SECURITIES AND EXCHANGE COMMISSION
                                           WASHINGTON, D.C. 20549

# FORM 10-Q

FOR QUARTERLY AND TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15 (d)
                                   OF THE SECURITIES EXCHANGE ACT OF 1934
                                                 (Mark One)
(X)   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) 
OF THE SECURITIES EXCHANGE ACT OF 1934

For Quarterly Period Ended March 31, 2003OR
                           (  )   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from _____ to _____ 
 Commission File Number 1-8538

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

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

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

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

Common Stock (par value $.01)
                                       Warrants to purchase Common Stock

Indicate, by check mark, whether the
Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

YES   X    
  NO

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

YES   X    
  NO

Indicate, by check mark, whether the
Registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).

YES       
  NO  X

Common Stock  Par value $0.01; 6,532,100
shares outstanding at May 9, 2003.



# ASCENT ASSURANCE, INC. 

INDEX TO FORM 10-Q

|PART I.  |  | FINANCIAL INFORMATION                                                                                                                         |  | Page No.
|-------- |  | --------------------------------------------------------------------------------------------------------------------------------------------- |  | --------
|        
|Item 1  |  | Financial Statements                                                                                                                          |  |         
|         |  | Ascent Assurance, Inc. Condensed Consolidated Balance Sheets at
   March 31, 2003 and December 31, 2002                                       |  | 3       
|         |  | Ascent Assurance, Inc. Condensed
Consolidated Statements of Operations for the Three Months Ended March 31, 2003 and March 31, 2002           |  | 4       
|         |  | Ascent Assurance, Inc. Condensed Consolidated Statements of Comprehensive Income for the
Three Months Ended March 31, 2003 and March 31, 2002 |  | 5       
|         |  | Ascent Assurance, Inc. Consolidated Statement of Changes in Stockholders'
     Equity for the Three Months Ended March 31, 2003               |  | 6       
|         |  | Ascent Assurance, Inc.
Condensed Consolidated Statements of Cash Flow for the Three Months Ended March 31, 2003 and March 31, 2002            |  | 7       
|         |  | Notes to Condensed Consolidated Financial Statements                                                                                          |  | 8       
|        
|Item 2  |  | Managements Discussion and Analysis of Financial Conditionand Results of Operations                                                          |  |         
|         |  | General                                                                                                                                       |  | 15      
|         |  | Business Overview                                                                                                                             |  | 15      
|         |  | Forward-Looking Statements                                                                                                                    |  | 16      
|         |  | Operating Results                                                                                                                             |  | 18      
|         |  | Financial Condition                                                                                                                           |  | 21      
|         |  | Liquidity, Capital Resources and Statutory Capital and Surplus                                                                                |  | 23      
|        
|Item 3  |  | Quantitative and Qualitative Disclosures About Market Risk                                                                                    |  | 25      
|        
|Item 4  |  | Controls and Procedures                                                                                                                       |  | 25      
|        
|PART II. |  | OTHER INFORMATION                                                                                                                             |  |         
|        
|Item 6  |  | Exhibits and Reports on Form 8-K                                                                                                              |  | 26      



ASCENT ASSURANCE, INC.


CONDENSED CONSOLIDATED BALANCE SHEETS


|                                                                             |                                       | March 31,
     2003
     (Unaudited) |         | December 31,
     2002
     (Audited) |  
|---------------------------------------------------------------------------- | ------------------------------------- | ------------------------------------ | ------- | ------------------------------------- | -
|                                                                             | (in thousands, except per share data)
|Assets                                                                      
|Investments:                                                                 |                                      
|Fixed Maturities:                                                            |                                      
|Available-for-sale, at market value (amortized cost $97,092 and $95,580)     |                                       | $                                    | 100,834 |                                       | $
|Short-term investments                                                       |                                       |                                      | 8,074   |                                       |  
|Other investments (cost $373 and $381)                                       |                                       |                                      | 364     |                                       |  
|                                                                             |                                       |                                      |         |                                      
|Total Investments                                                            |                                       |                                      | 109,272 |                                       |  
|Cash                                                                         |                                       |                                      | 1,612   |                                       |  
|Accrued investment income                                                    |                                       |                                      | 1,358   |                                       |  
|Receivables from agents, net of allowance for doubtful accounts of $4,788    |                                      
|and $4,630                                                                   |                                       |                                      | 5,754   |                                       |  
|Deferred policy acquisition costs                                            |                                       |                                      | 22,387  |                                       |  
|Property and equipment, net of accumulated depreciation of $5,441 and $4,986 |                                       |                                      | 3,367   |                                       |  
|Other assets                                                                 |                                       |                                      | 9,334   |                                       |  
|                                                                             |                                       |                                      |         |                                      
|Total Assets                                                                 |                                       | $                                    | 153,084 |                                       | $
|                                                                             |                                       |                                      |         |                                       |  
|Liabilities, Preferred Stock and Stockholders' Equity                        |                                      
|Liabilities:                                                                 |                                      
|Policy liabilities and accruals:                                             |                                      
|Future policy benefits                                                       |                                       | $                                    | 59,605  |                                       | $
|Claim reserves                                                               |                                       |                                      | 30,098  |                                       |  
|                                                                             |                                       |                                      |         |                                      
|Total Policy Liabilities and Accruals                                        |                                       |                                      | 89,703  |                                       |  
|Accounts payable and other liabilities                                       |                                       |                                      | 10,820  |                                       |  
|Notes payable to bank                                                        |                                       |                                      | 2,000   |                                       |  
|Notes payable to related party                                               |                                       |                                      | 13,939  |                                       |  
|                                                                             |                                       |                                      |         |                                      
|Total Liabilities                                                            |                                       |                                      | 116,462 |                                       |  
|                                                                             |                                       |                                      |         |                                      
|Commitments and Contingencies
     Redeemable Convertible Preferred Stock    |                                       |                                      | 34,764  |                                       |  
|                                                                             |                                       |                                      |         |                                      
|Stockholders' Equity:                                                        |                                      
|Common stock ($.01 par value, 30,000,000 shares authorized;                  |                                      
|6,532,100 and 6,517,100 shares issued and outstanding)                       |                                       |                                      | 65      |                                       |  
|Capital in excess of par value                                               |                                       |                                      | 28,073  |                                       |  
|Accumulated other comprehensive income, net of tax                           |                                       |                                      | 3,733   |                                       |  
|Retained deficit                                                             |                                       |                                      | (30,013 | )                                     |  
|                                                                             |                                       |                                      |         |                                      
|Total Stockholders' Equity                                                   |                                       |                                      | 1,858   |                                       |  
|                                                                             |                                       |                                      |         |                                      
|Total Liabilities, Redeemable Convertible Preferred Stock                    |                                      
|And Stockholders' Equity                                                     |                                       | $                                    | 153,084 |                                       | $
|                                                                             |                                       |                                      |         |                                      

See the Notes to the
Condensed Consolidated Financial Statements.

ASCENT ASSURANCE, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)

|                                        |                                       | Three Months Ended
     March 31, |       
|--------------------------------------- | ------------------------------------- | --------------------------------- | ------
|                                        |                                       | 2003                              |       
|                                        | (in thousands, except per share data)
|Revenues:                               |                                      
|Premiums:                               |                                      
|First-year                              |                                       | $                                 | 5,386 
|Renewal                                 |                                       |                                   | 20,923
|                                        |                                       |                                   |       
|Total premiums                          |                                       |                                   | 26,309
|Net investment income                   |                                       |                                   | 1,680 
|Fee and service income                  |                                       |                                   | 2,651 
|Other insurance revenues                |                                       |                                   | 617   
|Net realized gain on investments        |                                       |                                   | 109   
|                                        |                                       |                                   |       
|Total revenue                           |                                       |                                   | 31,366
|                                        |                                       |                                   |       
|Benefits, claims and expenses:          |                                      
|Benefits and claims                     |                                       |                                   | 17,946
|Decrease in deferred acquisition costs  |                                       |                                   | 159   
|Commissions                             |                                       |                                   | 3,235 
|General and administrative expenses     |                                       |                                   | 5,592 
|Fee and service operating expense       |                                       |                                   | 2,677 
|Taxes, licenses and fees                |                                       |                                   | 959   
|Interest expense on notes payable       |                                       |                                   | 609   
|                                        |                                       |                                   |       
|Total expenses                          |                                       |                                   | 31,177
|Income (loss) before income taxes       |                                       |                                   | 189   
|Federal income tax expense (benefit)    |                                       |                                   | -     
|                                        |                                       |                                   |       
|Net income (loss)                       |                                       | $                                 | 189   
|Preferred stock dividends               |                                       |                                   | 869   
|                                        |                                       |                                   |       
|Loss applicable to common stockholders  |                                       | $                                 | (680  
|                                        |                                       |                                   |       
|Basic and diluted loss per common share |                                       | $                                 | (.10  
|                                        |                                       |                                   |       
|Weighted average shares outstanding:    |                                      
|Basic                                   |                                       |                                   | 6,527 
|                                        |                                       |                                   |       
|Diluted                                 |                                       |                                   | 6,527 
|                                        |                                       |                                   |       

See the Notes to the
Condensed Consolidated Financial Statements.

ASCENT ASSURANCE, INC.CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(Unaudited)

|                                                     |  | Three Months Ended
     March 31, |     
|---------------------------------------------------- |  | --------------------------------- | ----
|                                                     |  | 2003                              |     
|                                                     |  | (in thousands)                   
|                                                    
|Net income (loss)                                    |  | $                                 | 189 
|Other comprehensive income (loss):                   | 
|Unrealized holding gain (loss) arising during period |  |                                   | 385 
|Reclassification adjustment of gain on sales of      | 
|investments included in net income (loss)            |  |                                   | (109
|                                                     |  |                                   |     
|Comprehensive income (loss)                          |  | $                                 | 465 
|                                                     |  |                                   |     

See the Notes to the
Condensed Consolidated Financial Statements.



ASCENT ASSURANCE, INC.CONSOLIDATED STATEMENT
OF CHANGES IN STOCKHOLDERS EQUITY(Unaudited) 

(in thousands, except share data)

|                                     |  | Common Stock
     Shares          Amount |  | Capital
     in Excess of
     Par Value |  | Accumulated
     Other
     Comprehensive
     Income |  | Retained
     (Deficit)
     Earnings |        | Total
     Stockholders'
     Equity | 
|------------------------------------ |  | ---------------------------------------- |  | ---------------------------------------- |  | ----------------------------------------------------- |  | ------------------------------------- | ------ | ------------------------------------ | 
|Balance at December 31, 2002         |  | 6,517,100                                |  | $                                        |  | 65                                                    |  | $                                     | 28,072 |                                      | 
|Net income                           |  |                                          |  |                                          |  |                                                       |  |                                       |        |                                      | 
|Preferred stock dividend             |  |                                          |  |                                          |  |                                                       |  |                                       |        |                                      | 
|Other comprehensive gain,
net of tax |  |                                          |  |                                          |  |                                                       |  |                                       |        |                                      | 
|Amortization of unearned             | 
|compensation                         |  |                                          |  |                                          |  |                                                       |  |                                       | 1      |                                      | 
|Common stock issued                  |  | 15,000                                   |  |                                          |  | -                                                     |  |                                       |        |                                      | 
|                                     |  |                                          |  |                                          |  |                                                       |  |                                       |        |                                      | 
|Balance at March 31, 2003            |  | 6,532,100                                |  | $                                        |  | 65                                                    |  | $                                     | 28,073 |                                      | 
|                                     |  |                                          |  |                                          |  |                                                       |  |                                       |        |                                      | 

See the Notes to the
Condensed Consolidated Financial Statements.



ASCENT ASSURANCE, INC.CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOW(Unaudited)

|                                                                                                     |  | Three Months Ended
     March 31, |        
|---------------------------------------------------------------------------------------------------- |  | --------------------------------- | -------
|                                                                                                     |  | 2003                              |        
|                                                                                                     |  | (in thousands)                   
|                                                                                                    
|Cash Flow From Operating Activities:                                                                 | 
|Net income (loss)                                                                                    |  | $                                 | 189    
|Adjustments to reconcile net income (loss) to cash
     provided by (used for) operating activities:
|(Increase) decrease in accrued investment income                                                     |  |                                   | (46    
|Decrease in deferred acquisition costs                                                               |  |                                   | 159    
|Decrease (increase) in receivables from agents                                                       |  |                                   | 386    
|Provision for uncollectible agent receivables                                                        |  |                                   | 158    
|(Increase) decrease in other assets                                                                  |  |                                   | (30    
|Decrease in policy liabilities & accruals                                                            |  |                                   | (1,856 
|Increase (decrease) in accounts payable and other liabilities                                        |  |                                   | 1,285  
|Other, net                                                                                           |  |                                   | 932    
|                                                                                                     |  |                                   |        
|Net Cash Provided By (Used For) Operating Activities                                                 |  |                                   | 1,177  
|                                                                                                     |  |                                   |        
|Cash Flow From Investing Activities:                                                                 | 
|Purchases of fixed maturity investments                                                              |  |                                   | (27,320
|Sales of fixed maturity investments                                                                  |  |                                   | 23,029 
|Maturities and calls of fixed maturity investments                                                   |  |                                   | 2,717  
|Sales of equity securities                                                                           |  |                                   | 13     
|Net decrease in short term and other investments                                                     |  |                                   | 2,794  
|Property and equipment purchased                                                                     |  |                                   | (16    
|                                                                                                     |  |                                   |        
|Net Cash Provided By Investing Activities                                                            |  |                                   | 1,217  
|                                                                                                     |  |                                   |        
|Cash Flow From Financing Activities:                                                                 | 
|Issuance of notes payable                                                                            |  |                                   | -      
|Repayment of notes payable                                                                           |  |                                   | (2,660 
|                                                                                                     |  |                                   |        
|Net Cash Used For Financing Activities                                                               |  |                                   | (2,660 
|                                                                                                     |  |                                   |        
|Decrease In Cash During Period                                                                       |  |                                   | (266   
|Cash At Beginning Of Period                                                                          |  |                                   | 1,878  
|                                                                                                     |  |                                   |        
|Cash At End Of Period                                                                                |  | $                                 | 1,612  
|                                                                                                     |  |                                   |        

See the Notes to the
Condensed Consolidated Financial Statements.



ASCENT ASSURANCE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)

# NOTE 1 
DESCRIPTION OF BUSINESS

Ascent Assurance, Inc.
(Ascent) is the successor to a Delaware company incorporated in 1982 as an
insurance holding company. Ascent, through its applicable subsidiaries, is engaged in the
development, marketing, underwriting and administration of medical expense and
supplemental health insurance products, primarily to self-employed individuals and small
business owners (Ascent and its subsidiaries are collectively hereinafter the
Company).

The Companys revenues result
primarily from premiums and fees from the insurance products sold by its wholly owned
subsidiaries National Foundation Life Insurance Company (NFL), Freedom Life
Insurance Company of America (FLICA), National Financial Insurance Company
(NFIC) and American Insurance Company of Texas (AICT, and together
with NFL, NFIC and FLICA, collectively, the Insurance Subsidiaries) and
marketed by NationalCare® Marketing, Inc. (NCM), also a wholly
owned subsidiary. To a lesser extent the Company derives revenue from (i) tele-marketing
services, (ii) printing services, and (iii) renewal commissions received for prior year
sales of insurance products underwritten by unaffiliated insurance carriers.

# NOTE 2  ACCOUNTING
PRINCIPLES

Basis of
Presentation. The accompanying unaudited condensed consolidated financial
statements of the Company have been prepared in accordance with the instructions to Form
10-Q and Rule 10-01 of Regulation S-X, and do not include all of the information and
footnotes required by accounting principles generally accepted in the United States
(GAAP) for complete financial statements. The preparation of financial
statements in conformity with GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the 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. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Certain reclassifications of prior years
amounts have been made to conform to the 2003 financial statement presentation. The
financial statements should be read in conjunction with the consolidated financial
statements and notes thereto included in Ascents Annual Report on Form 10-K for the
year ended December 31, 2002.

Cash
Equivalents. Cash equivalents consist of highly liquid instruments with
maturities at the time of acquisition of three months or less. Cash equivalents are stated
at cost, which approximates market.

Short-Term
Investments. Short-term investments are stated at cost, which approximates
market.

Investments.    
          The Companys fixed maturity portfolio is classified as available-for-sale
          and is carried at estimated market value. Equity securities (common and
          nonredeemable preferred stocks), which are included in other investments, are
          also carried at estimated market value. Changes in aggregate unrealized
          appreciation or depreciation on fixed maturity and equity securities are
          reported directly in stockholders equity, net of applicable deferred
          income taxes and, accordingly, will have no effect on current operations.

Deferred Policy Acquisition
Costs (DPAC). Policy acquisition costs consisting of
commissions and other policy issue costs, which vary with and are primarily related to the
production of new business, are deferred and amortized over periods not to exceed the
estimated premium-paying periods of the related policies. The amortization of these costs
is based on actuarially estimated future premium revenues, and the amortization rate is
adjusted periodically to reflect actual experience. Projected future levels of premium
revenue are estimated using assumptions as to interest, mortality, morbidity and
withdrawals consistent with those used in calculating liabilities for future policy
benefits.

Agent
Receivables. In the ordinary course of business, a subsidiary of Ascent
advances commissions on policies written by its general agencies and their agents. Net
agent receivables were approximately $5.8 million and $6.3 million at March 31, 2003 and
December 31, 2002, respectively. Such subsidiary is reimbursed for these advances from the
commissions earned over the respective policys life. In the event that policies
lapse prior to the time the subsidiary has been fully reimbursed, the general agencies or
the individual agents, as the case may be, are responsible for reimbursing the subsidiary for
the outstanding balance of the commission advances. A reserve for uncollectible
agents balances is routinely established based upon historical experience and
projected commission earnings. As of March 31, 2003 and December 31, 2002, the
Companys allowances for uncollectible commission advances were $4.8 million and $4.6
million, respectively.

Property and Equipment.Property and equipment is stated on the basis of cost and consists
primarily of furniture, fixtures, leasehold improvements and software. Depreciation is
computed principally by the straight-line method for financial reporting purposes using
estimated useful lives of 2 to 10 years.

Future Policy Benefits.Liabilities for future policy benefits not yet incurred are computed
primarily using the net level premium method including actuarial assumptions as to
investment yield, mortality, morbidity, withdrawals, persistency and other assumptions,
which were appropriate at the time the policies were issued. Assumptions used are based on
the Insurance Subsidiaries experience as adjusted to provide for possible adverse
deviation. Generally, these actuarial assumptions are fixed and, absent material adverse
benefit experience, are not adjusted.

Claim Reserves.
Claim reserves represent the estimated liabilities on claims reported plus claims incurred
but not yet reported. The process of estimating claim reserves involves the active
participation of experienced actuarial consultants with input from the underwriting,
claims, and finance departments. The inherent uncertainty in estimating claim reserves is
increased when significant changes occur. Changes impacting the Insurance Subsidiaries
include: (1) changes in economic conditions; (2) changes in state or federal laws and
regulations, particularly insurance reform measures; (3) writings of significant blocks of
new business and (4) significant changes in claims payment patterns as a result of the
implementation of a new claims administration system in May 2000. Because claim reserves
are estimates, management monitors reserve adequacy over time, evaluating new information
as it becomes available and adjusting claim reserves as necessary. Such adjustments are
reflected in current operations.

Notes Payable.
Notes payable are stated at cost, which approximates market.

Federal Income Taxes.The Company records income taxes based on the asset and liability approach,
which requires the recognition of deferred tax liabilities and assets for the expected
future tax consequence of temporary differences between the carrying amounts and the tax
basis of assets and liabilities. The tax effect of future taxable temporary differences
(liabilities) and future deductible temporary differences (assets) are separately
calculated and recorded when such differences arise. A valuation allowance, reducing any
recognized deferred tax asset, must be recorded if it is determined that it is more likely
than not that such deferred tax asset will not be realized.

As of March 31, 2003, the Company has
reported cumulative pre-tax losses since the fresh start date of March 31, 1999.
Realization of the Companys deferred tax asset is dependent upon the return of the
Companys operations to profitability. Projections of future profitability are
significantly discounted when evaluating the recoverability of deferred tax assets and do
not overcome the negative evidence of cumulative losses under GAAP. Accordingly, the
Company has adjusted its deferred tax asset valuation allowance to fully reserve all net
deferred tax assets as of March 31, 2003 and December 31, 2002.

Recognition of Revenue.Premium revenues from insurance contracts are recognized when due from
policyholders. Fee and service income is recognized when earned, the services have been
provided and collectibly is reasonably assured.

Earnings Per Share.Under GAAP, there are two measures of earnings per share: basic
earnings per share and diluted earnings per share. Basic earnings per
share are computed by dividing income available to common shareholders by the weighted
average number of common shares outstanding during the period. Diluted earnings per share
reflect the potential dilution that could occur if securities or other contracts to issue
common stock were converted or exercised. For the first quarter ended March 31, 2003 and
2002, stock options of 974,150 and 1,085,850, respectively, and the conversion of the
preferred stock could potentially dilute basic earnings per share in the future, but were
not included in the computation of diluted earnings per share because to do so would have
been anti-dilutive.

The following table reflects the
calculation of basic and diluted EPS:

|                                       |  | Three Months Ended
     March 31, |      
|-------------------------------------- |  | --------------------------------- | -----
|                                       |  | 2003                              |      
|Net income (loss)                      |  | $                                 | 189  
|Preferred stock dividends              |  |                                   | (869 
|                                       |  |                                   |      
|Loss applicable to common shareholders |  | $                                 | (680 
|                                       |  |                                   |      
|Weighted average shares outstanding:   | 
|Basic                                  |  |                                   | 6,527
|Diluted                                |  |                                   | 6,527
|Basic and diluted loss per share       |  | $                                 | (0.10
|                                       |  |                                   |      

Recently Issued Accounting Pronouncements.

In June 2001, the FASB issued SFAS 142, "Goodwill and Other Intangible  Assets".  SFAS 142 supersedes APB 17, "Intangible  Assets," and
is effective  for fiscal years  beginning  after  December 15, 2001.  SFAS 142  primarily  addresses  the  accounting  for goodwill and
intangible assets  subsequent to their initial  recognition.  SFAS 142 (1) prohibits the amortization of goodwill and  indefinite-lived
intangible  assets,  (2) requires  testing of goodwill and  indefinite-lived  intangible  assets on an annual basis for impairment (and
more  frequently  if the  occurrence  of an event or  circumstance  indicates an  impairment),  (3) requires  that  reporting  units be
identified for the purpose of assessing  potential  future  impairments  of goodwill and (4) removes the  forty-year  limitation on the
amortization  period of  intangible  assets  that have  finite  lives.  The  Company  adopted  SFAS 142 on  January 1, 2002 and did not
recognize an impairment loss. The Company has no goodwill or  indefinite-lived  intangible  assets.  At March 31,2003,  the Company has
identified  intangible  assets  totaling  $1.8 million  included in other assets  representing  the  estimated  present value of future
profits of certain  insurance  policies  acquired  prior to March 1999.  The  Company has  determined  that there is no  indication  of
impairment  related  to these  assets and that the useful  lives  assigned  to the assets are  appropriate.  The  Company  tests  these
intangibles for impairment annually or more frequently if the occurrence of an event or circumstances indicates impairment.

In August 2001,  the FASB issued SFAS No. 143,  "Accounting  for Asset  Retirement  Obligations".  SFAS No. 143 requires  that the fair
value of a liability for an asset  retirement  obligation be recognized in the period in which it is incurred if a reasonable  estimate
of fair value can be made. The  associated  asset  retirement  costs are  capitalized as part of the carrying  amount of the long-lived
asset.  SFAS No. 143 will be effective  for  financial  statements  issued for fiscal years  beginning  after June 15, 2002.  An entity
shall  recognize the  cumulative  effect of adoption of SFAS No. 143 as a change in accounting  principle.  The Company does not expect
the adoption of the statement to materially impact the Company's results of operations and financial position.

In August 2001,  the FASB  approved SFAS No. 144,  "Accounting  for the  Impairment  or Disposal of  Long-Lived  Assets." The Statement
requires  that  long-lived  assets to be disposed of other than by sale be  considered  held and used until they are  disposed of. SFAS
No. 144 requires that  long-lived  assets to be disposed of by sale be accounted for under the  requirements  of SFAS No. 121. SFAS No.
121 requires  that such assets be measured at the lower of carrying  amounts or fair value less cost to sell and to cease  depreciation
(amortization).  SFAS No. 144 requires a  probability-weighted  cash flow estimation  approach in situations where alternative  courses
of action to recover  the  carrying  amount of a  long-lived  asset are under  consideration  or a range of  possible  future cash flow
amounts  are  estimated.  As a result,  discontinued  operations  will no longer be  measured  on a net  realizable  basis,  and future
operating losses will no longer be recognized  before they occur.  Additionally,  goodwill will be removed from the scope SFAS No. 121.
As a result,  goodwill  will not be  required  to be  allocated  to  long-lived  assets to be tested  for  impairment.  SFAS No. 144 is
effective for financial  statements  issued for fiscal years beginning after December 15, 2001, and interim periods within those fiscal
years.  The Company does not expect the  adoption of this  statement to  materially  impact the  Company's  results of  operations  and
financial position.

In April 2002, the FASB issued SFAS No. 145,  "Rescission of FASB Statements No. 4, 44 and 64,  Amendment of FASB Statement No. 13, and
Technical  Corrections".  SFAS No. 145  rescinds  SFAS No. 4, which  required  all gains and losses from  extinguishment  of debt to be
aggregated  and, if material,  classified as an  extraordinary  item,  net of related income tax effect.  As a result,  the criteria in
Opinion 30 will now be used to classify  those gains and losses.  The  provisions of this  Statement  related to the rescission of SFAS
No. 4 shall be applied in fiscal  years  beginning  after May 15, 2002.  SFAS No. 145 amends SFAS No. 13 to require that certain  lease
modifications  that  have  economic  effects  similar  to  sale-leaseback   transactions  be  accounted  for  in  the  same  manner  as
sales-leaseback  transactions.  The provisions of this Statement  related to SFAS No. 13 shall be effective for transactions  occurring
after May 15,  2002.  The  Company  does not expect the  adoption  of the  statement  to  materially  impact the  Company's  results of
operations and financial position.

On June 28,  2002,  the FASB voted in favor of  issuing  SFAS No.  146,  "Accounting  for Exit or  Disposal  Activities".  SFAS No. 146
addresses  significant issues regarding the recognition,  measurement and reporting of costs that are associated with exit and disposal
activities,  including  restructuring  activities  that are currently  accounted for pursuant to the guidance that the Emerging  Issues
Task Force  (EITF) has set forth in the EITF Issue No. 94-3,  "Liability  Recognition  for Certain  Employee  Termination  Benefits and
Other Costs to Exit an Activity  (including  Certain Costs Incurred in a  Restructuring)".  The scope of SFAS No. 146 also includes (1)
costs related to terminating a contract that is not a capital lease and (2) termination  benefits that employees who are  involuntarily
terminated  receive under the terms of a one-time  benefit  arrangement  that is not an ongoing  benefit  arrangement  or an individual
deferred  compensation  contract.  SFAS 146 will be effective for financial statements issued for fiscal years beginning after December
31,  2002.  The Company does not expect the adoption of SFAS No. 146 to  materially  impact the  Company's  results of  operations  and
financial position.

In October 2002, the FASB issued SFAS No. 147, "Acquisitions of Certain Financial  Institution,  an amendment of FASB Statements No. 72
and 144 and FASB  Interpretation  No.  9".  The  statement  removes  acquisitions  of  financial  institutions  from the  scope of FASB
Statements No. 72, and  Interpretation  9 and requires those  transactions  to be accounted for in accordance  with FASB Statements No.
141,  "Business  Combinations",  and No. 142,  Goodwill and Other Intangible  Assets." SFAS No. 147 is effective for acquisitions on or
after  October 1, 2002.  The Company  does not expect the adoption of the  statement  to  materially  impact the  Company's  results of
operations and financial position.

In November 2002, the Financial  Accounting  Standards Board ("FASB") issued FASB  Interpretation  No. 45 ("FIN 45"),  "Guarantees," an
interpretation of FASB Statement No. 5, "Accounting for Contingencies."  This  interpretation  elaborates on the disclosures to be made
by a guarantor in its interim and annual financial  statements about its obligations  under certain  guarantees that it has issued.  It
also clarifies  that a guarantor is required to recognize,  at the inception of certain  guarantees,  a liability for the fair value of
the obligation  undertaken in issuing the guarantees.  This  interpretation  is effective on a prospective  basis for guarantees issued
or modified  after December 31, 2002 and for financial  statements of interim or annual  periods  ending after December 15, 2002.  This
interpretation did not have a material impact on the Company's financial position or results of operations.

In December 2002, the FASB issued SFAS No. 148,  "Accounting and  Stock-Based  Compensation - Transition and Disclosure an amendment of
FASB  Statement No. 123".  This  statement  amends FASB  Statement  No. 123,  "Accounting  for  Stock-Based  Compensation",  to provide
alternative  transition for an entity that  voluntarily  changes to the fair value based method of accounting for stock-based  employee
compensation.  It also  amends the  disclosure  provisions  of that  Statement  to require  prominent  disclosure  about the effects on
reported net income of an entity's  accounting  policy  decisions  with respect to stock-based  employee  compensation.  Finally,  this
statement amends APB Opinion No. 28, "Interim  Financial  Reporting",  to require  disclosure about those effects in interim  financial
information.  SFAS No. 148 is effective  for  financial  statements  for fiscal years ending after  December 15, 2002.  The Company has
complied  with the  requirements  of SFAS No.  148 in the  preparation  of this  statement  (see Note 5 of the  Notes to the  Condensed
Consolidated Financial Statements).

# NOTE 3 
CSFB FINANCING

Ascent received debt financing to
fund an $11 million capital contribution to FLICA in April 2001 from Credit Suisse First
Boston Management Corporation (CSFB), which is an affiliate of Special
Situations Holdings, Inc.  Westbridge (Ascents largest stockholder). The
credit agreement relating to that loan (CSFB Credit Agreement) provided Ascent
with total loan commitments of $11 million, all of which were drawn in April 2001. The
loan bears interest at a rate of 12% per annum and matures in April, 2004. Absent any acceleration following an
event of default, Ascent may elect to pay interest in kind by issuance of additional
notes. During the three months ended March 31, 2003, Ascent issued $410,000 in additional
notes for payment of interest in kind which increased the notes payable balance to CSFB at
March 31, 2003 to approximately $13.9 million. Terms of the
CSFB Credit Agreement are equivalent to terms that exist in arms-length credit
transactions. Ascent must obtain additional financing to retire the note payable when
it matures or restructure the terms of the note.

# NOTE 4 
REDEEMABLE CONVERTIBLE PREFERRED STOCK

The Company has authorized 40,000
shares of non-voting preferred stock. At March 31, 2003, 34,764 shares of preferred stock
were outstanding, all of which are owned by Special Situations Holdings, Inc. 
Westbridge, which is Ascents largest common stockholder and is also an
affiliate of CSFB. Dividends on Ascent's preferred stock are payable in cash or, through issuance of additional shares of preferred stock, at the option
of Ascent. On March 31, 2003, preferred stock dividends accrued in the first quarter of 2003 were paid through the issuance of 868
shares of preferred stock.

The preferred stock is mandatorily
redeemable in cash on March 24, 2004 in an amount equal to the stated value per share plus
all accrued and unpaid dividends thereon to the date of redemption. Ascent must
obtain additional financing to retire the preferred stock when due or restructure the
terms of the preferred stock.

# NOTE 5 EMPLOYEE BENEFIT PLANS

Ascent applies the intrinsic  value method,  in accordance  with APB 25, in accounting for its stock options issued to employees of one
of its subsidiaries and non-employee  directors.  Accordingly,  no compensation expense has been recognized for options granted with an
exercise  price equal to market  value at the date of grant.  Ascent  applies the fair value  method in  accounting  for stock  options
issued to consultants (including marketing agents).

Compensation  cost  recognized  in the  income  statement  for  stock-based  employee  and  consultants  (including  marketing  agents)
compensation awards was approximately $3,000 and $46,000 for the three months ended March 31, 2003 and 2002, respectively.

The following table illustrates the effect on net loss and loss per share if Ascent had applied the fair value  recognition  provisions
of FASB Statement No. 123, Accounting for Stock-Based Compensation, to stock-based employee compensation.

|                                                                                                                                              |  | Three Months Ended March 31 |      
|--------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------- | -----
|                                                                                                                                              |  | 2003                        |      
|Net loss to common stockholders                                                                                                               |  | $                           | (680 
|Total stock-based employee compensation expense
     determined under fair value based method for all
     awards, net of related tax effects |  |                             | (16  
|                                                                                                                                              |  |                             |      
|Pro forma net loss                                                                                                                            |  | $                           | (696 
|                                                                                                                                              |  |                             |      
|Loss per share:                                                                                                                              
|Basic - as reported                                                                                                                           |  | $                           | (0.10
|Basic - pro forma                                                                                                                             |  | $                           | (0.11
|                                                                                                                                             
|Diluted - as reported                                                                                                                         |  | $                           | (0.10
|Diluted - pro forma                                                                                                                           |  | $                           | (0.11

For purposes of pro forma disclosure,
the estimated fair value of the stock compensation is amortized to expense over the
stocks vesting period. The effect on net loss of the stock compensation amortization
for the year presented above is not likely to be representative of the effects on reported
income for future years.

# NOTE 6 
COMMITMENTS AND CONTINGENCIES

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

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

ASCENT ASSURANCE, INC. 

MANAGEMENTS DISCUSSION AND ANALYSIS 

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

# GENERAL

Ascent Assurance, Inc.
(Ascent) is the successor to a Delaware company incorporated in 1982 as an
insurance holding company. Ascent, through its applicable subsidiaries, is engaged in the
development, marketing, underwriting and administration of medical expense and
supplemental health insurance products, primarily to self-employed individuals and small
business owners (Ascent and its subsidiaries are collectively hereinafter the
Company).

The following discussion provides
managements assessment of financial condition at March 31, 2003 as compared to
December 31, 2002 and results of operations for the three months ended March 31, 2003 as
compared to the comparable 2002 periods for the Company. This discussion updates the
Managements Discussion and Analysis of Financial Condition and Results of
Operations in the Companys 2002 Report on Form 10-K and should be read in
conjunction therewith.

Business Overview.The Companys revenues result primarily from premiums and fees from
the insurance products sold by its wholly owned subsidiaries National Foundation Life
Insurance Company (NFL), Freedom Life Insurance Company of America
(FLICA), National Financial Insurance Company (NFIC) and American
Insurance Company of Texas (AICT, and together with NFL, NFIC and FLICA,
collectively, the Insurance Subsidiaries) and marketed by
NationalCare® Marketing, Inc. (NCM), also a wholly owned
subsidiary. To a lesser extent the Company derives revenue from (i) tele-marketing services,
(ii) printing services, and (iii) renewal commissions received for prior year sales of
insurance products for unaffiliated insurance carriers.

The Companys operations are
comprised of one segment, Accident and Health insurance. The principal products currently
marketed by NCM and underwritten by NFL and FLICA are medical expense reimbursement
policies. These products are designed with flexibility as to benefits, deductibles,
coinsurance and premium payments, which can be adapted to meet regional sales or
competitive needs, as well as those of the individual policyholders. The principal product
groups currently underwritten by NFL and FLICA are comprehensive major medical products,
hospital/surgical major medical products and supplemental specified disease products:

|o |  | Comprehensive major medical products are generally designed to reimburse insureds for
eligible expenses incurred for hospital confinement, surgical expenses, physician
services, outpatient services and the cost of medicines.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o |  | Hospital/surgical major medical products are similar to comprehensive major medical
products except that benefits are limited to hospital/surgical services (services such as
routine well care physician visits and prescription drugs are excluded) and deductibles
and coinsurance provisions are generally higher.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o |  | Supplemental
specified disease products include indemnity policies for hospital confinement and
convalescent care for treatment of specified diseases and event specific
policies, which provide fixed benefits or lump sum payments upon diagnosis of certain
types of internal cancer or other catastrophic diseases.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Prior to 1998, the Insurance
Subsidiaries also actively underwrote Medicare Supplement products designed to provide
reimbursement for certain expenses not covered by the Medicare program. The Insurance
Subsidiaries continue to receive premiums on Medicare Supplement policies sold prior to
that date.

Forward-Looking
Statements. Statements contained in this analysis and elsewhere in this
document that are not based on historical information are forward-looking statements and
are based on managements projections, estimates and assumptions. In particular,
forward-looking statements can be identified by the use of words such as may,
will, should, expect, anticipate,
estimate, continue, or similar words. Management cautions readers
regarding its forward-looking statements. The Private Securities Litigation Reform Act of
1995 provides a safe harbor for forward-looking statements. Various statements
contained in the Managements Discussion and Analysis of Results of Operation and
Financial Condition, are forward-looking statements. These forward-looking statements are
based on the intent, belief or current expectations of Ascent and members of its
senior management team. While Ascent management believes that its expectations are based on
reasonable assumptions within the bounds of its knowledge of its business and operations,
prospective investors are cautioned that any such forward-looking statements are not
guarantees of future performance, and involve risks and uncertainties, and that actual
results may differ materially from those contemplated by such forward-looking statements.
Important factors known to management that could cause actual results to differ materially
from those contemplated by the forward-looking statements in this Report include, but are
not limited to:

|o |  | the ability of Ascent to refinance redeemable preferred stock and notes payable maturing
in March 2004 and April 2004, respectively;
|- |  | ------------------------------------------------------------------------------------------------------------------------------------

|o |  | the ability of the Company to renew its existing revolving credit facility for the
financing of commission advances to agents which expires in January 2004;
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------

|o |  | Ascents ability to make capital contributions to its Insurance Subsidiaries in order
that they meet minimum regulatory capital requirements;
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------

|o |  | any limitation imposed on the Insurance Subsidiaries ability to control the impact
of rising health care costs, especially prescription drugs, and rising medical service
utilization rates through product and benefit design, underwriting criteria, premium rate
increases, utilization management and negotiation of favorable provider contracts;
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o |  | the impact of changing health care trends on the Insurance Subsidiaries ability to
accurately estimate claim and settlement expense reserves;
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------

|o |  | developments in health care reform and other regulatory issues, including the Health
Insurance Portability and Accountability Act of 1996 and increased privacy regulation, and
changes in laws and regulations in key states where the Insurance Subsidiaries operate;
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|o |  | default by issuers of fixed maturity investments owned by the Insurance Subsidiaries; and
|- |  | -----------------------------------------------------------------------------------------

|o |  | the loss of key management personnel.
|- |  | -------------------------------------

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



# OPERATING RESULTS

Consolidated results of operations for Ascent are
reported for the three months ended March 31, 2003 and 2002. (In thousands except
insurance operating ratios.)

|                                                  |  | Three Months Ended
     March 31, |       
|------------------------------------------------- |  | --------------------------------- | ------
|                                                  |  | 2003                              |       
|Premiums                                          |  | $                                 | 26,309
|Other                                             |  |                                   | 617   
|                                                  |  |                                   |       
|Total insurance operating revenue                 |  |                                   | 26,926
|Net investment income                             |  |                                   | 1,680 
|                                                  |  |                                   |       
|Total insurance revenues                          |  |                                   | 28,606
|Benefits and claims                               |  |                                   | 17,946
|Commissions                                       |  |                                   | 3,235 
|Decrease in deferred acquisition costs            |  |                                   | 159   
|General and administrative expense                |  |                                   | 5,592 
|Taxes, licenses and fees                          |  |                                   | 959   
|Interest expense on bank facilities               |  |                                   | 35    
|                                                  |  |                                   |       
|Total insurance operating expenses                |  |                                   | 27,926
|                                                  |  |                                   |       
|Insurance operating results                       |  |                                   | 680   
|                                                  |  |                                   |       
|Fee and service income                            |  |                                   | 2,651 
|Fee and service expenses                          |  |                                   | 2,677 
|                                                  |  |                                   |       
|Fee and service results                           |  |                                   | (26   
|                                                  |  |                                   |       
|Net realized gain on investments                  |  |                                   | 109   
|Interest expense on note payable to related party |  |                                   | (574  
|                                                  |  |                                   |       
|Income (loss) before income taxes                 |  |                                   | 189   
|Income tax expense (benefit)                      |  |                                   | -     
|                                                  |  |                                   |       
|Net income (loss)                                 |  | $                                 | 189   
|Preferred stock dividends                         |  |                                   | (869  
|                                                  |  |                                   |       
|Net loss to common shareholders                   |  | $                                 | (680  
|                                                  |  |                                   |       
|Insurance operating ratios*                      
|Benefits and claims                               |  |                                   | 68.2% 
|Commissions                                       |  |                                   | 12.3% 
|Decrease in deferred acquisition costs            |  |                                   | 0.6%  
|General and administrative expenses               |  |                                   | 20.8% 
|Taxes, licenses and fees                          |  |                                   | 3.6%  
|                                                  | 

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



Overview.    
          For the first quarter of 2003, net income was $189,000 compared to a net loss of
          ($359,000) for the corresponding period in 2002. The $548,000 increase in net
          income was primarily due to improved insurance operating results.

The $722,000 improvement in insurance
operating results is principally attributable to a 4.3 percentage point reduction in the
benefit and claims to premium ratio, due to a favorable change in major medical product
mix. Since July 2000, NFL and FLICA have been marketing a new major medical policy in all
significant marketing regions. This new product was designed to produce a substantially
lower benefits and claims to premium ratio than previously marketed major medical
products.

Fee and service results decreased
$185,000 for 2003 compared to 2002 principally due to the impact of the extended
economic downturn on Ascents printing and telemarketing subsidiaries. These
subsidiaries have been impacted by a reduction in the number of customers as well as
reduced order volume from current customers and have also experienced reduced profit
margins.

Interest expense on the note payable
to related party increased to $574,000 in the first quarter of 2003 from $527,000 in the
first quarter of 2002 due to the increase in the note payable balance to $13.9 million as
of March 31, 2003 from $12.3 million as of March 31, 2002 for interest paid in kind. In
addition, dividends on the redeemable convertible preferred stock increased during the
first quarter 2003 due to the payment of such dividends in kind. At March 31, 2003, total
redeemable convertible preferred stock outstanding was $34.8 million. The redeemable
preferred stock and note payable mature in March 2004 and April 2004, respectively.
Failure of Ascent to successfully refinance these facilities could have a material adverse
impact on Ascents liquidity, capital resources and results of operations (see
Liquidity, Capital Resources and Statutory Capital and Surplus.)

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

Premiums.    
          Premium revenue, in thousands, for each major product line is set forth below:

|                                |  | Three Months Ended
     March 31,
|------------------------------- |  | ---------------------------------
|                                |  | 2003                             
|Major medical:                  |  |                                  
|First-year                      |  | $                                
|Renewal                         |  |                                  
|                                |  |                                  
|Subtotal                        |  |                                  
|                                |  |                                  
|Supplemental specified disease: |  |                                  
|First-year                      |  |                                  
|Renewal                         |  |                                  
|                                |  |                                  
|Subtotal                        |  |                                  
|                                |  |                                  
|Medicare supplement:            |  |                                  
|Renewal                         |  |                                  
|                                |  |                                  
|Other                           |  |                                  
|                                |  |                                  
|Consolidated Premium Revenue    |  | $                                
|                                |  |                                  

Total premiums decreased $2.6
million, or 9.1%, for the first quarter of 2003 as compared to the first quarter of 2002
as a result of lower new major medical policy sales and the normal lapsing of supplemental
specified disease and medicare supplement policies.

In July 2000, NFL and FLICA began
marketing a new comprehensive major medical policy in all significant marketing regions.
The new major medical policy is designed to produce a substantially lower benefits and
claims to premium ratio than previously marketed products. Annual premiums for new major
medical policies in force at March 31, 2003 were $40.8 million as compared to $33.0
million at March 31, 2002.

Benefits and
Claims. Benefits and claims are comprised of (1) claims paid, (2) changes
in the claim reserves for claims incurred (whether or not reported), and (3) changes in
future policy benefit reserves. The 4.3 percentage point improvement in the ratio of
consolidated benefits and claims to consolidated premiums for the first quarter of 2003 as
compared to the first quarter of 2002 is principally attributable to the new major medical
product introduced in July 2000. As discussed above, this product was designed to produce
a lower benefits and claims to premium ratio. With each quarterly period, the new major
medical product comprises a greater percentage of total major medical premium revenue.

# FINANCIAL CONDITION

Investments.    
          The following table summarizes the Companys fixed maturity securities,
          excluding short-term investments and certificates of deposit. All of the
          Companys fixed maturity securities are classified as available-for-sale
          and are carried at market value. Investments in the debt securities of
          corporations are principally in publicly traded bonds.

|                                                                                                       |  | March 31, 2003       |         | December 31, 2002 |               
|------------------------------------------------------------------------------------------------------ |  | -------------------- | ------- | ----------------- | --------------
|                                                                                                       |  |                      |         |                   |               
|Fixed Maturity Securities                                                                              |  | Market
        Value |         | %                 |               
|                                                                                                       |  |                      |         |                   |               
|                                                                                                       |  | (in thousands)       |         |                   | (in thousands)
|U.S. Government and governmental agencies and
                    authorities (except mortgage-backed) |  | $                    | 24,447  |                   |               
|Finance companies                                                                                      |  |                      | 17,354  |                   |               
|Public utilities                                                                                       |  |                      | 6,498   |                   |               
|Mortgage-backed securities                                                                             |  |                      | 21,615  |                   |               
|States, municipalities and political subdivisions                                                      |  |                      | 1,719   |                   |               
|All other corporate bonds                                                                              |  |                      | 29,201  |                   |               
|                                                                                                       |  |                      |         |                   |               
|Total fixed maturity securities                                                                        |  | $                    | 100,834 |                   |               
|                                                                                                       |  |                      |         |                   |               

The following table indicates by
rating the composition of the Companys fixed maturity securities portfolio,
excluding short-term investments and certificates of deposit.

|                                                   |  | March 31, 2003       |         | December 31, 2002 |               
|-------------------------------------------------- |  | -------------------- | ------- | ----------------- | --------------
|                                                   |  |                      |         |                   |               
|Composition of Fixed Maturity Securities by Rating |  | Market
        Value |         | %                 |               
|                                                   |  |                      |         |                   |               
|                                                   |  | (in thousands)       |         |                   | (in thousands)
|Rating                                            
|Investment grade:                                 
|U.S. Government and agencies                       |  | $                    | 43,374  |                   |               
|AAA                                                |  |                      | 3,825   |                   |               
|AA                                                 |  |                      | 4,810   |                   |               
|A                                                  |  |                      | 29,969  |                   |               
|BBB                                                |  |                      | 16,882  |                   |               
|Non-Investment grade:                             
|BB                                                 |  |                      | 1,408   |                   |               
|B and below                                        |  |                      | 566     |                   |               
|                                                   |  |                      |         |                   |               
|Total fixed maturity securities                    |  | $                    | 100,834 |                   |               
|                                                   |  |                      |         |                   |               

The scheduled contractual maturities
of the Companys fixed maturity securities, excluding short-term investments and
certificates of deposit, at March 31, 2003 and December 31, 2002 are shown in the table
below. Expected maturities may differ from contractual maturities because borrowers may
have the right to call or prepay obligations with or without penalties.

|                                                     |  | March 31, 2003       |         | December 31, 2002 |               
|---------------------------------------------------- |  | -------------------- | ------- | ----------------- | --------------
|                                                     |  |                      |         |                   |               
|Composition of Fixed Maturity Securities by Maturity |  | Market
        Value |         | %                 |               
|                                                     |  |                      |         |                   |               
|                                                     |  | (in thousands)       |         |                   | (in thousands)
|Scheduled Maturity                                  
|                                                    
|Due in one year or less                              |  | $                    | 5,638   |                   |               
|Due after one year through five years                |  |                      | 37,357  |                   |               
|Due after five years through ten years               |  |                      | 22,627  |                   |               
|Due after ten years                                  |  |                      | 13,597  |                   |               
|Mortgage-backed and asset-backed securities          |  |                      | 21,615  |                   |               
|                                                     |  |                      |         |                   |               
|Total fixed maturity securities                      |  | $                    | 100,834 |                   |               
|                                                     |  |                      |         |                   |               

Claim Reserves.
Claim reserves are established by the Insurance Subsidiaries for benefit payments which
have already been incurred by the policyholder but which have not been paid by the
applicable Insurance Subsidiary. Claim reserves totaled $30.1 million at March 31, 2003 as
compared to $30.9 million at December 31, 2002. The process of estimating claim reserves
involves the active participation of experienced actuarial consultants with input from the
underwriting, claims, and finance departments. The inherent uncertainty in estimating
claim reserves is increased when significant changes occur. Changes impacting the
Insurance Subsidiaries include: (1) changes in economic conditions; (2) changes in state
or federal laws and regulations, particularly insurance reform measures; (3) writings of
significant blocks of new business and (4) significant changes in claims payment patterns
as a result of the implementation of a new claims administration system in May 2000.
Because claim reserves are estimates, management monitors reserve adequacy over time,
evaluating new information as it becomes available and adjusting claim reserves as
necessary. Such adjustments are reflected in current operations.

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

Future Policy Benefit
Reserves. Future policy benefit reserves are established by each applicable
Insurance Subsidiary for benefit payments that have not been incurred but which are
estimated to be incurred in the future. Future policy benefit reserves totaled $59.6
million at March 31, 2003 as compared to $60.7 million at December 31, 2002. Future policy
benefit reserves are calculated according to the net level premium reserve method and are
equal to the discounted present value of the applicable Insurance Subsidiarys
expected future policyholder benefits minus the discounted present value of its expected
future net premiums. These present value determinations are based upon assumed fixed
investment yields, the age of the insured(s) at the time of policy issuance, expected
morbidity and persistency rates, and expected future policyholder benefits. Except for
purposes of reporting to insurance regulatory authorities and for tax filing, policy
benefit reserves are determined in accordance with GAAP.

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

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

# LIQUIDITY, CAPITAL
RESOURCES AND STATUTORY CAPITAL AND SURPLUS

General.    
          The primary sources of cash for the Companys consolidated operations are
          premiums and fees from insurance policies, sales and maturity of invested assets
          and investment income while the primary uses of cash are payments of insurance
          policy benefits, claims and commissions, and general operating expenses. Net
          cash provided by (used for) operations totaled $1.2 million and ($881,000) for
          the first quarter ended March 31, 2003 and March 31, 2002, respectively. The
          increase in cash provided by operations is principally due to the timing of
          payments of accounts payable and other liabilities and decreases in the cash
          basis ratio of benefits and claims to premiums.

Ascent is a holding company, the
principal assets of which consist of the capital stock of its subsidiaries and invested
assets. Ascents principal sources of funds are comprised of dividends from its
non-insurance subsidiaries. The Insurance Subsidiaries are precluded from paying dividends
without prior approval of the Texas Insurance Commissioner as the Insurance
Subsidiaires earned surplus is negative due to statutory losses incurred in recent
years. Ascents principal uses of cash are for general and administrative expenses
and to fund capital contributions to the Insurance Subsidiaries necessary to maintain
certain statutory capital and surplus requirements. Ascent elected to fund capital
contributions to the Insurance Subsidiaries totaling approximately $252,000 and $1.8
million during the first quarter ended March 31, 2003 and March 31, 2002, respectively. As
of March 31, 2003, Ascent had approximately $1.3 million in unrestricted cash and invested
assets. In May 2003, Ascent funded contributions of $400,000 to one of its subsidiaries.

The statutory losses incurred during
recent years resulted from (1) significant losses for comprehensive major medical products
marketed prior to July 2000 due to higher than expected claims frequency and (2) costs
associated with increased new business production which must be expensed under statutory
accounting (for GAAP, such costs are deferred and amortized as related premiums are
recorded). Claims experience adverse to managements current estimates or adverse
claims experience for other insurance products may cause Ascent to make capital
contributions to the Insurance Subsidiaries in excess of those currently projected for
2003. Additional financing may be required by Ascent in order to make any such
excess contributions. As a result, adverse claims experience could have a
material adverse effect on the Insurance Subsidiaries ability to meet minimum
statutory capital and surplus requirements and maintain new business production at current
levels and therefore, have a material adverse impact on Ascents liquidity and
capital resources and results of operations.

CSFB Financing and Preferred
Stock. Ascent received debt financing to fund an $11 million capital
contribution to FLICA in April 2001 from Credit Suisse First Boston Management
Corporation, (CSFB), which is an affiliate of Special Situations Holdings,
Inc.  Westbridge (Ascents largest common stockholder). The Credit Agreement
relating to that loan (CSFB Credit Agreement) provided Ascent with total loan
commitments of $11 million, all of which were drawn in April 2001. The loan bears interest
at a rate of 12% per annum and matures in April 2004. Absent any acceleration following an
event of default, Ascent may elect to pay interest in kind by issuance of additional
notes. During the three months ended March 31, 2003, Ascent issued $410,000 in additional
notes for payment of interest in kind which increased the notes payable balance to CSFB at
March 31, 2003 to approximately $13.9 million. The CSFB Credit Agreement provides for a
facility fee of $1.5 million which is payable upon maturity or upon a change in control,
as defined. This facility fee is being accrued as additional interest payable over the
term of the loan. Ascents obligations to CSFB are secured, pursuant to a guaranty
and security agreement and pledge agreements, by substantially all of the assets of Ascent
and its subsidiaries (excluding the capital stock and the assets of AICT, FLICA, NFL,
NFIC, NCM, Ascent Funding, Inc. and Ascent Management, Inc., some or all of which is
pledged as collateral for bank financing described below). Ascents subsidiaries
(other than those listed above) have also guaranteed Ascents obligations under the
CSFB Credit Agreement. At March 31, 2003, there were no events of default.

Ascents redeemable convertible
preferred stock is 100% owned by Special Situations Holdings, Inc.  Westbridge,
which is Ascents largest common stockholder and is also an affiliate of CSFB.
Dividends may be paid in cash or by issuance of additional shares of preferred stock, at
Ascents option. Ascent paid preferred stock dividends through the issuance of
868 and 785 additional shares of preferred stock in the first quarter of 2003 and 2002,
respectively. The preferred stock is mandatorily redeemable in cash in March 2004.

Ascent must obtain additional
financing to retire the redeemable preferred stock and note payable when due in early 2004
or restructure these facilities. Failure of Ascent to successfully refinance these
facilities could have a material adverse impact on Ascents liquidity, capital
resources and results of operation.

Bank Financing.
The majority of commission advances to NCMs agents are financed through Ascent
Funding, Inc. (AFI), an indirect wholly owned subsidiary of Ascent. AFI has
entered into a Credit Agreement (the Credit Agreement) with LaSalle Bank, NA
(LaSalle), which currently provides AFI with a $4.5 million revolving loan
facility, the proceeds of which are used to purchase agent advance receivables from NCM
and other affiliates. As of March 31, 2003, $2.0 million was outstanding under the Credit
Agreement. AFI incurs a commitment fee on the unused portion of the Credit Agreement at a
rate of 0.50% per annum.

The Credit Agreement expires January
5, 2004, at which time the outstanding principal and interest will be due and payable.
Under the terms of the Credit Agreement, agent advances made within six months of the
expiration date (after July 5, 2003) are not eligible for financing. Failure of the
Company to obtain additional renewals of the Credit Agreement could have a material
adverse impact on Ascents liquidity and capital resources. Lack of adequate
financing would impair the Companys ability to pay competitive commission advances
and reduce new business sales needed to replace the normal lapsing of existing policies.
Therefore, failure by Ascent to maintain new business sales at current levels would result
in declining premium revenue and could have a material adverse impact on Ascents
results of operations.

AFIs obligations under the
Credit Agreement are secured by liens upon substantially all of AFIs assets.
AFIs principal assets at March 31, 2003 are net agent receivables of $5.8 million.
In addition, Ascent has guaranteed AFIs obligation under the Credit Agreement, and
has pledged all of the issued and outstanding shares of the capital stock of AFI, NFL,
FLICA and NFIC as collateral for that guaranty (the Guaranty Agreement). As of
March 31, 2003, there were no events of default under the Credit or Guaranty Agreements.

On January 31, 2003, pursuant to the
terms of the Credit Agreement, AFI liquidated a $2.6 million cash collateral account
pledged to LaSalle. Pursuant to an agreement with LaSalle, AFI paid a dividend of $1.6
million to Ascent. The proceeds of this dividend were used to fully pay off Ascent
Management Inc.s (AMI) term loan facility with LaSalle on January 31,
2003. In addition, AMIs assets and capital stock were pledged as collateral under
the Credit Agreement. The remaining proceeds from the cash collateral account were
principally used to reduce the outstanding loan balance under the Credit Agreement.

Inflation.    
          Inflation impacts claim costs and overall operating costs and, although
          inflation has been lower the last few years, hospital and medical costs have
          still increased at a higher rate than general inflation, especially prescription
          drug costs. New, more expensive and wider use of pharmaceuticals is inflating
          health care costs. The Insurance Subsidiaries will continue to establish premium
          rates in accordance with trends in hospital and medical costs along with
          concentrated efforts in various cost containment programs. However, there can be
          no assurance that these efforts will fully offset the impact of inflation or
          that increases in premium rates will equal or exceed increasing health care
          costs.

# ITEM 3 
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Ascent has no material changes to the
disclosure concerning market risk made in its Annual Report on Form 10-K for the year
ended December 31, 2002.

# ITEM 4  CONTROLS
AND PROCEDURES

Evaluation of disclosure
controls and procedures. Ascents management, including the Chief Executive
Officer and Chief Financial Officer, have evaluated the effectiveness of the
Companys disclosure controls and procedures (as defined in Rules
13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934 (the Exchange
Act)) as of a date (the Evaluation Date) within 90 days before the
filing date of this quarterly report. In designing and evaluating the disclosure controls
and procedures, management recognizes that any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurance of achieving the desired
control objectives, as the Companys control and procedures are designed to do, and
management necessarily was required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures. Based on such evaluation, Ascents
Chief Executive Officer and Chief Financial Officer have concluded that, as of the
Evaluation Date, the Companys disclosure controls and procedures were effective to
ensure that information required to be disclosed by Ascent in the reports that it files or
submits under the Exchange Act is recorded, processed, summarized and reported within the
time periods specified in the rules and forms of the Securities and Exchange Commission.

Changes in internal
controls. There were no significant changes in the Companys internal
controls or in other factors that could significantly affect these controls during the
period covered by this quarterly report.

# ASCENT ASSURANCE, INC.

# PART II

---

# ITEM 6  EXHIBITS
AND REPORTS ON FORM 8-K

# (a) Exhibits

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

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

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

| | 3.3 |  | Amendment to the By-Laws of Ascent, effective as of April 5, 2000 (incorporated by
reference to Exhibit 3.3 to the Companys Quarterly Report on Form 10-Q for the
quarter ended June 30, 2000).
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

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

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

| | 10.1 |  | First Amendment to Guaranty Agreement dated as of March 24, 1999 between Westbridge
Capital Corp. in favor of LaSalle National Bank (incorporated by reference to Exhibit
10.12 to the Companys Annual Report on Form 10-K for the year ended December 31,
1998).
| | ---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.2 |  | Registration Rights Agreement dated as of March 24, 1999 between Ascent and Special
Situations Holdings, Inc.  Westbridge (incorporated by reference to Exhibit 10.13 to
the Companys Annual Report on Form 10-K for the year ended December 31, 1998).
| | ---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.3 |  | 1999 Stock Option Plan dated as of March 24, 1999 (incorporated by reference to
Ascents Schedule 14A filed with the Commission on April 30, 1999)
| | ---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------

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

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

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

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

| | 10.8 |  | Extension of Employment Agreement, dated as of September 15, 1998, by and among Westbridge
Capital Corp., Westbridge Management Corp. and Mr. Patrick J. Mitchell (incorporated by
reference to Exhibit 10.8 to Ascents Quarterly Report on Form 10-Q for the quarter
ended June 30, 2000).
| | ---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

| | 10.11 |  | First Amendment to Pledge Agreement, dated as of November 30, 2000, by and among, Ascent
and LaSalle Bank National Association (incorporated by reference to Exhibit 10.22 to
Ascents Annual Report on Form 10-K for the year ended December 31, 2000).
| | ----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.12 |  | Fifth Amendment to Guaranty Agreement, dated as of November 30, 2000, by and among, Ascent
and LaSalle Bank National Association (incorporated by reference to Exhibit 10.23 to
Ascents Annual Report on Form 10-K for the year ended December 31, 2000).
| | ----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.13 |  | Third Amendment to Credit Agreement, dated as of November 30, 2000, by and among, Ascent
Funding, Inc. and LaSalle Bank National Association (incorporated by reference to Exhibit
10.24 to Ascents Annual Report on Form 10-K for the year ended December 31, 2000).
| | ----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.14 |  | First Amendment to Security Agreement, dated as of November 30, 2000, by and among, Ascent
Management, Inc. and LaSalle Bank National Association (incorporated by reference to
Exhibit 10.25 to Ascents Annual Report on Form 10-K for the year ended December 31,
2000).
| | ----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.15 |  | Credit Agreement dated April 17, 2001 between Ascent Assurance, Inc. and Credit Suisse
First Boston Management Corporation (incorporated by reference to Exhibit 10.1 to
Ascents Form 8-K filed April 25, 2001).
| | ----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.16 |  | Guaranty and Security  Agreement dated April 17, 2001 among Foundation  Financial  Services,  Inc.,  NationalCare(R)Marketing,
         Inc.,  LifeStyles  Marketing Group, Inc.,  Precision Dialing Service,  Inc., Senior Benefits,  L.L.C., and Westbridge Printing
         Services,  Inc. and Credit Suisse First Boston Management  Corporation  (incorporated by reference to Exhibit 10.2 to Ascent's
         Form 8-K filed April 25, 2001).
| | ----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.17 |  | Pledge Agreement dated April 17, 2001 between Ascent Assurance, Inc. and Credit Suisse
First Boston Management Corporation (incorporated by reference to Exhibit 10.3 to
Ascents Form 8-K filed April 25, 2001).
| | ----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.18 |  | Sixth Amendment to Guaranty Agreement and Waiver dated April 17, 2001 between Ascent
Assurance Inc. and LaSalle Bank National Association (incorporated by reference to Exhibit
10.4 to Ascents Form 8-K filed April 25, 2001).
| | ----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.19 |  | Fourth Amendment to Credit Agreement dated April 17, 2001 between Ascent Funding, Inc. and
LaSalle Bank National Association (incorporated by reference to Exhibit 10.5 to
Ascents Form 8-K filed April 25, 2001).
| | ----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.20 |  | Fifth Amendment to Credit Agreement dated November 27, 2001 between Ascent Funding, Inc.
and LaSalle Bank National Association (incorporated by reference to Exhibit 10.31 to
Ascents Annual Report on Form 10-K for the year ended December 31, 2001).
| | ----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.21 |  | Employment Agreement, dated September 16, 2001, by and among Ascent, Ascent Management,
Inc., and Mr. Patrick J. Mitchell (incorporated by reference to Exhibit 10.32 to
Ascents Annual Report on Form 10-K for the year ended December 31, 2001).
| | ----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.22 |  | Employment Agreement, dated September 16, 2001, by and among Ascent, Ascent Management,
Inc., and Mr. Patrick H. ONeill (incorporated by reference to Exhibit 10.33 to
Ascents Annual Report on Form 10-K for the year ended December 31, 2001).
| | ----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.23 |  | Sixth Amendment to Credit Agreement dated May 15, 2002 between Ascent Funding, Inc. and
LaSalle Bank National Association (incorporated by reference to Exhibit 10.23 to
Ascents Quarterly Report on Form 10-Q for the quarter ended June 30, 2002).
| | ----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.24 |  | Seventh Amendment to Credit Agreement dated November 20, 2002 between Ascent Funding, Inc.
and LaSalle Bank National Association (incorporated by reference to Exhibit 10.35 to
Ascents Annual Report on Form 10-K for the year ended December 31, 2002).
| | ----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.25 |  | Employment Agreement dated as of December 18, 2002, by and between
Ascent, Ascent Management, Inc. and Mr. Patrick J. Mitchell (incorporated by reference to Exhibit 10.36 to Ascents Annual Report on
                    Form 10-K for the year ended December 31, 2002).
| | ----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.26 |  | Employment Agreement  dated as of December  18, 2002, by and between Ascent, Ascent Management, Inc. and Mr. Patrick H.
         O'Neill. (incorporated  by reference to Exhibit 10.37 to Ascent's Annual Report on Form 10-K for the year ended December 31,
         2002).
| | ----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.27 |  | Employment  Agreement dated as of January 10, 2003, by and between Ascent,  Ascent  Management,  Inc. and Mr. Konrad H. Kober.
         (incorporated by reference to Exhibit 10.38 to Ascent's Annual Report on Form 10-K for the year ended December 31, 2002).
| | ----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.28 |  | Employment Agreement dated as of January 10, 2003, by and between Ascent,  Ascent Management,  Inc. and Ms. Cynthia B. Koenig.
         (incorporated by reference to Exhibit 10.39 to Ascent's Annual Report on Form 10-K for the year ended December 31, 2002).
| | ----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.29 |  | Seventh Amendment to Guaranty Agreement dated January 27, 2003 between Ascent and LaSalle
Bank National Association. (incorporated by reference to Exhibit 10.40 to Ascents
Annual Report on Form 10-K for the year ended December 31, 2002).
| | ----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.30 |  | Eighth Amendment to Credit Agreement dated January 27, 2003 between Ascent Funding, Inc. and LaSalle Bank National Association
(incorporated by reference to Exhibit 10.41 to Ascents Annual Report on
                    Form 10-K for the year ended December 31, 2002).
| | ----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.31 |  | Second  Amendment to Security  Agreement  dated  January 27, 2003 between  Ascent  Management,  Inc. and LaSalle Bank National
         Association. (incorporated  by reference to Exhibit 10.42 to Ascent's Annual Report on Form 10-K for the year ended December
         31, 2002).
| | ----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.32 |  | First Amendment to Pledge Agreement dated January 27, 2003 between Ascent and LaSalle Bank
National Association. (incorporated by reference to Exhibit 10.43 to Ascents Annual
Report on Form 10-K for the year ended December 31, 2002).
| | ----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.33 |  | Termination Agreement dated January 31, 2003 executed by LaSalle Bank National Association
acknowledging payment in full of Ascent Management, Inc. note payable. (incorporated by
reference to Exhibit 10.44 to Ascents Annual Report on Form 10-K for the year ended
December 31, 2002).
| | ----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.34 |  | First Amendment to Credit Agreement dated February 26, 2003 between Ascent and Credit
Suisse First Boston Management Corporation. (incorporated by reference to Exhibit 10.45 to
Ascents Annual Report on Form 10-K for the year ended December 31, 2002).
| | ----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 99.1 |  | Certification of Patrick J. Mitchell, Chairman and Chief Executive Officer and Cynthia B.
Koenig, Senior Vice President, Chief Financial Officer and Treasurer of the Company
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
| | ---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# (b)Reports on Form 8-K

No reports on Form 8-K were filed
during the quarter ended March 31, 2003.

Form 10-Q

Pursuant to the requirements of the
Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.

| | ASCENT ASSURANCE, INC.                                                                                                    
| | --------------------------------------------------------------------------------------------------------------------------
|
| | /s/ Cynthia B. Koenig                                                                                                     
| | Cynthia B. Koenig
Senior Vice President
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)

Dated at Fort Worth, Texas
May 9, 2003



# Certification of
Principal Executive Officer

I, Patrick J. Mitchell, certify that:

|1. |  | I have reviewed this quarterly report on Form 10-Q of Ascent;
|-- |  | -------------------------------------------------------------

|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
               statement of a material fact or, omit to state, a material fact necessary to
               make the statements made, in light of the circumstances under which such
               statements were made, not misleading with respect to the period covered by this
               quarterly report;
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. |  | Based on my knowledge, the financial statements, and other financial information
               included in this quarterly report, fairly present in all material respects the
               financial condition, results of operations and cash flows of Ascent as of, and
               for, the periods presented in this quarterly report;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. |  | Ascents other certifying officers and I are responsible for establishing
               and maintaining disclosure controls and procedures (as defined in Exchange Act
               Rules 13a-14 and 15d-14) for the Company and we have:
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|a) |  | designed such disclosure controls and procedures to ensure that material
                    information relating to the Company, including its consolidated subsidiaries, is
                    made known to us by others within those entities, particularly during the period
                    in which this quarterly report is being prepared;
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|b) |  | evaluated the effectiveness of the Companys disclosure controls and
                    procedures as of a date within 90 days prior to the filing date of this
                    quarterly report (the Evaluation Date); and
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|c) |  | presented in this quarterly report our conclusions about the effectiveness of
                    the disclosure controls and procedures based on our evaluation as of the
                    Evaluation Date;
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. |  | Ascents other certifying officers and I have disclosed, based on our most
               recent evaluation, to the Companys auditors and the audit committee of
               Ascents board of directors (or persons performing the equivalent
               function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|a) |  | all significant deficiencies in the design or operation of internal controls
                    which could adversely affect the Companys ability to record, process,
                    summarize and report financial data and have identified for the Companys
                    auditors any material weaknesses in internal controls; and
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|b) |  | any fraud, whether or not material, that involves management or other employees
                    who have a significant role in the Companys internal controls; and
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6. |  | Ascents other certifying officers and I have indicated in this quarterly
               report whether or not there were significant changes in internal controls or in
               other factors that could significantly affect internal controls subsequent to
               the date of our most recent evaluation, including any corrective actions with
               regard to significant deficiencies and material weaknesses.
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: May 9, 2003

| | /s/ Patrick J. Mitchell                                              
| | ---------------------------------------------------------------------
| | Patrick J. Mitchell
Chairman of the Board and
Chief Executive Officer



# Certification of
Principal Financial Officer

I, Cynthia B. Koenig, certify that:

|1. |  | I have reviewed this quarterly report on Form 10-Q of Ascent;
|-- |  | -------------------------------------------------------------

|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
               statement of a material fact or omit to state a material fact necessary to make
               the statements made, in light of the circumstances under which such statements
               were made, not misleading with respect to the period covered by this quarterly
               report;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. |  | Based on my knowledge, the financial statements, and other financial information
               included in this quarterly report, fairly present in all material respects the
               financial condition, results of operations and cash flows of Ascent as of, and
               for, the periods presented in this quarterly report;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. |  | Ascents other certifying officers and myself are responsible for
               establishing and maintaining disclosure controls and procedures (as defined in
               Exchange Act Rules 13a-14 and 15d-14) for the Company and we have:
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|a) |  | designed such disclosure controls and procedures to ensure that material
                    information relating to the Company, including its consolidated subsidiaries, is
                    made known to us by others within those entities, particularly during the period
                    in which this quarterly report is being prepared;
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|b) |  | evaluated the effectiveness of the Companys disclosure controls and
                    procedures as of a date within 90 days prior to the filing date of this
                    quarterly report (the Evaluation Date); and
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|c) |  | presented in this quarterly report our conclusions about the effectiveness of
                    the disclosure controls and procedures based on our evaluation as of the
                    Evaluation Date;
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. |  | Ascents other certifying officers and I have disclosed, based on our most
               recent evaluation, to the Companys auditors and the audit committee of
               Ascents board of directors (or persons performing the equivalent
               function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|a) |  | all significant deficiencies in the design or operation of internal controls
                    which could adversely affect the Companys ability to record, process,
                    summarize and report financial data and have identified for the Companys
                    auditors any material weaknesses in internal controls; and
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|b) |  | any fraud, whether or not material, that involves management or other employees
                    who have a significant role in the Companys internal controls; and
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6. |  | Ascents other certifying officers and I have indicated in this quarterly
               report whether or not there were significant changes in internal controls or in
               other factors that could significantly affect internal controls subsequent to
               the date of our most recent evaluation, including any corrective actions with
               regard to significant deficiencies and material weaknesses.
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: May 9, 2003

| | /s/ Cynthia B. Koenig                                                         
| | ------------------------------------------------------------------------------
| | Cynthia B. Koenig
Senior Vice President,
Chief Financial Officer and Treasurer