SECURITIES AND EXCHANGE COMMISSION
                                Washington, D.C.
                                   Form 10-Q

                 QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934
    For the three months ended
       March 31, 1997                          Commission File Number 0-15330
             ___________________________

                        AMVESTORS FINANCIAL CORPORATION
                    _______________________________________
             (Exact name of registrant as specified in its charter)

                   Kansas                                   48-1021516
         ____________________________             _____________________________
   (State or other jurisdiction of         (I.R.S. Employer Identification No.)
     incorporation or organization)

         555 South Kansas Avenue, Topeka, Kansas                       66603
        __________________________________________________          __________
           (Address of principal executive offices)                 (Zip code)

Registrant's telephone number, including area code:  (913) 232-6945
                                                                               
                                                                               


Securities registered pursuant to Section 12(g) of the Act:
                                  Common Stock*
                                  _____________

                                    Title of class

*Report being filed pursuant to Section 13 of the act.
    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 the number of shares outstanding of each of the issuer's classes 
of common stock, as of the close of the period covered by this report.

    Class                                         Outstanding March 31, 1997
    ______                                       ___________________________
    Common Stock, no par value                          13,249,115 shares
<PAGE>
AMVESTORS FINANCIAL CORPORATION
INDEX


PARTI.         Financial Information:                               Page Number
               Consolidated Balance Sheets-
                 March 31, 1997 and December 31, 1996                      2-3
               Consolidated Statements of Earnings-
                 Three months ended March 31, 1997 and 1996                  4
               Consolidated Statements of Stockholders' Equity-
                 Twelve months ended December 31, 1996 and
                 Three months ended March 31, 1997                           5
               Consolidated Statements of Cash Flows-
                 Three months ended March 31, 1997 and 1996                6-7
               Notes to Consolidated Financial Statements                 8-27
               Management's Discussion and Analysis of Financial
                 Condition and Results of Operations                     27-32

PART II.       Other Information                                         33-36
1<PAGE>
                AMVESTORS FINANCIAL CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                      March 31, 1997 and December 31, 1996
                                (000's Omitted)
                                  (Unaudited)
ASSETS                                                    1997            1996
____________________________________________        ____________  ______________
Investments:
    Debt securities:
      Bonds:
        Available-for-sale (cost: $2,660,751 and
         $2,547,658)  ..................................   $2,647,055 2,594,293
        Trading (cost: $10,049 and $12,198) ............       10,043    12,291
                                                            2,657,098 2,606,584
    Equity securities:
      Common stock:
        Available-for-sale (cost: $2,659 and $1,396) ...        3,518     2,440
      Preferred stock:
        Available-for-sale (cost: $27,388 and $27,742) .       29,133    30,694
        Trading (cost: $286 and $2,516) ...............           250     2,539
                                                               32,901    35,673
    Other long-term investments                                36,626    41,152
    Short-term investments                                      1,801       371
        Total investments                                   2,728,426 2,683,780
Cash and cash equivalents                                      52,818   132,574
Amounts receivable under reinsurance agreements               235,878   241,458
Amounts receivable on securities settlements in process         1,996     2,395
Accrued investment income                                      39,222    36,676
Deferred cost of policies produced                            205,737   175,837
Deferred cost of policies purchased                            44,775    39,865
Goodwill                                                       11,544    11,644
Other assets                                                   23,629    21,246
  Total assets...................................          $3,344,025 3,345,475

See notes to consolidated financial statements.
2<PAGE>
                AMVESTORS FINANCIAL CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                      March 31, 1997 and December 31, 1996
                                (000's Omitted)
                                  (Unaudited)

LIABILITIES AND STOCKHOLDERS' EQUITY                 1997             1996
______________________________________________   _______________    __________ 

Liabilities:

Policy liabilities:
Future policy benefits .............................$ 3,054,786    3,037,005
Other policy liabilities                                 10,502        6,709
                                                      3,065,288    3,043,714

Subordinated debentures payable                         65,000       65,000
Amounts due on securities settlements in process        12,591       11,301
Deferred income taxes                                    3,667       13,302
Accrued expenses and other liabilities                   7,845        7,811
Total liabilities                                    3,154,391    3,141,128
Commitments and contingencies

Stockholders' equity:
Preferred stock, $1.00 par value, authorized -
2,000,000 shares                                            -             -
Common stock, no par value, authorized -
25,000,000 shares; issued - 13,297,291
shares in 1997 and 13,167,372 shares in 1996           16,921       16,755
Paid in capital                                        99,995       98,678
Unrealized investment gains (losses) (net of deferred
cost of policies produced amortization expense
(benefit) of ($3,718) and $18,175 and net of
deferred cost of policies purchased amortization
expense (benefit) of ($1,584) and $5,112 and
deferred income tax expense (benefit) of ($2,093)
and $9,643)                                             (3,697)      17,701
Retained earnings                                       79,151       73,949
                                                       192,370      207,083
Less treasury stock                                       (234)        (234)
Less leveraged employee stock ownership trust
(LESOP) ............................................    (2,502)      (2,502)
Total stockholders' equity                              189,634      204,347
Total liabilities and stockholders' equity ......... $3,344,025    3,345,475

See notes to consolidated financial statements.
3<PAGE>
                AMVESTORS FINANCIAL CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF EARNINGS
                   Three months ended March 31, 1997 and 1996
                     (000's Omitted, except per share data)
                                  (Unaudited)
                                                               1997      1996
 
Revenue:
    Insurance premiums and policy charges.................... $ 4,409    2,457
    Net investment income....................................  50,432   39,169
    Net investment gains (losses)............................   2,443    7,627
    Other revenue............................................     665       25
    Total revenue............................................  57,949   49,278

Benefits and expenses:
    Benefits, claims and interest credited to policyholders..  37,764   30,620
    Amortization of deferred cost of policies produced.......   3,879    4,970
    Amortization of deferred cost of policies purchased......   1,786        -
    General insurance expenses...............................   3,948    1,921
    Premium and other taxes, licenses and fees...............     609      251
    Other expenses...........................................      59       60
 
    Total benefits and expenses..............................  48,045   37,822

Operating earnings...........................................   9,904   11,456
Interest expense.............................................   1,435      125
Earnings before income tax expense...........................   8,469   11,331
Income tax expense...........................................   2,964    3,910
Net earnings................................................. $ 5,505    7,421
Earnings per share of common stock:

    Primary:
    Net earnings............................................. $   .40      .71

    Fully diluted:
    Net earnings............................................. $   .37      .71

Average shares outstanding:

    Primary                                                    13,750   10,427
    Fully diluted............................................  17,549   10,493

See notes to consolidated financial statements.
4<PAGE>

AMVESTORS AMVESTORS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(000's Omitted, except share and per share data)
(Unaudited)
<TABLE>
<CAPTION>

                                                 Unrealized        
                                                  Investment                     
                                Common    Paid-in    Gains   Retained  Treasury         
                                Stock     Capital   (Losses) Earnings   Stock   LESOP     Total
                               ________   ________  _________ ________ ______  ______     _______
<S>                            <C>         <C>      <C>       <C>      <C>     <C>        <C>
Balance as of January 1,
  1996 ......................... $12,904    64,284    45,372   54,714     -     (2,829)    174,445

Net earnings ...................      -         -         -    20,862     -          -      20,862
Change in unrealized invest-
  ment gains (losses) .............   -         -   (27,671)         -     -         -     (27,671)
Cash dividends to stockholders
  ($.1425 per share on common
  stock) .........................    -         -        -      (1,627)    -          -     (1,627)
Issuance of common stock:
 upon acquisition of company .....3,464    28,865        -          -      -          -     32,329
 upon exercise of options ........  387       585<F1>     -          -      -          -        972
Issuance of warrants:
  upon acquisition of company ....   -      5,201        -          -      -          -      5,201
Purchase of warrants ............    -       (257)       -          -      -          -       (257)
Acquisition of treasury shares ...   -          -        -          -   (234)         -       (234)
Allocation of LESOP shares ......    -          -        -          -      -        327        327
_______________________________
Balance as of December 31,
  1996 ........................ 16,755     98,678    17,701    73,949   (234)    (2,502)    204,347
Net earnings ..................     -          -         -      5,505      -          -       5,505
Change in unrealized invest-
  ment gains (losses) .........     -          -    (21,398)       -       -          -     (21,398)
Cash dividends to stockholders
  ($.0225 per share on common
  stock) .......................    -          -          -      (303)     -          -        (303)
Issuance of common stock:
 upon exercise of options ....    166       1,317<F1>      -        -       -          -       1,483
____________________________
Balance as of March 31,
  1997 .....................   $16,921     99,995     (3,697)   79,151  (234)    (2,502)    189,634

<FN>
<F1> Net of income tax benefit of $377 and $242 for the period ended March 31, 
1997 and 
    December 31, 1996, respectively.
</FN>
</TABLE>

See notes to consolidated financial statements.
5<PAGE>
                AMVESTORS FINANCIAL CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                Increase (Decrease) in Cash and Cash Equivalents
                   Three Months ended March 31, 1997 and 1996
                                (000's Omitted)
                                  (Unaudited)
                                                            1997          1996
                                                
Operating Activities:
    Net earnings..........................................$     5,505      7,421
    Adjustments to reconcile net earnings to net
        cash provided by (used in) operating activities:
      Interest credited to policyholders..................     39,778     30,835
      Amortization of (discounts) premiums
       on debt securities, net............................      (984)      (241)
      Amortization of deferred cost of policies
       produced...........................................      3,879      4,970
      Amortization of deferred cost of policies
        purchased.........................................      1,786          -
      Net investment (gains) losses.......................    (2,443)    (7,627)
      Investment trading activity.........................      4,736       217
      Accrued investment income...........................    (2,546)      (144)
      Deferred income taxes...............................    (2,100)       737
      Other, net..........................................      4,549     2,779
     Net cash provided by operating activities............     52,160    38,947
Investing Activities:
    Purchases of securities:
     Available-for-sale...................................  (259,546)  (261,348)
    Proceeds from sale of securities:
     Available-for-sale...................................    113,166   135,203
    Proceeds from maturity or redemption:
     Available-for-sale...................................     35,601    38,558
    Other long-term investments, net......................      4,536     4,977
    Short-term investments, net...........................    (1,431)         9
    Capitalization of deferred cost of policies
      produced............................................   (11,885)    (9,071)
    Other, net............................................    (3,049)      (984)
     Net cash used in investing activities................   (122,608)  (92,656)
 Financing Activities:
    Premiums received.....................................    117,958    97,144
    Surrender and death benefits paid.....................  (138,722)   (93,786)
    Surrender and risk charges collected..................      3,822     1,880
    Securities settlements in process.....................      1,689    11,092
    Cash dividends to stockholders........................      (303)      (753)
    Issuance of common stock..............................      1,482       105
    Other, net............................................      4,766     2,258
     Net cash provided by (used in)
     financing activities.................................    (9,308)    17,940
 Increase (Decrease) in Cash and Cash Equivalents.........    (79,756)  (35,769)
Cash and Cash Equivalents:
    Beginning of year.....................................    132,574    48,281
    End of year...........................................$    52,818    12,512
                                                            

See notes to consolidated financial statements.
6<PAGE>
                AMVESTORS FINANCIAL CORPORATION AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                Increase (Decrease) in Cash and Cash Equivalents
                   Three months ended March 31, 1997 and 1996
                                (000's Omitted)
                                  (Unaudited)


SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION:
                                                      1997              1996
    Income tax payments (refunds)................. $       950            315
    Interest payments............................. $         -            118
  
                                                         (000's Omitted)
                                                  For the Period Ended March 31,
                                            ___________________________________

NON-CASH ACTIVITIES:                                          1997         1996
                                                     
                                                     
                                                     


  Change in net unrealized investment gains
     (losses).....................................   $     (61,723)     (68,368)

    Less: Associated (increase) reduction in
          amortization of deferred cost of policies
           Produced...............................           21,893      19,235
          Purchased...............................            6,696          -  
          Deferred income tax (expense) benefit...           11,736      17,197
                      
     Net change in net unrealized gains (losses)...   $    (21,398)     (31,936)
 
    Investing activities:
     Purchase of securities:
       Available-for-sale.........................   $       6,490            -
     Sales of securities:
       Available-for-sale.........................   $        6,490           -

    The above represents transactions involving the exchange of one security 
for another. For additional information see Note 2 of Notes to Consolidated 
Financial Statements.

See notes to consolidated financial statements.
7<PAGE>
AMVESTORS FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  Summary of Significant Accounting Policies:
_______________________________________________

A.  PRINCIPLES OF CONSOLIDATION:

        The consolidated financial statements include the accounts of 
AmVestors and its wholly-
        owned subsidiaries American Investors Life Insurance Company, Inc. 
(American), American Investors Sales Group, Inc. (American Sales), AmVestors 
Acquisition Subsidiary, Inc. (AAS), successor through merger with Financial 
Benefit Group, Inc. (FBG), AmVestors CBO II, Inc. (CBO II), AmVestors 
Investment Group, Inc. (AIG), Annuity International Marketing Corporation 
(AIMCOR), Financial Benefit Life Insurance Company (FBL), The Insurance Mart, 
Inc. (TIM), and Rainbow Card Pack Publication, Inc. (RBCP), (collectively the 
company). All significant intercompany accounts and transactions have been 
eliminated.
B.  ACCOUNTING PRINCIPLES AND PRACTICES:
        The accompanying unaudited consolidated financial statements have 
been prepared on the basis of generally accepted accounting principles as 
promulgated by the American Institute of Certified Public Accountants. In the 
opinion of the company, the consolidated financial statements contain all 
adjustments (consisting of only normal recurring accruals) necessary to 
present fairly the financial position as of March 31, 1997 and the results of 
earnings and the statements of cash flows for the three month periods ended 
March 31, 1997 and 1996.
C. INVESTMENTS:

        Debt securities held-to-maturity are carried at amortized cost, 
except that those securities with an other than temporary impairment in value 
are carried at estimated net realizable value. Debt securities 
available-for-sale are carried at estimated market value, with any unrealized 
gains (losses) recorded in stockholders' equity.
        Investments are reviewed on each balance sheet date to determine if 
they are impaired. In determining whether an investment is impaired, the 
company considers whether the decline in market value at the balance sheet 
date is an other than temporary decline; if so, then the investment's 
carrying value is reduced to a new cost basis which represents estimated fair 
value. The decline in value is reported as a realized loss, and a recovery 
from the new cost basis is recognized as a realized gain only at sale.
        The estimates of fair value are based on information obtained from 
published financial information provided by issuers, independent sources such 
as broker dealers or the company's independent investment advisor. Such 
amounts represent an estimate of the consideration to be received in the 
future when the defaulted company's debt is settled through the sale of their 
assets or the restructuring of their debt. These estimates do not represent 
the discounted present value of these future considerations.
        Investments in common and preferred stock are carried at market, with 
unrealized gains (losses) recorded in stockholders' equity for securities 
available-for-sale.
        Investments in debt and equity securities which were purchased 
principally for the purpose of selling such securities in the near term are 
classified as trading securities and are carried at market. Unrealized gains 
(losses) are included currently in the results of earnings.
        The cost of securities sold is determined on a specific 
identification basis.
        Other long-term investments include policy loans and mortgage loans 
on real estate which 
        are carried at cost less principal payments since date of 
acquisition, and certain partnership investments which are carried at an 
amount equal to the company's share of the partner's estimated market value 
with any unrealized gains or (losses) recorded in net investment income.
8<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
1. Summary of Significant Accounting Policies (continued):
___________________________________________________________
D.  FAIR VALUE OF FINANCIAL INSTRUMENTS:

        Estimated fair value amounts have been determined by the company 
using available market information and appropriate valuation methodologies. 
Due to the fact that considerable 
        judgment is required to interpret market data to develop the 
estimates of fair value, the estimates presented are not necessarily 
indicative of the amounts that could be realized in a current market 
exchange.
        The carrying values and estimated fair values of the company's 
financial instruments as of March 31, 1997, and December 31, 1996, were as 
follows:
                                                     (000's Omitted)
                                           1997                    1996
                           _______________________     ________________________
                             Carrying       Fair        Carrying         Fair
                               Value        Value         Value          Value
                            ___________   _________     ___________    _________
Assets:
Debt securities ...........   $2,657,098    2,657,098    2,606,584    2,606,584
Equity securities .........       32,901       32,901       35,673       35,673
Other long-term investments       36,626       36,799       41,152       41,176
Short-term investments ....        1,801        1,801          371          371
Cash and cash equivalents .       52,818       52,818      132,574      132,574
Accounts receivable on
 securities settlements in
  process .................        1,996        1,996        2,395        2,395
Accrued investment income .       39,222       39,222       36,676       36,676
Liabilities:
 Future policy benefits -
  investment contracts .....    2,815,503    2,631,487    2,767,326    2,583,902
 Other policy liabilities ..       10,502       10,502        6,709        6,709
 Subordinated debentures
  payable ..................       65,000       65,975       65,000       65,325
 Amounts due on securities
  settlements in process ...       12,591       12,591       11,301       11,301
 Accrued expenses and other
  liabilities ..............        7,845        7,845        7,811        7,811

        DEBT SECURITIES - Fair values are based on quoted market prices or 
dealer quotes, if available. If a quoted market price is not available, fair 
value is estimated using quoted market prices for similar securities.
        EQUITY SECURITIES - Fair value equals the carrying value as these 
securities are carried at quoted market value.
        OTHER LONG-TERM INVESTMENTS - For certain homogeneous categories of 
mortgage loans, fair value is estimated using quoted market prices for 
securities backed by similar loans, adjusted for differences in loan 
characteristics. Fair value of policy loans and other long-term investments 
is estimated to approximate the assets' carrying value.
        SHORT-TERM INVESTMENTS AND CASH AND CASH EQUIVALENTS - The carrying 
amounts reported in the balance sheet approximate the assets' fair value.
        AMOUNTS RECEIVABLE ON SECURITIES SETTLEMENTS IN PROCESS - The 
carrying amount reported in the balance sheet approximates the fair value of 
this asset.
        ACCRUED INVESTMENT INCOME - The carrying amounts reported in the 
balance sheet for these assets approximate fair value.
9<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

1. Summary of Significant Accounting Policies (continued):
___________________________________________________________
        FUTURE POLICY BENEFITS FOR INVESTMENT CONTRACTS - The fair values for 
deferred annuities were estimated to be the amount payable on demand at the 
reporting date as those investment contracts have no defined maturity and are 
similar to a deposit liability. The amount payable at the reporting date was c
alculated as the account balance less any applicable surrender charges.
        OTHER POLICY LIABILITIES - The carrying amount reported in the 
balance sheet approximates the fair value of these liabilities.
        SUBORDINATED DEBENTURES PAYABLE - The fair value of the company's 
debentures is based on a dealer quote. 
        AMOUNTS DUE ON SECURITIES SETTLEMENTS IN PROCESS - The carrying 
amount reported in the
        balance sheet approximates the fair value of this liability.
        ACCRUED EXPENSES AND OTHER LIABILITIES - The carrying amount reported 
in the balance sheet approximates the fair value of these liabilities.
        The use of different market assumptions and/or estimation 
methodologies could have a material effect on the estimated fair value 
amounts.
E. SIGNIFICANT RISKS AND UNCERTAINTIES:
        NATURE OF OPERATIONS - The company specializes in the sale of 
deferred annuity products, the earnings on which are not currently taxable to 
the annuity owner. Any changes in tax regulations which eliminate or 
significantly reduce this advantage of tax deferred income would adversely 
impact the operations of the company. The company's products are marketed 
nationwide through a network of independent agents licensed in 47 states, the 
District of Columbia and the U.S. Virgin Islands. The company is not 
dependent on any one agent or agency for a substantial amount of its 
business. No single agent accounted for more than 2% of annuity sales in 
1996, and the top twenty individual agents accounted for approximately 18% of 
1996 annuity sales.
        USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS - The 
preparation of financial statements in conformity with generally accepted 
accounting principles 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 may differ from those estimates.
        CERTAIN SIGNIFICANT ESTIMATES - Certain costs incurred to acquire new 
business are deferred and amortized in relation to the incidence of expected 
gross profits over the expected life of the policies. Determination of 
expected gross profits includes management's estimate of certain elements 
over the life of the policies, including investment income, interest to be 
credited to the contract, surrenders and resultant surrender charges, deaths 
and in the case of life insurance, mortality charges to be collected. These 
estimates of expected gross profits are used as a basis for amortizing 
deferred costs. These estimates are periodically reviewed by management and, 
if actual experience indicates that the estimates should be revised, the 
total amortization recorded to date is adjusted by a charge or credit to 
earnings.
F.  DEFERRED COST OF POLICIES PRODUCED:
        The costs of acquiring new business (primarily commissions and policy 
expenses), which vary with and are directly related to the production of new 
business, have been deferred. The deferred costs related to investment-type 
deferred annuity contracts are amortized in relation to the incidence of 
expected gross profits over the expected life of the policies. For single 
premium life insurance, deferred policy acquisition costs are amortized over 
the life of the policies, but not more than 20 years for policies issued 
before January l, 1987, and not more than 30 years for policies issued after 
December 31, 1986,
10<PAGE>
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
1. Summary of Significant Accounting Policies (continued):
___________________________________________________________
based on the expected gross profits for the amortization periods. The 
deferred costs related to traditional life contracts are amortized over the 
premium paying period for the related policies using the same actuarial 
assumptions as to interest, mortality and withdrawals as are used to 
calculate the reserves for future benefits.
        Estimates of the expected gross profits to be realized in future 
years include the 
        anticipated yield on investments, including realized gains (losses). 
Deferred policy acquisition costs will be adjusted in the future based on 
actual investment income earned.
G.  DEFERRED COST OF POLICIES PURCHASED:
        At the date of acquisition of a company, a portion of the purchase 
price is allocated to the right to receive future cash flows from the 
existing insurance contracts. The amount allocated represents the present 
value of the projected future cash flows from the acquired policies. These 
projections take into account mortality, surrenders, operating expenses, 
yields on the investments held to back the policy liabilities and other 
factors known or expected at the valuation date based on the judgment of manag
ement.
        The deferred cost of policies purchased is amortized in relation to 
the incidence of expected cash flows over the expected life of the policies. 
If it is determined that the present value of future cash flows is 
insufficient to recover the deferred cost of policies purchased, its carrying 
value will be reduced with a corresponding charge to earnings.
H.  GOODWILL:
        Goodwill represents the excess of the amount paid to acquire a 
company over the fair value of the net assets acquired. This balance is 
amortized on a straight-line basis over a 30-year period. If it is determined 
through an estimate of future cash flows that the goodwill has been impaired, 
its carrying value will be reduced with a corresponding charge to earnings.
I.  FUTURE POLICY BENEFITS:
        Liabilities for future policy benefits under life insurance policies, 
other than single
        premium life insurance, have been computed by the net level premium 
method based upon estimated future policy benefits (excluding participating 
dividends), investment yield, mortality and withdrawals giving recognition to 
risk of adverse deviation. Interest rates range from 41\2% to 101\4% 
depending on the year of issue, with mortality and withdrawal assumptions 
based on company and industry experience prevailing at the time of issue.
        For single premium life insurance and single premium annuities, the 
future policy
        benefits are equal to the accumulation of the single premiums at the 
credited rate of interest and for single premium whole life, less any 
mortality charges.
J.  PARTICIPATING POLICIES:
        The company issued participating policies on which dividends are paid 
to policyholders as determined annually by the Board of Directors. The amount 
of dividends declared but undistributed is included in other liabilities. 
Policy benefit reserves do not include a provision for estimated future 
participating dividends.
        K.  DEPRECIATION:
        The home office buildings are depreciated on the straight-line basis 
over estimated lives of 40 years. Other depreciation is provided on the 
straight-line basis over useful lives ranging from 3 to 8 years.
11<PAGE>
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
1. Summary of Significant Accounting Policies (continued):
___________________________________________________________
L.  INCOME TAXES:
        The company and its subsidiaries, except for FBL, prepare and file 
their income tax returns on a consolidated basis. Under current tax law, 
FBLis not eligible for inclusion in a consolidated tax return for a period of 
five years following the acquisition.
        The company provides for the recognition of deferred tax assets and 
liabilities for the expected future tax consequences of events that have been 
reported in the financial statements on the liability method.
M.  EARNINGS PER SHARE:
        Primary earnings per share of common stock are computed by dividing 
net earnings by the sum of the weighted average number of shares outstanding 
during the period plus dilutive common stock equivalents applicable to stock 
options and warrants calculated using the treasury stock method. Fully 
diluted earnings per share assumes the conversion of the convertible 
debentures outstanding with applicable reduction in interest expense related 
to the debentures.
N.  CONSOLIDATED STATEMENTS OF CASH FLOWS:
        For purposes of reporting cash flows, cash and cash equivalents 
includes cash and money market accounts and other securities with original 
maturities of three months or less.
O.  NEW ACCOUNTING STANDARDS:
        Effective for transfer and servicing of financial assets and 
extinguishment of liabilities occurring after December 31, 1996, SFAS No. 
125, "Accounting for Transfers and Servicing of Financial Assets and 
Extinguishment of Liabilities" establishes accounting and reporting standards 
based on the consistent application of the financial-components approach. 
This approach requires the recognition of financial assets and servicing 
assets that are controlled by the reporting entity, the derecognition of 
financial assets when control is surrendered, and the derecognition of 
liabilities when they are extinguished. Specific criteria are established for 
determining when control has been surrendered in the transfer of financial 
assets. The company does not expect the implementation of this Statement to 
have a material effect on its consolidated financial statements.
P.  RECLASSIFICATIONS:
        Certain reclassifications have been made to conform the March 31, 
1996 and December 31, 1996 financial statements to the March 31, 1997 
presentation.
12<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
2. Investments:
_________________
A summary of net investment income and net investment gains (losses) follows:

                                                      (000's Omitted)
                                            For the Period Ended March 31,
                                        ______________________________________
                                                        1997         1996
                                                 
                                                 
                                                 
Net investment income:
Debt securities.................................. $        47,739     37,781
Equity securities................................             386        168
Other long-term investments......................           1,392      1,234
Short-term investments...........................           1,620        715
                                                 
                                                 
                                                 
    .............................................          51,137     39,898
Less investment expenses.........................             705        729
                                                 
                                                 
                                                 
Net investment income............................ $        50,432     39,169
Net investment gains (losses):
 Realized investment gains (losses):
    Debt securities, available-for-sale.......... $           736      7,203
    Debt securities, trading.....................             290        280
    Equity securities, available-for-sale........           1,371          -
    Equity securities, trading...................             199        115
                                                 
                                                 
                                                 
Net realized investment gains (losses)...........           2,596      7,598
                                                 
                                                 
                                                 
 Unrealized investment gains (losses):
    Debt securities, trading.....................            (99)          22
    Equity securities, trading...................            (59)           7
    Other long-term investments..................              5           -
                                                 
                                                 
                                                 
Net unrealized investment gains (losses).........           (153)          29
                                                 
                                                 
                                                 
Net investment gains (losses).................... $         2,443      7,627

        Certain limited partnership investments are included in income from 
other long-term investments. These funds (commonly referred to as hedge 
funds) are managed by outside investment advisors. The investment guidelines 
of these partnerships provide for a broad range of investment alternatives, 
including stocks, bonds, futures, options, commodities, and various other 
financial instruments. These investments were purchased with the strategy to 
achieve a yield in excess of the S&P 500 Index. The partnerships are carried 
at an amount equal to the company's share of the partnerships' estimated 
market value with related unrealized gains and losses recorded in net 
investment income. In accordance with the permitted guidelines, the 
investments purchased by these partnerships may experience greater than 
normal volatility which could materially affect the company's earnings for 
any given period.
13<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
2. Investments (continued):
______________________________
        The maturity of the company's debt and equity securities portfolio as 
of March 31, 1997 was as follows:
                                                  (000's Omitted)
                                               As of March 31, 1997
                                          

                                    Available-for-Sale            Trading
                                               Estimated               Estimated
                                    Amortized    Market    Amortized     Market
                                      Cost        Value       Cost        Value
 
Debt securities:
 One year or less ...........   $     55,953      54,841        --          --
 Two years through five years        545,038     554,376       2,016       2,027
 Six years through ten years       1,611,952   1,597,894       6,188       6,178
 Eleven years and after .....        447,808     439,944       1,845       1,838
                                    2,660,751   2,647,055      10,049     10,043
Equity securities ...........         30,047      32,651         286         250
                                $  2,690,798   2,679,706      10,335      10,293
 
        These tables include the maturities of mortgage-backed securities 
based on the estimated cash flows of the underlying mortgages.
        The amortized cost, estimated market value and unrealized market 
gains and losses of debt and equity securities as of March 31, 1997 and 
December 31, 1996, were as follows:
                                                (000's Omitted)
                                                                    Estimated
                                   Amortized Unrealized Unrealized    Market
                                      Cost      Gains    Losses       Value
          March 31, 1997
         _______________
Bonds available-for-sale:
  Corporate debt obligations
  Investment grade ............... $1,743,015   19,933    31,421    1,731,527
  High-yield .....................    139,102    2,161     3,128      138,135
                                    1,882,117   22,094    34,549    1,869,662
  U.S. Treasury obligations ......      5,399        9        98        5,310
  Mortgage-backed securities
  Investment grade ...............    768,314    8,122     7,797      768,639
  High-yield .....................      4,921     --       1,477        3,444
   Bonds available-for-sale ......  2,660,751   30,225    43,921    2,647,055
 Bonds trading:
  Corporate debt obligations
  Investment grade ...............      7,522       83        82        7,523
  High-yield .....................      2,527       11        18        2,520
   Bonds trading .................     10,049       94       100       10,043
    Total bonds ..................  2,670,800   30,319    44,021    2,657,098
Equity securities ................     30,333    3,663     1,095       32,901
                                   $2,701,133   33,982    45,116    2,689,999
 
14<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

2. Investments (continued):
_____________________________
                                                   (000's Omitted)
                                                                     Estimated
                                   Amortized  Unrealized Unrealized    Market
                                     Cost        Gains     Losses       Value
              December 31, 1996
           __________________
Bonds available-for-sale:
  Corporate debt obligations
  Investment grade ............... $1,589,336    38,980     8,831    1,619,485
  High-yield .....................    129,510     3,546       821      132,235
                                    1,718,846    42,526     9,652    1,751,720
  U.S. Treasury obligations ......     44,520       246       437       44,329
  Mortgage-backed securities
  Investment grade ...............    778,615    18,216     2,561      794,270
  High-yield .....................      5,677      --       1,703        3,974
   Bonds available-for-sale ......  2,547,658    60,988    14,353    2,594,293
 Bonds trading:
  Corporate debt obligations
  Investment grade ...............      8,824        90        57        8,857
  High-yield .....................      3,374        84        24        3,434
  Bonds trading ..................     12,198       174        81       12,291
   Total bonds ...................  2,559,856    61,162    14,434    2,606,584
Equity securities ................     31,654     4,430       411       35,673
                                   $2,591,510    65,592    14,845    2,642,257

        The preceding table includes the carrying value and estimated market 
value of debt securities which the company has determined to be impaired (othe
r than temporary decline in value) as follows:
                                             (000's Omitted)
                                      Accumulated                  Estimated
                      Original           Write         Carrying      Market
                       Cost              Downs           Value       Value
March 31, 1997        $ 7,545            7,545             -           -
December 31, 1996     $ 7,545            7,545             -           -

        The company defines high-yield securities as those corporate debt 
obligations rated below investment grade by Standard & Poor's and Moody's or, 
if unrated, those that meet the objective criteria developed by the company's 
independent investment advisory firm. Management believes that the return on 
high-yield securities adequately compensates the company for additional 
credit and liquidity risks that characterize such investments. In some cases, 
the ultimate collection of principal and timely receipt of interest is 
dependent upon the issuer attaining improved operating results, selling 
assets or obtaining financing.
15<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

2. Investments (continued):
____________________________

        The amortized cost, estimated market value and unrealized market 
gains (losses) by type of mortgage-backed security as of March 31, 1997 and 
December 31, 1996 were as follows:
<TABLE>
<CAPTION>

                                                               (000's Omitted)
                                                                                     Estimated
                                                   Amortized   Unrealized Unrealized   Market
             March 31, 1997                           Cost       Gains     Losses       Value
             _______________                           
                                                                                   
<S>                                               <C>            <C>       <C>        <C>                                          
Government agency mortgage-backed securities:
   Pass-throughs ................................   $     22          2       --           24
           Total government agency
             mortgage-backed securities .........         22          2       --           24
Government sponsored enterprise
 mortgage-backed securities:
        Planned amortization classes ............    465,091      6,025      3,320    467,796
        Targeted amortization classes and
         accretion directed classes .............     27,634        202       --       27,836

        Sequential classes ......................      8,840          8         36      8,812
        Pass-throughs ...........................      2,220         22         10      2,232
           Total government-sponsored enterprise
             mortgage-backed securities .........    503,785      6,257      3,366    506,676
Other mortgage-backed securities:
        Planned amortization classes ............     11,825        102       --       11,927
        Sequential classes ......................    206,865      1,471      3,909    204,427
        Pass-throughs ...........................          8       --         --            8
        Mezzanine classes .......................     12,165       --          242     11,923
        Subordinated classes ....................     38,565        290      1,757     37,098
           Total other mortgage-backed securities    269,428      1,863      5,908    265,383
Total mortgage-backed securities ................   $773,235      8,122      9,274    772,083
</TABLE>
16<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
2. Investments (continued):
___________________________

<TABLE>
<CAPTION>
                                                                       (000's Omitted)
                                                                            
                                                                                         Estimated
                                                      Amortized    Unrealized Unrealized   Market
             December 31, 1996                           Cost       Gains     Losses      Value
             _________________          
<S>                                                <C>           <C>        <C>      <C>
Government agency mortgage-backed securities:
   Pass-throughs ................................   $     23          2       --           25
           Total government agency
             mortgage-backed securities .........         23          2       --           25
Government sponsored enterprise
 mortgage-backed securities:
        Planned amortization classes ............    488,496     13,569      1,400    500,665
        Targeted amortization classes and
         accretion directed classes .............     27,596        673       --       28,269

        Sequential classes ......................      8,883        194       --        9,077
        Pass-throughs ...........................      2,712         31          1      2,742
           Total government-sponsored enterprise
             mortgage-backed securities .........    527,687     14,467      1,401    540,753
Other mortgage-backed securities:
        Planned amortization classes ............     13,025        163       --       13,188
        Sequential classes ......................    204,193      3,054      1,160    206,087
        Pass-throughs ...........................          9       --         --            9
        Subordinated classes ....................     39,355        530      1,703     38,182
           Total other mortgage-backed securities    256,582      3,747      2,863    257,466
 Total mortgage-backed securities ...............   $784,292     18,216      4,264    798,244
</TABLE>


        Certain mortgage-backed securities are subject to significant 
prepayment risk. In periods of declining interest rates, mortgages may be 
repaid more rapidly than scheduled as individuals refinance higher rate 
mortgages to take advantage of the lower current rates. As a result, holders 
of mortgage-backed securities may receive large prepayments on their 
investments which they are unable to reinvest at an interest rate comparable 
to the rate on the prepaying mortgages. Mortgage-backed pass-through securitie
s and sequential classes, which comprised 28.2% and 27.5% of the carrying 
value of the company's mortgage-backed securities as of March 31, 1997 and 
December 31, 1996, respectively, are sensitive to this prepayment risk.
        A portion of the company's mortgage-backed securities portfolio 
consist of planned
        amortization class ("PAC"), targeted amortization class ("TAC") and 
accretion directed class ("AD") instruments. These securities are designed to 
amortize in a more predictable manner by shifting the primary risk of 
prepayment to investors in other tranches of the mortgage-backed security. 
PAC, TAC and ADsecurities comprised 65.3% and 67.5% of the carrying value of 
the company's mortgage-backed securities as of March 31, 1997 and December 
31, 1996, respectively.
        As of March 31, 1997, 65.2% of the company's mortgage-backed 
securities were issued by either government agencies or government-sponsored 
enterprises, compared to 67.3% as of December 31, 1996. The credit risk 
associated with these securities is generally less than other mortgage-backed 
securities. With the exception of seven issues, with a carrying value of 
$27,106,340 as of March 31, 1997, all of the company's investments in other 
mortgage-backed securities are rated A or better by Standard& Poor's or 
Moody's.
17<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
2. Investments (continued):
___________________________
        The consideration received on sales of investments, carrying value 
and realized gains and losses on those sales were as follows:

                                                           (000's Omitted)
                                                  For the Period Ended March 31,
                                                          1997       1996
         Consideration received .......................$ 216,294    180,312
         Carrying value ...............................  213,698    172,714
           Net realized investment gains (losses) .....$   2,596     7,598
         Investment gains ........................     $   3,338     8,365
         Investment losses .......................         (742)      (767)
           Net realized investment gains (losses) ...  $  2,596       7,598
 
        Net unrealized gains (losses) on debt securities available-for-sale, 
debt securities trading, equity securities available-for-sale, equity 
securities trading and other long-term investments changed as follows:
                                             (000's Omitted)
                                      Net Unrealized Gains (Losses)
                        Debt                    Equity               
                      Securities      Debt    Securities   Equity     Other
                      Available-   Securities  Available- Securities  Long-term
                       for-Sale      Trading    for-Sale    Trading  Investments
Balance as of
  January 1, 1996 ...   $ 96,829          (4)        301          10         - 
1996 Net Change .....    (50,194)         97       3,695          13         -
Balance as of
    December 31, 1996     46,635          93       3,996          23         -
1997 Net Change .....    (60,331)        (99)     (1,392)        (59)        5
Balance as of
    March 31, 1997 ..   $(13,696)         (6)      2,604         (36)        5
18<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
3. Other Assets:
________________

        Other assets consist of the following:
                                                           (000's Omitted)
                                                 ______________________________
                                                     March 31,     December 31,
                                                       1997            1996
                                                   _____________  ____________
        Property and equipment at cost:
         Home office properties
          (including land of $1,067)........     $   19,627           17,605
         Furniture and equipment.............         6,007            5,015
         Automobiles.........................           224              196
                                                   _____________  ____________
                                                      25,858          22,816
         Less accumulated depreciation..........       6,260           5,987
                                                   _____________  ____________
                                                     19,598           16,829
                                                   _____________  ____________
        Accounts receivable....................         557            1,051
        Other....................................     3,474            3,366
                                                   _____________  ____________
                                                 $   23,629           21,246
                                                   _____________  ____________
                                                   _____________  ____________

4. Reinsurance:
_______________
        The company reinsures portions of insurance it writes. The maximum 
amount of risk retained by American on any one life is $150,000, while the 
maximum amount of risk retained by FBL on any one life is 25,000.
        A summary of reinsurance data follows (000's Omitted):
                                                         Ceded to
        For the                               Gross       Other           Net
  Period Ended     Descriptions              Amount      Companies       Amount
_____________   ________________________   __________    ___________ ___________
  March 31,
    1997       Life insurance in force   $     290,846     214,017      76,829
               Insurance premiums and
               policy charges .......           4,642         233       4,409

  March 31,
     1996      Life insurance in force         305,699   234,692      71,007
               Insurance premiums and
               policy charges .......            2,649       192       2,457

  March 31,
     1997      Future policy benefits        3,054,786    232,695   2,822,091

December 31,
   1996        Future policy benefits        3,037,005    238,774   2,798,231

        The company is contingently liable for the portion of the policies 
reinsured under each of its existing reinsurance agreements in the event the 
reinsurance companies are unable to pay their portion of any reinsured claim. 
Management believes that any liability from this contingency is unlikely.
        The company had amounts receivable under reinsurance agreements of 
$235,878,214 and $241,458,335 as of March 31, 1997 and December 31, 1996, 
respectively. Of the total amounts receivable, $138,065,626 and $140,457,353 
were associated with a coinsurance agreement entered into in 1989, which 
ceded 90% of the risk on American's block of single premium whole life 
policies written prior to 1989 to Employers Reassurance Corporation (ERC). 
The agreement provides that ERC assumes 90% of all risks associated with each 
policy in the block. Reimbursement received from ERC for amounts paid by 
American on the reinsured risks totaled $3,713,355 and $2,416,764 for period 
ended March 31, 1997 and 1996, respectively.
19<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
4. Reinsurance (continued):
___________________________
        The following table identifies the components of the amounts 
receivable from ERC:

                                             (000's Omitted)
                                    __________________________________
                                         March 31,      December 31,
                                           1997           1996
                                      ______________  _____________


Reserve for future policy benefits ...   $137,209    139,571
Reimbursement for benefit payments and
 administrative allowance ............        825        886
                                         ________   ________
                                         $138,034    140,457
                                         ________   ________
                                         ________   ________

        FBL and Philadelphia Life Insurance Company (PLI) are parties to a 
reinsurance agreement under which FBL ceded 100% of the risk on certain 
deferred annuity policies on a coinsurance basis. As of March 31, 1997 and 
December 31, 1996, the company had amounts receivable of $96,144,279 and 
$99,335,043 resulting from this agreement.
        The following table identifies the components of the amounts 
receivable from PLI:

                                               (000's Omitted)
                                      ________________________________
                                        March 31,   December 31,
                                         1997          1996
                                       ___________  _____________


Reserve for future policy benefits ...   $93,837    97,602
Reimbursement for benefit payments and
 administrative allowance ............     2,307     1,733
                                         _______   _______
                                         $96,144    99,335
                                         _______   _______
                                         _______   _______
5. Convertible Subordinated Debentures:
_______________________________________

        On July 12, 1996, the company closed an offering of $65,000,000 of 
Convertible Subordinated Debentures. These securities were placed in Europe 
pursuant to Regulation S under the Securities Act of 1933. The debentures pay 
an annual cash yield of 3% payable semi-annually, are convertible into the 
company's common stock at $17.125, and mature on July 12, 2003 unless 
previously converted or redeemed. The debentures are redeemable, in whole or 
in part, at the option of the holders, on September 30, 2001, at 124.25% of 
their principal amount (which in essence reflects deferred interest at a 
compounded rate of 4.25%), plus accrued but unpaid cash interest at the 
coupon rate of 3%. The debentures are redeemable, at the company's option, on 
or after June 30, 1999, at certain specified declining redemption prices 
(starting at 103% of principal value) plus accrued but unpaid cash interest 
(at the rate of 3%) and accrued deferred interest (at a compounded rate of 
4.25%). The debentures may be redeemed any time after August 15, 1996, at the 
company's option at their principal amount plus accrued cash interest (at the 
rate of 3%), but with no payment for accrued deferred interest, if the 
average closing price of the company's common stock equals or exceeds $23.12 f
or 20 consecutive trading days.
        The debentures are unsecured obligations of the company, subordinated 
to all existing and future senior indebtedness. Approximately $35,000,000 of 
the net proceeds of the offering were used to repay existing bank debt, 
$20,000,000 was contributed to American and the balance was used for other 
general corporate purposes.
6. Credit Agreement:
____________________
        On April 8, 1996, the company entered into a $35,000,000 credit 
agreement with The First National Bank of Chicago (First Chicago), Fleet 
National Bank (Fleet) and Boatmen's First National Bank of Kansas City 
(Boatmen's), as Lenders. On that same date, the company borrowed the entire 
$35,000,000, using the proceeds to repay existing bank debt, fund the cash 
portion of the acquisition of FBG and for general corporate purposes. 
        On July 12, 1996, the company paid off the existing bank debt from 
the proceeds of the Convertible Subordinated Debentures.
20<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
7. Retirement Plans:
____________________
        The company sponsors an Employee Stock Ownership Plan (ESOP) for all 
full-time employees with one year of service. Qualifying participants may 
contribute an amount not to exceed 10% of covered compensation. As of March 
31, 1997 and December 31, 1996, the ESOP held 62,003 shares of AmVestors 
common stock. The company made no contributions to this plan during either 
the three months ended March 31, 1997 and 1996.
        The company sponsors a Leveraged Employee Stock Ownership Plan 
(LESOP) for all full-time employees with one year of service.
        The LESOP has acquired 370,244 shares of the company's stock through 
the proceeds of a note payable to American. The note bears interest at 7.0% 
and is payable in annual installments through December 30, 2002. The note had 
an unpaid principal balance of $2,662,965 as of March 31, 1997, and December 
31, 1996.
        Each year the company makes contributions to the LESOP which are to 
be used to make loan interest and principal payments. On December 31 of each 
year, a portion of the common stock is allocated to participating employees. 
Of the 414,450 shares of the company's common stock now owned by the LESOP, 
200,222 shares have been allocated to the participating employees with the 
remaining 214,228 shares being held by American as collateral for the loan.
        On October 24, 1996, the ESOP was merged into the LESOP.
        The unallocated portion of the company's common stock owned by the 
LESOP has been recorded as a separate reduction of stockholders' equity. 
Accrued contributions to the LESOP were $87,459 and $81,738 for three months 
ended March 31, 1997 and 1996, respectively.
        During 1992, the company's Board of Directors approved retirement 
plans for its members and members of the Board of Directors of certain of its 
subsidiaries. The plans provide that retired Directors shall serve as 
Advisory Members to the Board at a fee of $750 per meeting attended and a 
monthly lifetime benefit in the amount of $750 be paid to each qualified 
Director upon retirement. In addition, the company has agreed to continue any 
life insurance policies being provided as of the date of retirement.
        To qualify for this benefit, a Director must reach the age of 60 and 
meet years of service requirements thereafter. The plan also calls for a 
mandatory retirement on the date the Director's term expires following age 
70. A liability in the amount of $429,824, representing the present value of 
future benefits, has been established. Charges (credits) to earnings related 
to the plans were ($1,535) and $1,986 for the three months ended March 31, 
1997 and 1996, respectively.
        Effective January 1, 1993, the company adopted an Age-Weighted Money 
Purchase Plan for all full-time employees with one year of service. The full 
cost of this plan will be paid by the company with qualifying participants 
receiving contributions based upon their age at plan implementation and 
current salary. Contributions to the Age-Weighted Money Purchase Plan for the 
three months ended March 31, 1997 and 1996, were $95,762 and $67,249, 
respectively.
        Prior to the merger with AmVestors, FBG had approved a 
non-contributory Employee Stock Ownership Plan (FBGESOP) and a contributory 
401-k Plan for all of its employees. As of March 31, 1997 and December 31, 
1996, the FBG ESOP owned 313,031 shares of AmVestors common stock and 76,579 
warrants to purchase AmVestors common stock. At that same date, the 401-k 
Plan held 15,846 shares of AmVestors common stock and 3,861 warrants to 
purchase AmVestors common stock. The company anticipates maintaining these as 
separate plans for the benefit of the former FBG employees and is working 
with the Internal Revenue Service to correct any qualification problems which 
may exist. There were no contributions to the FBG ESOP in 1997 or 1996.
21<PAGE>
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
8. STOCKHOLDERS' EQUITY:
        Dividends by American and FBLto AmVestors are limited by laws 
applicable to insurance companies. Under Kansas law, American may pay a 
dividend from its surplus profits, without prior consent of the Kansas 
Commissioner of Insurance, if the dividend does not exceed the greater of 10% 
of statutory capital and surplus at the end of the preceding year or all of 
the statutory net gain from operations of the preceding year. As of December 
31, 1996, surplus profits of American were $19,936,727 and 10% of statutory 
capital and surplus was $10,146,126. American is also required to maintain, 
on a statutory basis, paid-in capital stock and surplus (capital in excess of 
par value and unassigned surplus) of $400,000 each. As of March 31, 1997 and 
December 31, 1996, American's statutory capital and surplus was $101,457,061 
and $101,461,258,respectively. The statutory net gain from operations for 
1996 was $7,203,263.
        Under Florida insurance law and regulations, the aggregate dividends 
that FBL may pay without prior regulatory approval is limited to the greater 
of the sum of statutory net operating profits and net realized capital gains 
for the preceding calendar year (provided there is available surplus from net 
operating profits and net realized capital gains) or 10% of its available and 
accumulated statutory surplus derived from net operating profits and net 
realized capital gains. After payment of a dividend, FBL must have 115% of 
required statutory surplus.
        On December 31, 1996, FBLhad accumulated statutory surplus derived 
from net operating profits and net realized capital gains of $25,384,976. The 
sum was statutory net profits and net realized capital gains for 1996 were 
$3,811,912. As of March 31, 1997, available surplus from net operating 
profits and net realized capital gains was $2,567,059. Required statutory 
surplus as of March 31, 1997 was $19,277,236 and actual surplus was 
$35,684,447.
        In connection with the original establishment of the Interest 
Maintenance Reserve (IMR), the Commissioner of Insurance of Kansas, the 
company's domiciliary state, ordered that American prepare its December 31, 
1992, NAIC Annual Statement Form to equitably allocate 1992 capital gains and 
losses, not included in the calculation of the Asset Valuation Reserve (AVR), 
on other than government securities, fifty (50%) percent to surplus and fifty 
(50%) percent to IMR, after calculation of the AVR pursuant to the 
instructions provided by the NAIC. This differs from prescribed statutory 
accounting practices. This represented a permitted accounting practice for 
regulatory purposes, the effect of which was to increase statutory surplus by 
$8,168,000 as of December 31, 1992 ($5,303,927 as of March 31, 1997).
        In addition, American received permission from the Commissioner of 
Insurance of Kansas to amortize the effects of changing to Actuarial 
Guideline No. 32 concerning the Commissioners Annuity Reserve Valuation 
Method for individual annuity contracts over a three-year period beginning in 
1995 rather than to record the full amount of the change of $2,176,000. The 
effect of this permitted accounting practice was to increase statutory 
surplus by $497,746 and $679,154 as of March 31, 1997 and December 31, 1996, 
respectively.
        On August 2, 1996, American was granted a variance from prescribed 
statutory accounting practices which allowed the company to contribute 
$20,000,000 to be used for the sole purpose of strengthening American's 
reserves without experiencing a decrease in Unassigned Funds (Surplus). The 
contribution was recorded as a contribution to a Special Surplus Fund and the 
resulting reserve strengthening was charged against this Special Surplus 
Fund. Total surplus was unaffected by this transaction.
        The company currently has two fixed stock option plans; the 1989 
Nonqualified Stock Option Plan (1989 Plan), and the 1996 Incentive Stock 
Option Plan (1996 Plan). Options granted under the 1989 Plan have an exercise 
price equal to the closing price of the company's stock on the date of the 
original grant and none may be exercised beyond ten years from the grant 
date. A total of 973,820 options to acquire common stock were outstanding 
under the 1989 Plan as of March 31, 1997. The 1996 Plan was approved by the 
stockholders of the company at its Annual Meeting held on May 16, 1996 and is 
intended to qualify as an "incentive stock option plan" under Section 422 of 
the Internal Revenue Code of 1986. Options granted under the 1996 Plan have 
an exercise price equal to the closing price of 
22<PAGE>
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
8. Stockholders' Equity (continued):
____________________________________
the company's stock on the date of the original grant and none may be 
exercised beyond ten years from the grant date. No options to acquire common 
stock were outstanding under the 1996 Plan as of March 31, 1997.
        Both the 1989 Plan and the 1996 Plan are administered by the Board of 
Directors and officers of the company and its subsidiaries. The terms of the 
options, including the number of shares granted, and the exercise price are 
subject to the sole discretion of the Board of Directors.
        A summary of the company's stock option plans as of and for the 
period ended March 31, 1997 and December 31, 1996 follows:
                                  1997                        1996
                         ______________________      ____________________
                                         Weighted                Weighted
                                          Average                Average
                                         Exercise                Exercise
                        Shares            Price       Shares      Price
                       ________         ________     ________    ________
Options outstanding,
  beginning of period    1,551,556   $     11.15      839,841     $  8.97
Options granted .....      483,247         15.63      804,500       12.96
Options exercised ...     (129,919)        10.00      (76,285)       6.52
Options terminated ..           -             -       (16,500)      10.15
                        __________   ___________   __________   ______
Options outstanding,
  end of period .....   1,904,884   $     12.46     1,551,556   $   11.15
                        __________   ___________   __________   ______
                        __________   ___________   __________   ______

Options exercisable,
  end of period .....   1,003,211                   1,127,630
Options reserved for
  future grants,
  end of period .....         -0-                     483,247

         The following table summarizes information about stock options 
outstanding under the company's option plans as of March 31, 1997:
                                            Weighted                   
                                            Average           Weighted
      Range of                             Remaining          Average
      Exercise           Options          Contractual         Exercise
      Prices           Outstanding       Life in Years         Price
     ________         ____________      ______________      __________
             
      $4.84                 40,000                 -             $4.84
      $7.03-$7.50          143,073               .59              7.32
      $8.75                 20,000              7.65              8.75
     $10.00-$11.25         353,500              6.90             10.12
     $12.66-$13.50         865,064              8.71             12.94
     $15.60                483,247              5.07             15.63
                         __________        __________        __________
                         1,904,884              6.65            $12.46
                         __________        __________        __________
                         __________       __________         __________
23<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

8. Stockholders' Equity (continued):
____________________________________


        The following table summarizes information about stock options 
exercisable under the company's option plans as of March 31, 1997:
                                                  Weighted
                                                  Average
                          Options                 Exercise
                        Exercisable                Price
                        ____________             __________
              
                             40,000                  $4.84
                            143,573                   7.32
                             20,000                   8.75
                            353,500                  10.12
                            446,138                  12.83
                          __________             __________
                          1,003,211                 $10.69
                          __________             __________
                          __________             __________

        The estimated fair value of options granted in 1995 was $4.77 per 
share. The estimated fair value of options granted or modified in 1996 was 
$5.00 per share. The company applies Accounting Principles Board Opinion No. 
25 and related Interpretations in accounting for its stock option plans. 
Accordingly, no compensation expense has been recognized for its option 
plans. Had compensation expense for the company's option plans been 
determined based on the fair value at the grant dates for awards under those p
lans consistent with the method prescribed by SFAS123, the company's net 
earnings and fully diluted earnings per share for the quarter ended March 31, 
1997 and 1996 would have been reduced to the pro forma amounts indicated 
below:
                                                 1997          1996
                                            ______________  _____________


  Net earnings (in thousands):
    As reported..............................      $5,505         7,421
    Pro forma................................       5,125         7,350
  Fully diluted earnings per share:
    As reported..............................      $.37             .71
    Pro forma................................       .35             .70
        As SFAS No. 123 has not been applied to options granted prior to 
January 1, 1995, the resulting proforma compensation cost may not be 
representative of that to be expected in future years.
        The fair value of options granted in 1997 was estimated on the date 
of grant using a binomial options-pricing model and the following weighted 
average assumptions: (i) expected volatility of 23.9%, (ii) risk-free 
interest rate of 5.37%, (iii) dividend yield of .70%, and (iv) an expected 
life equal to the contractual expiration.
        The fair value of options granted in 1996 was estimated on the date 
of grant using a binomial options-pricing model and the following weighted 
average assumptions: (i) expected volatility of 29.4% (ii) risk-free interest 
rate of 5.14%, (iii) dividend yield of .58%, and (iv) an expected life equal 
to the contractual expiration.
        On March 17, 1989, the Board of Directors also adopted the 1989 Stock 
Appreciation Rights Plan (the SAR Plan) and the 1989 Restricted Stock Plan 
(the Restricted Stock Plan). The SAR Plan authorized the Board of Directors 
to grant stock appreciation rights to employees, officers and directors in 
such amounts and with such exercise prices as it shall determine. No stock 
appreciation rights granted under the SAR Plan may be exercised more than 
five years from its date of grant. The SAR Plan authorized a maximum of 
125,000 shares to be issued pursuant to stock appreciation rights granted 
thereunder.
24<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

8. Stockholders' Equity (continued):
____________________________________
                                                   For the Period Ended
                                                   (000's Omitted)
                                          _____________________________________
                                              March 31,            December 31,
                                                 1997                  1996
                                          ________________      ________________
  Rights outstanding, beginning of year..             -                 -
  Rights granted.........................             -                 -
  Rights exercised.......................             -                 -
  Rights expired.........................             -                 -
  Rights cancelled.......................             -                 -
                                          ________________    ________________
  Rights outstanding, end of year........             -                 -
                                          ________________    ________________
                                          ________________    ________________
  Reserved for future grants.............         35,000            35,000
                                          ________________     ________________
                                          ________________     ________________

        The company recorded no compensation expense relating to stock 
appreciation rights for the three months ended March 31, 1997 and 1996, 
respectively.
        The Restricted Stock Plan authorizes the Board of Directors to make 
restricted stock awards to employees, officers and directors in such amounts 
as it shall determine. The stock issued pursuant to such awards is subject to 
restrictions on transferability for a period of five years. Such stock is 
subject to a five-year vesting schedule, and the company is required to 
repurchase all vested stock from a grantee if such grantee's employment with 
the company is terminated prior to the lapse of the transfer restrictions. 
The Restricted Stock Plan authorizes a maximum of 125,000 shares to be issued 
thereunder. No restricted stock awards have been granted pursuant to the 
Restricted Stock Plan.
        In conjunction with a previous bank borrowing, the company issued 
ten-year warrants to purchase a total of 170,002 shares of its common stocks 
as summarized in the following table:
        Warrant             Issue       Number      Exercise     Expiration
         Holder              Date     of Shares      Price          Date
  Morgan Guaranty          12/8/88      75,000    $    3.9688      12/9/98
                           4/30/92      95,002         6.3855      5/1/02
              
                                       170,002
 
        In conjunction with the acquisition of FBG, the company issued 
warrants to purchase 663,706 shares of its common stock. Also 52,660 warrants 
to purchase common stock were issued by the exercise of warrants previously 
issued by FBGby conversion. These warrants are exercisable at $16.42 per 
share of common stock and expire on April 2, 2002.
        In addition to the above, the company assumed warrants previously 
issued by FBG to purchase a total of 270,689 shares of its common stock. 
Prior to December 31, 1996, 260,305 warrants had been exercised. The 
remaining 10,384 warrants have exercise prices ranging from $1.346 to 
$3.7198.
9. Other Revenue:
__________________
        Effective December 1, 1989, the company entered into a coinsurance 
agreement with Employers Reassurance Corporation (ERC) which reinsured 90% of 
the risk on the company's block of SPWL policies written prior to 1989. The 
agreement provides that ERC assumes 90% of all risks associated with each 
policy in the block. These policies continue to be administered by American. 
In return, American receives an administrative allowance of $31.50 per policy 
per year. The total allowance received during the three months ended March 
31, 1997 and 1996 were $26,900 and $29,187, respectively.
25<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

9. Other Revenue (continued):
_____________________________
        Other revenue for the three months ended March 31, 1997 includes 
override commissions of $415,133 attributable to the marketing efforts of 
AIMCORand TIM, and $152,541 of administrative fees received by AIG from 
AmVestors CBO Trust I.
10. Income Taxes:
_________________
        The provision for income taxes charged to operations was as follows:
                                                                              
                                                     (000's Omitted)
                                         For the three months Ended March 31,
                                                    1997           1996
Current income tax expense..................... $    864           3,172        
Deferred income tax expense (benefit)..........    2,100           3,738
   Total income tax expense (benefit)..........$   2,964           3,910        
11. Acquisition:
________________
        On September 8, 1995, the company signed a merger agreement pursuant 
to which it acquired all of the outstanding capital stock of FBG, a Delaware 
corporation, for $5.31 per share, payable in 2,722,223 shares of the 
company's common stock, warrants to purchase 663,706 shares of common stock 
and cash of approximately $10,000,000.
        FBG was an insurance holding company which owned all of the shares of 
FBL, a Florida domiciled insurer, which specializes in the sale and 
underwriting of annuity products and is admitted in 41 jurisdictions, which 
includes 39 states, the District of Columbia and the U.S. Virgin Islands. FBG 
also owned all of the shares of AIMCOR and TIM, both of which specialize in 
the distribution and marketing of annuities.
        The merger received the approval of the shareholders of both FBG and 
the company, and became effective on April 8, 1996. The consolidated 
statements of earnings for the three months ended March 31, 1997 include the 
results of operations of FBG.
26<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
11. Acquisition (continued):
____________________________
        The transaction has been accounted for using the purchase method with 
any resulting goodwill being amortized on a straight line basis over a period 
not to exceed 30 years. The opening consolidated balance sheet of the 
acquired entities follows:
                                                              (000's Omitted)
  ASSETS
        Investments...........................................  $   523,145
        Cash and cash equivalents.............................        8,932
        Amounts receivable under reinsurance agreements.......      112,875
        Accrued investment income.............................        7,373
        Deferred cost of policies purchased...................       51,500
        Goodwill..............................................       11,942
        Other assets..........................................        6,621
          Total assets.........................................  $  722,388
      LIABILITIES AND STOCKHOLDERS' EQUITY
        Liabilities:
        Policy liabilities....................................  $   650,865
        Notes payable.........................................       15,500
        Deferred income taxes.................................        1,316
        Accrued expenses and other liabilities................        5,930
         Total liabilities....................................      673,611
         Stockholders' Equity:
        Common stock, no par value............................            -
        Paid in capital.......................................       48,777
          Total stockholders' equity...........................      48,777
           Total liabilities and stockholders' equity...........  $ 722,388
 
12. Commitments and Contingencies:
__________________________________

        The company's insurance subsidiaries are subject to state guaranty 
association assessments in all states in which they are admitted. Generally, 
these associations guarantee specified amounts payable to residents of the 
state under policies issued by insolvent insurers. Most state laws permit 
assessments or some portion thereof to be credited against future premium 
taxes. Charges relating to the guaranty fund assessments impacted the years 
1996 and 1995 by approximately $1,913,000 and $1,001,000. The company expects 
that further charges to income may be required in the future and will record 
such amounts when they become known.

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

GENERAL
    The company specializes in the sale of deferred annuity products. During 
each of the past three years, sales of deferred annuities have accounted for 
at least 96% of the company's premiums received, while sales of single 
premium immediate annuities (SPIAs) and flexible premium universal life 
insurance (FPULs) have accounted for virtually all remaining premiums 
received.
27<PAGE>
    The company's operating earnings are derived primarily from its investment
results, including realized gains (losses), less 
interest credited to annuity contracts and expenses. Under GAAP, premiums 
received on deferred annuities, SPIAs without life contingencies and FPULs 
are not recognized as revenue at the time of sale. Similarly, policy 
acquisition costs (principally commissions) related to such sales are not 
recognized as expenses but are capitalized as deferred acquisition costs, or 
"DAC". As a result of this deferral of costs and the lack of revenue 
recognition for premiums received, no profit or loss is realized on these 
contracts at the time of sale. Premiums received on deferred annuities, SPIAs 
without life contingencies and FPULs are reflected on the company's balance 
sheet by an increase in assets equal to the premiums received and by a 
corresponding increase in future policy liabilities.
    The company's earnings depend, in significant part, upon the persistency 
of its annuities. Over the life of the annuity, net investment income, net 
investment gains (losses) and policy charges are realized as revenue, and DAC 
is amortized as an expense. The timing of DACamortization is based on the 
projected realization of profits including realized gains (losses) for each 
type of annuity contract and is periodically adjusted for actual experience. 
If a policy is terminated prior to its expected maturity, any remaining 
related DAC is expensed in the current period. Most of company's annuity 
policies in force have surrender charges which are designed to discourage and 
mitigate the effect of premature terminations.As a result, the impact on 
earnings from surrenders will depend upon the extent to which available 
surrender charges offset the associated amortization of DAC.
    Recent periods of low interest rates have reduced the company's 
investment yields. As a result of the lower investment yields, the company 
reduced credited interest rates on its annuity products. Certain annuities 
issued by the company include a "bailout" feature which allows policyowners 
to withdraw their entire account balance without surrender charges for a 
period of 45 to 60 days following the initial determination of a renewal 
credited rate below a predetermined level. If a policyowner elects not to 
withdraw funds during this period, surrender charges are reinstated. As of 
March 31, 1997, approximately $259.0 million, or 11.7% of American's annuity 
account values contained a "bailout" provision, the current credited interest 
rates on these policies are above the "bailout" rate. The "bailout" rate on 
$256.9 million of this amount is 6% or less. As of that same date, 
approximately $18.6 million, or 3.8% of FBL's annuity account values 
contained a "bailout" provision, the current credited interest rates on these 
policies are above the "bailout" rate. The "bailout" rate on the entire $18.6 
million is 5.5% or less, with $14.8 million at 5% or less. If the company 
reduces credited interest rates below the "bailout" rates on policies 
containing "bailout" provisions in the future, it intends to pay any 
resulting surrenders from cash provided by operations and premiums received. 
In the event such sources are not sufficient to pay surrenders, the company 
would have to sell securities at the then current market prices. Management 
expects that withdrawals on the company's annuity contracts will increase as 
such contracts approach maturity. The company may not be able to realize 
investment gains in the future to offset the adverse impact on earnings, shoul
d future "bailout" surrenders occur.
MARGIN ANALYSIS
        The company's earnings are impacted by realized investment gains 
(losses) and by the associated amortization of the deferred costs of policies 
produced and purchased. The actual timing and pattern of such amortization is 
determined by the actual profitability to date (which includes realized 
investment gains (losses)) and the expected future profitability on a 
particular annuity contract. To the extent investment income is accelerated 
through realization of investment gains, the corresponding amortization of 
deferred costs is also accelerated as the stream of profitability on the 
underlying annuities is effectively accelerated. When investment losses are 
realized, the reverse is true. The following margin analysis depicts the 
effects of realized gains, amortization of DACand other components of profit 
on the company's operating earnings:
28<PAGE>
                                    For the three months Ended March 31,
                          ___________________________________________________
                                          1997                         1996
                                                  (dollars in millions)
                                       (percent of average invested assets)
Average invested assets <F1>   $ 2,772.5       100.0%   $2,078.4          100.0%
Insurance premiums and
  policy charges ............   $   4.4           .63     $  2.5            .47%
Net investment income <F2> ...     50.4          7.28       39.2           7.54
Net investment gains
    (losses), core <F3> ......      2.1           .30         .4            .08
Policyholder benefits .......     (37.8)        (5.45)     (30.6)         (5.89)
Gross interest margin .......      19.1          2.76       11.4           2.20
Associated amortization of
    deferred cost of:
     Policies produced ......      (3.9)         (.56)      (2.9)          (.57)
     Policies purchased .....      (1.5)         (.22)         -             -
Net interest margin .........      13.7          1.98        8.5           1.63
Net investment gains, other .        .4           .06        7.2           1.39
Associated amortization of
    deferred cost of:
     Policies produced ......         -             -         (2.0)       (.39)
     Policies purchased .....       (.3)         (.04)           -          -
Net margin from investment
    gains, other ............        .1           .02        5.2           1.00
 Total net margin ...........      13.8          2.00       13.7           2.63
Expenses, net ...............      (3.9)         (.57)      (2.2)          (.42)
Operating earnings ..........       9.9          1.43       11.5           2.20
Interest expense ............      (1.4)         (.21)       (.1)          (.02)
Earnings before income taxes        8.5          1.22       11.3           2.18
Income tax expense ..........      (3.0)         (.43)%     (3.9)          (.75)
Net earnings ................   $   5.5           .79%$      1.43%
Operating earnings ..........   $   9.9          1.43%$      2.20%
Less: Net margin from
    investment gains, other .        .1           .02        5.2           1.00%
Operating earnings
    excluding net margin from
    investment gains, other .   $   9.8          1.41% $     6.3           1.20%
[FN]<F1> Average of cash, invested assets (before SFAS115 adjustment) and net 
amounts due 
    to or from brokers on unsettled security trades at the beginning and end 
of
    period for 1997 and 1996.
<F2> Net investment income is presented net of investment expense.
<F3> Includes realized and unrealized gains (losses) on trading securities and 
realized 
    gains (losses) on convertible securities where the company has accepted 
lower current 
    yields in anticipation of the equity performance of the underlying common 
stock.
Note: Numbers may not add due to rounding.
29<PAGE>
        Three Months Ended March 31, 1997, and 1996
        INSURANCE PREMIUMS AND POLICY CHARGES increased $1.9 million or 76%, 
to $4.4 million in 1997, due primarily to a $1.8 million increase in 
surrender charges received on increased surrenders of annuity policies. This 
increase results in large part from the acquisition of FBG.
        NET INVESTMENT INCOME increased $11.2 million or 29%, to $50.4 
million in 1997. This increase reflects an increase in average invested 
assets from $2,078.4 million in 1996 to $2,772.5 million in 1997, offset in 
part by a decrease in the average yield on invested assets from 7.5% for the 
three months ended March 31, 1996, to 7.3% for the same period in 1997. The 
increase in average invested assets can be attributed to the acquisition of 
FBG. The yield in both periods was impacted by investments in investment 
partnerships. These partnerships form a fund of funds totalling $19.2 million 
and $18.8 million on March 31, 1997 and 1996, respectively. This fund of 
funds is structured in an attempt to consistently provide returns in excess 
of the S&P 500 over time without regard to the general direction of financial 
markets. This fund generated net income of $.4 million in the 1997 quarter 
compared with income of $.7 million in 1996.
        NET INVESTMENT GAINS (LOSSES) were $2.4 million in 1997, compared 
with $7.6 million in 1996. Gains and losses may be realized upon securities 
which are disposed of for various reasons. The net gains realized in both 
periods are the result of general portfolio management. Unrealized gains 
(losses) in the company's bond portfolio were ($13.7) million, $46.7 million 
and $28.1 million as of March 31, 1997, December 31, 1996 and March 31, 1996, 
respectively.
        OTHER REVENUE increased $.6 million to $.7 million in 1997. This 
increase results from $.4 million of commissions received by TIM and AIMCOR 
and $.2 million of administrative fees received by AIGfrom AmVestors CBOTrust 
I.
        BENEFITS, CLAIMS AND INTEREST CREDITED TO POLICYHOLDERS increased 
$7.2 million, or 24%, to $37.8 million in 1997 from $30.6 million in 1996. 
This increase results primarily from an increase in annuity liabilities to 
$2,879.3 million on March 31, 1997, from $2,120.7 million on March 31, 1996. 
This increase was partially offset by a decrease in the average interest rate 
credited on the company's annuity liabilities, from 6.0% as of March 31, 
1996, to 5.7% as of March 31, 1997. Both the increase in annuity liabilities 
and the decrease in the average interest rate credited on those liabilities 
are largely due to the acquisition of FBG.
        Amortization of deferred cost of policies produced decreased $1.0 
million, or 26%, to $3.9 million in 1997 from $4.9 million in 1996. 
Amortization associated with gross interest margin increased $1.0 million to 
$3.9 million in 1997 from $2.9 million in 1996. Amortization associated with 
investment gains decreased to $0 on $.4 million of gains in 1997 from $2.0 
million on $7.6 million of gains in 1996. Costs incurred during 1997 and 
deferred into future policy periods were $11.9 million, compared with $9.1 
million in 1996.
        Amortization of deferred cost of policies purchased of $1.8 million 
represents the amortization of the purchase price allocated to the policies 
acquired in the acquisition of FBG. There was no similar expense in the 1996 
period.
        General insurance expenses increased $2.0 million, or 105%, to $3.9 
million for the 1997 three months from $1.9 million for the same period in 
1996. This increase can be attributed to increases in business activity, 
assets under management and the acquisition of FBG.
        Interest expense increased $1.3 million reflecting the $65.0 million 
of convertible subordinated debentures issued in July, 1996.
30<PAGE>
        Income tax expense decreased $.9 million to $3.0 million in 1997 from 
$3.9 million in 1996. Taxes were provided at an effective rate of 35% on both 
1997 and 1996 income.
LIQUIDITY AND CAPITAL RESOURCES
        The company is an insurance holding company whose principal asset is 
the common stock of its insurance subsidiaries. The company's primary cash 
requirements are to pay operating expenses, stockholder dividends and debt 
service.
        As a holding company, the company relies on funds received from 
American and FBL to meet its cash requirements at the holding company level. 
The company receives funds from American in the form of commissions paid to 
American Sales, fees paid to AIG, rent, administrative, printing and data 
processing charges and dividends. The insurance laws of Kansas and Florida 
generally limit the ability of American and FBL to pay cash dividends in 
excess of certain amounts without prior regulatory approval and also require 
that certain agreements relating to the payment of fees and charges to the 
company by it's insurance subsidiaries be approved by the Insurance 
Commissioner of the state of domicile.
        The liquidity requirements of American and FBL are met by premiums 
received from annuity sales, net investment income received, and proceeds 
from investments upon maturity, sale or redemption. The primary uses of funds 
are the payment of surrenders, policy benefits, operating expenses and 
commissions, as well as the purchase of assets for investment.
        For purposes of reporting the company's consolidated statements of 
cash flows, financing activities include premiums received from sales of 
deferred annuities, surrenders and death benefits paid, and surrender and 
policy charges collected on these contracts. The net cash provided by (used 
in) these particular financing activities for the three months ended March 
31, 1997 and 1996 was ($16.9) million and $5.2 million, respectively.
        The decrease in net cash provided by annuity contracts without life 
contingencies in 1997 resulted primarily from a $44.9 million increase in 
surrender and death benefits paid from $93.8 million (approximately 4% of 
beginning reserves for future policy benefits) to $138.7 million 
(approximately 5% of beginning reserves for future policy benefits) offset by 
a $20.9 million increase in premiums received from $97.1 million to $118.0 
million.
        Net cash provided by the company's operating activities was $52.2 
million and $38.9 million in 1997 and 1996, respectively.
        Cash provided by financing and operating activities and by the sale 
and maturity of portfolio investments is used primarily to purchase portfolio 
investments and for the payment of acquisition costs (commissions and 
expenses associated with the sale and issue of policies). To meet its 
anticipated liquidity requirements, the company purchases investments taking 
into account the anticipated future cash flow requirements of its underlying 
liabilities. In addition, the company invests a portion of its assets in 
short-term investments with maturities of less than one year (5% and 8% as of 
March 31, 1997 and December 31, 1996, respectively). The weighted average 
duration of the company's investment portfolio was 4.6 years as of March 31, 
1997.
        The company continually assesses its capital requirements in light of 
business developments and various capital and surplus adequacy ratios which 
affect insurance companies. The company has met its capital needs and those 
of American through several different sources including bank borrowing, the 
issuance of convertible debentures and the sale of both preferred and common 
stock. 
        Recent regulatory actions against certain large life insurers 
encountering financial difficulty have prompted the various state guaranty 
associations to begin assessing life insurance companies for the resulting 
losses. For further information regarding the effects of guaranty fund 
assessments, see Note 12 of Notes to Consolidated Financial Statements.
31<PAGE>
        REINSURANCE. American and Employers Reassurance Corporation (ERC) are 
parties to a reinsurance agreement under which American ceded 90%, on a 
coinsurance basis, of the risk on its SPWLpolicies written prior to 1989. 
Under the terms of the agreement, American continues to administer the 
policies and is reimbursed for all payments made under the terms of the 
reinsured policies. For its services, American receives a fee from the 
reinsurer for administering such policies. If ERCwere to become insolvent, 
American would remain responsible for the payment of all policy liabilities. 
As of March 31, 1997 and December 31, 1996, American had amounts receivable 
resulting from this agreement of $138.0 million and $140.5 million, 
respectively.
        FBL and Philadelphia Life Insurance Company (PLI) are parties to a 
reinsurance agreement under which FBLceded 100% of the risk on certain 
deferred annuity policies on a coinsurance basis. Under the terms of the 
agreement, FBL continues to administer the policies and is reimbursed for all 
payments made under the terms of the reinsured policies. For its services, 
FBLreceives a fee from the reinsurer for administering such policies. If PLI 
were to become insolvent, FBL would remain responsible for the payment of all 
policy liabilities. As of March 31, 1997 and December 31, 1996, FBL had 
amounts receivable resulting from this agreement of $96.1 and $99.3 million. 
        In addition, American is a party to two assumption reinsurance 
agreements with other reinsurers.
        EFFECT OF INFLATION AND CHANGES IN INTEREST RATES. The company does 
not believe that inflation has had a material effect on its consolidated 
results of operations during the past three years. The company seeks to 
manage its investment portfolio in part to reduce its exposure to interest 
rate fluctuations. In general, the market value of the company's fixed income 
securities increases or decreases directly with interest rate changes. For 
example, if interest rates decline (as was the case in 1995), the company's 
fixed income investments generally will increase in market value, while net 
investment income will decrease. Conversely, if interest rates rise (as was 
the case in 1996), fixed income investments generally will decrease in market 
value, while net investment income will increase.
        In a rising interest rate environment, the company's average cost of 
funds would increase over time as it prices its new and renewing annuities to 
maintain a generally competitive market rate. During such a rise in interest 
rates, new funds would be invested in bonds with higher yields than the 
liabilities assumed. In a declining interest rate environment, the company's 
cost of funds would decrease over time, reflecting lower interest crediting 
rates on its fixed annuities.
        In addition to the increase in the company's average cost of funds 
caused by a rising interest rate environment, surrenders of annuities are no 
longer protected by surrender charges increase. 
32<PAGE>

PART II. OTHER INFORMATION
AMVESTORS FINANCIAL CORPORATION

Item 1.           Legal Proceedings
________________________________

        The company has no material legal proceedings pending against it.
Item 2.           Changes in Securities
_____________________________________

        None
Item 3.           Defaults upon Senior Securities
_________________________________________________

        None
Item 4.           Submission of Matters to a Vote of Security Holders
______________________________________________________________________

        None
Item 5.           Other Information
________________________________

        None
Item 6.  Exhibits and Reports on Form 8-K
___________________________________________________

        (a)Exhibits (numbered in accordance with Item 601 of Regulations S-K).
<TABLE>
<CAPTION>

 Exhibit                  Page Number or Incorporation
  Number                       Description                                by Reference
<C>                       <C>                                            <C>
 (2)(a)                   Plan and Agreement of Union dated                Exhibit (2) to Registration
                          July 10, 1986, between AmVestors                 Statement on Form S-2,
                          Financial Corporation and American               File No. 2-82811 dated
                          Investors Life Insurance Company,                November 26, 1986.
                          Inc.

 (2)(b)                   Resolutions of the Board of                      Exhibit (2)(a) to Form 10-Q
                          Directors dated January 7, 1988,                 dated May 11, 1988.
                          providing for succession to the
                          position of Chairman of the Board
                          of Directors

 (2)(c)                   Agreement and Plan of Merger dated               Exhibit (2.1)to Registration                  
                  
                          September 8, 1995, between Financial             Statement on Form S-4,
                          Benefit Group, Inc., AmVestors                   File No. 333-01309 dated
                          Financial Corporation and AmVestors              March 1, 1996
                          Acquisition Subsidiary, Inc. as Amended

 (3)(a)                   Articles of Incorporation as Amended             Exhibit (3)(a) to Form 10-Q
                          and Restated                                     dated October 26, 1993

 (3)(b)                   Bylaws of the company                            Exhibit (4.2) to Registration
                                                                           Statement on Form S-4, File
                                                                           No. 333-01309 dated February 
                                                                           28, 1996

 (4)(a)                   Specimen Common Stock Certificate                Exhibit (4)(a) to Form 10-K                   
                                                                           dated March 30, 1995.
</TABLE>
33<PAGE>
<TABLE>
<CAPTION>

 Exhibit                  Page Number or Incorporation
  Number                       Description                                by Reference
<C>                       <C>                                           <C>
  (4)(b)                  Common Stock Purchase Warrant                    Exhibit (10)(o) to Form 10-K
                          expiring December 9, 1998                        dated April 12, 1989

  (4)(c)                  Common Stock Purchase Warrant                    Exhibit (10)(v) to Form 10-Q
                                                                           dated May 13, 1992

  (4)(d)                  1995 Agents Stock Option Plan                    Exhibit (4.1) to Registration 
                                                                           Statement on Form S-3, File 
                                                                           No. 333-02211 dated April 2, 
                                                                           1996


  (4)(e)                  AmVestors Financial Corporation 1996             Exhibit (4)(a) to Registration
                          Incentive Stock Option Plan                      Statement on Form S-8, File 
                                                                           No. 333-14571 dated October 21,
                                                                           1996

  (4)(f)                  Form of 3% Convertible Subordinated              Exhibit (4.2) to Registration
                          Debentures due 2003                              Statement on Form S-3, File No.
                                                                           333-10101 dated August 29, 1996

  (4)(g)                  Warrant agreement and form of warrant            Appendix V to Registration
                                                                           statement on Form S-4, File No.
                                                                           333-01309 dated March 1, 1996

 (10)(a)                  Form of Indemnification Agreement between         Exhibit (10)(a) to Form 10-K
                          company and its officers and directors                  dated March 29, 1988

 (10)(b)                  1989 Non-Qualified Stock Option Plan                    Exhibit (10)(q) to Form 10-K
                          adopted March 17, 1989                                  dated April 12, 1989

 (10)(c)                  Stock Appreciation Rights Plan adopted                  Exhibit (10)(r) to Form 10-K
                          March 17, 1989                                          dated April 12, 1989

 (10)(d)                  Restricted Stock Plan adopted                           Exhibit (4.4) to Registration
                          March 17, 1989                                          Statement on Form S-8, File
                                                                                  No. 33-31155 dated September
                                                                                  19, 1989

 (10)(e)                  Employment Agreement dated December 17,                 Exhibit (10)(l) to Form 10-K
                          1992, among the company, it's                           dated March 30, 1993
                          subsidiaries and Mark V. Heitz

 (10)(f)                  Employment Agreement dated October 3,                   Exhibit (10)(a) to Form 10-Q
                          1994, among the company, it's                           dated November 10, 1994
                          subsidiaries and Ralph W. Laster, Jr.

 (10)(g)                  Bonus Compensation Agreement dated                      Exhibit (10)(b) to Form 10-Q
                          September 30, 1994, between the company                 dated November 10, 1994
                          and Ralph W. Laster, Jr.

 (10)(h)                  Bonus Compensation Agreement dated                      Exhibit (10)(c) to Form 10-Q
                          September 30, 1994, between the company                 dated November 10, 1994
                          and Mark V. Heitz
</TABLE>
34<PAGE> 
<TABLE>
<CAPTION>

 Exhibit                  Page Number or Incorporation
  Number                       Description                                           by Reference
<C>                       <C>                                            <C> 

 (10)(i)                  1994 Stock Purchase Plan for Non-Employee         Exhibit (10)(j) to Form 10-K
                          Directors effective February 24, 1994             dated March 30, 1995

 (10)(j)                  Incentive Compensation Plan between the            Exhibit (10)(k) to Form 10-K
                          company and certain designated employees           dated March 30, 1995
                          effective for the calendar year 1994

 (10)(k)                  Employment Agreement dated January 1,               PP 38-42
                          1997 between the company and Timothy S.
                          Reimer

 (10)(l)                  Employment Agreement dated January 1,                PP 43-47
                          1997 between the company and Thomas M.
                          Fogt

 (10)(m)                  Employment Agreement dated January 1,                PP 48-52
                          1997 between the company and Lynn F.
                          Hammes

 (10)(n)                  Employment Agreement dated January 1,                PP 53-57
                          1997 between the company and Ronald J.
                          Stanley

 (10)(o)                  Special Incentive Bonus Agreement dated              PP 58-59
                          March 27, 1997, between the company and
                          Ralph W. Laster, Jr.

 (10)(p)                  Special Incentive Bonus Agreement dated              PP 60-61
                          March 27, 1997, between the company and
                          Mark V. Heitz

 (10)(q)                  Employment Agreement dated April 8,                  Exhibit (10)(p) to Form 10-Q
                          1996, between the company and                        dated November 13, 1996
                          Frank T. Crohn

 (10)(r)                  Employment Agreement dated April 8,                  Exhibit (10)(p) to Form 10-Q                  
                          1996, between the company and                        dated November 13, 1996                       
                          Donna J. Rubertone

 (11)                     Calculation of Earnings per Share                    P 62

 (20)                     Reports on Form 8-K                                  
                          There were no reports on Form 8-K for
                           the three months ended March 31, 1997
</TABLE>
35<PAGE>
<TABLE>
<CAPTION>

 Exhibit                  Page Number or Incorporation
  Number                       Description                                              by Reference
<C>                       <C>                                            <C>
 Exhibit                                                                                           Page Number or Incorporation

 (21)                   Wholly-owned subsidiaries of the
                      registrant:

                      American Investors Life Insurance
                      Company, Inc.
                      555 South Kansas Avenue
                      Topeka, Kansas 66603

                      American Investors Sales Group, Inc.
                      (formerly Gateway Corporation)
                      555 South Kansas Avenue
                      Topeka, Kansas 66603

                      AmVestors Investment Group, Inc.
                      (formerly American Investors Sales
                      Group, Inc.)
                      555 South Kansas Avenue
                      Topeka, Kansas 66603

                      AmVestors Acquisition Subsidiary, Inc.
                      555 South Kansas Avenue
                      Topeka, Kansas 66603

                      AmVestors CBO II, Inc.
                      555 South Kansas Avenue
                      Topeka, Kansas 66603

                      Annuity International Marketing
                       Corporation
                      7251 West Palmetto Park Road
                      Boca Raton, Florida 33433

                      Financial Benefit Life Insurance Company
                      555 South Kansas Avenue
                      Topeka, Kansas 66603

                      The Insurance Mart, Inc.
                      7251 West Palmetto Park Road
                      Boca Raton, Florida 33433

                      Rainbow Card Pack Publication, Inc.
                      7251 West Palmetto Park Road
                      Boca Raton, Florida 33433

 (27)                 Financial Data Schedule
36<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.
AMVESTORS FINANCIAL CORPORATION

                                    By: /c/ Ralph W. Laster, Jr.
                                   _____________________________
                                    Ralph W. Laster, Jr.
                                    Chairman of the Board
                                    Chief Executive Officer
                                    (Principal Executive Officer
                                    and Chief Financial Officer)
                                    (Principal Accounting Officer)

Date:  March 14, 1997
      ____________________

37

</TABLE>