##### Table of Contents



FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549


Quarterly Report Under Section 13 or 15(d) of
The Securities Exchange Act of 1934

For the three months ended March 31, 2003

Commission File Number 2-39729

COTTON STATES LIFE INSURANCE COMPANY




(Exact name of registrant as specified in its charter)


|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|GEORGIA                                                        |  | 58-0830929                             
|                                                               |  |                                        
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification Number)
|                                                               |  |                                        
|244 Perimeter Center Parkway, N.E., Atlanta, Georgia           |  | 30346                                  
|                                                               |  |                                        
|(Address of principal executive offices)                       |  | (Zip Code)                             

Registrants telephone number, including area code: (770) 391-8600

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 twelve months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to the
filing requirements for at least the past 90 days.

YES   x   
NO   o

Indicate by check mark whether the registrant is an accelerated Filer (as
defined in Rule 126.2 of the Exchange Act).

YES   o   
NO   x

The Registrant as of March 31,
2003, has 6,323,737 shares of common stock
outstanding.





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TABLE OF CONTENTS



|                                         |                                                                                                                       |                                                                     |  |  |  |  |  | 
|---------------------------------------- | --------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------- |  |  |  |  |  | 
|                                         |                                                                                                                       | INDEPENDENT ACCOUNTANTS REVIEW REPORT                             
|                                         | ITEM I. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS                                                                  
|                                         |                                                                                                                       | Consolidated Condensed Balance Sheets                              
|                                         |                                                                                                                       | Unaudited Consolidated Condensed Statements of Earnings            
|                                         |                                                                                                                       | Unaudited Consolidated Condensed Statements of Cash Flows          
|                                         |                                                                                                                       | Unaudited Consolidated Condensed Statements of Comprehensive Income
|                                         |                                                                                                                       | Notes to Unaudited Consolidated Condensed Financial Statements     
|                                         | ITEM 2  MANAGEMENTS DISCUSSION AND ANALYSIS OF CONSOLIDATED CONDENSED FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                         | ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                  
|                                         | ITEM 4. CONTROLS AND PROCEDURES                                                                                      
|PART II  OTHER INFORMATION             
|                                         | Item 1. Legal Proceedings                                                                                            
|                                         | Item 2. Changes in Securities and Use of Proceeds                                                                    
|                                         | Item 3. Defaults Upon Senior Securities                                                                              
|                                         | Item 4. Submission of Matters to a Vote of Security Holders                                                          
|                                         | Item 5. Other Information                                                                                            
|                                         | Item 6. Exhibits and Reports on Form 8-K                                                                             
|EX-11 Computation of Per Share Earnings 
|EX-15 Consent of Independent Accountants



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COTTON STATES LIFE INSURANCE COMPANY

FORM 10-Q

FOR THE THREE MONTHS ENDED MARCH 31, 2003

INDEX

|                                                                                                                     |                                                                                                              |  |      |   | 
|-------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------ |  | ---- | - | 
|                                                                                                                     |                                                                                                              |  | Page
|                                                                                                                     |                                                                                                              |  |     
|PART 1  FINANCIAL INFORMATION                                                                                       |                                                                                                              |  |      |  
|Item 1. Financial Statements                                                                                         |                                                                                                              |  |      |  
|                                                                                                                     | Independent Accountants Review Report                                                                       |  |      | 1 | 
|                                                                                                                     | Consolidated Condensed Balance Sheets as of
March 31, 2003 and December 31, 2002                             |  |      | 2 | 
|                                                                                                                     | Consolidated Condensed Statements of Earnings for the
Three Months Ended March 31, 2003 and 2002             |  |      | 3 | 
|                                                                                                                     | Consolidated Condensed Statements of Cash Flows for the
Three Months Ended March 31, 2003 and 2002           |  |      | 4 | 
|                                                                                                                     | Consolidated Condensed Statements of Comprehensive Income
for the Three Months Ended March 31, 2003 and 2002 |  |      | 5 | 
|                                                                                                                     | Notes to Unaudited Consolidated Condensed Financial Statements                                               |  |      | 6 | 
|Item 2. Managements Discussion and Analysis of Consolidated Condensed Financial
Condition and Results of Operations |                                                                                                              |  | 11   |  
|Item 3. Quantitative and Qualitative Disclosures about Market Risk                                                   |                                                                                                              |  | 19   |  
|Item 4. Controls and Procedures                                                                                      |                                                                                                              |  | 20   |  
|PART II  OTHER INFORMATION                                                                                          |                                                                                                              |  |      |  
|Item 1. Legal Proceedings                                                                                            |                                                                                                              |  | 21   |  
|Item 2. Changes in Securities and Use of Proceeds                                                                    |                                                                                                              |  | 21   |  
|Item 3. Defaults Upon Senior Securities                                                                              |                                                                                                              |  | 21   |  
|Item 4. Submission of Matters to a Vote of Security Holders                                                          |                                                                                                              |  | 21   |  
|Item 5. Other Information                                                                                            |                                                                                                              |  | 21   |  
|Item 6. Exhibits and Reports on Form 8-K                                                                             |                                                                                                              |  | 21   |  
|SIGNATURES                                                                                                           |                                                                                                              |  | 21   |  





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INDEPENDENT ACCOUNTANTS REVIEW REPORT

To the Board of Directors and Shareholders of
Cotton States Life Insurance Company:

We have reviewed the accompanying consolidated condensed balance sheet of
Cotton States Life Insurance Company and subsidiaries as of March 31, 2003, and
the related consolidated condensed statements of earnings, comprehensive income
and cash flows for the three-month period ended March 31, 2003. These financial
statements are the responsibility of the Companys management. The consolidated
condensed statements of earnings, comprehensive income and cash flows for the
three-month period ended March 31, 2002 were reviewed by other accountants
whose report (dated April 22, 2002) stated that they were not aware of any
material modifications that should be made to those statements for them to be
in conformity with accounting principles generally accepted in the United
States.

We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data, and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with auditing standards generally accepted in the United States,
which will be performed for the full year with the objective of expressing an
opinion regarding the financial statements taken as a whole. Accordingly, we
do not express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to the accompanying consolidated condensed financial statements at
March 31, 2003, and for the three-month period then ended for them to be in
conformity with accounting principles generally accepted in the United States.

We have previously audited, in accordance with auditing standards generally
accepted in the United States, the consolidated balance sheet of Cotton States
Life Insurance Company and subsidiaries as of December 31, 2002, and the
related consolidated statements of earnings, comprehensive income and cash
flows for the year then ended and in our report dated February 25, 2003, we
expressed an unqualified opinion on those consolidated financial statements.
In our opinion, the information set forth in the accompanying consolidated
condensed balance sheet as of December 31, 2002, is fairly stated, in all
material respects, in relation to the consolidated balance sheet from which it
has been derived.

|                                |  |                  
|------------------------------- |  | -----------------
|                                |  | Ernst & Young LLP
|                                |  |                  
|Atlanta, Georgia
April 29, 2003 |  |                  

1



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ITEM I. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

The following consolidated condensed financial statements have been prepared by management.
In managements opinion, all adjustments and reclassifications necessary for a fair statement
of financial position at March 31, 2003 and December 31, 2002 and the results of operations for the
three months ended March 31, 2003 and 2002 have been made.

COTTON STATES LIFE INSURANCE COMPANY




Consolidated Condensed Balance Sheets


|                                         |                                                                                                                                                                                                                                                              |                                                                             |                                       |                            |            |             |             |              |            |             |             | 
|---------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | --------------------------------------------------------------------------- | ------------------------------------- | -------------------------- | ---------- | ----------- | ----------- | ------------ | ---------- | ----------- | ----------- | 
|                                         |                                                                                                                                                                                                                                                              |                                                                             |                                       |                            |            | March 31,   |             | December 31,
|                                         |                                                                                                                                                                                                                                                              |                                                                             |                                       |                            |            | 2003        |             | 2002        
|                                         |                                                                                                                                                                                                                                                              |                                                                             |                                       |                            |            |             |             |             
|                                         |                                                                                                                                                                                                                                                              |                                                                             |                                       |                            |            | (unaudited) |             |              |            |            
|Assets                                   |                                                                                                                                                                                                                                                              |                                                                             |                                       |                            |            |             |             |             
|Investments:                             |                                                                                                                                                                                                                                                              |                                                                             |                                       |                            |            |             |             |             
|                                         | Fixed maturities, held for investment, at amortized
cost (fair value of $6,103,584 in 2003 and $7,324,373 in 2002)                                                                                                                                           |                                                                             | $                                     | 5,847,924                  |            |             |             | 7,048,175    |           
|                                         | Fixed maturities, available for sale, at fair value (amortized
cost of $151,705,644 in 2003 and $146,159,339 in 2002)                                                                                                                                        |                                                                             |                                       | 157,895,375                |            |             |             | 152,307,406  |           
|                                         | Equity securities, at fair value (cost of $2,618,735 in 2003
and $2,984,720 in 2002)                                                                                                                                                                         |                                                                             |                                       | 2,390,480                  |            |             |             | 2,519,895    |           
|                                         | First mortgage loans on real estate                                                                                                                                                                                                                          |                                                                             |                                       | 1,274,084                  |            |             |             | 1,320,330    |           
|                                         | Policy loans                                                                                                                                                                                                                                                 |                                                                             |                                       | 10,513,925                 |            |             |             | 10,425,612   |           
|                                         | Other invested assets                                                                                                                                                                                                                                        |                                                                             |                                       | 582,000                    |            |             |             | 582,000      |           
|                                         |                                                                                                                                                                                                                                                              |                                                                             |                                       |                            |            |             |             |             
|                                         |                                                                                                                                                                                                                                                              |                                                                             |                                       | Total investments          |            |             | 178,503,788 |              |            |             | 174,203,418 | 
|Cash and cash equivalents                |                                                                                                                                                                                                                                                              |                                                                             | 19,902,952                            |                            |            |             | 18,913,861  |             
|Accrued investment income                |                                                                                                                                                                                                                                                              |                                                                             | 2,228,924                             |                            |            |             | 2,406,298   |             
|Amounts receivable, principally premiums |                                                                                                                                                                                                                                                              |                                                                             | 3,407,106                             |                            |            |             | 3,777,671   |             
|Amount due from reinsurers               |                                                                                                                                                                                                                                                              |                                                                             | 3,951,244                             |                            |            |             | 4,263,828   |             
|Deferred policy acquisition costs        |                                                                                                                                                                                                                                                              |                                                                             | 59,790,144                            |                            |            |             | 57,686,410  |             
|Federal income tax receivable            |                                                                                                                                                                                                                                                              |                                                                             |                                      |                            |            |             | 98,457      |             
|Other assets                             |                                                                                                                                                                                                                                                              |                                                                             | 430,008                               |                            |            |             | 460,061     |             
|                                         |                                                                                                                                                                                                                                                              |                                                                             |                                       |                            |            |             |             |             
|                                         |                                                                                                                                                                                                                                                              | $                                                                           | 268,214,166                           |                            |            |             | 261,810,004 |             
|                                         |                                                                                                                                                                                                                                                              |                                                                             |                                       |                            |            |             |             |             
|Liabilities and Shareholders Equity     |                                                                                                                                                                                                                                                              |                                                                             |                                       |                            |            |             |             |             
|Policy liabilities and accruals:         |                                                                                                                                                                                                                                                              |                                                                             |                                       |                            |            |             |             |             
|                                         | Future policy benefits                                                                                                                                                                                                                                       |                                                                             | $                                     | 164,439,004                |            |             |             | 160,424,107  |           
|                                         | Policy claims and benefits payable                                                                                                                                                                                                                           |                                                                             |                                       | 2,284,087                  |            |             |             | 3,241,343    |           
|                                         |                                                                                                                                                                                                                                                              |                                                                             |                                       |                            |            |             |             |             
|                                         |                                                                                                                                                                                                                                                              |                                                                             | Total policy liabilities and accruals |                            |            | 166,723,091 |             |              |            | 163,665,450 |            
|Federal income taxes:                    |                                                                                                                                                                                                                                                              |                                                                             |                                       |                            |            |             |             |             
|                                         | Current                                                                                                                                                                                                                                                      |                                                                             |                                       | 253,011                    |            |             |             |             |           
|                                         | Deferred                                                                                                                                                                                                                                                     |                                                                             |                                       | 11,705,013                 |            |             |             | 11,181,184   |           
|Other liabilities                        |                                                                                                                                                                                                                                                              |                                                                             | 6,321,596                             |                            |            |             | 5,592,961   |             
|                                         |                                                                                                                                                                                                                                                              |                                                                             |                                       |                            |            |             |             |             
|                                         |                                                                                                                                                                                                                                                              |                                                                             |                                       | Total liabilities          |            |             | 185,002,711 |              |            |             | 180,439,595 | 
|                                         |                                                                                                                                                                                                                                                              |                                                                             |                                       |                            |            |             |             |             
|Shareholders equity:                    |                                                                                                                                                                                                                                                              |                                                                             |                                       |                            |            |             |             |             
|                                         | Common stock of $1 par value. Authorized 20,000,000 shares;
issued: 6,987,331 shares in 2003 and 6,929,347 shares in 2002;
outstanding: 6,323,737 shares in 2003 and 6,328,737 shares in 2002;
restricted: 232,827 shares in 2003 and 174,843 shares in 2002 |                                                                             |                                       | 6,987,331                  |            |             |             | 6,929,347    |           
|                                         | Additional paid-in capital                                                                                                                                                                                                                                   |                                                                             |                                       | 3,743,965                  |            |             |             | 3,434,018    |           
|                                         | Accumulated other comprehensive income, net of tax                                                                                                                                                                                                           |                                                                             |                                       | 3,672,676                  |            |             |             | 3,226,975    |           
|                                         | Retained earnings                                                                                                                                                                                                                                            |                                                                             |                                       | 73,342,292                 |            |             |             | 72,035,550   |           
|                                         | Less:                                                                                                                                                                                                                                                        |                                                                             |                                       |                            |            |             |             |              |           
|                                         |                                                                                                                                                                                                                                                              | Unearned compensation  restricted stock                                    |                                       |                            | (996,858   | )           |             |              | (764,543   | )          
|                                         |                                                                                                                                                                                                                                                              | Treasury stock, at cost (430,767 shares in 2003 and
425,767 shares in 2002) |                                       |                            | (3,537,951 | )           |             |              | (3,490,938 | )          
|                                         |                                                                                                                                                                                                                                                              |                                                                             |                                       |                            |            |             |             |             
|                                         |                                                                                                                                                                                                                                                              |                                                                             |                                       | Total shareholders equity |            |             | 83,211,455  |              |            |             | 81,370,409  | 
|                                         |                                                                                                                                                                                                                                                              |                                                                             |                                       |                            |            |             |             |             
|                                         |                                                                                                                                                                                                                                                              | $                                                                           | 268,214,166                           |                            |            |             | 261,810,004 |             
|                                         |                                                                                                                                                                                                                                                              |                                                                             |                                       |                            |            |             |             |             

See accompanying notes to unaudited consolidated condensed financial statements.

2



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COTTON STATES LIFE INSURANCE COMPANY




Unaudited Consolidated Condensed Statements of Earnings


Three months ending March 31, 2003 and 2002


|                                                                     |                                          |         |                            |           |                    |            |      |           |           |            | 
|-------------------------------------------------------------------- | ---------------------------------------- | ------- | -------------------------- | --------- | ------------------ | ---------- | ---- | --------- | --------- | ---------- | 
|                                                                     |                                          |         |                            |           | Three months ended
|                                                                     |                                          |         |                            |           | March 31,         
|                                                                     |                                          |         |                            |           |                   
|                                                                     |                                          |         |                            |           | 2003               |            | 2002
|                                                                     |                                          |         |                            |           |                    |            |     
|Revenue:                                                             |                                          |         |                            |           |                    |            |      |          
|                                                                     | Premiums                                 |         | $                          | 8,198,949 |                    |            |      | 7,666,317 |          
|                                                                     | Investment income                        |         |                            | 2,320,537 |                    |            |      | 2,471,936 |          
|                                                                     | Realized investment gains                |         |                            | 392,447   |                    |            |      | 156,972   |          
|                                                                     | Brokerage commissions                    |         |                            | 1,077,969 |                    |            |      | 1,008,286 |          
|                                                                     |                                          |         |                            |           |                    |            |      |          
|                                                                     |                                          |         | Total revenue              |           |                    | 11,989,902 |      |           |           | 11,303,511 | 
|                                                                     |                                          |         |                            |           |                    |            |      |          
|Benefits and expenses:                                               |                                          |         |                            |           |                    |            |      |          
|                                                                     | Benefits and claims                      |         |                            | 4,809,176 |                    |            |      | 4,356,796 |          
|                                                                     | Interest credited                        |         |                            | 1,502,614 |                    |            |      | 1,446,230 |          
|                                                                     | Amortization of policy acquisition costs |         |                            | 1,026,202 |                    |            |      | 981,266   |          
|                                                                     | Operating expenses                       |         |                            | 2,383,420 |                    |            |      | 2,290,303 |          
|                                                                     |                                          |         |                            |           |                    |            |      |          
|                                                                     |                                          |         | Total benefits and expense |           |                    | 9,721,412  |      |           |           | 9,074,595  | 
|                                                                     |                                          |         |                            |           |                    |            |      |          
|                                                                     | Income before income tax expense         |         |                            | 2,268,490 |                    |            |      | 2,228,916 |          
|                                                                     | Income tax expense                       |         |                            | 706,754   |                    |            |      | 697,748   |          
|                                                                     |                                          |         |                            |           |                    |            |      |          
|                                                                     |                                          |         | Net income                 |           | $                  | 1,561,736  |      |           |           | 1,531,168  | 
|                                                                     |                                          |         |                            |           |                    |            |      |          
|Basic income per share of common stock                               |                                          |         |                            |           |                    |            |      |          
|                                                                     |                                          |         | Net income                 |           | $                  | 0.25       |      |           |           | 0.24       | 
|                                                                     |                                          |         |                            |           |                    |            |      |          
|Diluted income per share of common stock                             |                                          |         |                            |           |                    |            |      |          
|                                                                     |                                          |         | Net Income                 |           | $                  | 0.24       |      |           |           | 0.24       | 
|                                                                     |                                          |         |                            |           |                    |            |      |          
|Weighted average number of shares
used in computing income per share |                                          |         |                            |           |                    |            |      |          
|                                                                     |                                          | Basic   |                            |           | 6,325,303          |            |      |           | 6,335,428 |           
|                                                                     |                                          |         |                            |           |                    |            |      |          
|                                                                     |                                          | Diluted |                            |           | 6,613,332          |            |      |           | 6,494,737 |           
|                                                                     |                                          |         |                            |           |                    |            |      |          
|Dividends paid per share                                             |                                          | $       | 0.04                       |           |                    |            | 0.04 |          
|                                                                     |                                          |         |                            |           |                    |            |      |          

See accompanying notes to unaudited consolidated condensed financial statements.

3



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COTTON STATES LIFE INSURANCE COMPANY




Unaudited Consolidated Condensed Statements of Cash Flows


Three months ending March 31, 2003 and 2002


|                                                      |                     |                                                                                     |                                                                |            |                    |            |            |            |             |            |  
|----------------------------------------------------- | ------------------- | ----------------------------------------------------------------------------------- | -------------------------------------------------------------- | ---------- | ------------------ | ---------- | ---------- | ---------- | ----------- | ---------- | -
|                                                      |                     |                                                                                     |                                                                |            | Three months ended
|                                                      |                     |                                                                                     |                                                                |            | March 31,         
|                                                      |                     |                                                                                     |                                                                |            |                   
|                                                      |                     |                                                                                     |                                                                |            | 2003               |            | 2002      
|                                                      |                     |                                                                                     |                                                                |            |                    |            |           
|Cash flows from operating activities:                 |                     |                                                                                     |                                                                |            |                    |            |            |           
|                                                      |                     | Net income                                                                          |                                                                | $          | 1,561,736          |            |            |            | 1,531,168   |           
|                                                      |                     | Adjustments to reconcile net income to net
cash provided from operating activities: |                                                                |            |                    |            |            |            |             |           
|                                                      |                     |                                                                                     | Realized investment gains                                      |            |                    | (392,447   | )          |            |             | (156,972   | )
|                                                      |                     |                                                                                     | Increase in policy liabilities and accruals                    |            |                    | 3,057,641  |            |            |             | 3,864,767  |  
|                                                      |                     |                                                                                     | (Increase) in deferred policy acquisition costs                |            |                    | (1,706,663 | )          |            |             | (1,577,295 | )
|                                                      |                     |                                                                                     | Decrease in liability for income taxes                         |            |                    | 645,693    |            |            |             | 247,750    |  
|                                                      |                     |                                                                                     | Decrease in amounts receivable and
amounts due from reinsurers |            |                    | 683,149    |            |            |             | 454,081    |  
|                                                      |                     |                                                                                     | Increase (decrease) in amounts due affiliates                  |            |                    | 362,729    |            |            |             | (727,952   | )
|                                                      |                     |                                                                                     | Other, net                                                     |            |                    | 959,163    |            |            |             | 190,380    |  
|                                                      |                     |                                                                                     |                                                                |            |                    |            |            |           
|                                                      |                     | Net cash provided from operating activities                                         |                                                                |            | 5,171,001          |            |            |            | 3,825,927   |           
|                                                      |                     |                                                                                     |                                                                |            |                    |            |            |           
|Cash flows from investing activities:                 |                     |                                                                                     |                                                                |            |                    |            |            |           
|                                                      |                     | Purchase of fixed maturities available for sale                                     |                                                                |            | (39,010,500        | )          |            |            | (30,536,694 | )         
|                                                      |                     | Purchase of equity securities                                                       |                                                                |            | (29,300            | )          |            |            | (744,523    | )         
|                                                      |                     | Sale of fixed maturities available for sale                                         |                                                                |            | 27,649,012         |            |            |            | 19,661,357  |           
|                                                      |                     | Sale of equity securities                                                           |                                                                |            | 37,953             |            |            |            | 948,280     |           
|                                                      |                     | Proceeds from maturities of fixed
maturities held for investment                    |                                                                |            | 1,200,000          |            |            |            | 1,000,000   |           
|                                                      |                     | Proceeds from maturity and redemption of fixed
maturities held for sale             |                                                                |            | 6,324,598          |            |            |            | 4,773,432   |           
|                                                      |                     | First mortgage loans originated                                                     |                                                                |            |                   |            |            |            | (76,000     | )         
|                                                      |                     | Principal collected on first mortgage loans                                         |                                                                |            | 46,246             |            |            |            | 99,389      |           
|                                                      |                     | Net increase in policy loans                                                        |                                                                |            | (88,313            | )          |            |            | (118,241    | )         
|                                                      |                     | Other, net                                                                          |                                                                |            | (9,600             | )          |            |            | (44,272     | )         
|                                                      |                     |                                                                                     |                                                                |            |                    |            |            |           
|                                                      |                     | Net cash used in investing activities                                               |                                                                |            | (3,879,904         | )          |            |            | (5,037,272  | )         
|                                                      |                     |                                                                                     |                                                                |            |                    |            |            |           
|Cash flows from financing activities:                 |                     |                                                                                     |                                                                |            |                    |            |            |           
|                                                      |                     | Cash dividends paid                                                                 |                                                                |            | (254,993           | )          |            |            | (254,993    | )         
|                                                      |                     | Purchase of treasury stock                                                          |                                                                |            | (47,013            | )          |            |            |            |           
|                                                      |                     |                                                                                     |                                                                |            |                    |            |            |           
|                                                      |                     | Net cash used in financing activities                                               |                                                                |            | (302,006           | )          |            |            | (254,993    | )         
|                                                      |                     |                                                                                     |                                                                |            |                    |            |            |           
|Net increase (decrease) in cash and cash equivalents: |                     |                                                                                     | 989,091                                                        |            |                    |            | (1,466,338 | )         
|                                                      |                     |                                                                                     |                                                                |            |                    |            |            |           
|Cash and cash equivalents:                            |                     |                                                                                     |                                                                |            |                    |            |            |           
|                                                      | Beginning of period |                                                                                     |                                                                | 18,913,861 |                    |            |            | 13,187,601 |            
|                                                      |                     |                                                                                     |                                                                |            |                    |            |            |           
|                                                      |                     | End of period                                                                       |                                                                | $          | 19,902,952         |            |            |            | 11,721,263  |           
|                                                      |                     |                                                                                     |                                                                |            |                    |            |            |           

See accompanying notes to unaudited consolidated condensed financial statements.

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COTTON STATES LIFE INSURANCE COMPANY




Unaudited Consolidated Condensed Statements of Comprehensive Income


Three months ending March 31, 2003 and 2002


|            |                                                                             |                                                    |           |                    |           |      |           |            |            |  
|----------- | --------------------------------------------------------------------------- | -------------------------------------------------- | --------- | ------------------ | --------- | ---- | --------- | ---------- | ---------- | -
|            |                                                                             |                                                    |           | Three months ended
|            |                                                                             |                                                    |           | March 31,         
|            |                                                                             |                                                    |           |                   
|            |                                                                             |                                                    |           | 2003               |           | 2002
|            |                                                                             |                                                    |           |                    |           |     
|Net income: |                                                                             | $                                                  | 1,561,736 |                    |           |      | 1,531,168 |           
|            |                                                                             |                                                    |           |                    |           |      |           |           
|            | Other comprehensive income (loss),
before tax:                              |                                                    |           |                    |           |      |           |            |           
|            | Change in fair value of securities
available for sale                       |                                                    |           | 1,067,752          |           |      |           | (2,043,797 | )         
|            | Reclassification adjustment for realized
(gains) included in net income     |                                                    |           | (392,447           | )         |      |           | (156,972   | )         
|            |                                                                             |                                                    |           |                    |           |      |           |           
|            |                                                                             | Total other comprehensive income (loss)
before tax |           |                    | 675,305   |      |           |            | (2,200,769 | )
|            | Income tax expense (benefit) related to
items of other comprehensive income |                                                    |           | 229,604            |           |      |           | (834,203   | )         
|            |                                                                             |                                                    |           |                    |           |      |           |           
|            | Other comprehensive income (loss)
net of tax                                |                                                    |           | 445,701            |           |      |           | (1,366,566 | )         
|            |                                                                             |                                                    |           |                    |           |      |           |           
|            |                                                                             | Total comprehensive income                         |           | $                  | 2,007,437 |      |           |            | 164,602    |  
|            |                                                                             |                                                    |           |                    |           |      |           |           

See accompanying notes to unaudited consolidated condensed financial statements.

5



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##### Table of Contents



Cotton States Life Insurance Company




Notes to Unaudited Consolidated Condensed Financial Statements


March 31, 2003


Note 1  Basis of Presentation

The accompanying consolidated condensed financial statements include the
accounts of Cotton States Life Insurance Company and its wholly owned
subsidiaries CSI Brokerage Services, Inc., and CS Marketing Resources, Inc.
Significant intercompany transactions and balances are eliminated in the
consolidation.

The consolidated condensed financial statements for the three months ended
March 31, 2003 are unaudited and have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States
of America have been condensed or omitted pursuant to such rules and
regulations. These consolidated condensed financial statements should be read
in conjunction with the audited consolidated financial statements and footnotes
included in the Companys annual report on Form 10-K for the year ended
December 31, 2002.

In the opinion of management, all adjustments and reclassifications necessary
to present fairly the financial position and the results of operations and cash
flows for the interim periods have been made. All such adjustments are of a
normal and recurring nature. The results of operations for any interim period
are not necessarily indicative of the results of operations that the Company
may achieve for the entire year.

Certain prior year amounts in the accompanying consolidated condensed financial
statements have been reclassified in order to conform with current year
presentation.

Note 2  Stock-Based Compensation

In accordance with APB Opinion No. 25, $136,000 and $76,000 in compensation
expense was recorded in the three months ended March 31, 2003 and 2002,
respectively, for the various stock option and restricted stock awards granted.
Had the Company determined compensation cost based on the fair value at the
grant date for its stock options and restricted stock awards under SFAS No.
123, Accounting for Stock-Based Compensation, the Companys net income, basic
net income per share, and diluted net income per share would have been reduced
to the pro forma amounts indicated below:

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##### Table of Contents



Notes to Unaudited Consolidated Condensed Financial Statements
(continued)

|                              |             |  |                     |           |      |  |  |           | 
|----------------------------- | ----------- |  | ------------------- | --------- | ---- |  |  | --------- | 
|                              |             |  | Three Months Ending
|                              |             |  | March 31,          
|                              |             |  |                    
|                              |             |  | 2003                |           | 2002
|                              |             |  |                     |           |     
|Net income:                   |             |  |                     |           |      |  |  |          
|                              | As reported |  | $                   | 1,561,736 |      |  |  | 1,531,168 | 
|                              |             |  |                     |           |      |  |  |          
|                              | Pro forma   |  | $                   | 1,546,350 |      |  |  | 1,515,782 | 
|                              |             |  |                     |           |      |  |  |          
|Basic net income per share:   |             |  |                     |           |      |  |  |          
|                              | As reported |  | $                   | 0.25      |      |  |  | 0.24      | 
|                              |             |  |                     |           |      |  |  |          
|                              | Pro forma   |  | $                   | 0.24      |      |  |  | 0.24      | 
|                              |             |  |                     |           |      |  |  |          
|Diluted net income per share: |             |  |                     |           |      |  |  |          
|                              | As reported |  | $                   | 0.24      |      |  |  | 0.24      | 
|                              |             |  |                     |           |      |  |  |          
|                              | Pro forma   |  | $                   | 0.23      |      |  |  | 0.23      | 
|                              |             |  |                     |           |      |  |  |          

The per share weighted-average fair value of stock options and restricted stock
granted was estimated using an option pricing model with the following
weighted-average assumptions: expected life of three years for restricted
stock awarded in 2003 and 2002; expected dividend yield of 1.67% for 2003 and
2002 grants; risk-free interest rate of 3.5% for 2003 and 2002; and an
expected volatility of 66% for 2003 grants and 2002 grants.

Note 3  Accounting Pronouncements

The Financial Accounting Standards Board issued SFAS No. 143 Accounting for
Asset Retirement Obligations, which is effective for fiscal years beginning
after June 15, 2002, with early adoption encouraged. SFAS No. 143 applies to
legal obligations associated with the retirement of long-lived assets that
result from the acquisition, construction, development and (or) the normal
operation of a long-lived asset, except for certain obligations of lessees.
The adoption of SFAS No. 143 did not affect the Companys results of operations
or financial position.

The Financial Accounting Standards Board also issued SFAS No. 144 Accounting
for the Impairment or Disposal of Long-Lived Assets which supercedes SFAS No.
121 Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of, and the accounting and reporting provisions of APB
Opinion No. 30 Reporting the Results of Operations-Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions, and is effective for fiscal
years beginning after December 15, 2001. SFAS No. 144 establishes a single
accounting model for the disposal of long-lived assets. The adoption of SFAS
No. 144 did not affect the Companys results of operations or financial
position.

The Financial Accounting Standards Board also issued SFAS No. 145 Rescission
of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and
Technical Corrections, which is effective for financial statements issued
after May 15, 2002. The adoption of SFAS No. 145 did not affect the Companys
results of operations or financial position.

7



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##### Table of Contents



Notes to Unaudited Consolidated Condensed Financial Statements
(continued)

In July 2002, the Financial Accounting Standards Board issued SFAS No. 146
Accounting for Costs Associated with Exit or Disposal Activities, which is to
be applied prospectively to exit or disposal activities initiated after
December 31, 2002. The adoption of SFAS No. 146 did not affect the Companys
results of operations or financial position.

In October 2002, the Financial Accounting Standards Board issued SFAS No. 147
Acquisitions of Certain Financial Institutions, which is effective October 1,
2002. The adoption of SFAS No. 147 did not affect the Companys results of
operations or financial position.

In November 2002, the Financial Accounting Standards Board issued
Interpretation No. 45, Guarantors Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others, for which
accounting requirements are effective for guarantees issued or modified after
December 15, 2002. The adoption of Interpretation No. 45 did not affect the
Companys results of operations or financial position.

In December 2002, the Financial Accounting Standards Board issued SFAS No. 148
Accounting for Stock Based Compensation  Transition and Disclosure, which is
effective for financial statements issued after December 15, 2002. The
adoption of SFAS No. 148 did not affect the Companys results of operations or
financial position.

Note 4  Business Segments

The Companys operations include the following three major segments,
differentiated primarily by their respective methods of distribution and the
nature of related products: individual life insurance, guaranteed and
simplified issue life insurance, and brokerage operations. The Companys
operations in each segment are concentrated within its southeastern state
geographic market. Individual life insurance products are distributed through
the Companys multi-line exclusive agents, guaranteed and simplified issue
products are distributed through independent agents as well as exclusive
agents, and brokerage operations all involve third party products distributed
through the Companys exclusive and independent agents. The Company does not
group items on the consolidated condensed balance sheet into segments, nor does
it analyze those items by segment when making management decisions. Investment
income is allocated to the individual life insurance and guaranteed and
simplified issue life insurance segments based on their respective average
future policy benefit reserves. Investment income for the brokerage operations
segment is determined directly by each subsidiarys investment portfolio.

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##### Table of Contents



Notes to Unaudited Consolidated Condensed Financial Statements
(continued)

Total revenue and net income by business segment are as follows:

|                                                |                           |               |        |                        |       |      |        |       |       | 
|----------------------------------------------- | ------------------------- | ------------- | ------ | ---------------------- | ----- | ---- | ------ | ----- | ----- | 
|                                                |                           |               |        | Three Months Ended    
|                                                |                           |               |        | March 31,             
|                                                |                           |               |        | (Dollars in thousands)
|                                                |                           |               |        | 2003                   |       | 2002
|                                                |                           |               |        |                        |       |     
|Individual life insurance:                      |                           |               |        |                        |       |      |        |      
|                                                | Premiums                  |               | $      | 4,754                  |       |      |        | 4,649 |      
|                                                | Investment income         |               |        | 2,067                  |       |      |        | 2,247 |      
|                                                | Realized investment gains |               |        | 349                    |       |      |        | 142   |      
|                                                |                           |               |        |                        |       |      |        |      
|                                                |                           | Total revenue |        | $                      | 7,170 |      |        |       | 7,038 | 
|                                                |                           |               |        |                        |       |      |        |      
|                                                | Net income                |               | $      | 1,044                  |       |      |        | 944   |      
|                                                |                           |               |        |                        |       |      |        |      
|Guaranteed and simplified issue life insurance: |                           |               |        |                        |       |     
|                                                | Premiums                  |               | $      | 3,445                  |       |      |        | 3,017 |      
|                                                | Investment income         |               |        | 253                    |       |      |        | 220   |      
|                                                | Realized investment gains |               |        | 43                     |       |      |        | 15    |      
|                                                |                           |               |        |                        |       |      |        |      
|                                                |                           | Total revenue |        | $                      | 3,741 |      |        |       | 3,252 | 
|                                                |                           |               |        |                        |       |      |        |      
|                                                | Net income                |               | $      | 8                      |       |      |        | 106   |      
|                                                |                           |               |        |                        |       |      |        |      
|Brokerage:                                      |                           |               |        |                        |       |      |        |      
|                                                | Commission income         |               | $      | 1,078                  |       |      |        | 1,008 |      
|                                                | Investment income         |               |        | 1                      |       |      |        | 5     |      
|                                                |                           |               |        |                        |       |      |        |      
|                                                |                           | Total revenue |        | $                      | 1,079 |      |        |       | 1,013 | 
|                                                |                           |               |        |                        |       |      |        |      
|                                                | Net income                |               | $      | 510                    |       |      |        | 481   |      
|                                                |                           |               |        |                        |       |      |        |      
|Total revenue                                   |                           | $             | 11,990 |                        |       |      | 11,303 |      
|                                                |                           |               |        |                        |       |      |        |      
|Total net income                                |                           | $             | 1,562  |                        |       |      | 1,531  |      
|                                                |                           |               |        |                        |       |      |        |      

Note 5  Legal Proceedings

The Company is a defendant in various actions incidental to the conduct of its
business. The Company intends to vigorously defend the litigation and while
the ultimate outcome of these matters cannot be estimated with certainty,
management does not believe the actions will result in any material loss to the
Company.

The Company has reached partial settlement regarding $900,000 in reinsurance
coverage. A lawsuit was initiated by the Company in the third quarter of 2001.
To date, the Company has received $475,000 and continues to seek additional
recoveries against reinsurance brokers through already existing legal channels.
The remaining amount outstanding is included in Amounts due from reinsurers on
the consolidated condensed balance sheet.

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##### Table of Contents



Notes to Unaudited Consolidated Condensed Financial Statements
(continued)

Note 6  Income Taxes

The Company accounts for income taxes using the asset and liability method
prescribed by SFAS No. 109, Accounting for Income Taxes. Under the asset and
liability method of SFAS No. 109, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities,
and their respective tax basis. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which these temporary differences are expected to be recovered or
settled. Under SFAS No. 109, the effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period that includes
the enactment date.

Income tax expense recognized by the Company in any one year is impacted by the
extent to which the Company qualifies for the small life company deduction.
The small life company deduction is 60% of life insurance company taxable
income up to a maximum taxable income of $3 million. This deduction is phased
out on taxable income above $3 million up to and including a maximum of $15
million. To the extent, if any, that the Companys taxable income exceeds $3
million, its effective Federal income tax rate will increase.

Note 7  Treasury Stock

During the three months ended March 31, 2003 the Company purchased 5,000 shares
of its common stock, which is held in treasury. For the same period, the
Company issued no shares of common stock out of treasury for its restricted
stock performance award program.

There were no changes in the Companys capital structure for the three months
ended March 31, 2003.

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##### Table of Contents






ITEM 2  MANAGEMENTS DISCUSSION AND ANALYSIS OF CONSOLIDATED CONDENSED FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

Statements made in the following discussion that state the Companys or
managements intentions, hopes, beliefs, expectations or predictions of the
future are forward-looking statements. Without limiting the foregoing,
forward-looking statements include statements which represent the Companys
beliefs concerning future levels of sales and redemption of the Companys
products, investment spreads and yields, the earnings and profitability of the
Companys activities, and the sufficiency of the Companys cash flows for
liquidity purposes.

Forward-looking statements are necessarily based on estimates and assumptions
that are inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond the Companys control
and many of which are subject to change. These uncertainties and contingencies
could cause actual results to differ materially from those expressed in any
forward-looking statements made by, or on behalf of, the Company. Whether or
not actual results differ materially from forward-looking statements may depend
on numerous foreseeable and unforeseeable developments. Some may be national
in scope, such as general economic conditions, changes in tax law and changes
in interest rates. Some may be related to the insurance industry generally,
such as pricing competition, regulatory developments and industry
consolidation. Others may relate to the Company specifically, such as credit,
volatility and other risks associated with the Companys investment portfolio.
Investors are also directed to consider other risks and uncertainties
discussed in Form 10-K filed by the Company with the Securities and Exchange
Commission. If the Companys assumptions and estimates are incorrect or do
not come to fruition, or if the Company does not achieve all of these key
factors, then the Companys actual performance could differ materially from the
forward-looking statements made herein. The Company disclaims any obligation
to update forward-looking information.

Results of Operations

|                                               |                  |                                 |                |       |                        |          |       |       |           |       |    |   |   |   |  
|---------------------------------------------- | ---------------- | ------------------------------- | -------------- | ----- | ---------------------- | -------- | ----- | ----- | --------- | ----- | -- | - | - | - | -
|                                               |                  |                                 |                |       | Three Months Ended    
|                                               |                  |                                 |                |       |                        |          |       |       | March 31, |       |    |   |  
|                                               |                  |                                 |                |       | (Dollars in thousands)
|                                               |                  |                                 |                |       |                       
|Premiums                                       |                  | 2003                            |                | 2002  |                        | Increase
|                                               |                  |                                 |                |       |                        |          |       |       |          
|Guaranteed and simplified
issue life insurance |                  | $                               | 3,445          |       |                        |          | 3,017 |       |           |       | 14 | %
|Individual life insurance:                     |                  |                                 |                |       |                        |          |       |       |           |       |    |  
|                                               | Traditional life |                                 |                | 1,589 |                        |          |       | 1,553 |           |       |    | 2 | %
|                                               | Universal life   |                                 |                | 3,165 |                        |          |       | 3,096 |           |       |    | 2 | %
|                                               |                  |                                 |                |       |                        |          |       |       |           |       |    |  
|                                               |                  | Total individual life insurance |                |       | 4,754                  |          |       |       | 4,649     |       |    |   | 2 | %
|                                               |                  |                                 |                |       |                        |          |       |       |           |       |    |  
|                                               |                  |                                 | Total premiums |       | $                      | 8,199    |       |       |           | 7,666 |    |   |   | 7 | %
|                                               |                  |                                 |                |       |                        |          |       |       |           |       |    |  

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##### Table of Contents



Guaranteed and simplified issue life insurance premiums continued to show
significant growth as a result of higher production by the independent agency
force which had approximately 4,200 agents under contract at March 31, 2003.
This product is also distributed by the Companys multi-line exclusive agents
and is available for purchase over the Internet at the Companys home page
(www.cottonstatesinsurance.com).

Individual life insurance products are principally sold by the Companys
exclusive agent producers. Growth in individual life premiums largely reflects
the popularity of participating whole life and universal life products. The
Company had 269 exclusive agents under contract at March 31, 2003.

Investment Income and Realized Gains and Losses

Investment income decreased 6% for the first quarter of fiscal year 2003 as
compared to the first quarter of fiscal year 2002. This decrease was primarily a
result of a decrease in the annualized average yield to 5.3% compared to 6.2%
for the first three months of 2002, which occurred as a result of lower
interest rates.

During the first quarter of 2003 the Company realized a pre-tax investment loss
of $356,000 from the write-down of the carrying value of twelve equity
securities. These write-downs were the result of the Company determining that
an other-than-temporary impairment had occurred.

The Company has procedures in place to monitor all debt and equity securities
for possible other-than-temporary impairments. Securities are tracked
comparing both unrealized losses as a percentage of original cost and length of
time the security has been below a predetermined percentage of cost. Monthly
discussions are held with Companys investment managers to gather information
and documentation as to their outlook for future recovery of the securities
making the Companys watch list. As of March 31, 2003 there were no other
debt or equity securities whose unrealized losses would be deemed to be
other-than-temporary impairments.

Brokerage Commissions

Exclusive agents also sell products that the Cotton States Group does not
underwrite (both life and property and casualty). Property and casualty
business lines, principally non-standard auto, continue to show strong growth
with commissions increasing 8% for the first three months of 2003 compared to
the first three months of 2002 and met management expectations for the quarter.
This was partially offset by lower than expected override commissions on
multi-peril Federal crop insurance and mobile home insurance.

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##### Table of Contents



Benefits and Claims

Life benefits and claims, including reserve increases on traditional life and
guaranteed and simplified issue products are as follows:

|                                |                  |                                 |                           |         |                        |        |      |         |              |    |       |       |       |       |    |    |    |    |  
|------------------------------- | ---------------- | ------------------------------- | ------------------------- | ------- | ---------------------- | ------ | ---- | ------- | ------------ | -- | ----- | ----- | ----- | ----- | -- | -- | -- | -- | -
|                                |                  |                                 |                           |         | Three Months Ended    
|                                |                  |                                 |                           |         | March 31,             
|                                |                  |                                 |                           |         | (Dollars in thousands)
|                                |                  |                                 |                           |         | 2003                   |        | 2002
|                                |                  |                                 |                           |         |                        |        |     
|                                |                  |                                 |                           |         | Benefits and           |        | % of |         | Benefits and |    | % of 
|Benefits and Claims             |                  | Claims                          |                           | Premium |                        | Claims |      | Premium
|                                |                  |                                 |                           |         |                        |        |      |         |              |    |      
|Guaranteed and
simplified issue |                  | $                               | 2,711                     |         |                        |        | 79   | %       |              |    | 2,234 |       |       |       | 74 | % 
|Individual life insurance:      |                  |                                 |                           |         |                        |        |      |         |              |    |       |       |       |       |    |   
|                                | Traditional life |                                 | $                         | 1,108   |                        |        |      | 70      | %            |    |       | 1,001 |       |       |    | 64 | % 
|                                | Universal life   |                                 |                           | 990     |                        |        |      | 31      | %            |    |       | 1,122 |       |       |    | 36 | % 
|                                |                  |                                 |                           |         |                        |        |      |         |              |    |       |       |       |       |    |   
|                                |                  | Total individual
life insurance |                           |         | 2,098                  |        |      |         | 44           | %  |       |       | 2,123 |       |    |    | 46 | % 
|                                |                  |                                 |                           |         |                        |        |      |         |              |    |       |       |       |       |    |   
|                                |                  |                                 | Total
benefits and
claims |         | $                      | 4,809  |      |         |              | 59 | %     |       |       | 4,357 |    |    |    | 57 | %
|                                |                  |                                 |                           |         |                        |        |      |         |              |    |       |       |       |       |    |   

Benefits and claims as a percentage of premium fluctuate within a normal range
reflecting volatility in mortality, changes in mix of business, and age of
policyholders. Guaranteed and simplified issue experience in 2003 and 2002 is
more indicative of the Companys expectations as the block of business matures.
Individual life insurance claims improved in 2003 and were consistent with
managements expectations for the three month period. Due to the Companys
small size, quarterly fluctuations do and will occur. The Company offsets the
effects of annual mortality fluctuations by routinely purchasing annual
aggregate stop loss reinsurance coverage in excess of 120% of expected
mortality.

Interest Credited to Policyholders

Interest credited to universal life contracts increased 4% for the three month
period ended March 31, 2003 as compared to the same period in 2002, reflecting
strong growth in universal life policy accumulations. The annual interest rate
credited to universal life contract accumulations was 5.75% for the first two
months of 2003. Effective March 1, 2003 the annual interest rate credited to
policyholders was changed to 5.47%. The annual interest rate credited was
6.25% for the three month period in 2002.

Amortization of Policy Acquisition Costs and Operating Expenses

The amortization of policy acquisition costs as a percentage of premiums was
13% for the three months ended March 31, 2003 and 2002. 2003 and 2002 results
are within the Companys expected range of 12-14%. Amortization for the quarter
reflects better than expected mortality in the universal life line of business
and a decrease in the annual interest rate credited to policyholders.

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Operating expenses as a percentage of premiums were 29% for the first three
months of 2003 compared to 30% for the same period in 2002. The Companys
expectations for fiscal year 2003 are between 28-31%.

Income Tax Expense

The effective tax rate for the first three months of 2003 and 2002 was 31% and
reflects the Companys best estimate of the annual effective rate.

Net Income

|                                |                                 |                |            |       |                        |            |     |     |     |       |     |    |          |    |  
|------------------------------- | ------------------------------- | -------------- | ---------- | ----- | ---------------------- | ---------- | --- | --- | --- | ----- | --- | -- | -------- | -- | -
|                                |                                 |                |            |       | Three Months Ended    
|                                |                                 |                |            |       | March 31,             
|                                |                                 |                |            |       | (Dollars in thousands)
|                                |                                 |                |            |       |                       
|                                |                                 |                |            |       |                        |            |     |     |     |       |     |    | Increase
|Net Income                      |                                 | 2003           |            | 2002  |                        | (Decrease)
|                                |                                 |                |            |       |                        |            |     |     |    
|Guaranteed and
simplified issue |                                 | $              | 8          |       |                        |            | 106 |     |     |       | (92 | %)
|                                |                                 |                |            |       |                        |            |     |     |     |       |     |   
|Individual life insurance:      |                                 |                |            |       |                        |            |     |     |     |       |     |   
|                                |                                 | Traditional    |            |       | 283                    |            |     |     | 363 |       |     |    | (22      | %)
|                                |                                 | Universal life |            |       | 761                    |            |     |     | 581 |       |     |    | 31       | % 
|                                |                                 |                |            |       |                        |            |     |     |     |       |     |   
|                                | Total individual life insurance |                |            | 1,044 |                        |            |     | 944 |     |       |     | 11 | %       
|                                |                                 |                |            |       |                        |            |     |     |     |       |     |   
|Brokerage operations            |                                 |                | 510        |       |                        |            | 481 |     |     |       | 6   | % 
|                                |                                 |                |            |       |                        |            |     |     |     |       |     |   
|                                |                                 |                | Net Income |       | $                      | 1,562      |     |     |     | 1,531 |     |    |          | 2  | %
|                                |                                 |                |            |       |                        |            |     |     |     |       |     |   

Net income for the quarter ended March 31, 2003 increased modestly compared to
2002 due to continued strong growth in premiums, offset by a slight decrease in
investment income and, although they were consistent with managements
expectations, mortality levels that were higher than the first quarter of 2002.

Critical Accounting Policies

The accounting policies described below are those the Company considers
critical in preparing its consolidated condensed financial statements. These
polices include significant estimates made by management using information
available at the time the estimates are made. However, as described below,
these estimates could change materially if different information or assumptions
were used.

Insurance Related Assets and Liabilities

The Company establishes an insurance related asset for deferred policy
acquisition costs, and insurance related liabilities for future policy benefits
and claims relating to its insurance policies under contract. Such assets and
liabilities are developed using actuarial principles and assumptions which
consider a number of factors, including: investment yields, withdrawal rates,

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mortality and morbidity. The Company accounts for its traditional individual
life insurance policies using a net level premium method and assumptions as to
the factors enumerated above. Generally, the Companys earnings in any given
calendar year will not be impacted by differences in emerging experience on its
traditional individual business unless such differences are severe enough to
call into question the profitability of the entire block of traditional life
business.

The Company does, however, experience fluctuations in its earnings as a result
of current mortality experience differing from that expected in any given year.
For the three months ended March 31, 2003 and 2002, the Company experienced
emerged mortality of 95% and 82% of amounts expected, respectively, related to
its traditional individual life insurance business. The Company routinely
purchases annual aggregate stop loss reinsurance coverage which limits
experience to 120% of expected mortality in any one year.

The Company accounts for its interest-sensitive and universal life insurance
polices and annuities under the provisions of SFAS No. 97, Accounting and
Reporting by Insurance Enterprises for Certain Long-Duration Contracts and for
Realized Gains and Losses from the Sale of Investments. SFAS No. 97 requires
the remeasurement of the Companys deferred acquisition costs each period in a
manner that amortizes such deferred costs as a level percentage of actual
emerged profit over the expected gross profits.

Each period, the Company estimates the relevant factors, based primarily on its
emerging experience, and uses this information to determine the assumptions
underlying its asset and liability calculations. An extensive degree of
judgment is used in this estimation process.

Any adjustments required to properly state insurance assets and liabilities are
charged or credited to benefit expense in the period in which the need for the
adjustment becomes known.

Accounting for Income Taxes

The Company accounts for income taxes using the asset and liability method
prescribed by SFAS No. 109, Accounting for Income Taxes. Under the asset and
liability method of SFAS No. 109, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax basis. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which these temporary differences are expected to be recovered or settled.
Under SFAS No. 109, the effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.

Income tax expense recognized by the Company in any one year is impacted by the
extent to which the Company qualifies for the small life company deduction.
The small life company deduction is 60% of life insurance company taxable
income up to a maximum taxable income of $3 million. This deduction is phased
out on taxable income above $3 million up to and including a maximum of $15
million. To the extent, if any, that the Companys taxable income exceeds $3
million, its effective Federal income tax rate will increase.

15



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##### Table of Contents



Recent Accounting Pronouncements

The Financial Accounting Standards Board issued SFAS No. 143 Accounting for
Asset Retirement Obligations, which is effective for fiscal years beginning
after June 15, 2002, with early adoption encouraged. SFAS No. 143 applies to
legal obligations associated with the retirement of long-lived assets that
result from the acquisition, construction, development and (or) the normal
operation of a long-lived asset, except for certain obligations of lessees.
The adoption of SFAS No. 143 did not affect the Companys results of operations
or Financial position.

The Financial Accounting Standards Board also issued SFAS No. 144 Accounting
for the Impairment or Disposal of Long-Lived Assets which supercedes SFAS No.
121 Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of, and the accounting and reporting provisions of APB
Opinion No. 30 Reporting the Results of Operations-Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions, and is effective for fiscal
years beginning after December 15, 2001. SFAS No.144 establishes a single
accounting model for the disposal of long-lived assets. The adoption of SFAS
No.144 did not affect the Companys results of operations or financial
position.

The Financial Accounting Standards Board also issued SFAS No. 145 Rescission
of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and
Technical Corrections, which is effective for financial statements issued
after May 15, 2002. The adoption of SFAS No. 145 did not affect the Companys
results of operations or financial position.

In July 2002, the Financial Accounting Standards Board issued SFAS No. 146
Accounting for Costs Associated with Exit or Disposal Activities, which is to
be applied prospectively to exit or disposal activities initiated after
December 31, 2002. The adoption of SFAS No. 146 did not affect the Companys
results of operations or financial position.

In October 2002, the Financial Accounting Standards Board issued SFAS No. 147
Acquisitions of Certain Financial Institutions, which is effective October 1,
2002. The adoption of SFAS No. 147 did not affect the Companys results of
operations or financial position.

In November 2002 the Financial Accounting Standards Board issued Interpretation
No. 45, Guarantors Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees for Indebtedness of Others, for which accounting
requirements are effective for guarantees issued or modified after December 31,
2002 and disclosure requirements are effective for financial statements issued
after December 15, 2002. The adoption of Interpretation No. 45 did not affect
the Companys results of operations or financial position.

In December 2002, the Financial Accounting Standards Board issued SFAS No. 148
Accounting for Stock Based Compensation  Transition and Disclosure, which is
effective for financial statements issued after December 15, 2002. The
adoption of SFAS No. 148 did not affect the Companys results of operations or
financial position.

16



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##### Table of Contents



Liquidity and Capital Resources

Cash Flow

As of March 31, 2003 the Companys insurance operations generated positive cash
flows in excess of its immediate needs. Cash flows provided by operations
were $5.2 million in the first three months of 2003 compared to $3.8 million
for the comparable period last year.

Operating cash flow is primarily used to purchase debt securities. The Company
received proceeds of $7.5 million from investment maturities and repayments in
2003, adding to available cash flows. Such proceeds were $5.8 million in 2002.
When market opportunities arise, the Company disposes of selected debt
securities available for sale to improve future investment yields and/or
improve duration matching of its assets and liabilities. Therefore,
dispositions before maturity can vary significantly from year to year.
Proceeds from sales prior to maturity were $27.6 million in 2003 and $19.7
million for the comparable period of 2002.

The Companys principal financing activity is payment of dividends to the
Companys shareholders. Dividends are normally declared quarterly and must be
approved by the Board of Directors. Under regulatory requirements, the maximum
amount of dividends that may be paid in 2003 by the Company to its shareholders
without prior regulatory approval is approximately $2.9 million.

Other than noted above, the Company does not have any debt, lease obligations,
purchase obligations, lines of credit, guarantees, off-balance sheet
arrangements, trading activities involving non-exchange traded contracts
accounted for at fair value or relationships with persons or entities that
derive benefits from a non-independent relationship with the Company or the
Companys related parties.

Liquidity

Liquidity pertains to a companys ability to meet the demand for cash
requirements of its business operations and financial obligations. The
Companys two sources of short-term liquidity include its positive cash flow
from operations and its portfolio of marketable securities as described above.
The Company believes that these sources are sufficient to meet its liquidity
needs for the next 12 months.

Investments

Since December 31, 2002, there has not been a material change in mix or credit
quality of the Companys investment portfolio. All bond purchases have been
available for sale and over 91% of the holdings at March 31, 2003 and December
31, 2002 are rated A or better by Standard & Poors Corporation. For all
fixed maturities, 9% in 2003 and 2002 are rated BBB. Ratings of BBB- and
higher are considered investment grade by the rating services.

17



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##### Table of Contents



Mortgage Loans

The Companys mortgage loan policy limits the amounts of loans to no more than
80% of the collateral value on residential loans and no more than 75%
of the collateral value on
commercial loans. The Company grants loans only to employees (excluding
officers and directors) and agents.

The geographic distribution of the loan portfolio is:

|                |    |              |  |                        |    |           |  |              |  |            |       |  |  |  |       | 
|--------------- | -- | ------------ |  | ---------------------- | -- | --------- |  | ------------ |  | ---------- | ----- |  |  |  | ----- | 
|                |    |              |  |                        |    |           |  |              |  | Book Value
|Number of Loans |    |              |  | (dollars in thousands)
|                |    |              |  |                       
|March 31,       |    | December 31, |  |                        |    | March 31, |  | December 31,
|2003            |    | 2002         |  | State                  |    | 2003      |  | 2002        
|                |    |              |  |                        |    |           |  |             
|                | 2  |              |  |                        | 2  |           |  | Alabama      |  | $          | 99    |  |  |  | 100   | 
|                | 6  |              |  |                        | 6  |           |  | Florida      |  |            | 274   |  |  |  | 283   | 
|                | 24 |              |  |                        | 25 |           |  | Georgia      |  |            | 901   |  |  |  | 937   | 
|                |    |              |  |                        |    |           |  |              |  |            |       |  |  |  |       | 
|                | 32 |              |  |                        | 33 |           |  |              |  | $          | 1,274 |  |  |  | 1,320 | 
|                |    |              |  |                        |    |           |  |              |  |            |       |  |  |  |       | 

Three loans representing $98,000 in principal are over 30 days delinquent. The
loan-to-value ratio on delinquent loans is 20%.

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##### Table of Contents






ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Credit Risk

Credit risk is the risk that issuers of securities owned by the Company will
default, or other parties, including reinsurers, which owe the Company money,
will not pay. The Company attempts to minimize these risks by following a
conservative investment strategy and by contracting with reinsuring companies
that meet high standards for rating criteria and other qualifications. The
Company invests principally in government, governmental agency and high quality
corporate bonds having an A rating or better. The fixed maturity portfolio had
an average rating of Aa- as rated by Standard & Poors Corporation at March 31,
2003 and 2002.

Interest Rate Risk

Interest rate risk is the risk that interest rates will change and cause a
decrease in the value of an insurers investments. The Companys fixed
maturity investments are subject to interest rate risk. The Company seeks to
manage the impact of interest rate fluctuation through cash flow modeling,
which attempts to match the maturity schedule of its assets with expected
payout of its liabilities. Liabilities for interest sensitive products are
carried at full account value. The fixed maturity portfolio at March 31, 2003
and March 31, 2002 had an effective duration of 4.3 years and 4.4 years,
respectively.

The table below summarizes the Companys interest rate risk and shows the
effect of a hypothetical 100 basis point increase/decrease in interest rates on
the fair values of the fixed investment portfolio. The selection of 100 basis
point increases/decrease in interest rates should not be construed as a
prediction by the Companys management of future market events, but rather, to
illustrate the potential impact of such events. These calculations may not
fully capture the impact of the changes in the ratio of long-term rates to
short-term rates.

|                                       |  |   |                        |  |                              |                 |                           |  |                        |         |                      |  |                         |      |    |  | 
|-------------------------------------- |  | - | ---------------------- |  | ---------------------------- | --------------- | ------------------------- |  | ---------------------- | ------- | -------------------- |  | ----------------------- | ---- | -- |  | 
|                                       |  |   |                        |  |                              |                 |                           |  |                        |         | Estimated Fair Value |  | Hypothetical Percentage
|                                       |  |   | Estimated Value        |  | Estimated Change in Interest |                 | After Hypothetical Change |  | Increase (Decrease) In
|                                       |  |   | March 31, 2003         |  | Rates (bp-Basis Points)      |                 | in Interest Rates         |  | Shareholders' Equity  
|                                       |  |   |                        |  |                              |                 |                           |  |                       
|                                       |  |   | (dollars in thousands) |  |                              |                 |                           |  |                        |         |                      |  |                         |      |   
|Fixed Maturities  Held
for Investment |  | $ | 6,104                  |  |                              | 100 bp decrease |                           |  | 6,141                  |         |                      |  | N/A                     |     
|                                       |  |   |                        |  |                              | 100 bp increase |                           |  | 6,073                  |         |                      |  | N/A                     |     
|Fixed Maturities  Available for Sale  |  | $ | 157,895                |  |                              | 100 bp decrease |                           |  | 164,211                |         |                      |  | 7.6                     | %   
|                                       |  |   |                        |  |                              |                 | 100 bp increase           |  |                        | 152,053 |                      |  |                         | (7.0 | )%

19



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##### Table of Contents






ITEM 4. CONTROLS AND PROCEDURES



|(a) |  | Evaluation of Disclosure Controls and Procedures.The Companys Chief
Executive Officer and Chief Accounting Officer have evaluated the
effectiveness of the Companys disclosure controls and procedures (as such
term is defined in Rules 13a-14(c) and 15 d-14(c) under the Securities
Exchange Act of 1934, as amended (the Exchange Act) as of a date within
90 days prior to the filing date of this quarterly report (the Evaluation
Date). Based on such evaluation, such officers have concluded that, as
of the Evaluation Date, the Companys disclosure controls and procedures
are effective in alerting them on a timely basis to material information
relating to the Company (including the Companys consolidated
subsidiaries) required to be included in the Companys reports filed or
submitted under the Exchange Act.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | Changes in Internal Controls. Since the Evaluation Date, there have not
been any significant changes in the Companys internal controls or in
other factors that could significantly affect such controls.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

20



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##### Table of Contents






PART II  OTHER INFORMATION




Item 1. Legal Proceedings

The Company is a defendant in various actions incidental to the conduct of its
business. The Company intends to vigorously defend the litigation and while
the ultimate outcome of these matters cannot be estimated with certainty,
management does not believe the actions will result in any material loss to the
Company.

The Company has reached partial settlement regarding $900,000 in reinsurance
coverage. A lawsuit was initiated by the Company in the third quarter of 2001.
To date, the Company has received $475,000 and continues to seek additional
recoveries against the reinsurance brokers through already existing legal
channels. The remaining amount outstanding is included in Amounts due
from reinsurers on the consolidated condensed balance sheet.




Item 2. Changes in Securities and Use of Proceeds

NONE




Item 3. Defaults Upon Senior Securities

NONE




Item 4. Submission of Matters to a Vote of Security Holders

NONE




Item 5. Other Information

NONE




Item 6. Exhibits and Reports on Form 8-K



| |                                                                                                                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company filed a report on Form 8-K on April 30, 2003 pursuant to Item
12 of Form 8-K, Disclosures of Results of Operations and Financial
Condition as directed by the Securities and Exchange Commission in
Release No. 23-47583.

Exhibit 11  Statement re: Computation of Per Share Earnings

Exhibit 15  Letter Regarding Unaudited Interim Financial Information

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.

|      |  |          |  |                                                                    
|----- |  | -------- |  | -------------------------------------------------------------------
|      |  |          |  | COTTON STATES LIFE INSURANCE COMPANY
Registrant                    
|      |  |          |  |                                                                    
|Date: |  | 04/29/03 |  | /s/ J. Ridley Howard                                               
|      |  |          |  |                                                                    
|      |  |          |  | J. Ridley Howard, Chairman
President and Chief Executive Officer   
|      |  |          |  |                                                                    
|Date: |  | 04/29/03 |  | /s/ William J. Barlow                                              
|      |  |          |  |                                                                    
|      |  |          |  | William J. Barlow
Vice President of Finance and Assistant Treasurer

21



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##### Table of Contents



Certification Pursuant to Registrants
Filing Under Section 13(a) or 15(d) of the Securities and Exchange Act

I, J. Ridley Howard, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Cotton States Life
Insurance Company;                                                                                                                                                                                                                                   
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|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 the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrant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 registrant and we
have:                                                                                                     



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, 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 registrant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. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors;
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



|6. |  | The registrant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: |  | 04/29/03 |  |                                                                 
|      |  |          |  |                                                                 
|      |  |          |  |                                                                 
|      |  |          |  | /s/ J. Ridley Howard                                            
|      |  |          |  |                                                                 
|      |  |          |  | J. Ridley Howard, Chairman
President and Chief Executive Officer





---



##### Table of Contents



Certification Pursuant to Registrants
Filing Under Section 13(a) or 15(d) of the Securities and Exchange Act

I, William J. Barlow, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Cotton States Life
Insurance Company                                                                                                                                                                                                                                   
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|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
statement 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 the registrant as of, and for, the periods presented in this
quarterly report;                  
|  
|4. |  | The registrant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 registrant and we
have;                                                                                                    



| | a) |  | designed such disclosure control and procedures to ensure that
material information relating to the registrant, 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 registrant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 of the Evaluation Date;                                                                                                                          



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors;
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



|6. |  | The registrant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: |  | 04/29/03 |  |                                            
|      |  |          |  |                                            
|      |  |          |  |                                            
|      |  |          |  | /s/ William J. Barlow                      
|      |  |          |  |                                            
|      |  |          |  | William J. Barlow
Vice President of Finance





---



##### Table of Contents



Pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350)

The undersigned, as the President and Chief Executive Officer and Vice
President of Finance and Assistant Treasurer of Cotton States Life Insurance
Company, certifies that the Quarterly Report on Form 10-Q for the period ended
March 31, 2003, which accompanies this certification fully complies with the
requirements of Section 13(a) or 15(d), as applicable, of the Securities
Exchange Act of 1934 and the information contained in the periodic report
fairly presents, in all material respects, the financial condition and results
of operations of Cotton States Life Insurance Company at the dates and for the
periods indicated. The foregoing certification is made pursuant to §906 of
the Sarbanes-Oxley Act of 2002 (18 U.S.C.§1350) and no purchaser or seller of
securities or any other person shall be entitled to rely upon the foregoing
certification for any other purpose. The undersigned expressly disclaims any
obligation to update the foregoing certification except as required by law.

|      |  |          |  |                                                                    
|----- |  | -------- |  | -------------------------------------------------------------------
|Date: |  | 04/29/03 |  | /s/ J. Ridley Howard                                               
|      |  |          |  |                                                                    
|      |  |          |  | J. Ridley Howard
President and Chief Executive Officer             
|      |  |          |  |                                                                    
|Date: |  | 04/29/03 |  | /s/ William J. Barlow                                              
|      |  |          |  |                                                                    
|      |  |          |  | William J. Barlow
Vice President of Finance and Assistant Treasurer