UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    Form 10-K

The registrant meets the conditions set forth in General Instruction I(1)(a) and
(b) of Form 10-K and is therefore filing this Form with the reduced disclosure
format.



         [X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2000

                                       OR

         [ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934

                        Commission file numbers:  333-59765
                                                  333-59769
                                                  333-88045

                          LINCOLN BENEFIT LIFE COMPANY
             (Exact name of registrant as specified in its charter)

         Nebraska                                        470221457
         --------                                        ---------
(State or other jurisdiction of                      (I.R.S. Employer
incorporation or organization)                      Identification No.)

                             2940 South 84th Street
                             Lincoln, NE 68506-4142

                                  1-800-525-9287
              (Registrant's telephone number, including area code)

        Securities registered pursuant to Section 12(b) of the Act: None
        Securities registered pursuant to Section 12(g) of the Act: None

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

                  Yes          X                              No
                             -----                          ------

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]

     As of March 29, 2001, there were 25,000 shares of common capital stock
outstanding, par value $100 per share all of which shares are held by Allstate
Life Insurance Company.


<PAGE>



                          LINCOLN BENEFIT LIFE COMPANY
         (A wholly owned subsidiary of Allstate Life Insurance Company)
                       Annual Report for 2000 on Form 10-K

                                TABLE OF CONTENTS

                                                                            PAGE
                                     PART I

ITEM 1.  Business**......................................................   3
ITEM 2.  Properties**....................................................   4
ITEM 3.  Legal Proceedings...............................................   4
ITEM 4.  Submission of Matters to a Vote of Security Holders*............   N/A

                                     PART II

ITEM 5.  Market for Registrant's Common Equity and
         Related Stockholder Matters.....................................   4
ITEM 6.  Selected Financial Data*........................................   N/A
ITEM 7.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations.......................................   5
ITEM 7A. Quantitative and Qualitative Disclosures About
         Market Risk.....................................................   13
ITEM 8.  Consolidated Financial Statements and Supplementary Data........   13
ITEM 9.  Changes in and Disagreements with Accountants on
         Accounting and Financial Disclosure.............................   N/A

                                    PART III

ITEM 10. Directors and Executive Officers of the Registrant*.............   N/A
ITEM 11. Executive Compensation*.........................................   N/A
ITEM 12. Security Ownership of Certain Beneficial Owners and
         Management*.....................................................   N/A
ITEM 13. Certain Relationships and Related Transactions*.................   N/A

                                     PART IV

ITEM 14. Exhibits, Financial Statement Schedules, and
         Reports on Form 8-K.............................................   13

Index to Financial Statements Schedules..................................   14
Signatures...............................................................   15

*        Omitted pursuant to General Instruction I(2) of Form 10-K.
**       Item prepared in accordance with General Instruction I(2) of Form 10-K.


<PAGE>



                                     PART I

ITEM 1.  BUSINESS

Lincoln Benefit Life Company ("Lincoln Benefit" or the "Company") is a stock
life insurance company organized under the laws of the state of Nebraska in
1938. Our legal domicile and principal business address is 2940 South 84th
Street, Lincoln, Nebraska, 68506-4142. Lincoln Benefit is a wholly owned
subsidiary of Allstate Life Insurance Company ("Allstate Life" or "ALIC"), a
stock life insurance company incorporated under the laws of the State of
Illinois. Allstate Life is a wholly owned subsidiary of Allstate Insurance
Company ("AIC"), a stock property-liability insurance company incorporated under
the laws of Illinois. All outstanding capital stock of AIC is owned by The
Allstate Corporation ("Corporation").

Lincoln Benefit is authorized to conduct life insurance and annuity business in
the District of Columbia, Guam, U.S. Virgin Islands and all states except New
York.

Under the reinsurance agreements with Allstate Life, substantially all
contract-related transactions are transferred to Allstate Life. Through Lincoln
Benefit's reinsurance agreements with Allstate Life, substantially all of the
assets backing Lincoln Benefit's reinsured liabilities are owned by Allstate
Life. These assets represent the Company's general account and are invested and
managed by Allstate Life. Accordingly, the results of operations with respect to
applications received and contracts issued by Lincoln Benefit are not reflected
in the Company's financial statements. The amounts reflected in Lincoln
Benefit's financial statements relate only to the investment of those assets of
Lincoln Benefit that are not transferred to Allstate Life under the reinsurance
agreements. While the reinsurance agreements provide Lincoln Benefit with
financial backing from Allstate Life, it does not create a direct contractual
relationship between Allstate Life and Lincoln Benefit policyholders.

Under the Company's reinsurance agreements with ALIC, the Company reinsures all
reserve liabilities with ALIC except for variable contracts. The Company's
variable contract assets and liabilities are held in legally-segregated,
unitized Separate Accounts and are retained by the Company. However, the
transactions related to such variable contracts such as premiums, expenses and
benefits are transferred to ALIC.

Lincoln Benefit's general account assets, like the general account assets of
other insurance companies, including Allstate Life, must be invested in
accordance with applicable state laws. These laws govern the nature and quality
of investments that may be made by life insurance companies and the percentage
of their assets that may be committed to any particular type of investment. In
general, these laws permit us, within specified limits and subject to certain
qualifications, to invest in federal, state, and municipal obligations,
corporate bonds, preferred stocks, real estate mortgages, real estate and
certain other investments. All of Lincoln Benefit's general account assets are
available to meet its obligations.

Lincoln Benefit is engaged in a business that is highly competitive. Many other
life insurance companies and other entities sell insurance and annuities. There
are approximately 1,400 insurers in business in the United States. As of
December 31, 2000, A.M. Best Company assigns a rating of A+ (Superior) to
Allstate Life, which automatically reinsures all net general account business of
Lincoln Benefit. A.M. Best Company also assigns Lincoln Benefit a rating of
A+(r), because Lincoln Benefit automatically reinsures all general account
business with Allstate Life. Standard & Poor's Insurance Rating Services assigns
an AA+ (Very Strong.) to Lincoln Benefit's financial strength rating. Moody's
assigns an Aa2 (Excellent) financial stability rating to Lincoln Benefit.
Lincoln Benefit shares the same ratings as its parent, Allstate Life.

Although the federal government generally does not directly regulate the
business of insurance, federal initiatives often have an impact on the business
in a variety of ways. Current and proposed measures which may significantly
affect the Company's insurance business relate to the taxation of insurance
companies, the tax treatment of insurance products and the removal of barriers
preventing banks and other financial organizations from engaging in the
insurance business.

Lincoln Benefit Life is regulated by the Securities and Exchange Commission
("SEC") as an issuer of registered products. The SEC also regulates certain
Lincoln Benefit Life Separate Accounts which issue variable life contracts or,
together with the Company, issue variable annuity contracts.

                                       3
<PAGE>
ITEM 2.  PROPERTIES

Lincoln  Benefit  leases  office  space  in  Lincoln,  Nebraska.   The  combined
leased spaces are used for home office administration and marketing operations.

ITEM 3.  LEGAL PROCEEDINGS

The Company and its Board of  Directors  know of no material  legal  proceedings
pending to which the  Company is a party or which  would  materially  affect the
Company.  The Company is involved in pending and  threatened  litigation  in the
normal course of its business in which claims for monetary damages are asserted.
Management,  after  consultation  with legal  counsel,  does not  anticipate the
ultimate liability arising from such pending or threatened  litigation to have a
material effect on the financial condition of the Company.

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

All of the Company's  outstanding  shares are owned by its parent,  ALIC. ALIC's
outstanding shares are owned by AIC. All of the outstanding capital stock of AIC
is owned by The Corporation.


                                      4
<PAGE>
ITEM 7.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations


                          LINCOLN BENEFIT LIFE COMPANY
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

      THE FOLLOWING DISCUSSION HIGHLIGHTS SIGNIFICANT FACTORS INFLUENCING THE
RESULTS OF OPERATIONS AND CHANGES IN FINANCIAL POSITION OF LINCOLN BENEFIT LIFE
COMPANY (THE "COMPANY"). IT SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL
STATEMENTS AND RELATED NOTES. TO CONFORM WITH THE 2000 PRESENTATION, CERTAIN
PRIOR YEAR AMOUNTS HAVE BEEN RECLASSIFIED.

OVERVIEW

     The Company is a wholly owned subsidiary of Allstate Life Insurance Company
("ALIC"), which is a wholly owned subsidiary of Allstate Insurance Company
("AIC"), a wholly owned subsidiary of The Allstate Corporation ("Corporation").
The Company markets a broad line of life insurance and investment products
through independent insurance agents and brokers. Life insurance consists of
traditional products, including term and whole life, interest-sensitive life,
immediate annuities with life contingencies, variable life and indexed life
insurance. Investment products include deferred annuities and immediate
annuities without life contingencies. Deferred annuities include fixed rate,
market value adjusted, indexed and variable annuities.

     The Company has identified itself as a single segment entity.

     The assets and liabilities related to variable annuity and variable life
contracts are legally segregated and reflected as Separate Accounts. The assets
of the Separate Accounts are carried at fair value. Separate Accounts
liabilities represent the contractholders' claims to the related assets and are
carried at the fair value of the assets. In the event that the asset value of
certain contractholder accounts are projected to be below the value guaranteed
by the Company, a liability is established through a charge to earnings.
Investment income and realized gains and losses of the Separate Accounts accrue
directly to the contractholders and therefore, are not included in the Company's
statements of operations and comprehensive income.

     On January 25, 2000, the Company paid a dividend of all common shares of
AFD, Inc. ("AFDI") stock, a registered broker-dealer, to ALIC. Prior to the
dividend, AFDI had been consolidated in the Company's financial statements and
related disclosures. In conjunction with the dividend, the Company has restated
its prior year financial results to exclude AFDI.

RESULTS OF OPERATIONS

($ in thousands)
<TABLE>
<CAPTION>
                                      2000        1999       1998
                                    --------    --------   --------
<S>                                 <C>         <C>        <C>
Net investment income               $ 12,214    $ 10,740   $ 10,752

Realized capital gains and losses        (95)       (913)       134

Other expense                             20       2,301         42

Income tax expense                     4,221       2,560      3,611
                                    --------    --------   --------
Net income                          $  7,878    $  4,966   $  7,233
                                    ========    ========   ========
</TABLE>

     The Company has reinsurance agreements under which contract and policy
related transactions are transferred, primarily to ALIC. The Company also has
reinsurance agreements with third parties. The Company's results of operations
include primarily net investment income and realized capital gains and losses
earned on the assets of the Company that are not transferred under the
reinsurance agreements. Certain non-investment related expenses which are not
transferred under the reinsurance agreements are presented in other expenses.

                                       5

<PAGE>

                          LINCOLN BENEFIT LIFE COMPANY
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     Net income was $7.9 million in 2000 compared to $5.0 million in 1999, due
to the $2.0 million write-down of the Company's building and unamortized
building improvements in 1999 as well as increased net investment income and
decreased capital losses in 2000. In 1999, net income was $5.0 million compared
to $7.2 million in 1998 as increased net investment income was more than offset
by realized capital losses and the $2.0 million write-down.

     Pretax net investment income increased 13.7% to $12.2 million in 2000 due
to higher investment balances, before the impact of unrealized gains and losses
on fixed income securities, and reduced investment expenses. In 1999, pretax net
investment income was consistent with 1998 at $10.7 million as higher investment
balances, before the impact of unrealized gains and losses on fixed income
securities, and reduced investment expenses were offset by slightly lower
investment yields. For both years, the higher investment balances arose from
positive cash flows from operating activities. Investments, excluding Separate
Accounts and unrealized gains and losses on fixed income securities, grew 10.9%
and 4.6% in 2000 and 1999, respectively. The Company expects to experience lower
investment yields due, in part, to the reinvestment of proceeds from calls and
maturities and the investment of positive cash flows from operations in
securities yielding less than the average portfolio rate.

     Realized capital losses, after-tax, were $62 thousand and $593 thousand in
2000 and 1999, respectively, compared to realized capital gains of $87 thousand
in 1998. Sales of fixed income securities resulted in the majority of the losses
in 2000 and 1999. In 1998, the increase in realized capital gains arose
principally from pre-payments of fixed income securities. Year-to-year
fluctuations in realized capital gains and losses are largely the result of the
timing of sales decisions reflecting management's view of individual securities
and overall market conditions.

 FINANCIAL POSITION

($ in thousands)
<TABLE>
<CAPTION>
                                              2000          1999
                                           ----------   ----------
<S>                                        <C>          <C>
Fixed income securities (1)                $  170,142   $  157,218
Short-term                                     11,243        1,919
                                           ----------   ----------
      Total investments                    $  181,385   $  159,137
                                           ==========   ==========
Reinsurance recoverable from ALIC          $8,366,927   $7,539,995
                                           ==========   ==========
Separate Accounts assets and liabilities   $1,648,691   $1,411,996
                                           ==========   ==========
Contractholder funds                       $8,157,502   $7,369,664
                                           ==========   ==========
</TABLE>

(1)  Fixed income securities are carried at fair value. Amortized cost for these
     securities was $166,893 and $158,747 at December 31, 2000 and 1999,
     respectively.

     Total investments were $181.4 million at December 31, 2000 compared to
$159.1 million at December 31, 1999. The increase was due primarily to positive
cash flows generated from operations and unrealized gains on fixed income
securities. Investments at December 31, 2000, excluding Separate Accounts and
unrealized gains and losses on fixed income securities, grew 10.9% from December
31, 1999. Excluding the $10 million capital contribution made by ALIC in
December 2000, investments grew 4.7% from 1999.

                                       6


<PAGE>

                          LINCOLN BENEFIT LIFE COMPANY
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FIXED INCOME SECURITIES

     The Company's fixed income securities portfolio consists of publicly traded
corporate bonds, U.S. government bonds, mortgage-backed securities and municipal
bonds. The Company generally holds its fixed income securities to maturity, but
has classified all of these securities as available for sale to allow maximum
flexibility in portfolio management. At December 31, 2000 unrealized net capital
gains on the fixed income securities portfolio totaled $3.2 million compared to
unrealized net capital losses of $1.5 million at December 31, 1999. The change
in the unrealized position is primarily attributable to a decrease in interest
rates.

     At December 31, 2000, substantially all of the Company's fixed income
securities portfolio was rated investment grade, which is defined by the Company
as a security having a National Association of Insurance Commissioners ("NAIC")
rating of 1 or 2, a Moody's rating of Aaa, Aa, A or Baa, or a comparable Company
internal rating. The quality mix of the Company's fixed income securities
portfolio at December 31, 2000 is presented in the following table.

($ in thousands)

<TABLE>
<CAPTION>
      NAIC
    RATINGS       MOODY'S EQUIVALENT DESCRIPTION              FAIR VALUE        PERCENT TO TOTAL
    -------       ------------------------------              -----------       ----------------
<S>               <C>                                         <C>               <C>
       1          Aaa/Aa/A                                     $  144,885               85.2%
       2          Baa                                              21,084               12.4%
       5          Caa or lower                                      4,173                2.4%
                                                               ----------              ------
                                                               $  170,142              100.0%
                                                               ==========              ======
</TABLE>

     At December 31, 2000 and 1999, $42.3 million and $42.0 million,
respectively, of the fixed income portfolio was invested in mortgage-backed
securities ("MBS"). The MBS portfolio consists primarily of securities which
were issued by or have underlying collateral that is guaranteed by U.S.
government agencies or sponsored entities, thus minimizing credit risk.

     The MBS portfolio is subject to interest rate risk since the price
volatility and ultimate realized yield are affected by the rate of repayment of
the underlying mortgages. The Company attempts to limit interest rate risk on
these securities by investing a portion of the portfolio in securities that
provide prepayment protection. At December 31, 2000, over 21.3% of the MBS
portfolio was invested in planned amortization class bonds.

     The Company closely monitors its fixed income portfolio for declines in
value that are other than temporary. Securities are placed on non-accrual status
when they are in default or when the receipt of interest payments is in doubt.

SHORT-TERM INVESTMENTS
     The Company's short-term investment portfolio was $11.2 million and $1.9
million at December 31, 2000 and 1999, respectively. The significant increase is
primarily due to a $10 million capital contribution from ALIC in December 2000.
The Company invests available cash balances primarily in taxable short-term
securities having a final maturity date or redemption date of one year or less.

CONTRACTHOLDER FUNDS AND REINSURANCE RECOVERABLE FROM ALIC
     During 2000, contractholder funds and amounts recoverable from ALIC under
reinsurance agreements increased $787.8 million and $826.9 million,
respectively. The increases resulted primarily from increased sales of market
value adjusted annuity contracts as well as interest credited on fixed
annuities, partially offset by surrenders and withdrawals of fixed annuity
contracts. As the Company's interest-sensitive life policies and annuity
contracts inforce grow and age, the dollar amount of surrenders and withdrawals
will likely increase. While the overall amount of surrenders may increase in the
future, a significant increase in the level of surrenders relative to total
contractholder account balances is not anticipated. Reinsurance recoverable from
ALIC relates to contract benefit obligations ceded to ALIC.

                                       7

<PAGE>

                          LINCOLN BENEFIT LIFE COMPANY
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


SEPARATE ACCOUNTS

     Separate Accounts assets and liabilities increased 16.8% to $1.65 billion
at December 31, 2000 as compared to the December 31, 1999 balance. The increases
were primarily attributable to increased sales of variable annuity and variable
life contracts, partially offset by unrealized losses in the Separate Accounts
investment portfolios as well as surrenders and withdrawals.

MARKET RISK

     Market risk is the risk that the Company will incur losses due to adverse
changes in equity prices or interest rates. The Company's primary market risk
exposure is to changes in interest rates, although the Company also has certain
exposures to changes in equity prices.

CORPORATE OVERSIGHT

     The Company, administers and oversees investment risk management processes
primarily through its Board of Directors and the Investment Committee and the
Credit and Risk Management Committee ("CRMC"). The Board of Directors provide
executive oversight of investment activities. The CRMC is a senior management
committee consisting of the Chief Investment Officer, the Investment Risk
Manager, and other investment officers who are responsible for the day-to-day
management of investment risk. The CRMC meets at least monthly to provide
detailed oversight of investment risk, including market risk.

     The Company has investment guidelines that define the overall framework for
managing market and other investment risks, including the accountabilities and
controls over these activities. In addition, the Company has specific Board of
Directors-approved investment policies that delineate the investment limits and
strategies that are appropriate given the liquidity, surplus, product and
regulatory requirements.

     The day-to-day management of market risk within defined tolerance ranges
occurs as portfolio managers buy and sell within their respective markets based
upon the acceptable boundaries established by the investment guidelines and
investment policies. The Company has implemented a comprehensive daily
measurement process, administered by the Investment Risk Manager, for monitoring
compliance to limits established by these governance documents.

INTEREST RATE RISK

     Interest rate risk is the risk that the Company will incur economic losses
due to adverse changes in interest rates, as the Company invests substantial
funds in interest-sensitive assets. One of the measures used to quantify this
exposure is duration. Duration measures the sensitivity of the fair value of
assets to changes in interest rates. For example, if interest rates increase 1%,
the fair value of an asset with a duration of 5 years is expected to decrease in
value by approximately 5%. At December 31, 2000, the Company's asset duration
was approximately 3.9 years versus 4.1 years at December 31, 1999.

     To calculate duration, the Company projects asset cash flows, and discounts
them to a net present value basis using a risk-free market rate adjusted for
credit quality, sector attributes, liquidity and other specific risks. Duration
is calculated by revaluing these cash flows at an alternative level of interest
rates, and determining the percentage change in fair value from the base case.
The projections include assumptions (based upon historical market and Company
specific experience) reflecting the impact of changing interest rates on the
prepayment and/or option features of instruments, where applicable. Such
assumptions relate primarily to mortgage-backed securities, collateralized
mortgage obligations, and municipal and corporate obligations.

                                       8

<PAGE>

                          LINCOLN BENEFIT LIFE COMPANY
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     Based upon the information and assumptions the Company uses in its duration
calculation and interest rates in effect at December 31, 2000, management
estimates that a 100 basis point immediate, parallel increase in interest rates
("rate shock") would decrease the net fair value of its assets identified above
by approximately $6.6 million versus $6.5 million at December 31, 1999. The
selection of a 100 basis point immediate parallel increase in interest rates
should not be construed as a prediction by the Company's management of future
market events, but rather, is intended to illustrate the potential impact of
such an event.

     To the extent that actual results differ from the assumptions utilized, the
Company's duration and rate shock measures could be significantly impacted.
Additionally, the Company's calculation assumes that the current relationship
between short-term and long-term interest rates (the term structure of interest
rates) will remain constant over time. As a result, these calculations may not
fully capture the impact of non-parallel changes in the term structure of
interest rates and/or large changes in interest rates.

EQUITY PRICE RISK

     Equity price risk is the risk that the Company will incur economic losses
due to adverse changes in a particular stock, stock fund or stock market. At
December 31, 2000 the Company had variable annuity and variable life funds with
balances totaling $1.65 billion. This is an increase over the $1.41 billion of
variable funds at December 31, 1999. The Company earns mortality and expense
fees as a percentage of fund balance. In the event of an immediate decline of
10% in the fund balances due to equity market declines, the Company would earn
approximately $2.1 million less in annualized fee income which would be ceded to
ALIC. This is an increase over the $1.8 million amount determined at December
31, 1999. The contractholder of a variable annuity product may elect to purchase
a minimum death benefit guarantee or a minimum income benefit guarantee,
generally at the time of purchase. Both guarantees may subject the Company to
additional equity price risk, as the beneficiary or contractholder may receive
their benefit for an amount greater than the fund balance under contractually
defined circumstances and terms. The Company recorded actuarially determined
reserves as of December 31, 2000 for these exposures and has ceded them either
to ALIC or a third party. The Company expects growth in its variable annuity
products in the future, stemming from both new sales as well as market value
appreciation, which will increase its exposure to equity price risk.

CAPITAL RESOURCES AND LIQUIDITY

CAPITAL RESOURCES

     Under the terms of reinsurance agreements, premiums and deposits, excluding
those relating to Separate Accounts, are transferred primarily to ALIC, which
maintains the investment portfolios supporting the Company's products. Payments
of policyholder claims, benefits, contract maturities, contract surrenders and
withdrawals and certain operating costs are also reimbursed primarily by ALIC,
under the terms of the reinsurance agreements. The Company continues to have
primary liability as a direct insurer for risks reinsured. The Company's ability
to meet liquidity demands is dependent on ALIC's ability to meet those demands.
ALIC's claims-paying ability was rated Aa2, AA+, and A+ by Moody's, Standard &
Poor's and A.M. Best, respectively, at December 31, 2000.

     The primary sources for the remainder of the Company's funds are collection
of principal and interest from the investment portfolio and capital
contributions from ALIC. The primary uses for the remainder of the Company's
funds are to purchase investments and pay costs associated with the maintenance
of the Company's investment portfolio.

CAPITAL CONTRIBUTION

     In December 2000, the Company received a $10 million capital contribution
from ALIC.


                                       9

<PAGE>

                          LINCOLN BENEFIT LIFE COMPANY
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

DEBT

     The Company had no outstanding debt at December 31, 2000 and 1999. The
Company has entered into an intercompany loan agreement with the Corporation.
The amount of intercompany loans available to the Company is at the discretion
of the Corporation. The maximum amount of loans the Corporation will have
outstanding to all its eligible subsidiaries at any given point in time is
limited to $1 billion. The Corporation uses commercial paper borrowings, bank
lines of credit and repurchase agreements to fund intercompany borrowings.

FINANCIAL RATINGS AND STRENGTH

     At December 31, 2000, the Moody's, Standard and Poor's and A. M. Best
claims-paying ratings for the Company were Aa2, AA+ and A+, respectively.
Additionally, A.M. Best affirmed its 12/31/00 rating in the first quarter of
2001.

LIQUIDITY

     The NAIC has a standard for assessing the solvency of insurance companies,
which is referred to as risk-based capital ("RBC"). The standard is based on a
formula for determining each insurer's RBC and a model law specifying regulatory
actions if an insurer's RBC falls below specified levels. The RBC formula for
life insurance companies establishes capital requirements relating to insurance,
business, asset and interest rate risks. At December 31, 2000, RBC for the
Company was significantly above a level that would require regulatory action.

REGULATIONS AND LEGAL PROCEEDINGS

     The Company's business is subject to the effects of a changing social,
economic and regulatory environment. Recent public and regulatory initiatives
have varied and have included employee benefit regulations, removal of barriers
preventing banks from engaging in the securities and insurance business, tax law
changes affecting the taxation of insurance companies, the tax treatment of
insurance products and its impact on the relative desirability of various
personal investment vehicles. The ultimate changes and eventual effects, if any,
of these initiatives are uncertain.

     From time to time the Company is involved in pending and threatened
litigation in the normal course of its business in which claims for monetary
damages are asserted. In the opinion of management, the ultimate liability, if
any, in one or more of these actions in excess of amounts currently reserved is
not expected to have a material effect on the results of operations, liquidity
or financial position of the Company.

GUARANTY FUNDS

     Under state insurance guaranty fund laws, insurers doing business in a
state can be assessed, up to prescribed limits, for certain obligations of
insolvent insurance companies to policyholders and claimants. The Company's
expenses related to these funds have been immaterial and are ceded to ALIC under
reinsurance agreements.

OTHER DEVELOPMENTS

     The NAIC's codification initiative has produced a comprehensive guide of
statutory accounting principles, which the Company will implement effective
January 2001. The Company's state of domicile, Nebraska, has passed legislation
revising various statutory accounting requirements to conform to codification.
These requirements did not have a material impact on the statutory surplus of
the Company.

                                       10


<PAGE>

                          LINCOLN BENEFIT LIFE COMPANY
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS AND RISK FACTORS

     This document contains "forward-looking statements" that anticipate results
based on management's plans that are subject to uncertainty. These statements
are made subject to the safe-harbor provisions of the Private Securities
Litigation Reform Act of 1995.

     Forward-looking statements do not relate strictly to historical or current
facts and may be identified by their use of words like "plans," "expects,"
"will," "anticipates," "estimates," "intends," "believes," "likely" and other
words with similar meanings. These statements may address, among other things,
our strategy for growth, product development, regulatory approvals, market
position, expenses, financial results and reserves. Forward-looking statements
are based on management's current expectations of future events. We cannot
guarantee that any forward-looking statement will be accurate. However, we
believe that our forward-looking statements are based on reasonable, current
expectations and assumptions. We assume no obligation to update any
forward-looking statements as a result of new information or future events or
developments.

     If the expectations or assumptions underlying our forward-looking
statements prove inaccurate or if risks or uncertainties arise, actual results
could differ materially from those communicated in our forward-looking
statements. In addition to the normal risks of business, the Company is subject
to significant risk factors, including those listed below which apply to it as
an insurance business.

-    Changes in market interest rates can have adverse effects on the Company's
     investment portfolio and investment income. Increasing market interest
     rates have an adverse impact on the value of the investment portfolio by
     decreasing unrealized capital gains on fixed income securities. Declining
     market interest rates could have an adverse impact on the Company's
     investment income as the Company invests proceeds from positive cash flows
     from operations and reinvests proceeds from maturing and called investments
     into new investments that could be yielding less than the portfolio's
     average rate.

-    The impact of decreasing Separate Accounts balances as a result of
     fluctuating market conditions could cause contract charges ceded by the
     Company to decrease.

-    In order to manage interest rate risk, from time to time the effective
     duration of the assets and liabilities of the investment portfolio is
     adjusted. Those adjustments may have an impact on the value of the
     investment portfolio and on investment income.

-    State insurance regulatory authorities require insurance companies to
     maintain specified levels of statutory capital and surplus. In addition,
     competitive pressures require the Company to maintain financial strength or
     claims-paying ability ratings. These restrictions affect the Company's
     ability to use its capital.

-    The Company distributes some of its products under agreements with other
     members of the financial services industry that are not affiliated with the
     Company. Termination of one or more of these agreements due to changes in
     control or other factors of any of these entities could have a detrimental
     effect on the segment's sales. This risk may be exacerbated by the
     enactment of the Gramm-Leach-Bliley Act of 1999, which eliminates many
     federal and state law barriers to affiliations among banks, securities
     firms, insurers and other financial service providers.

                                       11
<PAGE>

                          LINCOLN BENEFIT LIFE COMPANY
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

-    A number of enacted and pending legislative measures could lead to
     increased consolidation and increased competition for business and for
     capital in the financial services industry.

     -    At the federal level, these measures include the recently enacted
          Gramm-Leach-Bliley Act of 1999, which eliminates may federal and state
          law barriers to affiliations among banks, securities firms, insurers
          and other financials service providers.

     -    At the state level, these measures include legislation to permit
          mutual insurance companies to covert to a hybrid structure known as a
          mutual holding company, thereby allowing insurance companies owned by
          their policyholders to become stock insurance companies owned (through
          one or more intermediate holding companies) more than 50% by their
          policyholders and potentially up to 49% by stockholders. Also several
          large mutual life insurers have used or are expected to use existing
          state laws and regulations governing the conversion of mutual
          insurance companies into stock insurance companies (demutualization).

     -    In addition, state insurance regulators are reexamining the regulatory
          framework that currently governs the United States insurance business.
          They are engaged in an effort to determine the proper role of the
          state insurance regulation in the United States financial services
          industry following the enactment of the Graham-Leach-Bliley Act. The
          Company cannot predict whether any state or federal measures will be
          adopted to change the nature or scope of the regulation of the
          insurance business or what effect any such measures would have on the
          Company.

-    Deferred annuities and interest-sensitive life insurance products receive
     favorable policyholder taxation under current tax laws and regulations. Any
     legislative or regulatory changes that adversely alter this treatment are
     likely to negatively affect the demand for these products. Additionally,
     the demand for life insurance products which are used to address a
     customer's estate planning needs may be impacted to the extent any
     legislative changes to the current estate tax laws occur.

-    Financial strength ratings have become an increasingly important factor in
     establishing the competitive position of insurance companies and,
     generally, may be expected to have an effect on an insurance company's
     sales. On an ongoing basis, rating agencies review the financial
     performance and condition of insurers. A downgrade, while not expected,
     could have a material adverse effect on the Company's business, financial
     condition and results of operations.

-    Additional risk factors regarding market risk are incorporated by reference
     to the discussion of "Market Risk" beginning on page 8.

                                       12
<PAGE>


ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The pertinent  provisions of  Management's  Discussion and Analysis of Financial
Condition and Results of Operations are herein incorporated by reference.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


                                     PART IV

ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

         (a) The following  documents are filed as part of this Report. The page
number,  if any,  listed  opposite a document  indicates  the page number in the
sequential numbering system in the manually signed original of this Report where
such document can be found.

      (1) The financial statements filed as part of this Report are
          listed in Item 8.

      (2) Financial Statement Schedules

          Schedule IV - Reinsurance    page F-19

         (c)  Exhibits

              Exh. No.    Description
              --------    -----------
              3(a)        Articles of Incorporation*
              3(b)        Bylaws*
-------------------------------------------------
*    Incorporated herein by reference to the Registration  Statement on Form S-6
     for the Lincoln  Benefit Life Variable  Life Account  (File No.  333-47717)
     filed March 11, 1998.

                                       13
<PAGE>

                              Financial Statements

                                      INDEX
                                                                           PAGE

Independent Auditors' Report............................................    F-1

Financial Statements:

   Statements of Operations and Comprehensive Income
      for the Years Ended December 31, 2000, 1999 and 1998..............    F-2

   Statements of Financial Position
      December 31, 2000 and 1999........................................    F-3

   Statements of Shareholder's Equity for the Years Ended
      December 31, 2000, 1999 and 1998..................................    F-4

   Statements of Cash Flows for the Years Ended
      December 31, 2000, 1999 and 1998..................................    F-5

   Notes to Financial Statements........................................    F-6

   Schedule IV - Reinsurance for the Years Ended
      December 31, 2000, 1999 and 1998..................................    F-19



                                       14
<PAGE>

<PAGE>
INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholder of
Lincoln Benefit Life Company:

--------------------------------------------------------------------------------

We have audited the accompanying Statements of Financial Position of Lincoln
Benefit Life Company (the "Company", an affiliate of The Allstate Corporation)
as of December 31, 2000 and 1999, and the related Statements of Operations and
Comprehensive Income, Shareholder's Equity and Cash Flows for each of the three
years in the period ended December 31, 2000. Our audits also included Schedule
IV--Reinsurance. These financial statements and financial statement schedule are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and financial statement schedule based
on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 2000 and
1999, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 2000 in conformity with accounting
principles generally accepted in the United States of America. Also, in our
opinion, Schedule IV--Reinsurance, when considered in relation to the basic
financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.

/s/ Deloitte & Touche LLP

Chicago, Illinois
February 23, 2001

                                      F-1
<PAGE>
                          LINCOLN BENEFIT LIFE COMPANY
               STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

<TABLE>
<CAPTION>
                                                                 YEAR ENDED DECEMBER 31,
                                                              ------------------------------
                                                                2000       1999       1998
                                                              --------   --------   --------
                                                                     ($ IN THOUSANDS)
<S>                                                           <C>        <C>        <C>
REVENUES
  Net investment income.....................................  $12,214    $10,740    $10,752
  Realized capital gains and losses.........................      (95)      (913)       134
  Other expense.............................................      (20)    (2,301)       (42)
                                                              -------    -------    -------
INCOME FROM OPERATIONS BEFORE INCOME TAX EXPENSE............   12,099      7,526     10,844
INCOME TAX EXPENSE..........................................    4,221      2,560      3,611
                                                              -------    -------    -------
NET INCOME..................................................    7,878      4,966      7,233
                                                              -------    -------    -------
OTHER COMPREHENSIVE INCOME (LOSS), AFTER-TAX
  Change in unrealized net capital gains and losses.........    3,106     (6,900)     1,774
                                                              -------    -------    -------
COMPREHENSIVE INCOME (LOSS).................................  $10,984    $(1,934)   $ 9,007
                                                              =======    =======    =======
</TABLE>

                       See notes to financial statements.

                                      F-2
<PAGE>
                          LINCOLN BENEFIT LIFE COMPANY
                        STATEMENTS OF FINANCIAL POSITION

<TABLE>
<CAPTION>
                                                                      DECEMBER 31,
                                                              ----------------------------
                                                                  2000            1999
                                                              -------------   ------------
                                                              ($ IN THOUSANDS, EXCEPT PAR
                                                                         VALUE)
<S>                                                           <C>             <C>
ASSETS
Investments
  Fixed income securities, at fair value (amortized cost
   $166,893 and $158,747)...................................   $   170,142     $  157,218
  Short-term................................................        11,243          1,919
                                                               -----------     ----------
  Total investments.........................................       181,385        159,137
Cash........................................................            76            982
Reinsurance recoverable from Allstate Life Insurance
  Company, net..............................................     8,366,927      7,539,995
Reinsurance recoverables from non-affiliates, net...........       353,789        260,324
Other assets................................................         2,393          4,447
Separate Accounts...........................................     1,648,691      1,411,996
                                                               -----------     ----------
      TOTAL ASSETS..........................................   $10,553,261     $9,376,881
                                                               ===========     ==========
LIABILITIES
Reserve for life-contingent contract benefits...............   $   550,334     $  419,117
Contractholder funds........................................     8,157,502      7,369,664
Current income taxes payable................................         2,785          3,404
Deferred income taxes.......................................         4,607            745
Payable to affiliates, net..................................         9,210         12,650
Other liabilities and accrued expenses......................         1,371          1,528
Separate Accounts...........................................     1,648,691      1,411,996
                                                               -----------     ----------
      TOTAL LIABILITIES.....................................    10,374,500      9,219,104
                                                               -----------     ----------
COMMITMENTS AND CONTINGENT LIABILITIES (NOTE 8)

SHAREHOLDER'S EQUITY
Common stock, $100 par value, 30,000 shares authorized,
  25,000 issued and outstanding.............................         2,500          2,500
Additional capital paid-in..................................       126,750        116,750
Retained income.............................................        47,399         39,521
Accumulated other comprehensive income (loss):
  Unrealized net capital gains (losses).....................         2,112           (994)
                                                               -----------     ----------
      Total accumulated other comprehensive income (loss)...         2,112           (994)
                                                               -----------     ----------
      TOTAL SHAREHOLDER'S EQUITY............................       178,761        157,777
                                                               -----------     ----------
      TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY............   $10,553,261     $9,376,881
                                                               ===========     ==========
</TABLE>

                       See notes to financial statements.

                                      F-3
<PAGE>
                          LINCOLN BENEFIT LIFE COMPANY
                       STATEMENTS OF SHAREHOLDER'S EQUITY

<TABLE>
<CAPTION>
                                                                       DECEMBER 31,
                                                              ------------------------------
                                                                2000       1999       1998
                                                              --------   --------   --------
                                                                     ($ IN THOUSANDS)
<S>                                                           <C>        <C>        <C>
COMMON STOCK................................................  $  2,500   $  2,500   $  2,500
                                                              --------   --------   --------
ADDITIONAL CAPITAL PAID-IN
Balance, beginning of year..................................  $116,750   $116,750   $116,750
Capital contribution........................................    10,000         --         --
                                                              --------   --------   --------
Balance, end of year........................................   126,750    116,750    116,750
                                                              --------   --------   --------
RETAINED INCOME
Balance, beginning of year..................................  $ 39,521   $ 34,555   $ 27,322
Net income..................................................     7,878      4,966      7,233
                                                              --------   --------   --------
Balance, end of year........................................    47,399     39,521     34,555
                                                              --------   --------   --------
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Balance, beginning of year..................................  $   (994)  $  5,906   $  4,132
Change in unrealized net capital gains and losses...........     3,106     (6,900)     1,774
                                                              --------   --------   --------
Balance, end of year........................................     2,112       (994)     5,906
                                                              --------   --------   --------
    Total shareholder's equity..............................  $178,761   $157,777   $159,711
                                                              ========   ========   ========
</TABLE>

                       See notes to financial statements.

                                      F-4
<PAGE>
                          LINCOLN BENEFIT LIFE COMPANY
                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                 YEAR ENDED DECEMBER 31,
                                                              ------------------------------
                                                                2000       1999       1998
                                                              --------   --------   --------
                                                                     ($ IN THOUSANDS)
<S>                                                           <C>        <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income..................................................  $  7,878   $  4,966   $  7,233
Adjustments to reconcile net income to net cash provided by
 operating activities
    Depreciation, amortization and other non-cash items.....      (868)    (5,313)         2
    Realized capital gains and losses.......................        95        913       (134)
    Changes in:
      Life-contingent contract benefits and contractholder
       funds................................................    (1,342)    (4,868)     1,394
      Income taxes payable..................................     1,570     (1,266)     3,042
      Other operating assets and liabilities................    (1,543)    11,286     (2,892)
                                                              --------   --------   --------
    Net cash provided by operating activities...............     5,790      5,718      8,645
                                                              --------   --------   --------
CASH FLOWS FROM INVESTING ACTIVITIES
Fixed income securities
  Proceeds from sales.......................................    15,856     17,760         --
  Investment collections....................................     7,430     13,580     10,711
  Investments purchases.....................................   (30,979)   (39,723)   (18,587)
Change in short-term investments, net.......................    (9,003)     2,068     (2,646)
                                                              --------   --------   --------
    Net cash used in investing activities...................   (16,696)    (6,315)   (10,522)
                                                              --------   --------   --------
CASH FLOWS FROM FINANCING ACTIVITIES
Capital contribution........................................    10,000         --         --
                                                              --------   --------   --------
    Net cash provided by financing activities...............    10,000         --         --
                                                              --------   --------   --------
NET DECREASE IN CASH........................................      (906)      (597)    (1,877)
CASH AT BEGINNING OF YEAR...................................       982      1,579      3,456
                                                              --------   --------   --------
CASH AT END OF YEAR.........................................  $     76   $    982   $  1,579
                                                              ========   ========   ========
</TABLE>

                       See notes to financial statements.

                                      F-5
<PAGE>
LINCOLN BENEFIT LIFE COMPANY
NOTES TO FINANCIAL STATEMENTS
($IN THOUSANDS)
-------------------------------------------------------------------

1.  GENERAL

BASIS OF PRESENTATION
The accompanying financial statements include the accounts of Lincoln Benefit
Life Company (the "Company"), a wholly owned subsidiary of Allstate Life
Insurance Company ("ALIC"), which is wholly owned by Allstate Insurance Company
("AIC"), a wholly owned subsidiary of The Allstate Corporation (the
"Corporation"). These financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America.

On January 25, 2000, the Company paid a dividend of all common shares of
AFD, Inc. ("AFDI") stock, a registered broker-dealer, to ALIC. Prior to the
dividend, AFDI had been consolidated in the Company's financial statements and
related disclosures. In conjunction with the dividend, the Company has restated
its prior year financial results to exclude AFDI. To conform with the 2000
presentation, certain amounts in the prior years' financial statements and notes
have been reclassified.

NATURE OF OPERATIONS
The Company markets a broad line of life insurance and investment products
primarily through independent insurance agents and brokers. Life insurance
consists of traditional products, including term and whole life,
interest-sensitive life, immediate annuities with life contingencies, variable
life, indexed life, credit and accident and health insurance. Investment
products include deferred annuities and immediate annuities without life
contingencies. Deferred annuities include fixed rate, market value adjusted,
indexed and variable annuities. In 2000, annuity deposits represented 77.9% of
the Company's total statutory premiums and deposits.

Annuity contracts and life insurance policies issued by the Company are subject
to discretionary surrender or withdrawal by customers, subject to applicable
surrender charges. These policies and contracts are reinsured primarily with
ALIC (see Note 3), which invests premiums and deposits to provide cash flows
that will be used to fund future benefits and expenses.

The Company monitors economic and regulatory developments that have the
potential to impact its business. Federal legislation has allowed for banks and
other financial organizations to have greater participation in the securities
and insurance businesses. This legislation presents an increased level of
competition for sales of the Company's products. Furthermore, the market for
deferred annuities and interest-sensitive life insurance is enhanced by the tax
incentives available under current law. Any legislative changes which lessen
these incentives are likely to negatively impact the demand for these products.
The demand for life insurance products, that are used to address a customer's
estate planning needs, may be impacted to the extent any legislative changes
occur to the current estate tax laws.

Additionally, traditional demutualizations of mutual insurance companies and
enacted and pending state legislation to permit mutual insurance companies to
convert to a hybrid structure known as a mutual holding company could have a
number of significant effects on the Company by (1) increasing industry
competition through consolidation caused by mergers and acquisitions related to
the new corporate form of business; and (2) increasing competition in the
capital markets.

The Company is authorized to sell life and savings products in all states except
New York, as well as in the District of Columbia, Guam and the U.S. Virgin
Islands. The top geographic locations for statutory premiums and deposits for
the Company were California, Pennsylvania, Wisconsin, Michigan, Florida,
Minnesota and Illinois for the year ended December 31, 2000. No other
jurisdiction accounted for more than 5% of statutory premiums and deposits. All
premiums and deposits are ceded under reinsurance agreements.

                                      F-6
<PAGE>

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

INVESTMENTS
Fixed income securities include bonds and mortgage-backed securities. All fixed
income securities are carried at fair value and may be sold prior to their
contractual maturity ("available for sale"). The difference between amortized
cost and fair value, net of deferred income taxes, is reflected as a component
of shareholder's equity. Provisions are recognized for declines in the value of
fixed income securities that are other than temporary. Such writedowns are
included in realized capital gains and losses. Short-term investments are
carried at cost or amortized cost which approximates fair value.

Investment income consists primarily of interest. Interest is recognized on an
accrual basis. Interest income on mortgaged-backed securities is determined on
the effective yield method, based on the estimated principal repayments. Accrual
of income is suspended for fixed income securities that are in default or when
the receipt of interest payments is in doubt. Realized capital gains and losses
are determined on a specific identification basis.

REINSURANCE RECOVERABLE
The Company has reinsurance agreements whereby all premiums, contract charges,
credited interest, policy benefits and certain expenses are ceded (see Note 7).
Such amounts are reflected net of such reinsurance in the statements of
operations and comprehensive income. Reinsurance recoverable and the related
reserve for life-contingent contract benefits and contractholder funds are
reported separately in the statements of financial position. The Company
continues to have primary liability as the direct insurer for risks reinsured.

Investment income earned on the assets which support contractholder funds and
the reserve for life-contingent contract benefits is not included in the
Company's financial statements as those assets are owned and managed under terms
of the reinsurance agreements.

RECOGNITION OF INSURANCE REVENUE AND RELATED BENEFITS AND INTEREST CREDITED
Traditional life insurance products consist principally of products with fixed
and guaranteed premiums and benefits, primarily term and whole life insurance
products and certain annuities with life contingencies. Premiums from these
products are recognized as revenue when due. Benefits are recognized in relation
to such revenue so as to result in the recognition of profits over the life of
the policy and are reflected in contract benefits.

Interest-sensitive life contracts are insurance contracts whose terms are not
fixed and guaranteed. The terms that may be changed include premiums paid by the
contractholder, interest credited to the contractholder account balance and one
or more amounts assessed against the contractholder. Premiums from these
contracts are reported as deposits to contractholder funds. Contract charge
revenue consists of fees assessed against the contractholder account balance for
the cost of insurance (mortality risk), contract administration and surrender
charges. Contract benefits include interest credited to contracts and claims
incurred in excess of related contractholder account balance.

Limited payment contracts, a type of immediate annuity with life contingencies
and single premium life contract, are contracts that provide insurance
protection over a contract period that extends beyond the period in which
premiums are collected. Gross premiums in excess of the net premium on limited
payment contracts are deferred and recognized over the contract period. Contract
benefits are recognized in relation to such revenues so as to result in the
recognition of profits over the life of the policy.

                                      F-7
<PAGE>

Contracts that do not subject the Company to significant risk arising from
mortality or morbidity are referred to as investment contracts. Fixed rate
annuities, market value adjusted annuities, indexed annuities and immediate
annuities without life contingencies are considered investment contracts.
Deposits received for such contracts are reported as deposits to contractholder
funds. Contract charge revenue for investment contracts consists of charges
assessed against the contractholder account balance for contract administration
and surrenders. Contract benefits include interest credited and claims incurred
in excess of the related contractholder account balance.

Crediting rates for fixed rate annuities and interest-sensitive life contracts
are adjusted periodically by the Company to reflect current market conditions.
Crediting rates for indexed annuities and indexed life products are based on an
interest rate index, such as LIBOR or an equity index, such as the S&P 500.

Variable annuity and variable life contracts are sold as Separate Accounts
products. The assets supporting these products are legally segregated and
available only to settle Separate Accounts contract obligations. Deposits
received are reported as Separate Accounts liabilities. The Company's contract
charge revenue for these contracts consists of charges assessed against the
Separate Accounts fund balances for contract maintenance, administration,
mortality, expense and surrenders.

All premiums, contract charges, contract benefits and interest credited are
reinsured.

INCOME TAXES
The income tax provision is calculated under the liability method and presented
net of reinsurance. Deferred tax assets and liabilities are recorded based on
the difference between the financial statement and tax bases of assets and
liabilities at the enacted tax rates. Deferred income taxes arise primarily from
unrealized capital gains or losses on fixed income securities carried at fair
value and differences in the tax bases of investments.

SEPARATE ACCOUNTS
The Company issues deferred variable annuities and variable life contracts, the
assets and liabilities of which are legally segregated and recorded as assets
and liabilities of the Separate Accounts. Absent any contract provision wherein
the Company guarantees either a minimum return or account value upon death or
annuitization, variable annuity and variable life contractholders bear the
investment risk that the Separate Accounts' funds may not meet their stated
investment objectives.

The assets of the Separate Accounts are carried at fair value. Separate Accounts
liabilities represent the contractholders' claims to the related assets and are
carried at the fair value of the assets. In the event that the asset value of
certain contractholder accounts are projected to be below the value guaranteed
by the Company, a liability is established through a charge to earnings.
Investment income and realized capital gains and losses of the Separate Accounts
accrue directly to the contractholders and therefore, are not included in the
Company's statements of operations and comprehensive income. As described
earlier, revenues to the Company from the Separate Accounts are recorded as
contract charges.

                                      F-8
<PAGE>

RESERVE FOR LIFE-CONTINGENT CONTRACT BENEFITS
The reserve for life-contingent contract benefits, which relates to traditional
life insurance, immediate annuities with life contingencies and certain variable
annuity contract guarantees, is computed on the basis of assumptions as to
future investment yields, mortality, morbidity, terminations and expenses. These
assumptions, which for traditional life insurance are applied using the net
level premium method, include provisions for adverse deviation and generally
vary by such characteristics as type of coverage, year of issue and policy
duration. Detailed reserve assumptions and reserve interest rates are outlined
in Note 6.

CONTRACTHOLDER FUNDS
Contractholder funds arise from the issuance of contracts that include an
investment component, including interest-sensitive life policies and certain
other investment contracts. Deposits received are recorded as interest-bearing
liabilities. Contractholder funds are equal to deposits received and interest
credited to the benefit of the contractholder less withdrawals, mortality
charges and administrative expenses. Detailed information on crediting rates and
surrender and withdrawal protection on contractholder funds are outlined in Note
6.

USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.

3.  RELATED PARTY TRANSACTIONS
REINSURANCE
The Company has reinsurance agreements whereby certain premiums, contract
charges, credited interest, policy benefits and expenses are ceded to ALIC, and
reflected net of such reinsurance in the statements of operations and
comprehensive income. Reinsurance recoverable and the related reserve for
life-contingent contract benefits and contractholder funds are reported
separately in the statements of financial position. The Company continues to
have primary liability as the direct insurer for risks reinsured.

Investment income earned on the assets which support contractholder funds and
the reserve for life-contingent contract benefits are not included in the
Company's financial statements as those assets are owned and managed under terms
of the reinsurance agreements. See Note 7 for more information.

BUSINESS OPERATIONS
The Company utilizes services provided by AIC and ALIC and business facilities
owned or leased, and operated by AIC in conducting its business activities. The
Company reimburses AIC and ALIC for the operating expenses incurred on behalf of
the Company. The Company is charged for the cost of these operating expenses
based on the level of services provided. Operating expenses, including
compensation and retirement and other benefit programs, allocated to the Company
were $35,109, $26,418, and $45,940 in 2000, 1999 and 1998, respectively. Of
these costs, the Company retains investment related expenses and certain
expenses which are not transferred under the reinsurance agreements and
presented in other expenses. All other costs are ceded to ALIC under reinsurance
agreements.

DEBT
The Company has entered into an intercompany loan agreement with the
Corporation. The amount of funds available to the Company at a given point in
time is dependent upon the debt position of the Corporation. There was no
outstanding balance at December 31, 2000 and 1999, respectively.

                                      F-9
<PAGE>

4.  INVESTMENTS

FAIR VALUES
The amortized cost, gross unrealized gains and losses, and fair value for fixed
income securities are as follows:

<TABLE>
<CAPTION>
                                           Gross
                                        Unrealized
                        Amortized   -------------------     Fair
 At December 31, 2000     Cost       Gains      Losses     Value
 --------------------   ---------   --------   --------   --------
<S>                     <C>         <C>        <C>        <C>
U.S. government and
  agencies              $ 18,191     $2,072    $    --    $ 20,263
Corporate                103,414      1,531     (1,966)    102,979
Municipal                  4,514        100        (38)      4,576
Mortgage-backed
  securities              40,774      1,593        (43)     42,324
                        --------     ------    -------    --------
  Total fixed income
   securities           $166,893     $5,296    $(2,047)   $170,142
                        ========     ======    =======    ========
<CAPTION>
 At December 31, 1999
 --------------------
<S>                     <C>         <C>        <C>        <C>
U.S. government and
  agencies              $ 11,849     $  606    $   (30)   $ 12,425
Corporate                 95,036        439     (3,282)     92,193
Municipal                 10,625         78       (108)     10,595
Mortgage-backed
  securities              41,237      1,372       (604)     42,005
                        --------     ------    -------    --------
  Total fixed income
   securities           $158,747     $2,495    $(4,024)   $157,218
                        ========     ======    =======    ========
</TABLE>


SCHEDULED MATURITIES
The scheduled maturities for fixed income securities are as follows at
December 31, 2000:

<TABLE>
<CAPTION>
                                          Amortized     Fair
                                            Cost       Value
                                          ---------   --------
<S>                                       <C>         <C>
Due in one year or less                   $  4,168    $  4,200
Due after one year through five years       68,568      68,389
Due after five years through ten years      39,422      39,201
Due after ten years                         13,961      16,028
                                          --------    --------
                                           126,119     127,818
Mortgage-backed securities                  40,774      42,324
                                          --------    --------
  Total                                   $166,893    $170,142
                                          ========    ========
</TABLE>

Actual maturities may differ from those scheduled as a result of prepayments by
the issuers.

                                      F-10
<PAGE>

NET INVESTMENT INCOME

<TABLE>
<CAPTION>
     Year Ended December 31,         2000       1999       1998
     -----------------------       --------   --------   --------
<S>                                <C>        <C>        <C>
Fixed income securities            $11,517    $10,380    $11,075
Short-term                             830        577        285
                                   -------    -------    -------
  Investment income, before
   expense                          12,347     10,957     11,360
  Investment expense                   133        217        608
                                   -------    -------    -------
  Net investment income            $12,214    $10,740    $10,752
                                   =======    =======    =======
</TABLE>

REALIZED CAPITAL GAINS AND LOSSES, AFTER TAX

<TABLE>
<CAPTION>
        Year Ended December 31,             2000       1999       1998
        -----------------------           --------   --------   --------
<S>                                       <C>        <C>        <C>
Fixed income securities                     $(95)     $(913)      $134
  Income taxes                               (33)      (320)        47
                                            ----      -----       ----
  Realized capital gains and losses,
   after tax                                $(62)     $(593)      $ 87
                                            ====      =====       ====
</TABLE>

Excluding calls and prepayments, gross gains of $1 were realized during 1999 and
gross losses of $95 and $914 were realized on sales of fixed income securities
during 2000 and 1999, respectively. There were no gross gains realized on sales
of fixed income securities during 2000 and 1998 and there were no gross losses
in 1998.

UNREALIZED NET CAPITAL GAINS AND LOSSES
Unrealized net capital gains on fixed income securities included in
shareholder's equity at December 31, 2000 are as follows:

<TABLE>
<CAPTION>
                                                     Gross
                                                  Unrealized
                       Amortized     Fair     -------------------   Unrealized
                         Cost       Value      Gains      Losses    Net Gains
                       ---------   --------   --------   --------   ----------
<S>                    <C>         <C>        <C>        <C>        <C>
Fixed income
 securities            $166,893    $170,142   $ 5,296    $(2,047)    $ 3,249
                       ========    ========   =======    =======
Deferred income taxes                                                 (1,137)
                                                                     -------
Unrealized net
 capital gains                                                       $ 2,112
                                                                     =======
</TABLE>

CHANGE IN UNREALIZED NET CAPITAL GAINS AND LOSSES

<TABLE>
<CAPTION>
     Year Ended December 31,          2000       1999       1998
     -----------------------        --------   --------   --------
<S>                                 <C>        <C>        <C>
Fixed income securities             $ 4,778    $(10,615)  $ 2,729
Deferred income taxes                (1,672)      3,715      (955)
                                    -------    --------   -------
Increase (decrease) in unrealized
 net capital gains                  $ 3,106    $ (6,900)  $ 1,774
                                    =======    ========   =======
</TABLE>

                                      F-11
<PAGE>

SECURITIES ON DEPOSIT
At December 31, 2000, fixed income securities with a carrying value of $9,067
were on deposit with regulatory authorities as required by law.

5.  FINANCIAL INSTRUMENTS

In the normal course of business, the Company invests in various financial
assets and incurs various financial liabilities. The fair value estimates of
financial instruments presented on the following page are not necessarily
indicative of the amounts the Company might pay or receive in actual market
transactions. Potential taxes and other transaction costs have not been
considered in estimating fair value. The disclosures that follow do not reflect
the fair value of the Company as a whole since a number of the Company's
significant assets (including reinsurance recoverables) and liabilities
(including traditional life and interest-sensitive life insurance reserves and
deferred income taxes) are not considered financial instruments and are not
carried at fair value. Other assets and liabilities considered financial
instruments, such as accrued investment income and cash, are generally of a
short-term nature. Their carrying values are assumed to approximate fair value.

FINANCIAL ASSETS
The carrying value and fair value of financial assets at December 31, are as
follows:

<TABLE>
<CAPTION>
                                2000                      1999
                       -----------------------   -----------------------
                        Carrying       Fair       Carrying       Fair
                         Value        Value        Value        Value
                       ----------   ----------   ----------   ----------
<S>                    <C>          <C>          <C>          <C>
Fixed income
 securities            $  170,142   $  170,142   $  157,218   $  157,218
Short-term                 11,243       11,243        1,919        1,919
Separate Accounts       1,648,691    1,648,691    1,411,996    1,411,996
</TABLE>

Fair values for fixed income securities are based on quoted market prices where
available. Non-quoted securities are valued based on discounted cash flows using
current interest rates for similar securities. Short-term investments are highly
liquid investments with maturities of less than one year whose carrying value
are deemed to approximate fair value. Separate Accounts assets are carried in
the statements of financial position at fair value based on quoted market
prices.

FINANCIAL LIABILITIES
The carrying value and fair value of financial liabilities at December 31, are
as follows:

<TABLE>
<CAPTION>
                                2000                      1999
                       -----------------------   -----------------------
                        Carrying       Fair       Carrying       Fair
                         Value        Value        Value        Value
                       ----------   ----------   ----------   ----------
<S>                    <C>          <C>          <C>          <C>
Contractholder funds
 on investment
 contracts             $6,401,863   $6,186,479   $5,716,583   $5,424,725
Separate Accounts       1,648,691    1,648,691    1,411,996    1,411,996
</TABLE>

The fair value of contractholder funds on investment contracts is based on the
terms of the underlying contracts. Investment contracts with no stated
maturities (single premium and flexible premium deferred annuities) are valued
at the account balance less surrender charges. The fair value of immediate
annuities and annuities without life contingencies with fixed terms is estimated
using discounted cash flow calculations based on interest rates currently
offered for contracts with similar terms and durations. Separate Accounts
liabilities are carried at the fair value of the underlying assets.

                                      F-12
<PAGE>

6.  RESERVE FOR LIFE-CONTINGENT CONTRACT BENEFITS AND CONTRACTHOLDER FUNDS
At December 31, the Reserve for life-contingent contract benefits consists of
the following:

<TABLE>
<CAPTION>
                                             2000       1999
                                           --------   --------
<S>                                        <C>        <C>
Immediate annuities:
  Structured settlement annuities          $ 73,719   $ 38,019
  Other immediate annuities                  36,884     41,250
Traditional life                            406,260    312,130
Other                                        33,471     27,718
                                           --------   --------
  Total Reserve for life-contingent
   contract benefits                       $550,334   $419,117
                                           ========   ========
</TABLE>

The assumptions for mortality generally utilized in calculating reserves
include, the 1983 group annuity mortality table for immediate annuities; and
actual Company experience plus loading for traditional life. Interest rate
assumptions vary from 6.5% to 7.8% for structured settlement annuities; 4.9% to
8.8% for other immediate annuities and 4.0% to 8.0% for traditional life. Other
estimation methods used include the present value of contractually fixed future
benefits for immediate annuities and the net level premium reserve method using
the Company's withdrawal experience rates for traditional life.

At December 31, Contractholder funds consists of the following:

<TABLE>
<CAPTION>
                                           2000         1999
                                        ----------   ----------
<S>                                     <C>          <C>
Interest-sensitive life                 $1,777,128   $1,669,748
Fixed annuities:
  Immediate annuities                      152,181      123,637
  Deferred annuities                     6,228,193    5,576,279
                                        ----------   ----------
  Total Contractholder funds            $8,157,502   $7,369,664
                                        ==========   ==========
</TABLE>

Contractholder funds are equal to deposits received and interest credited to the
benefit of the contractholder less withdrawals, mortality charges and
administrative expenses. Interest rates credited range from 5.0% to 8.2% for
interest-sensitive life contracts; 5.5% to 6.0% for immediate annuities and 0.0%
to 12.6% for deferred annuities. Withdrawal and surrender charge protection
includes: i) for interest-sensitive life, either a percentage of account balance
or dollar amount grading off generally over 20 years; and, ii) for deferred
annuities not subject to a market value adjustment, either a declining or a
level percentage charge generally over nine years or less. Approximately 34% of
deferred annuities are subject to a market value adjustment.

7.  REINSURANCE
The Company purchases reinsurance to limit aggregate and single losses on large
risks. The Company continues to have primary liability as the direct insurer for
risks reinsured. Estimating amounts of reinsurance recoverable is impacted by
the uncertainties involved in the establishment of loss reserves.

The Company cedes a portion of the mortality risk on certain term life policies
with a pool of reinsurers.

Amounts recoverable from reinsurers are estimated based upon assumptions
consistent with those used in establishing the liabilities related to the
underlying reinsured contracts. Except for ALIC, no single reinsurer had a
material obligation to the Company nor is the Company's business substantially
dependent upon any reinsurance contract.

The following amounts were ceded to ALIC under reinsurance agreements. See
Note 3 for discussion of reinsurance agreements with ALIC.

                                      F-13
<PAGE>
The effects of reinsurance on premiums written and earned and contract charges
for the years ended December 31, are as follows:

<TABLE>
<CAPTION>
                                 2000        1999        1998
                               ---------   ---------   ---------
<S>                            <C>         <C>         <C>
Premiums and Contract Charges
Direct                         $ 470,337   $ 389,741   $ 291,286
Assumed                                2           2           3
Ceded
  Affiliate                     (241,361)   (187,854)   (136,968)
  Non-affiliate                 (228,978)   (201,889)   (154,321)
                               ---------   ---------   ---------
  Premiums and contract
   charges, net of
   reinsurance                 $      --   $      --   $      --
                               =========   =========   =========
</TABLE>

The effects of reinsurance on credited interest, policy benefits and other
expenses for the years ended December 31, are as follows:

<TABLE>
<CAPTION>
                                 2000        1999        1998
                               ---------   ---------   ---------
<S>                            <C>         <C>         <C>
Credited Interest, Policy
 Benefits and Other Expenses
Direct                         $ 885,081   $ 869,393   $ 757,249
Assumed                               --          --          --
Ceded
  Affiliate                     (630,015)   (684,703)   (624,678)
  Non-affiliate                 (255,046)   (182,389)   (132,529)
                               ---------   ---------   ---------
  Credited interest, policy
   benefits and other
   expenses, net of
   reinsurance                 $      20   $   2,301   $      42
                               =========   =========   =========
</TABLE>

8.  COMMITMENTS AND CONTINGENT LIABILITIES

LEASES
The Company leases certain office facilities and computer equipment. Total rent
expense for all leases was $885, $2,042 and $1,743 in 2000, 1999 and 1998,
respectively. Minimum rental commitments under noncancelable operating leases
with initial or remaining term of more than one year as of December 31, are as
follows:

<TABLE>
<CAPTION>
                           2000
                         --------
  <S>                    <C>
  2001                    $   695
  2002                        617
  2003                        655
  2004                        684
  2005                        724
                          -------
                          $ 3,375
                          =======
</TABLE>

                                      F-14
<PAGE>

REGULATION AND LEGAL PROCEEDINGS
The Company's business is subject to the effects of a changing social, economic
and regulatory environment. Public and regulatory initiatives have varied and
have included employee benefit regulation, removal of barriers preventing banks
from engaging in the securities and insurance business, tax law changes
affecting the taxation of insurance companies, and tax treatment of insurance
products and its impact on the relative desirability of various personal
investment vehicles, and proposed legislation to prohibit the use of gender in
determining insurance rates and benefits. The ultimate changes and eventual
effects, if any, of these initiatives are uncertain.

In the normal course of its business, the Company is involved in pending or
threatened litigation and regulatory actions in which claims for monetary
damages are asserted. At this time, based on their present status, it is the
opinion of management, that the ultimate liability, if any, in one or more of
these actions in excess of amounts currently reserved is not expected to have a
material effect on the results of operations, liquidity or financial position of
the Company.

GUARANTY FUNDS
Under state insurance guaranty fund laws, insurers doing business in a state can
be assessed, up to prescribed limits, for certain obligations of insolvent
insurance companies to policyholders and claimants. The Company's expenses
related to these funds have been immaterial and are ceded to ALIC under
reinsurance agreements.

MARKETING AND COMPLIANCE ISSUES
Companies operating in the insurance and financial services markets have come
under the scrutiny of regulators with respect to market conduct and compliance
issues. Under certain circumstances, companies have been held responsible for
providing incomplete or misleading sales materials and for replacing existing
policies with policies that were less advantageous to the policyholder. The
Company monitors its sales materials and enforces compliance procedures to
mitigate exposure to potential litigation. The Company is a member of the
Insurance Marketplace Standards Association, an organization which advocates
ethical market conduct.

9.  INCOME TAXES
The Company joins the Corporation and its other eligible domestic subsidiaries
(the "Allstate Group") in the filing of a consolidated federal income tax return
and is party to a federal income tax allocation agreement (the "Allstate Tax
Sharing Agreement"). Under the Allstate Tax Sharing Agreement, the Company pays
to or receives from the Corporation the amount, if any, by which the Allstate
Group's federal income tax liability is affected by virtue of inclusion of the
Company in the consolidated federal income tax return. The Company has also
entered into a supplemental tax sharing agreement with respect to reinsurance
ceded to ALIC to allocate to ALIC the tax benefits and detriments related to
such reinsurance. Effectively, these agreements result in the Company's annual
income tax provision being computed as if the Company filed a separate return,
as adjusted for the reinsurance ceded to ALIC.

Prior to June 30, 1995, the Corporation was a subsidiary of Sears Roebuck & Co.
("Sears") and, with its eligible domestic subsidiaries, was included in the
Sears consolidated federal income tax return and federal income tax allocation
agreement. Effective June 30, 1995, the Corporation and Sears entered into a new
tax sharing agreement, which governs their respective rights and obligations
with respect to federal income taxes for all periods during which the
Corporation was a subsidiary of Sears, including the treatment of audits of tax
returns for such periods.

                                      F-15
<PAGE>

The Internal Revenue Service ("IRS") has completed its review of the Allstate
Group's federal income tax returns through the 1993 tax year. Any adjustments
that may result from IRS examinations of tax returns are not expected to have a
material impact on the financial position, liquidity or result of operations of
the Company.

The components of the deferred income tax assets and liabilities at
December 31, are as follow:

<TABLE>
<CAPTION>
                                                2000       1999
                                              --------   --------
<S>                                           <C>        <C>
Deferred Assets
Unrealized net capital losses                 $    --    $   535
Other assets                                       --        897
                                              -------    -------
  Total deferred assets                            --      1,432

Deferred Liabilities
Difference in tax bases of investments         (2,405)    (2,177)
Unrealized net capital gains                   (1,137)        --
Other liabilities                              (1,065)        --
                                              -------    -------
  Total deferred liabilities                   (4,607)    (2,177)
                                              -------    -------
  Net deferred liability                      $(4,607)   $  (745)
                                              =======    =======
</TABLE>

The components of the income tax expense for the year ended at December 31, are
as follows:

<TABLE>
<CAPTION>
                                        2000       1999       1998
                                      --------   --------   --------
<S>                                   <C>        <C>        <C>
Current                                $2,032    $ 3,645     $3,170
Deferred                                2,189     (1,085)       441
                                       ------    -------     ------
  Total income tax expense             $4,221    $ 2,560     $3,611
                                       ======    =======     ======
</TABLE>

The Company paid income taxes of $2,651, $3,826 and $568 in 2000, 1999 and 1998,
respectively.

A reconciliation of the statutory federal income tax rate to the effective
income tax rate on income from operations for the year ended December 31, is as
follows:

<TABLE>
<CAPTION>
                                         2000       1999       1998
                                       --------   --------   --------
<S>                                    <C>        <C>        <C>
Statutory federal income tax rate       35.0%      35.0%      35.0%
Other                                    (.1)      (1.0)      (1.7)
                                        ----       ----       ----
Effective income tax rate               34.9%      34.0%      33.3%
                                        ====       ====       ====
</TABLE>

Prior to January 1, 1984, the Company was entitled to exclude certain amounts
from taxable income and accumulate such amounts in a "policyholder surplus"
account. The balance in this account at December 31, 2000, approximately $340,
will result in federal income taxes payable of $119 if distributed by the
Company. No provision for taxes has been made as the Company has no plan to
distribute amounts from this account. No further additions to the account have
been permitted since 1983.

                                      F-16
<PAGE>

10.  STATUTORY FINANCIAL INFORMATION
The Company's statutory capital and surplus was $169,436 and $153,632 at
December 31, 2000 and 1999, respectively. The Company's statutory net income was
$15,805, $6,091 and $7,201 for the years ended December 31, 2000, 1999 and 1998,
respectively.

PERMITTED STATUTORY ACCOUNTING PRACTICES
The Company prepares its statutory financial statements in accordance with
accounting practices prescribed or permitted by the Nebraska Department of
Insurance. Prescribed statutory accounting practices include a variety of
publications of the National Association of Insurance Commissioners ("NAIC"), as
well as state laws, regulations and general administrative rules. Permitted
statutory accounting practices encompass all accounting practices not so
prescribed. The Company does not follow any permitted statutory accounting
practices that have a significant impact on statutory surplus or statutory net
income.

The NAIC has approved a January 1, 2001 implementation date for newly developed
statutory accounting principles ("codification"). The Company's state of
domicile, Nebraska, has passed legislation revising various statutory accounting
requirements to conform to codification. These requirements will not have a
material impact on the statutory surplus of the Company. The NAIC has installed
a formal maintenance process to develop and propose new guidance, as well as
on-going clarification and interpretation of issues. The impact of any future
changes will be recorded as they are approved by the NAIC.

DIVIDENDS
The ability of the Company to pay dividends is dependent on business conditions,
income, cash requirements of the Company and other relevant factors. The payment
of shareholder dividends by the Company without the prior approval of the state
insurance regulator is limited to formula amounts based on net income and
capital and surplus, determined in accordance with statutory accounting
practices, as well as the timing and amount of dividends paid in the preceding
twelve months. The maximum amount of dividends that the Company can distribute
during 2001 without prior approval of the Nebraska Department of Insurance is
$16,647.

RISK-BASED CAPITAL
The NAIC has a standard for assessing the solvency of insurance companies, which
is referred to as risk-based capital ("RBC"). The standard is based on a formula
for determining each insurer's RBC and a model law specifying regulatory actions
if an insurer's RBC falls below specified levels. The RBC formula for life
insurance companies establishes capital requirements relating to insurance,
business, asset and interest rate risks. At December 31, 2000, RBC for the
Company was significantly above a level that would require regulatory action.

                                      F-17
<PAGE>

11.  OTHER COMPREHENSIVE INCOME
The components of other comprehensive income on a pretax and after-tax basis for
the year ended December 31, are as follows:

<TABLE>
<CAPTION>
                                           2000                              1999                              1998
                              -------------------------------   -------------------------------   -------------------------------
                               Pretax      Tax      After-tax    Pretax      Tax      After-tax    Pretax      Tax      After-tax
                              --------   --------   ---------   --------   --------   ---------   --------   --------   ---------
<S>                           <C>        <C>        <C>         <C>        <C>        <C>         <C>        <C>        <C>
Unrealized capital gains and
  losses:
----------------------------
Unrealized holding gains
  (losses) arising during
  the period                   $4,683    $(1,639)    $3,044     $(11,528)   $4,035     $(7,493)    $2,863    $(1,002)    $1,861
Less: reclassification
  adjustments                     (95)        33        (62)        (913)      320        (593)       134        (47)        87
                               ------    -------     ------     --------    ------     -------     ------    -------     ------
Unrealized net capital gains
  (losses)                      4,778     (1,672)     3,106      (10,615)    3,715      (6,900)     2,729       (955)     1,774
                               ------    -------     ------     --------    ------     -------     ------    -------     ------
Other comprehensive income
  (loss)                       $4,778    $(1,672)    $3,106     $(10,615)   $3,715     $(6,900)    $2,729    $  (955)    $1,774
                               ======    =======     ======     ========    ======     =======     ======    =======     ======
</TABLE>

12. SALE OF BUILDING
Included within other income and expenses in the Company's statements of
operations and comprehensive income for 1999, is a write-down of $798 associated
with the sale of the Company's building in Lincoln, Nebraska which occurred in
the first quarter of 2000. Also included in other income and expenses is the
write-down of $1,200 related to unamortized building improvements recognized in
the third quarter of 1999 when the building was vacated by the Company.

                                      F-18
<PAGE>
                          LINCOLN BENEFIT LIFE COMPANY
                            SCHEDULE IV--REINSURANCE
                                ($ IN THOUSANDS)

<TABLE>
<CAPTION>
                                                        GROSS                          NET
                                                        AMOUNT         CEDED          AMOUNT
                                                     ------------   ------------   ------------
<S>                                                  <C>            <C>            <C>
YEAR ENDED DECEMBER 31, 2000
Life insurance in force............................  $117,381,094   $117,381,094   $         --
                                                     ============   ============   ============
Premiums and contract charges:
  Life and annuities...............................  $    447,683   $    447,683   $         --
  Accident and health..............................        22,656         22,656             --
                                                     ------------   ------------   ------------
                                                     $    470,339   $    470,339   $         --
                                                     ============   ============   ============

<CAPTION>
                                                        GROSS                          NET
                                                        AMOUNT         CEDED          AMOUNT
                                                     ------------   ------------   ------------
<S>                                                  <C>            <C>            <C>
YEAR ENDED DECEMBER 31, 1999
Life insurance in force............................  $109,520,029   $109,520,029   $         --
                                                     ============   ============   ============
Premiums and contract charges:
  Life and annuities...............................  $    369,540   $    369,540   $         --
  Accident and health..............................        20,203         20,203             --
                                                     ------------   ------------   ------------
                                                     $    389,743   $    389,743   $         --
                                                     ============   ============   ============

<CAPTION>
                                                        GROSS                          NET
                                                        AMOUNT         CEDED          AMOUNT
                                                     ------------   ------------   ------------
<S>                                                  <C>            <C>            <C>
YEAR ENDED DECEMBER 31, 1998
Life insurance in force............................  $ 97,690,299   $ 97,690,299   $         --
                                                     ============   ============   ============
Premiums and contract charges:
  Life and annuities...............................  $    287,839   $    287,839   $         --
  Accident and health..............................         3,450          3,450             --
                                                     ------------   ------------   ------------
                                                     $    291,289   $    291,289   $         --
                                                     ============   ============   ============
</TABLE>

                                      F-19

<PAGE>





                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                     LINCOLN BENEFIT LIFE COMPANY

                             By:     /s/ B. Eugene Wraith
                                     ---------------------
                                     B. Eugene Wraith
                                     President and Chief Operating Officer

                             Date:   March 29, 2001
                                     ---------------------


         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
Registrant and in the capacities and on the dates indicated.


<TABLE>
<CAPTION>



<S>                          <C>                             <C>
    SIGNATURE                        TITLE                          DATE
--------------------         ----------------------          -------------------

/s/ B. Eugene Wraith
--------------------         President, Chief Operating
B. Eugene Wraith             Officer and Director                March 29, 2001
(PRINCIPAL EXECUTIVE OFFICER)

/s/ Robert L. Vance
--------------------         Vice President and Assistant
Robert L. Vance                 Treasurer                        March 29, 2001
(PRINCIPAL FINANCIAL OFFICER)

/s/ Samuel H. Pilch
-------------------          Vice President and Controller       March 29, 2001
Samuel H. Pilch
(PRINCIPAL ACCOUNTING OFFICER)

/s/ LAWRENCE W. DAHL
---------------------        Executive Vice President            March 29, 2001
Lawrence W. Dahl             and Director

/s/ DOUGLAS F. GAER
---------------------        Executive Vice President            March 29, 2001
Douglas F. Gaer              and Director

/s/ RODGER A. HERGENRADER
---------------------         Director                           March 29, 2001
Rodger A. Hergenrader


---------------------         Director                           March 29, 2001
J. Kevin McCarthy

---------------------         Director                           March 29, 2001
Kevin Slawin

/s/ J. SCOTT TAYLOR
---------------------         Director                           March 29, 2001
J. Scott Taylor

---------------------         Director                           March 29, 2001
Michael J. Velotta

/s/ CAROL S. WATSON
---------------------         Director                           March 29, 2001
Carol S. Watson

/s/ DEAN M. WAY
---------------------         Director                           March 29, 2001
Dean M. Way

---------------------         Director                           March 29, 2001
Patricia W. Wilson

---------------------         Chairman of the Board,             March 29, 2001
Thomas J. Wilson, II          Chief Executive Officer,
                              and Director
</TABLE>