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 six months ended
         June 30, 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:  (785) 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 June 30, 1997
    ------                                      ---------------------------
    Common Stock, no par value                        13,294,119 shares
<PAGE>
                        AMVESTORS FINANCIAL CORPORATION
                                     INDEX


PARTI.               Financial Information:                         Page Number
                     Consolidated Balance Sheets-
                       June 30, 1997 and December 31, 1996                 2-3
                     Consolidated Statements of Earnings-
                       Six months ended June 30, 1997 and 1996               4
                     Consolidated Statements of Earnings-
                       Three months ended June 30, 1997 and 1996             5
                     Consolidated Statements of Stockholders' Equity-
                       Twelve months ended December 31, 1996 and
                       Six months ended June 30, 1997                        6
                     Consolidated Statements of Cash Flows-
                       Six months ended June 30, 1997 and 1996             7-8
                     Notes to Consolidated Financial Statements           9-28
                     Management's Discussion and Analysis of Financial
                       Condition and Results of Operations               28-35

PART II.             Other Information                                   36-40
1<PAGE>

                AMVESTORS FINANCIAL CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                      June 30, 1997 and December 31, 1996
                                (000's Omitted)
                                  (Unaudited)



ASSETS                                                          1997        1996
-------------------------------------------------------   ----------   ---------


Investments:
    Debt securities:
      Bonds:
        Available-for-sale (cost: $2,651,581 and
       $ 2,547,658)                                       $2,689,208   2,594,293
        Trading (cost: $34,272 and $12,198)                   34,729      12,291
                                                           2,723,937   2,606,584
    Equity securities:
      Common stock:
        Available-for-sale (cost: $2,124 and $1,396)           2,973       2,440
      Preferred stock:
        Available-for-sale (cost: $34,217 and $27,742)        37,457      30,694
        Trading (cost: $463 and $2,516)                          470       2,539
                                                              40,900      35,673
    Other long-term investments                               38,266      41,152
    Short-term investments                                       514         371
          Total investments                                2,803,617   2,683,780
Cash and cash equivalents
                                                              86,758     132,574
Amounts receivable under reinsurance agreements              230,430     241,458
Amounts receivable on securities settlements in process        2,536       2,395
Accrued investment income                                     38,384      36,676
Deferred cost of policies produced                           199,383     175,837
Deferred cost of policies purchased                           37,323      39,865
Goodwill                                                      11,444      11,644
Other assets                                                  28,438      21,246
        Total assets                                      $3,438,313   3,345,475


See notes to consolidated financial statements.
2<PAGE>
                AMVESTORS FINANCIAL CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                      June 30, 1997 and December 31, 1996
                                (000's Omitted)
                                  (Unaudited)



LIABILITIES AND STOCKHOLDERS' EQUITY                     1997          1996
----------------------------------------------       -----------    ----------


Liabilities:

 Policy liabilities:
   Future policy benefits                               $3,118,221     3,037,005
   Other policy liabilities                                 14,024         6,709
                                                         3,132,245     3,043,714

 Subordinated debentures payable                            65,000        65,000
 Amounts due on securities settlements in process            1,357        11,301
 Deferred income taxes                                      16,075        13,302
 Accrued expenses and other liabilities                      9,827         7,811
              Total liabilities                          3,224,504     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 - 13,342,295
    shares in 1997 and 13,167,372 shares in 1996            16,978        16,755
 Paid in capital                                           100,330        98,678
 Unrealized investment gains (losses) (net of deferred cost of policies produced
   amortization  expense  (benefit)  of $14,988  and $18,175 and net of deferred
   cost of  policies  purchased  amortization  expense  (benefit)  of $4,083 and
   $5,112 and deferred income tax expense (benefit) of $7,859
   and $9,643)                                              14,785        17,701
 Retained earnings                                          84,452        73,949
                                                           216,545       207,083
 Less treasury stock                                          (234)        (234)
 Less leveraged employee stock ownership trust
   (LESOP)                                                  (2,502)      (2,502)
       Total stockholders' equity                          213,809       204,347
       Total liabilities and stockholders' equity      $ 3,438,313     3,345,475

See notes to consolidated financial statements.
3<PAGE>
AMVESTORS FINANCIAL CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF EARNINGS
                    Six months  ended  June 30,  1997 and 1996  (000's  Omitted,
                     except per share data)
                                  (Unaudited)


                                                                  1997      1996
Revenue:
    Insurance premiums and policy charges                     $  9,086     6,353
    Net investment income                                      103,138    89,157
    Net investment gains (losses)                                3,915     2,534
    Other revenue                                                1,561       713
    Total revenue                                              117,700    98,757
Benefits and expenses:
    Benefits, claims and interest credited to policyholders     76,471    66,765
    Amortization of deferred cost of policies produced           8,286     7,413
    Amortization of deferred cost of policies purchased          3,571     2,116
    General insurance expenses                                   7,550     5,536
    Premium and other taxes, licenses and fees                   1,624     1,100
    Other expenses                                                 104       113
    Total benefits and expenses                                 97,606    83,043
Operating earnings                                              20,094    15,714
Interest expense                                                 2,863       734
Earnings before income tax expense and extraordinary item       17,231    14,980
Income tax expense                                               6,031     5,243
Earnings before extraordinary item                              11,200     9,737
Extraordinary item: Loss on early extinguishment of
    debt (net of income tax benefit of $25)                       --        (47)
Net Earnings                                                  $ 11,200     9,690
Earnings per share of common stock:

    Primary:
    Net earnings                                              $    .81       .80
    Fully diluted:
    Net earnings                                              $    .73       .79

Average shares outstanding:

    Primary                                                     13,824    12,086
    Fully diluted                                               17,926    12,273

See notes to consolidated financial statements.
4<PAGE>
                AMVESTORS FINANCIAL CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF EARNINGS
                   Three months  ended June 30,  1997 and 1996  (000's  Omitted,
                     except per share data)
                                  (Unaudited)


                                                                 1997      1996
Revenue:
    Insurance premiums and policy charges .................   $ 4,677     3,896
    Net investment income .................................    52,706    49,988
    Net investment gains (losses) .........................     1,472    (5,093)
    Other revenue .........................................       896       688
     Total revenue ........................................    59,751    49,479
Benefits and expenses:
    Benefits, claims and interest credited to policyholders    38,707    36,145
    Amortization of deferred cost of policies produced ....     4,407     2,443
    Amortization of deferred cost of policies purchased ...     1,785     2,116
    General insurance expenses ............................     3,602     3,615
    Premium and other taxes, licenses and fees ............     1,015       849
    Other expenses ........................................        45        53
    Total benefits and expenses ...........................    49,561    45,221
Operating earnings ........................................    10,190     4,258
Interest expense ..........................................     1,428       609
Earnings before income tax expense and extraordinary item .     8,762     3,649
Income tax expense ........................................     3,067     1,333
Earnings before extraordinary item ........................     5,695     2,316
Extraordinary item: Loss on early extinguishment of
    debt (net of income tax benefit of $25) ...............      --         (47)
Net earnings ..............................................   $ 5,695     2,269
Earnings per share of common stock:

    Primary:
    Net earnings ..........................................   $   .41       .17
    Fully diluted:
    Net earnings ..........................................   $   .37       .17
Average shares outstanding:

    Primary ...............................................    13,925    13,574
    Fully diluted .........................................    17,990    13,671






See notes to consolidated financial statements.
5<PAGE>
                AMVESTORS FINANCIAL CORPORATION AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                (000's Omitted, except share and per share data)
                                  (Unaudited)
[CAPTION]
<TABLE>

                                                         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
  ($.1425 per share on common
  stock) ...............................        --      --      --    (1,627)      --        --      (1,627)
Issuance of common stock:
 upon acquisition of company ...........                       3,464  28,865       --        --    - 32,329
 upon exercise of options ..............                 387     585<F1> --         --        --    - 972
Issuance of warrants:
  upon acquisition of company ..........        --     5,201    --      --         --        --       5,201
Purchase of warrants ...................                --   (257) -    --         --        --        (257)
Acquisition of treasury shares .........        --      --      --      --         (234)     --        (234)
Allocation of LESOP shares .............        --      --      --      --         --         327       327
----------------------------------------   ----------------- -------  ------   --------  --------  --------
Balance as of December 31,
  1996 .................................              16,755  98,678  17,701     73,949    (2,502)  204,347
Net earnings ...........................        --      --      --    11,200       --        --      11,200
Change in unrealized invest-
  ment gains (losses) ..................        --      --    (2,916)   --         --        --      (2,916)
Cash dividends to stockholders
  ($.0525 per share on common
  stock) ...............................                --      --    - (697       --        --        (697)
Issuance of common stock:
 upon exercise of options ..............                 223   1,652<F1>) --         --        --     1,875
----------------------------------------   ----------------- -------  ------   --------  --------  --------
Balance as of June 30,
  1997 .................................   $  16,978 100,330  14,785  84,452       (234)   (2,502)  213,809
========================================   ================= =======  ======   ========  ========  ========

<FN>
<F1> Net of income tax  benefit  of $525 and $242 for the period  ended June 30,
1997 and December 31, 1996, respectively.
</FN>
</TABLE>
See notes to consolidated financial statements.
6<PAGE>
                AMVESTORS FINANCIAL CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                Increase (Decrease) in Cash and Cash Equivalents
                    Six Months ended June 30, 1997 and 1996
                                (000's Omitted)
                                  (Unaudited)

                                                                1997        1996
Operating Activities:
    Net earnings .......................................   $  11,200       9,689
    Adjustments to reconcile net earnings to net
        cash provided by (used in) operating activities:
      Interest credited to policyholders ...............      79,694      67,620
      Amortization of (discounts) premiums
       on debt securities, net .........................      (2,424)      (626)
      Amortization of deferred cost of policies
       produced ........................................      8,286       7,412
      Amortization of deferred cost of policies
        purchased ......................................       3,571       2,116

      Net investment (gains) losses ....................      (3,915)    (2,534)
      Investment trading activity ......................     (19,297)    (6,852)
      Accrued investment income ........................      (1,708)      (641)
      Deferred income taxes ............................      (4,610)        998
      Other, net .......................................       7,199       1,513
    Net cash provided by operating activities ..........      77,996      78,695
Investing Activities:
    Purchases of securities:
     Available-for-sale ................................    (393,279)  (537,208)
    Proceeds from sale of securities:
     Available-for-sale ................................     234,576     340,582
    Proceeds from maturity or redemption:
     Available-for-sale ................................      52,850      82,463
    Other long-term investments, net ...................       2,889       4,392
    Short-term investments, net ........................        (144)         12
    Capitalization of deferred cost of policies
      produced .........................................     (28,645)   (20,251)
    Capitalization of goodwill .........................          _        (330)
    Acquisition, net of cash received ..................          _      (2,314)
    Other, net .........................................      (3,003)    (3,494)
    Net cash used in investing activities ..............    (134,756)  (136,148)
Financing Activities:
    Premiums received ..................................     280,950     211,789
    Surrender and death benefits paid ..................    (278,470)  (215,318)
    Surrender and risk charges collected ...............       7,789       5,307
    Securities settlements in process ..................     (10,084)      2,082
    Acquisition of treasury stock ......................          _        (234)
    Cash dividends to stockholders .....................        (697)    (1,043)
    Issuance of common stock ...........................       1,874         472
    Notes payable ......................................          _       12,500
    Other, net .........................................       9,582       3,024
    Net cash provided by (used in)
     financing activities ..............................     10,944       18,579
Increase (Decrease) in Cash and Cash Equivalents .......     (45,816)   (38,874)
Cash and Cash Equivalents:
    Beginning of year ..................................     132,574      48,281
    End of year ........................................   $  86,758       9,407

See notes to consolidated financial statements.
7<PAGE>
                AMVESTORS FINANCIAL CORPORATION AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                Increase  (Decrease)  in Cash and Cash  Equivalents  Six  months
                    ended June 30, 1997 and 1996
                                (000's Omitted)
                                  (Unaudited)


SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION: .....        1997       1996
    Income tax payments (refunds) ...................    $  3,350      2,215
     Interest payments ..............................    $    975        600

                                                             (000's Omitted)
                                                  For the Period Ended June 30,

NON-CASH ACTIVITIES: ................................        1997       1996

   Change in net unrealized investment gains
     (losses) .......................................    $ (8,916)   (86,739)

    Less: Associated (increase) reduction in
          amortization of deferred cost of policies
           Produced .................................       3,187     24,989
          Purchased .................................       1,029       (403)

          Deferred income tax (expense) benefit .....       1,784     21,757
      Net change in net unrealized gains (losses) ...    $ (2,916)   (40,396)

                                                                    --------

    Investing activities:
     Purchase of securities:
       Available-for-sale ...........................    $ 20,884       --
     Sales of securities:
       Available-for-sale ...........................    $ 20,884       --

                                                                    --------

    Details of acquisition:
     Fair value of assets acquired ..................    $   --      722,388
     Liabilities assumed ............................        --     (673,611)
     Common stock and warrants issued ...............        --      (37,531)
     Cash paid ......................................        --       11,246
     Less: Cash acquired ............................        --       (8,932)
     Net cash paid for acquisition ..................    $   --        2,314

     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.
8<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), Annuity Warehouse,
Inc. (AW), formerly The Insurance Mart, Inc., 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 June 30,  1997 and the  results of  earnings  and the
statements of cash flows for the six month periods ended June 30, 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.
9<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 June 30, 1997, and December 31, 1996, were as follows:
                                                     (000's Omitted)

                                             1997              1996
                                        --------- ----------
                                        Fair    Carrying    Carrying    Fair
                                        Value     Value      Value      Value
                                     ---------- ---------  --------- ----------
Assets:
      Debt securities .............. $2,723,937 2,723,937  2,606,584  2,606,584
      Equity securities ............     40,900    40,900     35,673     35,673
      Other long-term investments ..     38,266    38,485     41,152     41,176
      Short-term investments .......        514       514        371        371
      Cash and cash equivalents ....     86,758    86,758    132,574    132,574
      Accounts receivable on
       securities settlements in
        process ....................      2,536     2,536      2,395      2,395
      Accrued investment income ....     38,384    38,384     36,676     36,676
Liabilities:
      Future policy benefits -
       investment contracts ........  2,879,970 2,663,753   2,767,32 62,583,902
      Other policy liabilities .....     14,024    14,024      6,709      6,709
      Subordinated debentures
       payable .....................     65,000    71,825     65,000     65,325
      Amounts due on securities
       settlements in process ......      1,357     1,357     11,301     11,301
      Accrued expenses and other
       liabilities .................      9,827     9,827      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.
10<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, 11<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 1 to 10 years.
12<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 June 30, 1996
and December 31, 1996 financial statements to the June 30, 1997 presentation.
13<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 June 30,


                                                           1997      1996



Net investment income:
Debt securities ..................................    $  98,307    86,203
Equity securities ................................          790       586
Other long-term investments ......................        3,158     2,701
Short-term investments ...........................        2,481       964

                                                        104,736    90,454
Less investment expenses .........................        1,598     1,297
Net investment income ............................    $ 103,138    89,157
Net investment gains (losses): Realized investment gains (losses):
    Debt securities, available-for-sale ..........    $     788     1,411
    Debt securities, trading .....................          822       267
    Equity securities, available-for-sale ........        1,699       577
    Equity securities, trading ...................          264       179
    Other ........................................            1        (5)
Net realized investment gains (losses) ...........        3,574     2,429
 Unrealized investment gains (losses):
    Debt securities, trading .....................          364       (43)
    Equity securities, trading ...................          (16)      148
    Other long-term investments ..................           (7)     --
Net unrealized investment gains (losses) .........          341       105
Net investment gains (losses) ....................    $   3,915     2,534
        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.
14<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
2. Investments (continued):
------------------------------
        The maturity of the company's debt and equity securities portfolio as of
June 30, 1997 was as follows:
                                 (000's Omitted)
                               As of June 30, 1997
                                 Available-for-sale       Trading
                                             Estimated          Estimated
                        Amortized Market Amortized Market
                                      Cost      Value   Cost      Value
Debt securities:
 One year or less                 $   46,769     47,077       -       -
 Two years through five years        600,585    617,880     946      993
 Six years through ten years       1,533,665  1,551,950  28,274   28,632
 Eleven years and after              470,562    472,301   5,052    5,104
                                   2,651,581  2,689,208  34,272   34,729
Equity securities                     36,341     40,430     463      470
                                   $2,687,922 2,729,638  34,735   35,199

        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 June 30, 1997 and  December 31,
1996, were as follows:
                                           (000's Omitted)

                                                                Estimated
                              Amortized  Unrealized Unrealized    Market
                                Cost       Gains       Losses      Value

     June 30, 1997
    ---------------
Bonds available-for-sale:
  Corporate debt obligations
  Investment grade .........   $1,784,525   33,441      12,052   1,805,914
  High-yield ...............      126,113    3,561       1,041     128,633
                                1,910,638   37,002      13,093   1,934,547
  U.S. Treasury obligations         5,467       13          47       5,433
  Mortgage-backed securities
  Investment grade .........      735,476   15,978       2,226     749,228
  High-yield ...............         --       --          --          --
  Bonds available-for-sale .    2,651,581   52,993      15,366   2,689,208
Bonds trading:
  Corporate debt obligations
  Investment grade .........        9,438      172          28       9,582
  High-yield ...............       24,834      377          64      25,147
  Bonds trading ............       34,272      549          92      34,729
  Total bonds ..............    2,685,853   53,542      15,458   2,723,937
Equity securities ..........       36,804    4,962         866      40,900
                               $2,722,657   58,504      16,324   2,764,837
15<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
June 30, 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.     16<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 June 30, 1997 and  December
31, 1996 were as follows: <TABLE> <CAPTION>

                                                               (000's Omitted)

                                                                                   Estimated
                                               Amortized   Unrealized  Unrealized   Market
             June 30, 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 .............    437,667   11,601   1,375   447,893
        Targeted amortization classes and
         accretion directed classes ..............     27,568      662    --      28,230
        Sequential classes .......................      8,824      160    --       8,984
        Pass-throughs ............................      2,170       23    --       2,193
           Total government-sponsored enterprise
             mortgage-backed securities ..........    476,229   12,446   1,375   487,300
Other mortgage-backed securities:
        Planned amortization classes .............      9,783       99    --       9,882
        Sequential classes .......................    203,712    2,696     851   205,557
        Pass-throughs ............................          8     --      --           8
        Subordinated classes .....................     45,722      735    --      46,457
            Total other mortgage-backed securities    259,225    3,530     851   261,904
Total mortgage-backed securities .................   $735,476   15,978   2,226   749,228
</TABLE>
17<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  29.2%  and  27.5%  of the  carrying  value  of  the  company's
mortgage-backed   securities  as  of  June  30,  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  64.6% and 67.5% of the carrying  value of the company's
mortgage-backed   securities  as  of  June  30,  1997  and  December  31,  1996,
respectively.
        As of June 30, 1997, 64.8% 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 six issues, with a carrying value of
$22,058,882 as of June 30, 1997, all of the company's investments in other
mortgage-backed securities are rated A or better by Standard& Poor's or Moody'
s.
18<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 June 30,
                                    1997 1996
Consideration received .................   $ 378,242     442,597
Carrying value .........................     374,668     440,168
  Net realized investment gains (losses)   $   3,574       2,429
Investment gains .......................   $   7,137      10,225
Investment losses ......................      (3,563)     (7,796)
  Net realized investment gains (losses)   $   3,574       2,429


        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 .....    (9,008)    364          93       (16)       (7)
Balance as of
    June 30, 1997 ...  $ 37,627     457       4,089         7        (7)
19<PAGE>

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

        Other assets consist of the following:
                                                     (000's Omitted)
                                           ---------------------------------
                                                  June 30,        December 31,
                                                    1997               1996

Property and equipment at cost:
 Home office properties
  (including land of $525 and 1,067)......      $    18,829           17,605
 Furniture and equipment..................            5,671            5,015
 Automobiles..............................              207              196
                                                     24,707           22,816
 Less accumulated depreciation............            4,752            5,987
                                                     19,955          16,829
Accounts receivable.........................          4,931             593
Other.....................................            3,552           3,824
                                                $    28,438           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
     June 30,
       1997       Life insurance in force    $283,367     207,556     75,811
                  Insurance premiums and
                  policy charges.......        9,532         446       9,086

     June 30,
       1996       Life insurance in force    308,443     233,065      75,378
                  Insurance premiums and
                  policy charges.......        6,948         595       6,353

     June 30,
       1997        Future policy benefits  3,118,221      227,779  2,890,442

   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
$230,430,267 and $241,458,335 as of June 30, 1997 and December 31, 1996,
respectively. Of the total amounts receivable, $136,200,197 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  $6,773,543  and $5,608,655 for periods
ended June 30, 1997 and 1996, respectively.
20<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)
                                                   June 30,     December 31,
                                                    1997           1996
 Reserve for future policy benefits              $    134,897      139,571
 Reimbursement for benefit payments and
  administrative allowance                              1,303          886
                                                 $    136,200      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 June 30, 1997 and December 31,
1996,  the  company  had  amounts  receivable  of  $92,560,445  and  $99,335,043
resulting from this agreement.
        The following table identifies the components of the amounts  receivable
from PLI:

                                 (000's Omitted)
                              June 30, December 31,
                                              1997          1996
Reserve for future policy benefits        $ 91,263         97,602
Reimbursement for benefit payments and
 administrative allowance                    1,297          1,733
                                           $ 92,560         99,335

5. Convertible Subordinated Debentures:
---------------------------------------

        On July 12,  1996,  the company  closed an offering of  $65,000,000  par
value 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 for 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.
21<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 June 30,
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 six
months ended June 30, 1997 or 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 June 30, 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
413,360  shares of the  company's  common stock now owned by the LESOP,  199,135
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 $174,918 and $163,476 for six months ended June
30, 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 $432,130,  representing  the present  value of future
benefits,  has been  established.  Charges  (credits) to earnings related to the
plans were $771 and  ($1,558)  for the six months  ended June 30, 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 six months
ended June 30, 1997 and 1996, were $189,032 and $164,040, 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 June 30, 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.
22<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 June 30, 1997 and December 31, 1996, American's
statutory  capital and surplus was $102,466,447  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,  FBLmust  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 of
statutory net profits and net realized  capital gains for 1996 were  $3,811,912.
As of June 30,  1997,  available  surplus  from net  operating  profits  and net
realized capital gains was $2,640,894. Required statutory surplus as of June 30,
1997 was $19,302,555 and actual surplus was $36,252,955.
        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 ($5,074,424 as of June 30, 1997).
        In addition,  American  received  permission  from the  Commissioner  of
Insurance of Kansas to amortize  the effects of changing to Actuarial  Guideline
No. 33  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  $2,176,497.  The effect of this
permitted  accounting practice was to increase statutory surplus by $210,736 and
$441,450 as of June 30, 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
928,820 options to acquire common stock were outstanding  under the 1989 Plan as
of June 30, 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 23<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.  A total of  931,064  options to acquire
common stock were outstanding under the 1996 Plan as of June 30, 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 June 30, 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      (174,919)           7.71        (76,285)       6.52
Options terminated            -             -         (16,500)        10.15
Options outstanding,
  end of period        1,859,884       $ 12.63       1,551,556      $11.15
Options exercisable,
  end of period        1,082,711                     1,127,630
Options reserved for
  future grants,
  end of period               -                        483,247

        The  following  table   summarizes   information   about  stock  options
outstanding under the company's option plans as of June 30, 1997:
                                               Weighted
                                               Average           Weighted
        Range of                              Remaining          Average
        Exercise              Options        Contractual         Exercise
        Prices              Outstanding     Life in Years         Price
        --------            ------------    --------------      ----------

      $7.03-$7.50              143,073             .34             $7.32
      $8.75                     20,000            7.40              8.75
     $10.00-$11.25             348,500            6.66             10.13
     $12.66-$13.50             865,064            8.46             12.94
     $15.63                    483,247            4.82             15.63
                             ----------      ----------        ----------
                             1,859,884            6.54            $12.63
24<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 June 30, 1997:
                                    Weighted
                                     Average
                        Options                 Exercise
                      Exercisable                Price
                      ------------             ----------

                          143,073                 $ 7.32
                           20,000                   8.75
                          348,500                  10.13
                          571,138                  12.98
                        ----------             ----------
                        1,082,711                 $11.24
                        ==========             ==========

        The  estimated  fair value of options  granted or  modified  in 1996 was
$6.03 per share.  The estimated fair value of options  granted in 1997 was $4.73
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 six month  period ended June 30, 1997 and 1996 would
have been reduced to the pro forma amounts indicated below:
                                                          1997          1996
   Net earnings (in thousands):
    As reported.......................................   $11,200        9,690
    Pro forma.........................................    10,412        8,986
  Fully diluted earnings per share:
    As reported.......................................   $   .73          .79
    Pro forma.........................................       .69          .73
        As SFASNo.  123 has not been applied to options granted prior to January
1, 1995, the resulting pro forma  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 .58%,  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 .69%,  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.  25<PAGE> NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

8. Stockholders' Equity (continued):
------------------------------------
                                                        For the Period Ended
                                                          (000's Omitted)
                                                 -----------------------------

                                                   June 30,       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  six  months  ended  June  30,  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. On June 9, 1997 5 warrants were
exercised to purchase  common stock.  In addition,  52,660  warrants to purchase
common  stock were issued upon 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 six months ended June 30, 1997 and 1996 were
$53,217 and $57,859,  respectively.  26<PAGE>  NOTES TO  CONSOLIDATED  FINANCIAL
STATEMENTS-(Continued)

9. Other Revenue (continued):
-----------------------------
        Other revenue for the six months ended June 30, 1997 and 1996
includes override commissions of $855,513 and $418,669, respectively
attributable to the marketing efforts of AIMCORand AW. The 1997 period
includes  $243,451 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 six months Ended June 30,
                                    1997 1996
Current income tax expense................ $    1,421      2,499
Deferred income tax expense (benefit).....      4,610      2,744
    Total income tax expense (benefit).... $    6,031      5,243

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 AW, 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 six months ended June 30, 1997 and 1996 include the results of
operations of FBG. 27<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. 28<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 the 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 June 30, 1997,  approximately
$261.6  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 $259.4 million of this amount is
6% or less. As of that same date,  approximately $19.8 million, or 3.3% 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 $19.8  million is 5.5% or less,  with $14.3  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,  should  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: 29<PAGE> <TABLE> <CAPTION>
                                                       For the six months Ended June 30,
                                                    ------------------------------------

                                                           1997                 1996
                                                              (dollars in millions)
                                                      (percent of average invested assets)
<S>                                              <C>         <C>         <C>          <C>
Average invested assets  <F1> .................   $  2,807.1     100.0%    $ 2,361.7     100.0%
Insurance premiums and
  policy charges .............................   $      9.1       .65%    $    6.4        .54%
Net investment income <F2> ....................        103.1       7.35%       89.2       7.55
Net investment gains
    (losses, core <F3> ........................          4.1        .29         1.6        .14
Policyholder benefits ........................        (76.5)     (5.45)      (66.8      (5.65)
Gross interest margin ........................         39.8)      2.84)       30.4       2.57
Associated amortization of
    deferred cost of:
     Policies produced .......................         (8.6)      (.61)       (6.9       (.59)
     Policies purchased ......................         (3.2)      (.23)       (2.5       (.21)
Net interest margin ..........................         28.0       2.00        20.9       1.77
Net investment gains (losses), other .........          (.2)      (.01)         .9        .08
Associated amortization of deferred cost of:
     Policies produced .......................           .4        .03         (.5       (.04)
     Policies purchased ......................          (.4)      (.03)         .5        .04
Net margin from investment
    gains (losses), other ....................          (.2)      (.01)         .9        .07
Total net margin .............................         27.8       1.98)       21.8       1.84
Expenses, net ................................         (7.7)      (.55)       (6.0)       (.51)
Operating earnings ...........................         20.1       1.43        15.8       1.33
Interest expense .............................         (2.9)      (.20)        (.7       (.06)
Earnings before income taxes and extraordinary
  item .......................................         17.2       1.23        15.0       1.27
Income tax expense ...........................         (6.0)      (.43)       (5.3       (.44)
Earnings before extraordinary item ...........         11.2        .80         9.7        .83%
Extraordinary item ...........................            -          -           -          -
Net earnings .................................   $     11.2        .80%        $ 9.7      .83%
Operating earnings ...........................   $     20.1       1.43%        $15.8     1.33%
Less: Net margin from
    investment gains (losses), other .........          (.2)      (.01)         .9        .07
Operating earnings
    excluding net margin from
    investment gains (losses), other .........   $     20.3       1.44%        $14.9     1.26%

<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 time weighted for 1996 for acquisition of FBG
effective April 1,
    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.
</TABLE>

Note: Numbers may not add due to rounding.
30<PAGE>
<TABLE>
<CAPTION>
                                                        For the three months Ended June 30,
                                                      --------------------------------------------------
                                                           1997                  1996
                                                              (dollars in millions)
                                                     (percent of average invested assets)
<S>                                             <C>            <C>      <C>           <C>
Average invested assets  <F1> .................   $  2,818.9     100.0%   $ 2,647.9     100.0%
Insurance premiums and
  policy charges .............................   $      4.7        .66%    $   3.9        .59%
Net investment income <F2> ....................         52.7       7.48        50.0       7.55
Net investment gains
    (losses), core <F3> .......................          2.0        .28         1.2        .18
Policyholder benefits ........................        (38.7)     (5.49)      (36.1)     (5.46)
Gross interest margin ........................         20.7       2.93        18.9       2.86
Associated amortization of
    deferred cost of:
     Policies produced .......................         (4.7)      (.67)       (4.0)      (.60)
     Policies purchased ......................         (1.6)      (.23)       (2.5)      (.38)
Net interest margin ..........................         14.3       2.03        12.4       1.87
Net investment gains (losses), other .........          (.5)      (.07)       (6.3)      (.95)
Associated amortization of deferred cost of:
     Policies produced .......................           .3        .05)        1.6        .23
     Policies purchased ......................          (.1)      (.02)         .4        .06
Net margin from investment
    gains (losses), other ....................          (.3)      (.05)       (4.3)      (.65)
Total net margin .............................         14.0       1.98         8.1       1.22
Expenses, net ................................         (3.8)      (.53)       (3.8)      (.58)
Operating earnings ...........................         10.2       1.45         4.3        .64
Interest expense .............................         (1.4)      (.20)        (.6)      (.09)
Earnings before income taxes and extraordinary
  item .......................................          8.8       1.25         3.7        .55
Income tax expense ...........................         (3.1)      (.44)       (1.3)      (.20)
Earnings before extraordinary item ...........          5.7        .81         2.3        .35
Extraordinary item ...........................        -         -            -         -
Net earnings .................................   $      5.7        .81%    $  2.3        .35%
Operating earnings ...........................   $     10.2       1.45%    $  4.3        .64%
Less: Net margin from
    investment gains (losses), other .........          (.3)      (.05)       (4.3)      (.65)
Operating earnings
    excluding net margin from
    investment gains (losses), other .........   $     10.5       1.50% $      8.6       1.29%
<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 time weighted for 1996 for acquisition of FBG
effective April 1,
    1996.
<F2> Net investment income is presented net of investment expense.
<F2> 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.
</TABLE>
31<PAGE>
Six Months Ended June 30, 1997, and 1996
        INSURANCE  PREMIUMS AND POLICY CHARGES increased $2.7 million or 42%, to
$9.1 million in 1997,  due  primarily  to a $2.2  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 $13.9 million or 16%, to $103.1 million
in 1997.  This  increase  reflects an increase in average  invested  assets from
$2,361.7  million  in 1996 to  $2,807.1  million  in 1997,  offset  in part by a
decrease  in the average  yield on invested  assets from 7.6% for the six months
ended  June 30,  1996,  to 7.4% 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 $20.5 million and $19.0 million on
June 30, 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 $1.8 million in the 1997 six months compared with income
of $1.5 million in 1996.
        NET INVESTMENT  GAINS (LOSSES) were $3.9 million in 1997,  compared with
$2.5 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 $38.1 million,  $46.7 million and $10.1 million as
of June 30, 1997, December 31, 1996 and June 30, 1996, respectively.
        OTHER  REVENUE  increased  $.8  million to $1.6  million  in 1997.  This
increase  results from $.4 million  increase in  commissions  received by AW and
AIMCOR and a $.2 million increase in administrative fees received by AIG.
        BENEFITS,  CLAIMS AND INTEREST CREDITED TO POLICYHOLDERS  increased $9.7
million,  or 15%,  to $76.5  million  in 1997 from $66.8  million in 1996.  This
increase results  primarily from an increase in annuity  liabilities to $2,945.1
million on June 30, 1997, from $2,797.8  million on June 30, 1996. This increase
was partially  offset by a decrease in the average interest rate credited on the
company's annuity liabilities, from 5.7% as of June 30, 1996, to 5.5% as of June
30,  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  increased  $.9
million, or 12%, to $8.3 million in 1997 from $7.4 million in 1996. Amortization
associated with gross interest margin  increased $1.7 million to $8.6 million in
1997 from $6.9 million in 1996.  Amortization  associated with investment  gains
(losses)  decreased  to $.4  million on $.2 million of (losses) in 1997 from $.5
million on $.9 million of gains in 1996. Costs incurred during 1997 and deferred
into future policy  periods were $28.6  million,  compared with $20.3 million in
1996.
        Amortization  of deferred  cost of  policies  purchased  increased  $1.6
million to $3.6 million and  represents the  amortization  of the purchase price
allocated to the policies  acquired in the  acquisition of FBG. The 1997 expense
represents  amortization  for six  months  while  the  1996  expense  represents
amortization for three months.
        General  insurance  expenses  increased  $2.1  million,  or 38%, to $7.6
million for the 1997 six months  from $5.5  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 $2.1 million  reflecting the $65.0 million of
convertible subordinated debentures issued in July, 1996.
        Income tax expense  increased  $.8 million to $6.0  million in 1997 from
$5.2 million in 1996.  Taxes were  provided at an effective  rate of 35% on both
1997 and 1996 income. 32<PAGE>
        Three Months Ended June 30, 1997, and 1996
        INSURANCE  PREMIUMS AND POLICY CHARGES  increased $.8 million or 20%, to
$4.7  million in 1997,  due  primarily  to a $.4 million  increase in  surrender
charges  received on increased  surrenders of annuity policies and a $.4 million
increase in premiums received on SPIA's with life contingencies.
        NET INVESTMENT  INCOME increased $2.7 million or 5%, to $52.7 million in
1997.  This  increase  reflects  an  increase  in average  invested  assets from
$2,647.9  million  in 1996 to  $2,818.9  million  in 1997,  offset  in part by a
decrease in the average yield on invested  assets from 7.6% for the three months
ended  June 30,  1996,  to 7.5% for the same  period in 1997.  The yield in both
periods  was  impacted  by   investments  in  investment   partnerships.   These
partnerships  form a fund of funds  totalling $20.5 million and $19.0 million on
June 30, 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 $1.3  million in the 1997 three  months  compared  with
income of $.8 million in 1996.
        NET INVESTMENT  GAINS (LOSSES) were $1.5 million gain in 1997,  compared
with $5.1 million loss 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.  Unrea  lized  gains
(losses) in the company's bond  portfolio were $38.1 million,  $46.7 million and
$10.1  million  as of June 30,  1997,  December  31,  1996  and  June 30,  1996,
respectively.
        BENEFITS,  CLAIMS AND INTEREST CREDITED TO POLICYHOLDERS  increased $2.6
million,  or 7%, to $38.7  million  in 1997 from  $36.1  million  in 1996.  This
increase results  primarily from an increase in annuity  liabilities to $2,945.1
million on June 30, 1997, from $2,797.8  million on June 30, 1996. This increase
was partially  offset by a decrease in the average interest rate credited on the
company's annuity liabilities, from 5.7% as of June 30, 1996, to 5.5% as of June
30, 1997.
        Amortization  of  deferred  cost of  policies  produced  increased  $2.0
million, or 80%, to $4.4 million in 1997 from $2.4 million in 1996. Amortization
associated with gross interest  margin  increased $.7 million to $4.7 million in
1997 from $4.0 million in 1996.  Amortization  associated with investment  gains
(losses)  decreased  $1.3  million to a benefit of $.3 million on $.5 million of
(losses)  in 1997 from a benefit of $1.6  million  on $6.3  million of losses in
1996.  Costs  incurred  during 1997 and deferred into future policy periods were
$16.7 million, compared with $11.2 million in 1996.
        Amortization  of  deferred  cost of  policies  purchased  decreased  $.4
million to $1.7 million and  represents the  amortization  of the purchase price
allocated to the policies acquired in the acquisition of FBG.
        Interest expense  increased $.8 million  reflecting the $65.0 million of
convertible subordinated debentures issued in July, 1996.
        Income tax expense  increased  $1.8 million to $3.1 million in 1997 from
$1.3 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 33<PAGE> 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 its  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 six months ended June 30, 1997 and 1996
was $10.3 million and $1.8 million, respectively.
        The  decrease in net cash  provided by annuity  contracts  without  life
contingencies  in 1997  resulted  primarily  from a $63.2  million  increase  in
surrender and death  benefits  paid from $215.3  million  (approximately  10% of
beginning reserves for future policy benefits) to $278.5 million  (approximately
9% of beginning  reserves for future policy  benefits) offset by a $69.2 million
increase in premiums received from $211.8 million to $281.0 million.
        Net cash  provided  by the  company's  operating  activities  was  $78.0
million and $78.7 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  (6% and 8% as of June  30,  1997 and
December 31, 1996, respectively). The weighted average duration of the company's
investment portfolio was 4.4 years as of June 30, 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.
        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 June 30, 1997 and  December  31,
1996,  American had amounts  receivable  resulting from this agreement of $136.2
million and $140.5 million, respectively. 34<PAGE>
        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 June  30,  1997  and  December  31,  1996,  FBL had  amounts
receivable resulting from this agreement of $92.6 million 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. 35<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
----------------------------------------------------------------------

        The annual meeting of the  stockholders  of the company was held May 15,
1997. The following Directors were elected at the annual meeting:
        Janis L. Andersen
        Mark V. Heitz
        Robert T. McElroy, M.D.
        The  names of the other  Directors  where  terms of office as  Directors
continued after the meeting were as follows:
        Robert G. Billings
        Jack H. Brier
        Robert R. Lee, II
        John F.X. Mannion
        Ralph W. Laster, Jr.
        R. Rex Lee, M.D.
        James V. O'Donnell
        Frank T. Crohn

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).

Exhibit                                         Page Number or Incorporation
Number           Description                             by Reference
(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.
36<PAGE>
Exhibit                                         Page Number or Incorporation
Number           Description                             by Reference
(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.

(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
37<PAGE>
Exhibit                                         Page Number or Incorporation
Number   Description                             by Reference
(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, its              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, its              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

(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,     Exhibit (10)(k) to Form 10-Q
        1997 between the company and Timothy S.   dated May 14, 1997
        Reimer

(10)(l) Employment Agreement dated January 1,     Exhibit (10)(l) to Form 10-Q
        1997 between the company and Thomas M.    dated May 14, 1997
        Fogt

(10)(m) Employment Agreement dated January 1,     Exhibit (10)(m) to Form 10-Q
        1997 between the company and Lynn F.      dated May 14, 1997
        Hammes

(10)(n) Employment Agreement dated January 1,     Exhibit (10)(n) to Form 10-Q
        1997 between the company and J. Ronald    dated May 14, 1997
        Stanley

(10)(o) Special Incentive Bonus Agreement dated   Exhibit (10)(o) to Form 10-Q
        March 27, 1997, between the company and   dated May 14, 1997
        Ralph W. Laster, Jr.
38<PAGE>

Exhibit                                           Page Number or Incorporation
Number     Description                                      by Reference
(10)(p)   Special Incentive Bonus Agreement dated   Exhibit (10)(p) to Form 10-Q
          March 27, 1997, between the company and   dated May 14, 1997
          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

(10)(s)   Employment Agreement dated April 1,       PP 42-56
          1997, between the company and
          Ralph W. Laster, Jr.

(10)(t)   Employment Agreement dated April 1,       PP 57-70
          1997, between the company and
          Mark V. Heitz


(11)       Calculation of Earnings per Share         P 71

(20)       Reports on Form 8-K
            There were no reports on Form 8-K for
            the three months ended June 30, 1997

(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
39<PAGE>
Exhibit                                         Page Number or Incorporation
Number           Description                             by Reference
              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

              Annuity Warehouse, Inc.
              (formerly 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
40<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:  August 14, 1997
      --------------------
41