1.5% of fixed  maturities at December 31, 2000 and 1999,
respectively.

Investment  securities on deposit with insurance  regulators in accordance  with
statutory  requirements  at December 31, 2000 and 1999 had a par value  totaling
$27.2 million and $27.3  million,  respectively.  At December 31, 2000 and 1999,
the Company had restricted cash and investments totaling $2.5 million related to
its receivables financing program (see Note 8).

NOTE 6 - 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
          2000 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 us 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 7 - CLAIM RESERVES

The following table provides a reconciliation  of the beginning and ending claim
reserve balances, on a  gross-of-reinsurance  basis, for 2000, 1999 and 1998, to
the amounts reported in the Company's balance sheet:
<TABLE>

                                                Ascent Assurance, Inc.          Westbridge Capital Corp.
                                           ------------------------------    ------------------------------
                                                Year          Nine Months     Three Months         Year
                                               Ended             Ended           Ended            Ended
                                            December 31,     December 31,       March 31,      December 31,
                                                2000             1999             1999             1998
                                                                   (in thousands)

<S>                                        <C>              <C>              <C>               <C>
Balance at beginning of period (Gross)     $    38,776      $    41,068      $     44,116      $  51,784
  Less: reinsurance recoverables on
     claim reserves                              1,501            1,871             1,765          2,955
                                           -------------    -------------    --------------    ----------
Net balance at beginning of period              37,275           39,197            42,351         48,829

Incurred related to:
  Current year                                  94,516           60,255            19,401         98,203
  Prior years                                    1,550            2,213             1,596            (95)
                                           -------------    -------------    --------------    ----------
     Total incurred                             96,066           62,468            20,997         98,108
                                           -------------    -------------    --------------    ----------

Paid related to:
  Current year                                  61,834           47,300             5,277         67,911
  Prior years                                   31,220           17,090            18,874         36,675
                                           -------------    -------------    --------------    ----------
     Total paid                                 93,054           64,390            24,151        104,586
                                           -------------    -------------    --------------    ----------
Balance at end of period                        40,287           37,275            39,197         42,351
  Plus: reinsurance recoverables on
     claim reserves                              2,491            1,501             1,871          1,765
                                           -------------    -------------    --------------    ----------
Balance at end of period (Gross)           $    42,778      $    38,776      $     41,068      $  44,116
                                           =============    =============    ==============    ==========
</TABLE>

Included in reinsurance  recoverables  on claim reserves is  approximately  $1.5
million,  $0.5 million, $0.9 million and $0.7 million relating to paid claims as
of December 31, 2000, 1999, March 31, 1999 and December 31, 1998, respectively.

NOTE 8 - 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.  AFI  has  entered  into  a  Credit  Agreement  (the  "Credit
Agreement")  with LaSalle Bank which  currently  provides AFI with a $7.5million
revolving loan facility (the "Receivables Financing"), the proceeds of which are
used to  purchase  agent  advance  receivables  from  FLICA and NFL and  certain
affiliated  marketing  companies.  Effective  September  30,  2000,  the  Credit
Agreement  was  amended to extend the  termination  date to June 5, 2002.  As of
December  31,  2000,  $6.2 million was  outstanding  under the Credit  Agreement
(weighted  average interest rate of 8.31%).  The Company incurs a commitment fee
on the unused  portion of the  Credit  Agreement  at at rate of 0.50% per annum.
Interest of $0.5 million was expensed and paid in 2000. Interest of $0.3 million
was expensed and paid in 1999.

AFI's  obligations  under  the  Credit  Agreement  are  secured  by  liens  upon
substantially all of AFI's assets.  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, FLICA and NFIC as collateral  for that guaranty.  See Note 3 for discussion
of compliance with debt covenants.

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.  As  of  December  31,  2000,  $2.8  million  was
outstanding  under the term loan  facility  (weighted  average  interest rate of
8.24%). Interest of $0.2 million was expensed and paid in 2000. Interest of $0.1
million was capitalized and paid in 1999.

Prior to the  Effective  Date of the Plan  (see  Note 4),  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, 1998
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 4, 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 9, 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 was $0.8 million.



<PAGE>


NOTE 9 - 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 4).

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

x Stated value of $1,000 per share.

x    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.

x    Each share of New Preferred  Stock is  convertible  at any time in 204.8897
     shares of New Common  Stock at an initial  conversation  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.

In December  2000,  the  Company  paid  preferred  stock  dividends  through the
issuance of 2,575 additional  shares of preferred stock and a $825  distribution
of cash.  Preferred  stock  dividends  accrued at December 31, 1999 were paid in
January 2000 through the issue of 1,873 additional shares of preferred stock and
a $965 distribution of cash.

Prior to the  Effective  Date of the Plan  (see  Note 4),  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.

NOTE 10 - DEFERRED POLICY ACQUISITION COSTS ("DPAC")

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

                                           Ascent Assurance, Inc.         Westbridge Capital Corp.
                                   -------------------------------    ---------------------------------
                                        Year          Nine Months         Three Months        Year
                                        Ended            Ended               Ended           Ended
                                     December 31,     December 31,         March 31,      December 31,
                                        2000              1999               1999             1998
                                        ----              ----               ----             ----

<S>                                <C>               <C>               <C>               <C>
Balance at beginning of period     $    19,393       $    15,039       $    14,177       $    19,165

Deferrals                                9,816             5,832             1,148             4,371

Recognition of premium deficiency       (1,500)                -                 -            (4,948)

Amortization expense                    (2,998)           (1,478)             (286)           (4,411)

                                   --------------    --------------    --------------    --------------
Balance at end of period           $    24,711       $    19,393       $    15,039       $    14,177
                                   ==============    ==============    ==============    ==============

</TABLE>


Recognition of Premium Deficiency In general, a premium deficiency exists if the
present value of future cash flows plus future policy benefit and claim reserves
at the calculation date is negative or less than net deferred policy acquisition
costs.  The  calculation of future cash flows includes  assumptions as to future
rate   increases  and   persistency.   The  Company   routinely   evaluates  the
recoverability  of deferred  acquisition  costs in  accordance  with GAAP.  As a
result of fourth quarter losses for certain major medical products,  the Company
determined  that a premium  deficiency  of $1.5 million  existed at December 31,
2000 related to medical expense reimbursement  products issued subsequent to the
fresh start date of March 31, 1999.  Accordingly,  deferred  policy  acquisition
costs were reduced by $1.5 million at December 31, 2000 by a non-cash  charge to
expense.

During  1998,  the  Company   experienced  adverse  loss  ratios  and  declining
persistency  on its old major  medical and Medicare  supplement  products.  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 a premium  deficiency  existed and
recorded a non-cash charge to expense of approximately $5.0 million in the third
quarter of 1998.


NOTE 11 - 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 (recovered) in 2000, 1999 and 1998 were $(1.2) million,  $80,000, and
$1.1 million respectively. The Company and its wholly owned subsidiaries,  other
than  FLICA,  file a  consolidated  federal  income tax  return.  FLICA  files a
separate  federal  income  tax  return.  Prior  to 2000,  NFIC and AICT  filed a
separate  consolidated  tax return.  NFIC and AICT entered the Ascent  Assurance
consolidated return in 2000.

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

                                        Ascent Assurance, Inc.            Westbridge Capital Corp.
                                    ------------------------------    -----------------------------
                                         Year          Nine Months     Three Months       Year
                                        Ended             Ended           Ended          Ended
                                     December 31,     December 31,      March 31,      December 31,
                                        2000              1999            1999            1998
                                        ----              ----            ----            ----
                                                             (in thousands)

<S>                                 <C>             <C>               <C>             <C>
Current                             $    (206)      $    (1,199)      $      67       $      231
Deferred                                6,209             2,324               -                -
                                    ------------    --------------    ------------    -------------

Total provision for income taxes    $   6,003       $     1,125       $      67       $      231
                                    ============    ==============    ============    =============
</TABLE>

Provision has not been made for state and foreign  income tax expense since such
expense is minimal.

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 Assurance, Inc.          Westbridge Capital Corp.
                                  ------------------------------    -----------------------------
                                      Year          Nine Months     Three Months        Year
                                      Ended            Ended           Ended            Ended
                                   December 31,     December 31,      March 31,      December 31,
                                      2000             1999             1999            1998
                                      ----             ----             ----            ----

<S>                                   <C>               <C>               <C>           <C>
Statutory tax rate                    (34%)             34%               34%           (34%)
Change in valuation allowance          80%               -                 -              -
Unutilized loss carryforwards           -                2%               (9%)           31%
Other items, net                        -               (1%)              (1%)            4%
                                  -------------    -------------    -------------   -------------
Effective tax rate                     46%              35%               24%             1%
                                  =============    =============    =============   =============
</TABLE>

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:



<PAGE>


<TABLE>
<CAPTION>

                                                                    December 31,
                                                           2000              1999
                                                           ----              ----
                                                                (in thousands)
Deferred Tax Assets:
<S>                                                    <C>                <C>
      Unrealized gain on investments                   $    1,197         $   2,074
      Policy reserves                                       6,792             4,150
      Net operating loss carryforwards                     13,538            17,998
      Other deferred tax assets                             3,056               964
                                                       --------------     -------------
         Total deferred tax asset                      $   24,583         $  25,186
                                                       --------------     -------------

Deferred Tax Liabilities:
      Deferred policy acquisition costs                $    1,361         $  (2,970)
      Other deferred tax liabilities                        4,959             4,121
                                                       --------------     -------------
         Total deferred tax liability                  $    6,320         $   1,151
                                                       --------------     -------------

Net Deferred Tax Asset Before Valuation
      Allowance                                        $   18,263         $  24,035
Less Valuation Allowance                                  (18,263)          (16,949)
                                                       --------------     -------------
Net Deferred Tax Asset                                 $        -         $   7,086
                                                       ==============     =============
</TABLE>

As of December 31,  2000,  the Company has reported  cumulative  pre-tax  losses
since the fresh  start  date of March 31,  1999.  Realization  of the  Company's
deferred tax asset is dependent  upon the return of the Company's  operations to
profitability.  Pre-tax  losses  during 2000 were  principally  attributable  to
adverse  claims  experience  for  certain  major  medical  products.  Management
believes  that  such  product  losses  can  be  significantly   reduced  through
aggressive   rate   increase   management.   However,   projections   of  future
profitability are significantly discounted when evaluating the recoverability of
deferred  tax assets and do not overcome  the  negative  evidence of  cumulative
losses.  Accordingly,  the Company  increased  its deferred tax asset  valuation
allowance by $10.4  million to $18.3  million to fully reserve the remaining net
deferred tax assets as of December 31, 2000. As a result of limitations  arising
from the  action of  sections  108 and 382 of the  Internal  Revenue  Code,  the
Company's  net  operating  loss  carryforwards  and  valuation  allowance  as of
December  31,  1999 were  reduced  by $9.1  million.  Changes  in the  valuation
allowance  applicable  to the net  deferred  tax asset for the three years ended
December 31, 2000 are as follows:
<TABLE>
<CAPTION>

                                                     Ascent Assurance, Inc.               Westbridge Capital Corp.
                                                     Year          Nine Months        Three Months             Year
                                                    Ended              Ended              Ended                Ended
                                            December 31, 2000    December 31, 1999    March 31, 1999     December 31, 1998
                                            -----------------    -----------------    --------------     -----------------
                                                                           (in thousands)

<S>                                         <C>                  <C>                  <C>                <C>
Balance, beginning of year                  $     (16,949)       $      (16,949)      $     (36,449)     $      (28,728)

Decrease in valuation allowance
    related to permanent limitations
    of net operating loss carryforwards             9,081                     -              19,500                   -

Increase in valuation
    allowance charged to
    income                                        (10,395)                    -                   -              (7,721)
                                            ----------------      ---------------     ---------------    ------------------

Balance, end of year                        $     (18,263)        $     (16,949)      $     (16,949)     $      (36,449)
                                            ================      ===============     ===============    ==================
</TABLE>

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, 2000,  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, 2000 and 1999,  NFL has  approximately  $7.8  million and $8.0
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,  2000,  the  Company and its wholly  owned  subsidiaries  have
aggregate  net  operating  loss  carryforwards,  net of  bankruptcy  related tax
attribute  reductions of  approximately  $39.8 million for regular tax and $40.2
million for alternative minimum tax purposes,  which will expire in 2003 through
2014.


NOTE 12 - 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.  Effective  September 28, 2000, NFL and FLICA  redomesticated  from the
states of Delaware and  Mississippi,  respectively,  to the state of Texas. As a
result,  NFL, FLICA, NFIC and AICT are Texas domestic  companies and are subject
to regulation  under Texas insurance  laws.  Under the Texas Insurance Code, the
insurance subsidiaries are required to maintain aggregate capital and surplus of
$1.4  million.  The following  states where the  companies are licensed  require
greater  amounts of capital and surplus:  California $1.5 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, 2000,
aggregate  statutory  capital  and  surplus  for NFL,  FLICA,  NFIC and AICT was
approximately  $5.5  million,  $6.0  million,  $1.6  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.  AICT is wholly  owned by NFIC.
Accordingly,  statutory  capital  and  surplus of NFIC  includes  the  statutory
capital and surplus of AICT.

Dividends paid by the Insurance  Subsidiaries  are subject to the regulations of
the insurance laws and practices of the Texas Department of Insurance. The Texas
Insurance  Code  allows life and health  insurance  companies  to make  dividend
payments  from surplus  profits or earned  surplus  arising  from its  business.
Earned surplus is defined as unassigned  surplus excluding any unrealized gains.
Texas life and health 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.
Dividends  exceeding the applicable  threshold are considered  extraordinary and
require the prior approval of the Texas Insurance Commissioner.

The Insurance  Subsidiaries  are  precluded  from paying  dividends  during 2001
without prior  approval of the Texas  Insurance  Commissioner  as the companies'
earned  surplus is negative.  On September 30, 2000,  NFL  transferred  its 100%
ownership of FLICA to Ascent through an extraordinary  dividend  approved by the
Texas Department of Insurance. 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.  The Texas
Department of Insurance  also  maintains  discretionary  powers  relative to the
declaration and payment of dividends based upon an insurance company's financial
position.  In  light  of  recent  statutory  losses  incurred  by the  Insurance
Subsidiaries,  the  Company  does not expect to receive any  dividends  from its
Insurance Subsidiaries for the foreseeable future.

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  bore interest at an agreed
upon rate not to exceed  10% and was  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.

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 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 Texas  Department  of  Insurance  adopted the NAIC's  Model Act during 2000.
NFL's and FLICA's  statutory  annual  statements for the year ended December 31,
2000 filed with the Texas  Department  of  Insurance  reflected  total  adjusted
capital in excess of Company  Action Level RBC;  however  FLICA did not meet the
negative trend test (see Note 3).

In 1998,  NFIC and AICT  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 Texas  Department  of  Insurance  in
response to losses sustained in 1997 and 1998 as well as the projected inability
to meet RBC requirements. Both NFIC and AICT ceased the sale and underwriting of
new business in 1998. At December 31, 2000,  AICT's RBC exceeded  Company Action
Level RBC; however,  NFIC's RBC only exceeded Authorized Control Level RBC. Both
NFIC and AICT are in compliance with the terms of the voluntary consent order.

Under Florida Statutes Section 624.4095,  Florida licensed insurance  companies'
ratio of actual or  projected  annual  written  premiums to current or projected
surplus as regards to policyholders ("the premium writing ratio") may not exceed
specified  levels for gross and net written  premiums as defined by the statute.
If a company  exceeds the premium  writing  ratio,  the  Florida  Department  of
Insurance  shall  suspend the company's  certificate  of authority in Florida or
establish  by order  maximum  gross or net annual  premiums to be written by the
company consistent with maintaining the ratios specified.  At December 31, 2000,
the premium  writing  ratio for FLICA,  which  currently  underwrites  insurance
policies in Florida, exceeded the limit mandated by Florida law (see Note 3).

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 13 - 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  October  1999,  the Company made
cash  contributions.  The Company's  contributions  to the 401 (k) plan in 2000,
1999 and 1998 approximated $92,000, $96,000 and $80,000, 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 4), 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 is as follows:
<TABLE>
<CAPTION>

                                      Year Ended December 31,
                                    2000                   1999
                              ------------------    -------------------

<S>                               <C>                  <C>
Outstanding at January 1            1,096,750                     -
Granted                                42,950             1,106,750
Exercised                                   -                     -
Forfeited / Cancelled                (195,100)              (10,000)
                              ------------------    -------------------
Outstanding at December 31            944,600             1,096,750
                              ==================    ===================
</TABLE>

The  weighted  average  option  exercise  price was $2.82 and $2.88 for  options
outstanding at December 31, 2000 and 1999,  respectively.  The weighted  average
option exercise price was $1.63 and $2.74, respectively, for options granted and
forfeited  during 2000. For 1999, the weighted average option exercise price was
$2.85 for both options granted and forfeited.

The weighted  average fair value of options  granted during 2000 was $1.57.  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 2000 and 1999,  respectively:
dividend  yield of 0% for both years;  expected  volatility  of 1.839 and 1.142;
risk free  interest  rate of 6.57% for both years;  expected life of 5 years for
both 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.

Compensation  cost recognized in the income  statement for stock-based  employee
compensation awards was $0.3 million for both 2000 and 1999.

If the fair value of the stock compensation granted had been accounted for under
FAS 123, the pro forma net loss for the year ended  December 31, 2000 would have
been $(19.1) million or $(3.33) per basic share and diluted share.  For the nine
months ended  December  31, 1999,  the pro forma net income would have been $2.0
million,  or $(.05) per basic share and 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, 2000:
<TABLE>
<CAPTION>

                                          Weighted Average
                                              Remaining        Weighted Average
Exercise Prices    Number Outstanding     Contractual Life      Exercise Price
---------------    ------------------     ----------------      --------------
<S>  <C>                   <C>                    <C>                <C>
     $0.01                 270,900                8.25               $0.01
     $1.63                  38,350                9.25               $1.63
     $3.00                 135,000                1.25               $3.00
     $4.39                 500,350                8.25               $4.39
                 ---------------------  --------------------   ----------------
                           944,600                7.29               $2.82
                 =====================  ====================   ================
</TABLE>

There were no options exercisable at December 31, 2000.

NOTE 14 - 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 premiums ceded to other companies were $4.0
million,  $2.6 million and $2.8 million for 2000,  1999 and 1998,  respectively.
Face amounts of life insurance in force ceded approximated  $12.6 million,  $6.5
million and $7.3 million at December 31, 2000, 1999 and 1998, respectively.

The Company  reinsures its risks under its Medical Expense policies on an excess
of loss basis so that its net payments on any one life insured  under the policy
are limited for any one  calendar  year to  $100,000.  Risks under its  Medicare
Supplement policies are not reinsured.  The Company's risks under its Accidental
Death  policies  are one  hundred  percent  (100%)  reinsured.  Under  its  life
insurance  reinsurance  agreement,  FLICA and NFL retains fifty percent (50%) of
the  coverage  amount of each of its life  insurance  policies  in force up to a
maximum of $65,000. NFL reinsures, through an excess of loss reinsurance treaty,
a closed  block of  annually  renewable  term  life  insurance  policies.  NFL's
retention limit is $25,000 per year. In accordance with industry  practice,  the
reinsurance  arrangements in force with respect to these policies are terminable
by either  party  with  respect to claims  incurred  after the  termination  and
expiration dates.

NOTE 15 - 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, 2000,  aggregated  $8.9
million.  The amounts due by year are as follows:  2001 - $2.0  million;  2002 -
$2.0 million; 2003 - $1.6 million; 2004 - $1.0 million; 2005 - $0.9 million; and
thereafter - $1.4 million. Aggregate rental expense included in the consolidated
financial  statements for all operating leases  approximated $2.1 million,  $2.4
million and $3.2 million in 2000, 1999 and 1998, 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.


<PAGE>


NOTE 16 - 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,
                                                             ---------------------------------------------------
                                                                 2000                1999             1998
                                                                 ----                ----             ----
                                                                                 (in thousands)

<S>                                                          <C>               <C>                <C>
Consolidated statutory capital and surplus                   $   13,014        $    16,990        $  $17,937

     Deferred acquisition costs                                  24,711             19,393            14,177
     Future policy benefits and claims                          (14,338)            (9,518)           (9,521)
     Unrealized gain (loss) on investments, net of tax             (723)            (2,585)            3,037
     Income taxes                                                     -              3,363                 -
     Non-admitted assets                                            258              1,490             2,123
     Asset valuation reserve                                        674                687               796
     Interest maintenance reserve                                   780              1,251             1,380
     Other                                                         (139)              (273)              863
     Non-insurance subsidiaries and eliminations                (20,162)            (7,014)          (92,872)

                                                             --------------    ---------------    --------------
GAAP stockholders' equity (deficit)                          $    4,075        $    23,784        $  (62,080)
                                                             ==============    ===============    ==============
</TABLE>
<TABLE>
<CAPTION>


                                                                           Year Ended December 31,
                                                             ---------------------------------------------------
                                                                  2000              1999              1998
                                                                               (in thousands)

<S>                                                          <C>               <C>               <C>
Consolidated statutory net income                            $  (16,956)       $   (6,486)       $    (8,108)

      Deferred acquisition costs, net of amortization             6,818             5,217                (41)
      Future policy benefits and claims                          (5,761)              228                806
      Recognition of premium deficiency                          (1,500)                -             (4,948)
      Income taxes                                               (4,754)           (4,366)             1,250
      Other                                                         261              (384)              (468)
      Non-insurance subsidiaries and eliminations                 2,950             8,105            (10,776)

                                                             --------------    --------------    ---------------
GAAP net (loss) income                                       $  (18,942)       $    2,314        $   (22,285)
                                                             ==============    ==============    ===============

</TABLE>


<PAGE>


NOTE 17 - QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

Summarized  quarterly  financial  information for each of the Company's last two
years of operations is as follows:

<TABLE>
<CAPTION>
                                                                                 Ascent
                                                                             Quarter Ended
                                                  --------------------------------------------------------------------
                                                      March            June            September          December
                                                      2000             2000               2000              2000
                                                      ----             ----               ----              ----

<S>                                               <C>              <C>                <C>               <C>
Premium income                                    $  29,005        $   29,228         $   30,831        $   30,844
Net investment income                                 2,078             2,266              2,626             2,771
Net realized gain (loss) on investments                  17              (254)                28              (245)
Fee, service and other income                         4,896             5,294              5,207             4,994
                                                  -------------    --------------     --------------    --------------
Total revenues                                    $  35,996        $   36,534         $   38,692        $   38,364
                                                  =============    ==============     ==============    ==============

Loss before income taxes                          $  (1,258)       $     (918)        $   (1,193)       $   (9,570)(1)
Net loss                                               (830)             (606)              (787)          (16,719)(2)
Preferred stock dividend                                651               651                651               622
Loss applicable to common
      stockholders                                   (1,481)           (1,257)            (1,438)          (17,341)
Loss per share:
      Basic                                       $   (0.23)       $    (0.19)        $    (0.22)       $    (2.67)
      Diluted                                     $   (0.23)       $    (0.19)        $    (0.22)       $    (2.67)
</TABLE>
<TABLE>
<CAPTION>

                                                    Westbridge                                 Ascent
                                                   Quarter Ended                            Quarter Ended
                                                  ---------------    -------------------------------------------------------
                                                      March               June             September           December
                                                      1999                1999               1999                1999
                                                      ----                ----               ----                ----

<S>                                               <C>                <C>                 <C>                <C>
Premium income                                    $    29,948        $    29,574         $    28,512        $    28,285
Net investment income                                   2,562              2,333               2,222              2,185
Net realized gain (loss) on investments                    41                (63)               (107)               (38)
Fee, service and other income                           4,263              4,196               4,506              4,367
                                                  ---------------    ---------------     ---------------    ---------------
Total revenues                                    $    36,814        $    36,040         $    35,133        $    34,799
                                                  ===============    ===============     ===============    ===============

Income before income taxes                        $       275        $     1,622         $     1,071        $       538
Net income                                                208              1,054                 707                345
Preferred stock dividend                                    -                647                 596                631
Income (loss) applicable to common
      stockholders                                        208                407                 111               (286)
Earnings (loss) per share:
      Basic                                       $      0.03        $      0.06         $      0.02        $     (0.04)
      Diluted                                     $      0.03        $      0.06         $      0.02        $     (0.04)
</TABLE>
(1)  Increase  in losses  for the fourth  quarter of 2000 due to adverse  claims
     experience  for major  medical  products  (see Note 3) and  recognition  of
     premium deficiency (see Note 10).

(2)  Includes $10.4 million  non-cash  charge for increase in deferred tax asset
     valuation allowance (see Note 11).


<PAGE>



                                   SCHEDULE II

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

                                 (in thousands)
<TABLE>
<CAPTION>

                                                                  December 31,     December 31,
                                                                     2000             1999
                                                                     ----             ----


 Assets:
<S>                                                             <C>                <C>
      Cash                                                      $     1,407        $     4,027
      Short-term investments                                          1,682              4,686
      Fixed maturities, at market value                               1,193                  -
      Investment in consolidated subsidiaries                        37,168             45,021
      Accrued investment income                                          29                  3
      Deferred tax assets                                                 -                646
      Other assets                                                       52                 50
                                                                ---------------    --------------
          Total Assets                                          $    41,531        $    54,433
                                                                ===============    ==============
 Liabilities:
      Dividends payable                                         $         -        $     1,874
      Payable to subsidiaries                                         7,155              2,157
      Other liabilities                                               2,596              3,361
                                                                ---------------    --------------
          Total Liabilities                                           9,751              7,392
                                                                ---------------    --------------

 Redeemable Convertible Preferred Stock                              27,705             23,257
                                                                ---------------    --------------

 Stockholders' Equity:
      Common stock                                                       65                 65
      Capital in excess of par value                                 27,620             27,338
      Accumulated other comprehensive loss, net of tax               (2,324)            (3,851)
      Retained (Deficit) Earnings                                   (21,286)               232
                                                                ---------------    --------------

          Total Stockholders' Equity                                  4,075             22,784
                                                                ---------------    --------------

          Total Liabilities, Redeemable Convertible
             Preferred Stock and Stockholders' Equity           $    41,531        $    54,433
                                                                ===============    ==============

</TABLE>


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


<PAGE>


                                   SCHEDULE II

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

                                 (in thousands)
<TABLE>
<CAPTION>

                                                                        Year           Nine Months
                                                                       Ended             Ended
                                                                    December 31,      December 31,
                                                                        2000              1999
                                                                        ----              ----

<S>                                                                <C>                <C>
Net investment income                                              $       308        $      509
Realized gain (loss) on investments                                         24              (376)
Inter-company interest on Surplus Certificates                               -                58
Other Income                                                                 -                 3
                                                                   ---------------    -------------
                                                                           332               194
                                                                   ---------------    -------------

Resolution of pre-confirmation contingencies                                 -            (1,235)
Inter-company interest on advances to subsidiaries                         109               (22)
General and administrative expenses                                        218              (237)
Taxes, licenses and fees                                                   119                (1)
                                                                   ---------------    -------------
                                                                           446            (1,495)
                                                                   ---------------    -------------

Income before income taxes and equity in undistributed
     net earnings of subsidiaries                                         (114)            1,689
(Expense) benefit from income taxes                                     (2,773)              629
                                                                   ---------------    -------------
                                                                        (2,887)            2,318

Equity in undistributed net loss of subsidiaries                       (16,055)             (212)
                                                                   ---------------    -------------

        Net (loss) income                                              (18,942)            2,106

Preferred stock dividends                                                2,576             1,874
                                                                   ---------------    -------------

(Loss) income applicable to common stockholders                    $   (21,518)       $      232
                                                                   ===============    =============

</TABLE>


         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 STATEMENTS OF INCOME

                                 (in thousands)

<TABLE>
<CAPTION>
                                                                    Three Months          Year
                                                                       Ended             Ended
                                                                     March 31,        December 31,
                                                                       1999               1998
                                                                       ----               ----

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

 General and administrative expenses                                     (112)            2,319
 Reorganization expense                                                     -             7,856
 Taxes, licenses and fees                                                  24                45
 Interest expense                                                         507             5,933
                                                                    -------------    -------------
                                                                          419            16,153
                                                                    -------------    -------------

 Loss before income taxes and equity in undistributed
      net earnings of subsidiaries and FHC                                (68)          (13,738)
      (Benefit from) provision for income taxes                             -              (235)
                                                                    -------------    -------------
                                                                          (68)          (13,503)

 Equity in undistributed net earnings (losses) of
      subsidiaries and FHC                                                276            (8,782)
                                                                    -------------    -------------

         Net income (loss)                                                208           (22,285)

 Preferred stock dividends                                                  -               520
                                                                    -------------    -------------

 Income (loss) applicable to common stockholders                    $     208        $  (22,805)
                                                                    =============    =============

</TABLE>


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


<PAGE>


                                   SCHEDULE II

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

                                 (in thousands)
<TABLE>
<CAPTION>

                                                                                  Year           Nine Months
                                                                                 Ended              Ended
                                                                              December 31,       December 31,
                                                                                  2000              1999
                                                                                  ----              ----

<S>                                                                          <C>                <C>
Net (loss) income                                                            $   (18,942)       $   2,106
Other comprehensive income (loss):
      Unrealized holding gain (loss) arising during period, net
         of tax                                                                       22             (245)
      Reclassification adjustment of (gain) loss on sales of
         investments included in net income, net of tax                              (16)             245

Other comprehensive income (loss) on investment in subsidiaries:
      Unrealized holding gain (loss) arising during period, net of tax             1,805           (3,711)
      Reclassification adjustment of gain on sales of
         investments included in net income, net of tax                             (284)            (140)
                                                                             --------------     ------------
Comprehensive loss                                                           $   (17,415)       $  (1,745)
                                                                             ==============     ============

</TABLE>


         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.)
                       STATEMENTS OF COMPREHENSIVE INCOME

                                 (in thousands)

<TABLE>
<CAPTION>
                                                                     Three Months          Year
                                                                         Ended            Ended
                                                                       March 31,       December 31,
                                                                         1999              1998
                                                                         ----              ----

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

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

</TABLE>


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



<PAGE>




                                   SCHEDULE II

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

                      (in thousands, except per share date)

<TABLE>
<CAPTION>

                                                                                       Accumulated
                                                                       Capital            Other        Retained          Total
                                                Common Stock          in Excess       Comprehensive   (Deficit)      Stockholders'
                                                ------------
                                           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
                                      =============     ========    =============     ============    ==========    ==============


Net loss                                                                                                 (18,942)        (18,942)
Preferred stock dividend                                                                                  (2,576)         (2,576)
Other comprehensive loss, net of tax                                                       1,527                           1,527
Amortization of unearned compensation                                      282                                               282
                                      -------------     --------    -------------     ------------    -----------   --------------
Balance at December 31, 2000             6,500,000      $   65      $   27,620        $   (2,324)     $  (21,286)   $      4,075
                                      =============     ========    =============     ============    ============  ==============
</TABLE>




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



<PAGE>


                                   SCHEDULE II

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

                      (in thousands, except per share date)


<TABLE>
<CAPTION>
                                                                                      Accumulated
                                                                         Capital        Other          Retained        Total
                                                  Common Stock          in Excess    Comprehensive     (Deficit)    Stockholders'
                                                  ------------
                                              Shares        Amount     of Par Value  Income (Loss)     Earnings        Equity

<S>                                         <C>          <C>          <C>           <C>              <C>           <C>
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)
<TABLE>
<CAPTION>

                                                                             Year          Nine Months
                                                                            Ended             Ended
                                                                         December 31,      December 31,
                                                                             2000              1999
                                                                             ----              ----

Cash Flow From Operating Activities:
<S>                                                                     <C>               <C>
     Net (loss) income                                                  $  (18,942)       $    2,106
     Adjustments to reconcile net income to cash provided
        by operating activities:
     Equity in undistributed net income of subsidiaries                     16,055               212
     (Increase) decrease in accrued investment income                          (26)              168
     Increase in deferred tax asset                                            646              (646)
     Increase in other assets                                                   (2)              (25)
     Decrease in other liabilities                                            (765)           (3,048)
     Increase in payables to subsidiaries                                    4,999             5,733
     Dividends received from subsidiaries                                        -               300
     Other, net                                                              1,685            (2,263)
                                                                        -------------     -------------
        Net Cash Provided by Operating Activities                            3,650             2,537
                                                                        -------------     -------------

Cash Flow From Investing Activities:
     Proceeds from sale of fixed maturity investments                          246             3,938
     Cost of fixed maturity investments acquired                            (2,660)             (699)
     Proceeds from sale of equity securities                                     -               873
     Net change in short-term investments                                    3,004            (2,780)
     Capital contributions to subsidiaries                                  (6,860)             (500)
                                                                        -------------     -------------
        Net Cash (Used For) Provided by Investing Activities                (6,270)              832
                                                                        -------------     -------------

Cash Flow From Financing Activities:
        Net Cash Provided by Financing Activities                                -                 -
                                                                        -------------     -------------
        (Decrease) increase in Cash During the Period                       (2,620)            3,369
        Cash at Beginning of Period                                          4,027               658
                                                                        -------------     -------------
        Cash at End of Period                                           $    1,407        $    4,027
                                                                        =============     =============

</TABLE>


         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.)
                             STATEMENT OF CASH FLOWS

                                 (in thousands)
<TABLE>
<CAPTION>

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

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

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

Cash Flows From Financing Activities:
     Retirement of senior subordinated debentures                         (15,167)                 -
     Issuance of preferred stock                                           15,167                  -
     Decrease (increase) in other assets                                        -                732
                                                                       --------------    ---------------
        Net Cash Provided by Financing Activities                               -                732
                                                                       --------------    ---------------
        Increase (decrease) in Cash During the Period                         176               (521)
        Cash at Beginning of Period                                           482              1,003
                                                                       --------------    ---------------
        Cash at End of Period                                          $      658        $       482
                                                                       ==============    ===============


</TABLE>

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



<PAGE>




                                  SCHEDULE III

                       SUPPLEMENTARY INSURANCE INFORMATION

                                 (in thousands)

<TABLE>
<CAPTION>
                                                       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.

Year Ended December 31, 2000:
<S>                            <C>          <C>       <C>        <C>       <C>        <C>        <C>           <C>        <C>
Insurance operations           $   23,853   $ 61,306  $  42,778  $119,908  $   7,387  $ 101,940  $    2,998    $ 42,575   $ 120,667
                                                                                                                          =========
Other activities                      858          -          -         -      2,046          -           -      24,771
Corporate (parent company)              -          -          -         -        308          -           -         337
                               ----------- ---------- ---------- --------- ---------- ---------- ------------  ---------
   Total                       $   24,711   $ 61,306  $  42,778  $119,908  $   9,741  $ 101,940  $    2,998    $ 67,683
                               =========== ========== ========== ========= ========== ========== ============  =========

Nine Months Ended December 31, 1999
Insurance operations           $   19,393   $ 57,119  $  38,776  $ 86,371  $   5,223  $  65,699  $    1,478    $ 26,488   $  85,694
                                                                                                                          =========
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   $  23,878
                                                                                                                          =========
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  $ 132,781
                                                                                                                          =========
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
                               =========== ========== ========== ========= ========== ========== ============  ==========
</TABLE>


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

<PAGE>





                                   SCHEDULE IV

                                   REINSURANCE

                       (in thousands, except percentages)

<TABLE>
<CAPTION>
                                                                                                          Percentage of
                                                          Ceded to         Assumed                           Amount
                                           Gross           Other          From Other         Net           Assumed to
                                           Amount        Companies        Companies         Amount             Net
                                     ---------------  ---------------  ---------------  ---------------  ---------------

         ASCENT ASSURANCE, INC.

Year Ended December 31, 2000
<S>                                  <C>              <C>              <C>              <C>
Life insurance in force              $     46,744     $     12,553     $          -     $     34,191               -
                                     ===============  ===============  ===============  ===============
Premiums:
    Life                             $        497     $         12     $          -     $        485               -
    Accident and health                   121,601            3,939            1,257          118,919             1.05%
    Other                                     504                -                -              504               -
                                     ---------------  ---------------  ---------------  ---------------
      Total premiums                 $    122,602     $      3,951     $      1,257     $    119,908             1.05%
                                     ===============  ===============  ===============  ===============

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%
                                     ===============  ===============  ===============  ===============

</TABLE>




<PAGE>


                                   SCHEDULE V

                 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

                                 (in thousands)

<TABLE>
<CAPTION>
                                                           Additions
                                                          (Reductions)
                                         Balance at        Charged to                                                Balance at
                                         Beginning         Costs and         Deductions                                End Of
                                         of Period          Expenses        (Charge Offs)            Other*            Period
                                     ----------------  ----------------  -------------------  -------------------  ---------------

                ASCENT ASSURANCE, INC.

Year Ended December 31, 2000:
Allowance for doubtful agents'
<S>                                  <C>               <C>               <C>                  <C>                  <C>
    balances                         $      6,060      $          (722)  $        (1,627)     $              -     $      3,711
                                     ================  ================  ===================  ===================  ===============

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
                                     ================  ================  ===================  ===================  ===============
</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 2001
Annual Meeting of Stockholders, which will be filed on or before April 30, 2001.
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 2001 Annual Meeting of Stockholders, which will be filed on or
before April 30, 2001.

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 2001 Annual Meeting of  Stockholders,  which
will be filed on or before April 30, 2001.

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information  pertaining to certain  relationships  and related  transactions  is
incorporated  herein by reference to "Principal  Stockholders"  and "Election of
Directors"  from the Company's  definitive  proxy  statement for the 2001 Annual
Meeting of Stockholders, which will be filed on or before April 30, 2001.



<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).

10.18Third  Amendment to Guaranty  Agreement dated April 17, 2000 between Ascent
     Assurance,  Inc. and LaSalle Bank  National  Association  (incorporated  by
     reference to Exhibit 10.7 to the  Company's  Quarterly  Report on Form 10-Q
     for the quarter ended June 30, 2000).

10.19Extension of 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  10.8 to the  company's  Quarterly
     Report on Form 10-Q for the quarter ended June 30, 2000).

10.20Extension of Employment  Agreement,  dated as of September 15, 1998, by and
     among the Company,  Westrbridge Management Corp. and Mr. Patrick H. O'Neill
     (incorporated  by  reference  to Exhibit  10.9 to the  Company's  Quarterly
     Report on Form 10-Q for the quarter ended June 30, 2000).

10.21Fourth Amendment to Guaranty Agreement dated August 10, 2000 between Ascent
     Assurance,  Inc. and LaSalle Bank  National  Association  (incorporated  by
     reference to Exhibit 10.10 to the Company's  Quarterly  Report on Form 10-Q
     for the quarter ended September 30, 2000).

10.22First Amendment to Pledge Agreement,  dated as of November 30, 2000, by and
     among Ascent Assurance, Inc. and LaSalle Bank National Association.

10.23Fifth  Amendment to Guaranty  Agreement,  dated as of November 30, 2000, by
     and among Ascent Assurance, Inc. and LaSalle Bank National Association.

10.24Third Amendment to Credit Agreement,  dated as of November 30, 2000, by and
     among Ascent Funding, Inc. and LaSalle Bank National Association.

10.25First  Amendment to Security  Agreement,  dated as of November 30, 2000, by
     and among Ascent Management, Inc. and LaSalle Bank National Association.

21.1*    List of Subsidiaries of Ascent Assurance, Inc.

24.1*    Consent of PricewaterhouseCoopers LLP

(b)  Report on Form 8-K.

No reports on Form 8-K were filed during the year ended December 31, 2000.



------------------------
*        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 17th day of April,
2001.


                             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.


SIGNATURE                   TITLE                             DATE
--------------------------- --------------------------------- ---------------

 /s/ Patrick J. Mitchell    Director, Chairman of the Board   April 17, 2001
---------------------------
(Patrick J. Mitchell)       and Chief Executive Officer
                          (Principal Executive Officer)


 /s/ John H. Gutfreund      Director                          April 17, 2001
---------------------------
(John H. Gutfreund)

 /s/ Richard H. Hershman    Director                          April 17, 2001
---------------------------
(Richard H. Hershman)

 /s/ Michael A. Kramer      Director                          April 17, 2001
---------------------------
(Michael A. Kramer)

 /s/ Robert A. Peiser       Director                          April 17, 2001
---------------------------
(Robert A. Peiser)

 /s/ James K. Steen         Director                          April 17, 2001
---------------------------
(James K. Steen)

 /s/ Paul E. Suckow         Director                          April 17, 2001
---------------------------
(Paul E. Suckow)




<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>


                                  Exhibit 21.1


                     SUBSIDIARIES OF ASCENT ASSURANCE, INC.


      Percentage Subsidiary                                        Ownership

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

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

  3.  National Financial Insurance Company (Texas)                    100%

  4.  Freedom Life Insurance Company of America (Texas)               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.   LifeStyles Marketing Group, Inc. (Delaware)                     100%

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

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

18.   HPI Marketing, Inc. (Delaware)                                  100%





<PAGE>




                                  Exhibit 24.1



                       CONSENT OF INDEPENDENT ACCOUNTANTS


We  hereby  consent  to the  incorporation  by  reference  in  the  Registration
Statement  on Form  S-8  (No.  333-82155)  of  Ascent  Assurance,  Inc.  and its
subsidiaries of our reports dated April 17, 2001 and March 29, 2000 appearing on
pages 27 and 28 of this Form 10-K.



/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP
Dallas, Texas
April 17, 2001


--------

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

(1) Excludes  interest on receivables from agents of $1.9 million,  $1.3 million
and $2.5  million  for the  years  ended  December  31,  2000,  1999  and  1998,
respectively.