--------------------------------------------------------------------------------
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 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, 2001
                                       OR

| |  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
     EXCHANGE ACT OF 1934

                        COMMISSION FILE NUMBER 333-88045

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

                NEBRASKA                                 47-0221457
        (State of Incorporation)            (I.R.S. Employer Identification No.)
         2940 SOUTH 84TH STREET
           LINCOLN, NEBRASKA                             68506-4142
(Address of principal executive offices)                 (Zip Code)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 1-800-525-9287
                                   -----------

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, 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 FILIERS PURSUANT TO ITEM 405
OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF THE 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.
                                   YES |X| NO | |

AS OF MARCH 25, 2002, THE REGISTRANT HAD 25,000 COMMON SHARES, $100 PAR VALUE,
OUTSTANDING, ALL OF WHICH ARE HELD BY ALLSTATE LIFE INSURANCE COMPANY.
<Page>

                          LINCOLN BENEFIT LIFE COMPANY
                                TABLE OF CONTENTS
                                DECEMBER 31, 2001




<Table>
<Caption>
                                                                                                               PAGE
                                                                                                               ----
<S>            <C>                                                                                             <C>
PART I.
Item 1.        Business *                                                                                        2
Item 2.        Properties *                                                                                      3
Item 3.        Legal Proceedings                                                                                 3
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                             3
Item 6.        Selected Financial Data **                                                                      N/A
Item 7.        Management's Discussion and Analysis of Financial Condition and Results of Operations             4
Item 7a.       Quantitative and Qualitative Disclosures about Market Risk                                       15
Item 8.        Financial Statements and Supplementary Data                                                      15
Item 9.        Change in and Disagreements with Accountants on Accounting and Financial Disclosure              15

PART III
Item 10.       Directors and Executive Officers of the Registrant **                                           N/A
Item 11.       Executive compensation                                                                          N/A
Item 12.       Security Ownership and 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                                  16
               Signatures                                                                                       17
               Index to Financial Statement Schedules                                                           18
</Table>

             * Item prepared in accordance with General Instruction I(2) of Form
               10-K.
            ** Omitted pursuant to 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. Lincoln Benefit is a wholly owned subsidiary of Allstate Life Insurance
Company ("ALIC"), a stock life insurance company incorporated under the laws of
the State of Illinois. ALIC is a wholly owned subsidiary of Allstate Insurance
Company ("AIC"), a stock property-liability insurance company incorporated under
the laws of the State of Illinois. All outstanding capital stock of AIC is owned
by The Allstate Corporation (the "Corporation"), a Delaware company which has
several different classes of securities, including common stock, registered with
the Securities and Exchange Commission.

     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.

     Lincoln Benefit, a single segment entity, markets a diversified group of
products to meet consumers' lifetime needs in the areas of protection and
retirement solutions through independent insurance agents and broker/dealers,
including master brokerage agencies. Products distributed through independent
insurance agents include term life insurance; whole life; universal life;
variable universal life; and single premium life; fixed annuities, including
market value adjusted annuities and equity-indexed annuities; immediate
annuities; variable annuities and long-term care products. Variable annuities
and variable universal life products are also distributed through independent
broker/dealers. ALFS, Inc. ("ALFS") is the principal underwriter for certain
Lincoln Benefit products, such as variable universal life, variable annuities
and fixed annuities with a market value adjustment feature. ALFS is a wholly
owned subsidiary of ALIC and is a registered broker/dealer under the
Securities and Exchange Act of 1934.

     Lincoln Benefit and ALIC entered into reinsurance agreements under which
Lincoln Benefit reinsures substantially all of its business with ALIC. Under the
agreements, premiums, contract charges, credited interest, policy benefits and
certain expenses under substantially all general account contracts are reinsured
with ALIC. ALIC is bound to stand behind the Company's contractual obligations
to its policyholders. However, the obligations of ALIC under the reinsurance
agreements are to the Company. The Company continues to have primary liability
as the direct insurer for risks reinsured. In addition, assets of the Company
that relate to insurance in-force, excluding Separate Accounts assets, are
transferred to ALIC. Therefore, all funds necessary to support the operations of
the Company are provided by ALIC and the Company is not required to obtain
additional capital to support in-force or future business.

     Under the Company's reinsurance agreements with ALIC, the Company reinsures
substantially all reserve liabilities with ALIC except for variable contracts it
issues and term life insurance which is ceded to non-affiliated reinsurers. The
assets which support these liabilities are owned and managed by ALIC.

     The assets and liabilities of variable contracts are held in
legally-segregated, unitized Separate Accounts and retained by the Company.
Contract charges are reinsured to ALIC and consist of charges assessed against
the account values of the Separate Accounts.

     In addition, the Company cedes 90%, 80% or 60% of the mortality risk on
certain term life policies, depending upon the issue year and product, to a pool
of eleven non-affiliated reinsurers. Beginning in 1998, the Company cedes
mortality risk on new business in excess of $2 million per life for individual
coverage. For business sold prior to 1998, the Company ceded mortality risk in
excess of $350 thousand per life for individual coverage.

     Lincoln Benefit's and ALIC's general account assets 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.

     Lincoln Benefit is engaged in a business that is highly competitive because
of the large number of stock and mutual life insurance companies and other
entities competing in the sale of insurance and annuities. As of December 2000,
the last year for which current information is available, there were
approximately 1,400 stock, mutual and other types of insurers in business in the
United States. Several independent rating agencies regularly evaluate life
insurers' claims paying ability, quality of investments and overall stability.
A.M. Best Company assigns a rating of A+ (Superior) to ALIC, which automatically
reinsures substantially 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 substantially all general account
business with ALIC. Standard & Poor's Insurance Rating Services assigns an
AA+ (Very Strong.) to Lincoln Benefit's financial strength rating. Moody's
Investors Service assigns an Aa2 (Excellent) financial stability rating to
Lincoln Benefit. Lincoln Benefit shares the same ratings as its parent, ALIC.
In February 2002, Standard & Poor's affirmed its December 31,

                                       2
<Page>

2001 ratings. Standard & Poor's revised its outlook for ALIC and its rated
subsidiaries and affiliates to "negative" from "stable". This revision is part
of an ongoing life insurance industry review recently initiated by Standard &
Poor's. Moody's and A.M. Best reaffirmed its ratings and outlook for the Company
and ALIC.

     The Company's business is subject to the effects of a changing social,
economic and regulatory environment. State and federal regulatory initiatives
have varied and have included employee benefit regulations, removal of barriers
preventing banks from engaging in the securities and insurance businesses, 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, and the overall expansion of regulation. The
ultimate changes and eventual effects, if any, of these initiatives are
uncertain.

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

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 position or results of operations of the
Company.

                                     PART II

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 common stock is owned by AIC. All of the outstanding shares
of AIC are owned by the Corporation.


                                       3
<Page>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

     THE FOLLOWING DISCUSSION HIGHLIGHTS SIGNIFICANT FACTORS INFLUENCING 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 2001 PRESENTATION, CERTAIN PRIOR YEAR
AMOUNTS HAVE BEEN RECLASSIFIED.

CRITICAL ACCOUNTING POLICIES

     In response to the Securities and Exchange Commission's ("SEC") release
"Cautionary Advice Regarding Disclosure about Critical Accounting Policies", the
Company identified critical accounting policies by considering policies that
involve the most complex or subjective judgments or assessments. The Company has
identified three policies as critical accounting policies because they involve
a higher degree of judgment and complexity. A brief summary of each critical
accounting policy follows. For a more complete discussion of the judgments and
other factors affecting the measurement of these items see the referenced
sections of Management's Discussion and Analysis ("MD&A").

     -    INVESTMENTS -All fixed income securities are carried at fair value and
          may be sold prior to their contractual maturity ("available for
          sale"). The difference between the amortized cost of fixed income
          securities and fair value, net of deferred income taxes, is reflected
          as a component of Shareholder's equity.

               The Company closely monitors its fixed income portfolios for
          declines in value that are other than temporary. Securities are placed
          on non-accrual status when they are in default or when timing or
          receipt of principal or interest payments are in doubt. Provisions for
          losses are recognized for declines in the value of fixed income
          securities that are deemed to be other than temporary. Such
          write-downs are included in Realized capital gains and losses.

     -    LIFE INSURANCE RESERVES AND CONTRACTHOLDER FUNDS - Reserves for
          life-contingent contract benefits, which relate to traditional life
          insurance and immediate annuities with life contingencies are
          computed on the basis of long-term actuarial 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. To the extent
          that unrealized capital gains on fixed income securities would
          result in a premium deficiency had those gains actually been
          realized, the related increase in reserve is recorded net of tax as
          a reduction of the unrealized capital gains included in
          Shareholder's equity.

               Contractholder funds arise from the issuance of contracts that
          include an investment component, including most fixed annuities,
          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 surrenders
          and withdrawals, mortality charges and administrative expenses. The
          Company reinsures substantially all reserve liabilities with ALIC.

     -    REINSURANCE RECOVERABLE - The Company has reinsurance agreements
          whereby certain premiums, contract charges, credited interest, policy
          benefits and certain expenses are ceded to ALIC (see Notes 3 and 7).
          The Company also has reinsurance agreements, whereas, the Company
          cedes 90%, 80% or 60% of the mortality risk on certain term life
          policies, depending upon the issue year and product, to a pool of
          eleven non-affiliated reinsurers. Beginning in 1998, the Company cedes
          mortality risk on new business in excess of $2 million per life for
          individual coverage. For business sold prior to 1998, the Company
          ceded mortality risk in excess of $350 thousand per life for
          individual coverage. Reinsurance does not extinguish the Company's
          primary liability under the policies written.

     The Company also discloses its significant accounting policies in Note 2 to
the financial statements.

OVERVIEW

     The Company, 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 (the
"Corporation"), markets a diversified group of products to meet consumer's
lifetime needs in the areas of protection and retirement solutions through
independent insurance agents and broker/dealers, including master brokerage
agencies. Products distributed through independent insurance agents include term
life insurance; whole life; universal life; variable universal life; and single
premium life; fixed annuities, including market value adjusted annuities and
equity-indexed annuities; immediate annuities; variable annuities and
long-term care products. Variable annuities and variable universal life
products are also distributed through independent broker/dealers. ALFS, Inc.
("ALFS") is the principal underwriter for certain Lincoln Benefit products,
such as variable universal life, variable annuities and fixed annuities with
a market value adjustment. ALFS is a wholly owned subsidiary of ALIC and is a
registered broker/dealer under the Securities and Exchange Act of 1934.

     The Company has identified itself as a single segment entity.

     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.


                                       4
<Page>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONT.)

RESULTS OF OPERATIONS

(IN THOUSANDS)
<Table>
<Caption>
                                               2001          2000             1999
                                               ----          ----             ----
<S>                                         <C>            <C>             <C>
Net investment income                       $ 12,144       $  12,214       $  10,740

Realized capital gains and losses             (1,352)            (95)           (913)
Other expense                                      -              20           2,301
Income tax expense                             3,768           4,221           2,560
                                            --------       ---------       ---------
Net income                                  $  7,024       $   7,878       $   4,966
                                            ========       =========       =========
</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. In prior years, certain non-investment related expenses
which were not transferred under the reinsurance agreements are presented in
other expenses.

     Net income was $7.0 million in 2001 compared to $7.9 million in 2000, due
primarily to increased realized capital losses in 2001. In 2000, net income was
$7.9 million 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 realized capital losses in
2000.

     Pretax net investment income in 2001 was comparable to 2000 as the effect
of higher investment balances was more than offset by increased investment
expenses. In 2000, pretax net investment income increased 13.7% to $12.2 million
due to higher investment balances, before the impact of unrealized gains and
losses on fixed income securities, and reduced investment expenses. 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 4.4% and 10.9% in 2001 and
2000, 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 $879 thousand, $62 thousand and
$593 thousand in 2001, 2000 and 1999, respectively, resulting from trading
losses on fixed income securities. Period to period fluctuations in realized
capital gains and losses are the result of timing of sales decisions reflecting
management's decision on positioning the portfolio, assessments of individual
securities, overall market conditions and write-downs when an assessment is made
by the Company that a decline in value of a security is other than temporary.


                                       5
<Page>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONT.)

FINANCIAL POSITION

(IN THOUSANDS)
<Table>
<Caption>
                                                            2001                2000
                                                        ------------         ------------
<S>                                                     <C>                  <C>
Fixed income securities (1)                             $    186,709         $    170,142
Short-term                                                     6,856               11,243
                                                        ------------         ------------
         Total investments                              $    193,565         $    181,385
                                                        ============         ============
Reinsurance recoverable from ALIC                       $  9,564,440         $  8,366,927
                                                        ============         ============
Contractholder funds                                    $  9,287,599         $  8,157,502
                                                        ============         ============
Reserve for life-contingent contract benefits           $    724,044         $    550,334
                                                        ============         ============
Separate Accounts assets and liabilities                $  1,565,708         $  1,648,691
                                                        ============         ============
</Table>

(1) Fixed income securities are carried at fair value. Amortized cost for these
securities was $179.1 million and $166.9 million at December 31, 2001 and 2000,
respectively.

     Total investments were $193.6 million at December 31, 2001 compared to
$181.4 million at December 31, 2000. The increase was due primarily to positive
cash flows generated from operations and unrealized gains on fixed income
securities. Investments at December 31, 2001, excluding Separate Accounts and
unrealized gains and losses on fixed income securities, grew 4.4% from December
31, 2000.

FIXED INCOME SECURITIES

     The Company's fixed income securities portfolio consists of publicly traded
corporate bonds, U.S. government bonds, mortgage-backed securities, foreign
government bonds, privately-placed corporate obligations and tax-exempt
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, 2001,
unrealized net capital gains on the fixed income securities portfolio totaled
$7.6 million compared to unrealized net capital gains of $3.2 million at
December 31, 2000. The increase in the unrealized gain is primarily attributable
to interest rate fluctuations from year to year. As of December 31, 2001,
approximately 99.7% of the fixed income securities portfolio was invested in
taxable securities.

     The Securities Valuation Office of the National Association of Insurance
Commissioners ("NAIC") evaluates the fixed income securities investments of
insurers for regulatory reporting purposes and assigns securities to one of six
investment categories called "NAIC designations." The NAIC designations parallel
the credit ratings of the Nationally Recognized Statistical Rating Organizations
for marketable securities. NAIC designations 1 and 2 include securities
considered investment grade (rated "Baa3" or higher by Moody's, or rate "BBB-"
or higher by Standard and Poor's) by such rating organizations. NAIC
designations 3 through 6 include securities considered below investment grade
(rated "Ba1" or lower by Moody's, or rated "BB+" or lower by Standard and
Poor's).

     At December 31, 2001, 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 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, 2001 is presented in the
following table:


                                       6
<Page>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONT.)

(IN THOUSANDS)

<Table>
<Caption>
NAIC
RATINGS       MOODY'S EQUIVALENT DESCRIPTION                 FAIR VALUE     PERCENT TO TOTAL
-------       ------------------------------                 ----------     ----------------
<S>           <C>                                            <C>                <C>
1             Aaa/Aa/A                                       $  161,720            86.6%
2             Baa                                                21,570            11.6
6             In or near default                                  3,419             1.8
                                                             ----------           -----
                                                             $  186,709           100.0%
                                                             ==========           =====
</Table>

     As of December 31, 2001, the fixed income securities portfolio contained
$1.0 million of privately placed corporate obligations. The benefits of
privately placed securities as compared to public securities are generally
higher yields, improved cash flow predictability through pro-rata sinking funds
on many bonds, and a combination of covenant and call protection features
designed to better protect the holder against losses resulting from credit
deterioration, reinvestment risk and fluctuations in interest rates. A relative
disadvantage of privately-placed securities as compared to public securities is
relatively reduced liquidity. At December 31, 2001, 100% of the privately placed
securities were rated as in or near default by either the NAIC or the Company's
internal ratings. The Company determines the fair value of privately placed
fixed income securities based on discounted cash flows using current interest
rates for similar securities.

     At December 31, 2001 and 2000, $41.1 million and $42.3 million,
respectively, of the fixed income securities 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. Therefore, the MBS portfolio
has relatively low 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, 2001, approximately 16.7% of the
MBS portfolio was invested in planned amortization class bonds.

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

SHORT-TERM INVESTMENTS

     The Company's short-term investment portfolio was $6.9 million and $11.2
million at December 31, 2001 and 2000, respectively. 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.

REINSURANCE RECOVERABLE FROM ALIC, CONTRACTHOLDER FUNDS AND RESERVES FOR
LIFE-CONTINGENT CONTRACT BENEFITS

     Under accounting principles generally accepted in the United States of
America ("GAAP"), when reinsurance contracts do not relieve the ceding company
of legal liability to policyholders, the ceding company is required to report
reinsurance recoverables arising from these contracts separately as assets. The
liabilities for the contracts are reported as contractholder funds or reserves
for life-contingent contract benefits, depending on the characteristics of the
contracts. Under the reinsurance agreements with ALIC, substantially all
policyholder obligations are reinsured to ALIC.

     At December 31, 2001, Contractholder funds increased to $9.29 billion from
$8.16 billion at December 31, 2000 as the result of additional deposits from
fixed annuities and credited interest partially offset by surrenders and
withdrawals. Reserves for life-contingent contract benefits increased $173.7
million to $724.0 million at December 31, 2001 resulting from increased sales of
term products partially offset by benefits paid. Reinsurance recoverable from
ALIC increased correspondingly by $1.20 billion due to the increase in
policyholder obligations discussed above.


                                       7
<Page>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONT.)

SEPARATE ACCOUNTS

     Separate Accounts assets and liabilities decreased 5.0% to $1.57 billion in
2001. The decreases were primarily attributable to unfavorable investment
performance in the Separate Accounts' investment portfolios and surrenders,
partially offset by sales of variable annuity contracts and transfers from the
fixed account contract option to variable Separate Accounts funds.

     The assets and liabilities related to variable 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. 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. Revenues to the Company from
the Separate Accounts consist of contract maintenance and administration fees
and mortality, surrender and expense charges and are ceded to ALIC.

     Absent any contract provision wherein the Company guarantees either a
minimum return or account value upon death or annuitization, variable annuity
contractholders bear the investment risk that the Separate Accounts' funds may
not meet their stated objectives.


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 Credit and Risk Management
Committee ("CRMC"). The Board of Directors provides executive oversight of
investment activities. The CRMC is a senior investment 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 a specific Board of
Directors-approved investment policy delineating the investment limits and
strategies that are appropriate for the Company's 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 policy. The Company
has implemented a comprehensive daily measurement process, administered by the
Investment Risk Manager, for monitoring compliance to limits established by the
investment policy.

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 by 1%, the fair value of an asset
with a duration of 5 is expected to decrease in value by approximately 5%. At
December 31, 2001, the Company's asset duration was approximately 3.8 versus 3.9
at December 31, 2000.

     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.

     Based upon the information and assumptions the Company uses in its duration
calculation and interest rates in effect at


                                       8
<Page>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONT.)

December 31, 2001, 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 $7.1 million versus $6.6
million at December 31, 2000. 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 index.

     At December 31, 2001, the Company had Separate Account assets totaling
$1.57 billion. This is a decrease from the $1.65 billion of Separate Accounts
assets at December 31, 2000. The Company earns mortality and expense fees as a
percentage of account values in the Separate Accounts. In the event of an
immediate decline of 10% in the account values due to equity market declines,
the Company would earn approximately $2.2 million less in annualized fee income
which would be ceded to ALIC. This is an increase over the $2.1 million amount
determined at December 31, 2000. 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 expects
growth in its variable annuity products in the future, stemming from both new
sales as well as market value appreciation, which will increase the Company's,
as well as ALIC's, exposure to equity price risk.

CAPITAL RESOURCES AND LIQUIDITY

CAPITAL RESOURCES

     The company's capital resources consist of shareholder's equity. The
following table summarizes the capital resources, at December 31:

<Table>
<Caption>
(IN THOUSANDS)                              2001             2000            1999
                                            ----             ----            ----
<S>                                     <C>              <C>             <C>
Common stock and retained income        $  183,673       $  176,649      $  158,771
Accumulated other comprehensive
  income                                     4,930            2,112            (994)
                                           -------          -------         -------
    Total shareholder's equity          $  188,603       $  178,761      $  157,777
                                           =======          =======         =======
</Table>

SHAREHOLDER'S EQUITY

     Shareholder's equity increased during 2001, as well as 2000, due to Net
income and increased Unrealized net capital gains. In December 2000, the Company
received a $10 million capital contribution from ALIC.

DEBT

     The Company had no outstanding debt at December 31, 2001 and 2000,
respectively. The Company has entered in an intercompany loan agreement with the
Corporation. The amount of funds 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 $1.00 billion. No amounts were outstanding for the Company under the
intercompany loan agreement at December 31, 2001 and 2000, respectively. The
Corporation uses commercial paper borrowings and bank lines of credit to fund
intercompany borrowings.


                                       9
<Page>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONT.)

FINANCIAL RATINGS AND STRENGTHS

     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. The
Company shares its financial strength ratings with its parent, ALIC, due to the
100% reinsurance agreements. The Company's current financial strength ratings
are listed below:

<Table>
<Caption>
     RATING AGENCY                        RATING              RATING STRUCTURE
     <S>                                  <C>                 <C>
     Moody's Investors Service, Inc.      Aa2                 Second highest of nine ratings
                                          ("Excellent")       categories and mid-range within the
                                                              category based on modifiers (e.g.,
                                                              Aa1, Aa2 and Aa3 are "Excellent")

     Standard & Poor's Ratings Services   AA+                 Second highest of nine ratings
                                          ("Very Strong")     categories and highest within the
                                                              category based on modifiers (e.g.,
                                                              AA+, AA and AA- are "Very Strong")

     A.M. Best Company, Inc.              A+                  Highest of nine ratings categories
                                          ("Superior")        and second highest within the
                                                              category based on modifiers (e.g.,
                                                              A++ and A+ are "Superior" while A
                                                              and A- are "Excellent")
</Table>

     In February 2002, Standard & Poor's affirmed its December 31, 2001 ratings.
Standard & Poor's revised its outlook for ALIC and its rated subsidiaries and
affiliates to "negative" from "stable". This revision is part of an ongoing life
insurance industry review recently initiated by Standard & Poor's. Moody's and
A.M. Best reaffirmed its ratings and outlook for the Company and ALIC.

     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, which
regulators use to assess the sufficiency of an insurer's capital, measures the
risk characteristics of a company's assets, liabilities and certain off-balance
sheet items. RBC is calculated by applying factors to various asset, premium and
liability items. Within a given risk category, these factors are higher for
those items with greater underlying risk and lower for items with lower
underlying risk. At December 31, 2001, the Company's RBC was significantly above
levels that would require regulatory actions.

     The NAIC has also developed a set of financial relationships or tests known
as the Insurance Regulatory Information System to assist state regulators in
monitoring the financial condition of insurance companies and identifying
companies that require special attention or action insurance regulatory
authorities. The NAIC analyzes data provided by insurance companies using
prescribed financial data ratios each with defined "usual ranges." Generally,
regulators will begin to monitor an insurance company if its ratios fall outside
the usual ranges for four or more of the ratios. If an insurance company has
insufficient capital, regulators may act to reduce the amount of insurance it
can issue. The Company is currently not under regulatory scrutiny based on these
ratios.

LIQUIDITY

     The principal sources of funds for the Company are collection of principal
and interest from the investment portfolio, capital contributions from ALIC and
intercompany loans from the Corporation. The primary uses of these funds are to
purchase investments, pay costs associated with the maintenance of the Company's
investment portfolio, income taxes, dividends to ALIC, and the repayment of
intercompany loans from the Corporation.


                                       10
<Page>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONT.)

     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.

     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 by Nebraska law to formula amounts
based on statutory surplus and statutory net gain from operations, 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 2002 without
prior approval of the Nebraska Department of Insurance is $18.3 million.

REGULATIONS AND LEGAL PROCEEDINGS

     The Company's business is subject to the effects of a changing social,
economic and regulatory environment. State and federal regulatory initiatives
have varied and have included employee benefit regulations, removal of barriers
preventing banks from engaging in the securities and insurance businesses, 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 and the overall expansion of regulation. 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.

STATE INSURANCE REGULATION

     State insurance authorities have broad administrative powers with respect
to all aspects of the life insurance business including:

-    Licensing to transact  business
-    Licensing agents
-    Admittance of assets to support statutory surplus
-    Approving policy forms
-    Regulating unfair trade and claims practices
-    Establishing reserve requirements and solvency standards
-    Regulating the type, amounts and valuations of investments permitted and
     other matters

     State insurance laws require the Company to file financial statements with
insurance departments in all states in which the Company does business. The
operations of the Company and the accounts are subject to examination by those
departments at any time. The Company prepares statutory financial statements in
accordance with accounting practices and procedures prescribed or permitted by
these departments.

     State insurance departments conduct periodic examinations of the books and
records, financial reporting, policy filings and market conduct of insurance
companies domiciled in their states, generally once every three to five years.
Examinations are generally carried out in cooperation with the insurance
departments of other states under guidelines promulgated by the NAIC.

MARKET CONDUCT REGULATION

     State insurance laws and regulations include numerous provisions governing
the marketplace activities of insurers, including provisions governing the form
and content of disclosure to consumers, illustrations, advertising, sales
practices and complaint handling. State regulatory authorities generally enforce
these provisions through periodic market conduct examinations.


                                       11
<Page>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONT.)

FEDERAL REGULATION AND SECURITIES OPERATIONS

     The Company's variable annuity and variable universal life insurance
products generally are considered securities within the meaning of federal
and state securities laws and are registered under the Securities Act of 1933
and are subject to regulation by the SEC, the National Association of
Securities Dealers ("NASD") and state securities regulations. The Company's
Separate Accounts are registered as investment companies under the Investment
Company Act of 1940.

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. Amounts
assessed to each company are typically related to its proportion of business
written in a particular state. The Company's expenses related to these funds
are immaterial and are ceded to ALIC under reinsurance agreements.

PENDING ACCOUNTING STANDARDS

     In December 2001, the Accounting Standards Executive Committee ("AcSEC")
issued Statement of Position ("SOP") 01-6, "Accounting by Certain Entities
(Including Entities With Trade Receivables) That Lend to or Finance the
Activities of Others", which is effective for interim and annual financial
statements issued for the fiscal year beginning after December 15, 2001. The SOP
conforms accounting and financial reporting practices for certain lending and
financing activities, eliminating various specialized accounting practices that
developed from the issuance of AICPA finance company, bank, and credit union
audit guides. The SOP also explicitly incorporates lending and financing
activities of insurance companies within its scope. The Company's adoption of
SOP 01-6 is not expected to have a material effect on the results of operations
or financial position.


FORWARD-LOOKING STATEMENTS AND RISK FACTORS

     This document contains "forward-looking statements" that anticipate results
based on management's plans 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 these 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 and a provider of other financial services.

-    In December 2001, the NAIC announced that it reached an agreement regarding
     the wording of insurance policy exclusions for acts of terrorism for
     commercial lines. In January 2002, the NAIC issued the following statement,
     "It is the sense of NAIC membership that terrorism exclusions are generally
     not necessary in personal lines property and casualty products to maintain
     a competitive market, and they may violate state law. However we recognize
     that state laws vary in their authority and discretion. Further, there may
     be unique company circumstances that need to be considered in individual
     cases. We expect these cases to be limited." In addition, several states
     have announced that they will not approve terrorism exclusions for personal
     and/or commercial lines of property and casualty insurance. Currently, the
     Corporation is examining the potential exposure in any of its insurance
     operations from acts of terrorism. The Corporation is also examining how
     best to address this exposure, if any, considering the interests of
     policyholders, shareholders, the lending community, regulators and others.
     The Company generally does not have exclusions for terrorist events
     included in its life insurance policies. In the event that a terrorist act
     occurs, the Company may be adversely impacted, depending on the nature of
     the event. With respect to the Company's investment portfolio, in the event
     that commercial insurance coverage for terrorism becomes unavailable or
     very expensive, there could be significant adverse impacts on some portion
     of the Company's portfolio, particularly in sectors such as airlines and
     real estate. For example, certain debt obligations might be adversely
     affected due to the inability to obtain coverage to restore the related
     real estate or other property, thereby creating the potential for increased
     default risk.


                                       12
<Page>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONT.)

-    Changes in market interest rates can have adverse effects on the Company's
     investment portfolio and investment income. Increases in market interest
     rates have an adverse impact on the value of the investment portfolio by
     decreasing unrealized capital gains on fixed income securities. In
     addition, increases in market interest rates as compared to rates offered
     on some of the Company's products could make those products less attractive
     and lead to lower sales and/or increase the level of surrenders on these
     products. Declining market interest rates could have an adverse impact on
     the Company's investment income as the Company reinvests proceeds from
     positive cash flows from operations and 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 volatile
     market conditions could cause contract charges realized by the Company, as
     well as ALIC, to decrease and increase the exposure to guaranteed minimum
     income and death benefits.

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

-    The Company amortizes DAC related to contractholder funds in proportion to
     gross profits over the estimated lives of the contract periods.
     Periodically, the Company updates the assumptions underlying the gross
     profits, which include estimated future fees, investment margins and
     expense margins, in order to reflect actual experience. Updates to these
     assumptions result in adjustments to the cumulative amortization of DAC.
     These adjustments may have a material effect on results of operations. DAC
     and any related adjustments are ceded to ALIC.

-    It is possible that the assumptions and projections used by the Company in
     establishing prices for the guaranteed minimum death benefits and
     guaranteed minimum income benefits on variable annuities, particularly
     assumptions and projections about investment performance, do not accurately
     anticipate the level of costs the Company will ultimately incur and cede to
     ALIC in providing those benefits.

-    Management believes the reserves for life-contingent contract benefits are
     adequate to cover ultimate policy benefits, despite the underlying risks
     and uncertainties associated with their determination when payments will
     not occur until well into the future. Reserves are based in many
     assumptions and estimates, including estimated premiums received over the
     assumed life of the policy, the timing of the event covered by the
     insurance policy, the amount of benefits on claims to be paid and the
     investment returns on the assets purchased with the premium received. The
     Company periodically reviews and revises its estimates. If future
     experience differs from assumptions, it may have a material impact on
     results of operations ceded to ALIC.

-    Under current U.S. tax law and regulations, deferred and immediate
     annuities and life insurance, including interest-sensitive products,
     receive favorable policyholder tax treatment. Any legislative or regulatory
     changes that adversely alter this treatment are likely to negatively affect
     the demand for these products. In addition, recent changes in the federal
     estate tax laws will affect the demand for the types of life insurance used
     in estate planning.

-    The Company distributes 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, for example, changes
     in control of any of these entities, could have a detrimental effect on the
     Company's sales. This risk may be exacerbated by the enactment of the
     Gramm-Leach-Bliley Act of 1999, which eliminated many federal and state law
     barriers to affiliations among banks, securities firms, insurers and other
     financial service providers.

-    The Corporation's liquidity could be significantly constrained by a
     catastrophe which results in extraordinary losses, a downgrade of the
     Corporation's current long-term debt rating of A1 and A+ (from Moody's and
     Standard & Poor's, respectively) to non-investment grade status of below
     Baa3/BBB-, a downgrade in AIC's financial strength rating from Aa2, AA and
     A+ (from Moody's Standard & Poor's and A.M. Best, respectively) to below
     Baa/BBB/B, or a downgrade in ALIC's or the Company's financial strength
     rating from Aa2, AA+ and A+ (from Moody's Standard & Poor's and A.M. Best,
     respectively) to below Aa3/AA-/A-. In the event of a downgrade of the
     Corporation's ratings, ALIC and its rated subsidiaries would also
     experience a similar downgrade.

-    In the wake of the September 11 attack on the World Trade Center in New
     York City and the Pentagon in Washington D.C. and the plane crash in
     Pennsylvania, the resulting disruption in the financial markets revealed
     weaknesses in the physical and operational infrastructure that underlies
     the U.S. and worldwide financial systems. Those weaknesses did not impair
     the Company's liquidity in the wake of the September 11. However, if an
     event of similar or greater magnitude occurs in the future and if the
     weaknesses in the physical and operational infrastructure of the U.S. and
     worldwide financial systems are not remedied, the Company could encounter
     significant difficulties in transferring funds, buying and selling
     securities and engaging in other financial transactions that support its
     liquidity.


                                       13
<Page>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONT.)

-    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 of either the Company or
     ALIC, while not expected, could have a material adverse effect on the
     Company's business, including the competitiveness of the Company's product
     offerings, its ability to market products, and its financial condition and
     results of operations.

-    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
     ratings. These restrictions affect the Company's ability to pay shareholder
     dividends to ALIC and to use its capital in other ways.

-    Following enactment of the Gramm-Leach-Bliley Act of 1999, federal
     legislation that allows mergers that combine commercial banks, insurers and
     securities firms, state insurance regulators have been collectively
     participating in a reexamination of the regulatory framework that currently
     governs the United States insurance business in an effort to determine the
     proper role of state insurance regulation in the U. S. financial services
     industry. We 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 affect any such measures would have on the Company.

-    The Gramm-Leach-Bliley Act of 1999 permits mergers that combine commercial
     banks, insurers and securities firms under one holding company. Until
     passage of the Gramm-Leach-Bliley Act, the Glass Steagall Act of 1933 had
     limited the ability of banks to engage in securities-related businesses and
     the Bank Holding Company Act of 1956 had restricted banks from being
     affiliated with insurers. With the passage of the Gramm-Leach-Bliley Act,
     bank holding companies may acquire insurers and insurance holding companies
     may acquire banks. In addition, grand-fathered unitary thrift holding
     companies, including the Allstate Corporation, may engage in activities
     that are not financial in nature. The ability of banks to affiliate with
     insurers may materially adversely affect all of the Company's product lines
     by substantially increasing the number, size and financial strength of
     potential competitors.

-    In some states, mutual insurance companies can convert to a hybrid
     structure known as a mutual holding company. This process converts
     insurance companies owned by their policyholders to become stock insurance
     companies owned (through one or more intermediate holding companies)
     partially by their policyholders and partially by stockholders. Also some
     states permit the conversion of mutual insurance companies into stock
     insurance companies (demutualization). The ability of mutual insurance
     companies to convert to mutual holding companies or to demutualize may
     materially adversely affect all of our product lines by substantially
     increasing competition for capital in the financial services industry.


                                       14
<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

     See Index to Financial Statements filed with this Report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

     No disclosure required by this Item.


                                       15
<Page>

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) Documents Filed as Part of This Report

     1. Financial Statements. The Registrant's financial statements, for the
     years ended December 31, 2001, 2000 and 1999, together with the Report of
     Independent Accountants are set forth on pages F-1 to F-14 of this report.

     2. Financial Statement Schedules. The following are included in Part IV of
     this report:

     Schedule IV - Reinsurance page F-15

     All other schedules have been omitted because they are not applicable or
     not required or because the required information is included in the
     financial statements or notes thereto.

3. Exhibits. The exhibits required to be filed by Item 601 of Regulation S-K are
listed under the caption "Exhibits" in Item 14(c).

     (b) Reports On Form 8-K

     No reports on Form 8-K were filed for the quarter ended December 31, 2001.

     (c) Exhibits

<Table>
<Caption>
     ------------------------------------------------------------------------------
     EXHIBIT NO.    DESCRIPTION
     ------------------------------------------------------------------------------
     ------------------------------------------------------------------------------
     <S>            <C>
     3(i)           Amended and Restated Articles of Incorporation of Lincoln
                    Benefit Life Company dated September 29, 2000.
     ------------------------------------------------------------------------------
     ------------------------------------------------------------------------------
     3(ii)          Amended and Restated By-Laws of Lincoln Benefit Life Company
                    dated July 23, 1997. Incorporated herein by reference to
                    Exhibit 6(b) to Registration Statement No. 333-47717 filed
                    March 11, 1998.
     ------------------------------------------------------------------------------
     ------------------------------------------------------------------------------
     10.1           Service and Expense Agreement among Allstate Insurance
                    Company and The Allstate Corporation and Certain Insurance
                    Subsidiaries. Incorporated herein by reference to Exhibit
                    10.2 to Northbrook Life Insurance Company's Annual Report
                    on Form 10-K for 2001.
     ------------------------------------------------------------------------------
     ------------------------------------------------------------------------------
      10.2          Investment Management Agreement and Amendment to Certain
                    Service and Expense Agreements Among Allstate Investments,
                    LLC and Allstate Insurance Company and The Allstate
                    Corporation and Certain Affiliates effective as of January
                    1, 2002. Incorporated herein by reference to Exhibit
                    10.3 to Northbrook Life Insurance Company's Annual Report
                    on Form 10-K for 2001.
     ------------------------------------------------------------------------------
     ------------------------------------------------------------------------------
      23            Independent Auditor's Consent
     ------------------------------------------------------------------------------
</Table>


                                       16
<Page>

     SIGNATURE

     Pursuant to the requirements of the 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 (REGISTRANT)

March 28, 2002                By: /s/ Thomas J. Wilson, II       .
                                  --------------------------------
                              CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
                                                AND DIRECTOR


     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
Registrants and in the capacities and on the dates indicated.

    SIGNATURE                        TITLE                             DATE
    ---------                        -----                             ----
    /s/ Thomas J. Wilson, II         Chairman of the Board and
    ------------------------         Chief Executive Officer and
    Thomas J. Wilson, II             Director
                                     (Principal Executive Officer)

    /s/ Samuel H. Pilch              Controller
    -------------------              (Principal Accounting Officer)
    Samuel H. Pilch

    /s/ Lawrence W. Dahl             Executive Vice President, and
    --------------------             Director
    Lawrence W. Dahl

    /s/ Margaret G. Dyer             Director
    --------------------
    Margaret G. Dyer

    /s/ Marla G. Friedman            Director
    ---------------------
    Marla G. Friedman

    /s/ Douglass F. Gaer             Vice President, Secretary,
    --------------------             General Counsel and Director
    Douglass F. Gaer

    /s/ John C. Lounds               Director
    ------------------
    John C. Lounds

    /s/ J. Kevin McCarthy            Director
    ---------------------
    J. Kevin McCarthy

    /s/ Steven E. Shebik             Director
    --------------------
    Steven E. Shebik

    /s/ Michael J. Velotta           Director
    ----------------------
    Michael J. Velotta


                                       17
<Page>

                              FINANCIAL STATEMENTS

                                      INDEX


                                                                           PAGE
                                                                           ----
Independent Auditors' Report                                                F-1

Financial Statements:

  Statements of Operations and Comprehensive Income for the Years Ended
    December 31, 2001, 2000 and 1999                                        F-2

  Statements of Financial Position
    December 31, 2001 and 2000                                              F-3

  Statements of Shareholder's Equity for the Years Ended
    December 31, 2001, 2000 and 1999                                        F-4

  Statements of Cash Flows for the Years Ended
    December 31, 2001, 2000 and 1999.                                       F-5

  Notes to Financial Statements                                             F-6

  Schedule IV- Reinsurance for the Years Ended
    December 31, 2001, 2000 and 1999                                       F-15


                                       18
<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, 2001 and 2000, 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, 2001. 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, 2001 and
2000, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 2001 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 20, 2002

                                      F-1
<Page>
                          LINCOLN BENEFIT LIFE COMPANY

               STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

<Table>
<Caption>
                                                                 YEAR ENDED DECEMBER 31,
                                                              ------------------------------
                                                                2001       2000       1999
                                                              --------   --------   --------
                                                                      (IN THOUSANDS)
<S>                                                           <C>        <C>        <C>
REVENUES
  Net investment income.....................................  $12,144    $12,214    $10,740
  Realized capital gains and losses.........................   (1,352)       (95)      (913)
  Other expense.............................................       --        (20)    (2,301)
                                                              -------    -------    -------
INCOME FROM OPERATIONS BEFORE INCOME TAX EXPENSE............   10,792     12,099      7,526
Income Tax Expense..........................................    3,768      4,221      2,560
                                                              -------    -------    -------
NET INCOME..................................................    7,024      7,878      4,966
                                                              -------    -------    -------
OTHER COMPREHENSIVE INCOME (LOSS), AFTER-TAX
  Change in unrealized net capital gains and losses.........    2,818      3,106     (6,900)
                                                              -------    -------    -------
COMPREHENSIVE INCOME (LOSS).................................  $ 9,842    $10,984    $(1,934)
                                                              =======    =======    =======
</Table>

                       See notes to financial statements.

                                      F-2
<Page>
                          LINCOLN BENEFIT LIFE COMPANY

                        STATEMENTS OF FINANCIAL POSITION

<Table>
<Caption>
                                                                       DECEMBER 31,
                                                              -------------------------------
                                                                   2001             2000
                                                              --------------   --------------
                                                              (IN THOUSANDS, EXCEPT PAR VALUE
                                                                           DATA)
<S>                                                           <C>              <C>
ASSETS
Investments
  Fixed income securities, at fair value (amortized cost
   $179,124 and $166,893)...................................   $   186,709      $   170,142
  Short-term................................................         6,856           11,243
                                                               -----------      -----------
  Total investments.........................................       193,565          181,385
Cash........................................................        43,796               76
Reinsurance recoverable from Allstate Life Insurance
  Company, net..............................................     9,564,440        8,366,927
Reinsurance recoverable from non-affiliates, net............       458,563          353,789
Receivable from affiliate, net..............................        17,027               --
Other assets................................................         2,924            2,393
Separate Accounts...........................................     1,565,708        1,648,691
                                                               -----------      -----------
      TOTAL ASSETS..........................................   $11,846,023      $10,553,261
                                                               ===========      ===========
LIABILITIES
Contractholder funds........................................   $ 9,287,599      $ 8,157,502
Reserve for life-contingent contract benefits...............       724,044          550,334
Current income taxes payable................................         3,645            2,785
Deferred income taxes.......................................         6,187            4,607
Payable to affiliates, net..................................            --            9,210
Other liabilities and accrued expenses......................        70,237            1,371
Separate Accounts...........................................     1,565,708        1,648,691
                                                               -----------      -----------
      TOTAL LIABILITIES.....................................    11,657,420       10,374,500
                                                               -----------      -----------
COMMITMENTS AND CONTINGENT LIABILITIES (NOTE 8)

SHAREHOLDER'S EQUITY
Common stock, $100 par value, 30,000 shares authorized,
  25,000 shares issued and outstanding......................         2,500            2,500
Additional capital paid-in..................................       126,750          126,750
Retained income.............................................        54,423           47,399
Accumulated other comprehensive income:
  Unrealized net capital gains and losses...................         4,930            2,112
                                                               -----------      -----------
      Total accumulated other comprehensive income..........         4,930            2,112
                                                               -----------      -----------
      TOTAL SHAREHOLDER'S EQUITY............................       188,603          178,761
                                                               -----------      -----------
      TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY............   $11,846,023      $10,553,261
                                                               ===========      ===========
</Table>

                       See notes to financial statements.

                                      F-3
<Page>
                          LINCOLN BENEFIT LIFE COMPANY

                       STATEMENTS OF SHAREHOLDER'S EQUITY

<Table>
<Caption>
                                                                 YEAR ENDED DECEMBER 31,
                                                              ------------------------------
                                                                2001       2000       1999
                                                              --------   --------   --------
                                                                      (IN THOUSANDS)
<S>                                                           <C>        <C>        <C>
COMMON STOCK................................................  $  2,500   $  2,500   $  2,500
                                                              --------   --------   --------
ADDITIONAL CAPITAL PAID-IN
Balance, beginning of year..................................   126,750    116,750    116,750
Capital contribution........................................        --     10,000         --
                                                              --------   --------   --------
Balance, end of year........................................   126,750    126,750    116,750
                                                              --------   --------   --------
RETAINED INCOME
Balance, beginning of year..................................    47,399     39,521     34,555
Net income..................................................     7,024      7,878      4,966
                                                              --------   --------   --------
Balance, end of year........................................    54,423     47,399     39,521
                                                              --------   --------   --------
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Balance, beginning of year..................................     2,112       (994)     5,906
Change in unrealized net capital gains and losses...........     2,818      3,106     (6,900)
                                                              --------   --------   --------
Balance, end of year........................................     4,930      2,112       (994)
                                                              --------   --------   --------
    TOTAL SHAREHOLDER'S EQUITY..............................  $188,603   $178,761   $157,777
                                                              ========   ========   ========
</Table>

                       See notes to financial statements.

                                      F-4
<Page>
                          LINCOLN BENEFIT LIFE COMPANY

                            STATEMENTS OF CASH FLOWS

<Table>
<Caption>
                                                                 YEAR ENDED DECEMBER 31,
                                                              ------------------------------
                                                                2001       2000       1999
                                                              --------   --------   --------
                                                                      (IN THOUSANDS)
<S>                                                           <C>        <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income..................................................  $  7,024   $  7,878   $  4,966
Adjustments to reconcile net income to net cash provided by
 operating activities
    Depreciation, amortization and other non-cash items.....      (531)      (868)    (5,313)
    Realized capital gains and losses.......................     1,352         95        913
    Changes in:
      Life-contingent contract benefits and contractholder
       funds, net of reinsurance recoverables...............     1,520     (1,342)    (4,868)
      Income taxes payable..................................       922      1,570     (1,266)
      Receivable/payable to affiliates, net.................   (26,237)    (3,440)     2,130
      Other operating assets and liabilities................    68,347      1,897      9,156
                                                              --------   --------   --------
    Net cash provided by operating activities...............    52,487      5,790      5,718
                                                              --------   --------   --------
CASH FLOWS FROM INVESTING ACTIVITIES
Fixed income securities
  Proceeds from sales.......................................    10,922     15,856     17,760
  Investment collections....................................    15,346      7,430     13,580
  Investments purchases.....................................   (39,422)   (30,979)   (39,723)
  Change in short-term investments, net.....................     4,387     (9,003)     2,068
                                                              --------   --------   --------
    Net cash used in investing activities...................    (8,767)   (16,696)    (6,315)
                                                              --------   --------   --------
CASH FLOWS FROM FINANCING ACTIVITIES
Capital contribution........................................        --     10,000         --
                                                              --------   --------   --------
    Net cash provided by financing activities...............        --     10,000         --
                                                              --------   --------   --------

NET INCREASE (DECREASE) IN CASH.............................    43,720       (906)      (597)
CASH AT BEGINNING OF YEAR...................................        76        982      1,579
                                                              --------   --------   --------
CASH AT END OF YEAR.........................................  $ 43,796   $     76   $    982
                                                              ========   ========   ========
</Table>

                       See notes to financial statements.

                                      F-5
<Page>
                          LINCOLN BENEFIT LIFE COMPANY
                         NOTES TO FINANCIAL STATEMENTS
-------------------------------------------------------------------

1.  GENERAL

BASIS OF PRESENTATION
The accompanying financial statements include the accounts of Lincoln Benefit
Life Company ("Lincoln Benefit" or 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
("GAAP").

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 2001 presentation, certain amounts in the prior years'
financial statements and notes have been reclassified.

NATURE OF OPERATIONS
Lincoln Benefit, a single segment entity, markets a diversified group of
products to meet consumers' lifetime needs in the areas of protection and
retirement solutions through independent insurance agents and broker/dealers,
including master brokerage agencies. Products distributed through independent
insurance agents include term life insurance; permanent life insurance such as
whole life, universal life, variable universal life and single premium life;
fixed annuities, including equity-indexed annuities; immediate annuities;
variable annuities and long-term care products. Variable annuities and variable
universal life products are also distributed through independent broker/dealers.
ALFS, Inc. ("ALFS") is the principal underwriter for certain Lincoln Benefit
products, such as variable universal life, variable annuities and market value
adjusted annuities. ALFS is a wholly owned subsidiary of ALIC and is a
registered broker/dealer under the Securities and Exchange Act of 1934.

In 2001, annuity deposits represented 74.4% of the Company's total statutory
premiums and deposits. Statutory premiums and deposits is a measure used by
management to analyze sales trends. Statutory premiums and deposits includes
premiums and annuity considerations determined in conformity with statutory
accounting practices prescribed or permitted by the insurance regulatory
authorities of the state of Nebraska, and all other funds received from
customers on deposit-type products which are treated as liabilities. The
statutory accounting practices differ in certain, material aspects from GAAP.

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 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, under current U.S.
tax laws and regulations, deferred and immediate annuities and life insurance,
including interest-sensitive products, receive favorable policyholder tax
treatment. Any legislative or regulatory changes that adversely alter this
treatment are likely to negatively affect the demand for these products. In
addition, recent changes in federal estate tax laws will affect the demand for
the types of life insurance used in estate planning.

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 annuity 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, Illinois, Pennsylvania, Wisconsin and Florida for
the year ended December 31, 2001. No other jurisdiction accounted for more than
5% of statutory premiums and deposits. All premiums and deposits are ceded under
reinsurance agreements.

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 fair value of exchange traded
fixed income securities is based upon quoted market prices

                                      F-6
<Page>
                          LINCOLN BENEFIT LIFE COMPANY
                         NOTES TO FINANCIAL STATEMENTS
-------------------------------------------------------------------

or dealer quotes. The fair value of non-exchange traded fixed income securities
is based on either independent third party sources or widely accepted pricing
valuation models which utilize internally developed ratings and independent
third party data as inputs. The difference between amortized cost and fair
value, net of deferred income taxes, is reflected as a component of Accumulated
other comprehensive income. 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 mortgage-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. They include gains and losses on portfolio trading and write-downs in
value due to other than temporary declines in fair value.

The Company monitors its fixed income portfolios for ratings changes or other
events that may result in declines in value that are other than temporary.
Factors considered in evaluating whether a decline in fair value is other than
temporary are: 1) the Company's ability and intent to retain the investment for
a period of time sufficient to allow for an anticipated recovery in value; 2)
the duration for and extent to which the fair value has been less than cost; and
3) the financial condition and near-term prospects of the issuer.

REINSURANCE RECOVERABLE
The Company has reinsurance agreements whereby certain premiums, contract
charges, credited interest, policy benefits and certain expenses are ceded to
ALIC (see Notes 3 and 7). The Company also has reinsurance agreements, whereas,
the Company cedes 90%, 80% or 60% of the mortality risk on certain term life
policies, depending upon the issue year and product, to a pool of eleven
non-affiliated reinsurers. Beginning in 1998, the Company cedes mortality risk
on new business in excess of $2 million per life for individual coverage. For
business sold prior to 1998, the Company ceded mortality risk in excess of $350
thousand per life for individual coverage.

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. Reinsurance does
not extinguish the Company's primary liability under the policies written.

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 by ALIC
under terms of 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. 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.

Immediate annuities with life contingencies, including certain structured
settlement annuities, provide insurance protection over a period that extends
beyond the period in which premiums are collected. Gross premiums in excess of
the net premium on immediate annuities with life contingencies 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.

Interest-sensitive life contracts, such as universal life and single premium
life, 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 charges consist of fees assessed
against the contractholder account balance for the cost of insurance (mortality
risk), contract administration and surrender charges. These revenues are
recognized when levied against the account balance. Contract benefits include
life-contingent benefit payments in excess of the reserves held.

Contracts that do not subject the Company to significant risk arising from
mortality or morbidity are referred to as investment contracts. Fixed annuities,
market value adjusted annuities, equity-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 charges for investment contracts consist of fees assessed
against the contractholder account balance for contract administration and
surrenders. These revenues are recognized when levied against the contractholder
account balance.

Interest credited to contractholders' funds represents contractual interest
accrued or paid for interest-sensitive life contracts and investment contracts.
Crediting rates for fixed

                                      F-7
<Page>
                          LINCOLN BENEFIT LIFE COMPANY
                         NOTES TO FINANCIAL STATEMENTS
-------------------------------------------------------------------

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.

Separate Accounts products include variable annuity and variable universal life.
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. Contract charges for these contracts consist
of fees assessed against the Separate Accounts fund balances for contract
maintenance, administration, mortality, expense and surrenders. Contract
benefits incurred for Separate Accounts include, for example, guaranteed minimum
death benefits paid in variable annuity contracts.

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. The principal assets and liabilities
giving rise to such differences are unrealized capital gains and losses on fixed
income securities carried at fair value and differences in the tax bases of
investments.

SEPARATE ACCOUNTS
The Company issues variable annuities and variable universal life contracts, the
assets and liabilities of which 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. 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. Revenues to the Company from the Separate Accounts
consist of contract maintenance and administration fees and mortality, surrender
and expense charges and are ceded to ALIC.

Absent any contract provision wherein the Company guarantees either a minimum
return or account value upon death or annuitization, contractholders bear the
investment risk that the Separate Accounts' funds may not meet their stated
objectives.

RESERVE FOR LIFE-CONTINGENT CONTRACT BENEFITS
The reserve for life-contingent contract benefits, which relates to traditional
life insurance and immediate annuities with life contingencies, is computed on
the basis of assumptions as to future investment yields, mortality, 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 interest-sensitive life policies
and 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 surrenders and 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 GAAP 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.

PENDING ACCOUNTING STANDARDS
In December 2001, the Accounting Standards Executive Committee ("AcSEC") issued
Statement of Position ("SOP") 01-6, "Accounting by Certain Entities (Including
Entities With Trade Receivables) That Lend to or Finance the Activities of
Others", which is effective for interim and annual financial statements issued
for the fiscal year beginning after December 15, 2001. The SOP conforms
accounting and financial reporting practices for certain lending and financing
activities, eliminating various specialized accounting practices that developed
from the issuance of AICPA finance company, bank, and credit union audit guides.
The SOP also explicitly incorporates lending and financing activities of
insurance companies within its scope. The Company's adoption of SOP 01-6 is not
expected to have a material effect on the results of operations or financial
position.

3.  RELATED PARTY TRANSACTIONS

REINSURANCE
The Company has reinsurance agreements whereby certain premiums, contract
charges, interest credited to contractholders' funds, contract 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

                                      F-8
<Page>
                          LINCOLN BENEFIT LIFE COMPANY
                         NOTES TO FINANCIAL STATEMENTS
-------------------------------------------------------------------

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. 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 $70.0 million, $35.1 million and $26.4 million in 2001, 2000 and 1999,
respectively. Of these costs, the Company retains investment related expenses.
All other costs are ceded to ALIC under reinsurance agreements.
INCOME TAXES
The Company is a party to a federal income tax allocation agreement with the
Corporation (Note 9).

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. No amounts were
outstanding for the Company under the intercompany loan agreement at December
31, 2001 and 2000, respectively.

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
         AT                           UNREALIZED
    DECEMBER 31,       AMORTIZED   ----------------     FAIR
        2001             COST      GAINS    LOSSES     VALUE
        ----           ---------   ------   -------   --------
(IN THOUSANDS)
<S>                    <C>         <C>      <C>       <C>
U.S. government and
  agencies             $ 39,710    $1,971   $  (15)   $ 41,666
Corporate                97,517    4,263      (450)    101,330
Municipal                 1,000       --        (3)        997
Mortgage-backed
  securities             39,389    1,731        (4)     41,116
Foreign government        1,508       92        --       1,600
                       --------    ------   -------   --------
  Total fixed income
   securities          $179,124    $8,057   $ (472)   $186,709
                       ========    ======   =======   ========
At December 31, 2000
U.S. government and
  agencies             $ 18,191    $2,072   $   --    $ 20,263
Corporate               103,414    1,531    (1,966)    102,979
Municipal                 1,000       --       (38)        962
Mortgage-backed
  securities             40,774    1,593       (43)     42,324
Foreign government        3,514      100        --       3,614
                       --------    ------   -------   --------
  Total fixed income
   securities          $166,893    $5,296   $(2,047)  $170,142
                       ========    ======   =======   ========
</Table>

SCHEDULED MATURITIES
The scheduled maturities for fixed income securities are as follows at
December 31, 2001:

<Table>
<Caption>
                                       AMORTIZED     FAIR
                                         COST       VALUE
(IN THOUSANDS)                         ---------   --------
<S>                                    <C>         <C>
Due in one year or less                $  5,417    $  5,516
Due after one year through five years    74,168      77,726
Due after five years through ten
 years                                   46,846      47,436
Due after ten years                      13,304      14,915
                                       --------    --------
                                        139,735     145,593
Mortgage-backed securities               39,389      41,116
                                       --------    --------
  Total                                $179,124    $186,709
                                       ========    ========
</Table>

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

NET INVESTMENT INCOME

<Table>
<Caption>
     YEAR ENDED DECEMBER 31,        2001      2000      1999
     -----------------------       -------   -------   -------
(IN THOUSANDS)
<S>                                <C>       <C>       <C>
Fixed income securities            $11,959   $11,517   $10,380
Short-term investments                 598       830       577
                                   -------   -------   -------
  Investment income, before
   expense                          12,557    12,347    10,957
  Investment expense                   413       133       217
                                   -------   -------   -------
  Net investment income            $12,144   $12,214   $10,740
                                   =======   =======   =======
</Table>

                                      F-9
<Page>
                          LINCOLN BENEFIT LIFE COMPANY
                         NOTES TO FINANCIAL STATEMENTS
-------------------------------------------------------------------

REALIZED CAPITAL GAINS AND LOSSES, AFTER TAX

<Table>
<Caption>
      YEAR ENDED DECEMBER 31,         2001     2000   1999
      -----------------------        -------   ----   -----
(IN THOUSANDS)
<S>                                  <C>       <C>    <C>
Fixed income securities              $(1,352)  $(95)  $(913)
Income taxes                             473    33      320
                                     -------   ----   -----
Realized capital gains and losses,
  after tax                          $  (879)  $(62)  $(593)
                                     =======   ====   =====
</Table>

Excluding calls and prepayments, gross gains of $123 thousand, $0 thousand and
$1 thousand were realized during 2001, 2000 and 1999, respectively, and gross
losses of $1.5 million, $95 thousand and $914 thousand were realized on sales of
fixed income securities during 2001, 2000 and 1999, respectively.

UNREALIZED NET CAPITAL GAINS AND LOSSES
Unrealized net capital gains and losses on fixed income securities included in
shareholder's equity at December 31, 2001 are as follows:

<Table>
<Caption>
                                                   GROSS
                                                UNREALIZED
                       AMORTIZED     FAIR     ---------------   UNREALIZED
                         COST       VALUE     GAINS    LOSSES   NET GAINS
(IN THOUSANDS)         ---------   --------   ------   ------   ----------
<S>                    <C>         <C>        <C>      <C>      <C>
Fixed income
 securities            $179,124    $186,709   $8,057   $(472)    $ 7,585
                       ========    ========   ======   =====
Deferred income taxes                                             (2,655)
                                                                 -------
Unrealized net
 capital gains and
 losses                                                          $ 4,930
                                                                 =======
</Table>

CHANGE IN UNREALIZED NET CAPITAL GAINS AND LOSSES

<Table>
<Caption>
     YEAR ENDED DECEMBER 31,         2001      2000       1999
     -----------------------        -------   -------   --------
(IN THOUSANDS)
<S>                                 <C>       <C>       <C>
Fixed income securities             $ 4,336   $ 4,778   $(10,615)
Deferred income taxes                (1,518)   (1,672)     3,715
                                    -------   -------   --------
Increase (decrease) in unrealized
 net capital gains and losses       $ 2,818   $ 3,106   $ (6,900)
                                    =======   =======   ========
</Table>

SECURITIES ON DEPOSIT
At December 31, 2001, fixed income securities with a carrying value of $8.9
million 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 below 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 recoverable and deferred income taxes) and liabilities
(including 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 deemed to approximate fair value.

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

<Table>
<Caption>
                                2001                      2000
                       -----------------------   -----------------------
                        CARRYING       FAIR       CARRYING       FAIR
                         VALUE        VALUE        VALUE        VALUE
(IN THOUSANDS)         ----------   ----------   ----------   ----------
<S>                    <C>          <C>          <C>          <C>
Fixed income           $ 186,709    $  186,709   $ 170,142    $  170,142
 securities
Short-term investments     6,856         6,856      11,243        11,243
Separate Accounts      1,565,708     1,565,708   1,648,691     1,648,691
</Table>

Fair values of exchange traded fixed income securities are based upon quoted
market prices or dealer quotes. The fair value of non-exchange traded fixed
income securities is based on either independent third party sources or widely
accepted pricing valuation models which utilize internally developed ratings and
independent third party data as inputs. 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>
                                2001                      2000
                       -----------------------   -----------------------
                        CARRYING       FAIR       CARRYING       FAIR
                         VALUE        VALUE        VALUE        VALUE
(IN THOUSANDS)         ----------   ----------   ----------   ----------
<S>                    <C>          <C>          <C>          <C>
Contractholder funds
 on investment
 contracts             $7,407,377   $7,446,451   $6,401,863   $6,186,479
Separate Accounts      1,565,708     1,565,708   1,648,691     1,648,691
</Table>

Contractholder funds include interest-sensitive life insurance contracts and
investment contracts. Interest-sensitive life insurance contracts and certain
other contractholder liabilities are not considered to be financial instruments
subject to fair value disclosure requirements. The fair value of investment
contracts is based on the terms of the underlying contracts. Fixed annuities and
immediate annuities without life contingencies are valued at the account balance
less surrender charges. Market value adjusted annuities' fair value is estimated
to be the market adjusted surrender value.

                                      F-10
<Page>
                          LINCOLN BENEFIT LIFE COMPANY
                         NOTES TO FINANCIAL STATEMENTS
-------------------------------------------------------------------

Equity indexed deferred annuity contracts' fair value approximates carrying
value since the embedded equity options are carried at market value in the
financial statements. Separate Accounts liabilities are carried at the fair
value of the underlying assets.

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>
                                             2001       2000
(IN THOUSANDS)                             --------   --------
<S>                                        <C>        <C>
Immediate annuities:
  Structured settlement annuities          $162,412   $ 73,719
  Other immediate annuities                  35,757     36,884
Traditional life                            503,992    406,260
Other                                        21,883     33,471
                                           --------   --------
  Total Reserve for life-contingent
   contract benefits                       $724,044   $550,334
                                           ========   ========
</Table>

The assumptions for mortality generally utilized in calculating reserves include
the U.S. population with projected calendar year improvements and age setbacks
for impaired lives for structured settlement annuities; the 1983 group annuity
mortality table for other immediate annuities; and actual Company experience
plus loading for traditional life. Interest rate assumptions vary from 6.0% 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.

Premium deficiency reserves are established, if necessary, for the immediate
annuity business, to the extent the unrealized gains on fixed income securities
would result in a premium deficiency had those gains actually been realized. The
Company did not have a premium deficiency reserve at December 31, 2001 and 2000.

At December 31, Contractholder funds consists of the following:

<Table>
<Caption>
                                           2001         2000
(IN THOUSANDS)                          ----------   ----------
<S>                                     <C>          <C>
Interest-sensitive life                 $1,876,260   $1,777,128
Fixed annuities:
  Immediate annuities                      245,468      152,181
  Deferred annuities                     7,165,871    6,228,193
                                        ----------   ----------
  Total Contractholder funds            $9,287,599   $8,157,502
                                        ==========   ==========
</Table>

Contractholder funds are equal to deposits received and interest credited for
the benefit of the contractholder less surrenders and withdrawals, mortality
charges and administrative expenses. Interest rates credited range from 3.4% to
7.5% for interest-sensitive life contracts; 4.8% to 5.9% for immediate annuities
and 0.0% to 12.0% 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 46.3% 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 effects of reinsurance on premiums written and earned and contract charges
for the years ended December 31, are as follows:

<Table>
<Caption>
                                 2001        2000        1999
(IN THOUSANDS)                 ---------   ---------   ---------
<S>                            <C>         <C>         <C>
PREMIUMS AND CONTRACT CHARGES
Direct                         $ 572,949   $ 470,337   $ 389,741
Assumed                                4           2           2
Ceded
  Affiliate                     (330,799)   (241,361)   (187,854)
  Non-affiliate                 (242,154)   (228,978)   (201,889)
                               ---------   ---------   ---------
    Premiums and contract
     charges, net of
     reinsurance               $      --   $      --   $      --
                               =========   =========   =========
</Table>

                                      F-11
<Page>
                          LINCOLN BENEFIT LIFE COMPANY
                         NOTES TO FINANCIAL STATEMENTS
-------------------------------------------------------------------

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

<Table>
<Caption>
                                 2001        2000        1999
(IN THOUSANDS)                ----------   ---------   ---------
<S>                           <C>          <C>         <C>
CREDITED INTEREST, POLICY
 BENEFITS AND OTHER EXPENSES
Direct                        $1,007,684   $ 885,081   $ 869,393
Assumed                               --          --          --
Ceded
  Affiliate                     (728,750)   (630,015)   (684,703)
  Non-affiliate                 (278,934)   (255,046)   (182,389)
                              ----------   ---------   ---------
    Credited interest,
     policy benefits and
     other expenses, net of
     reinsurance              $       --   $      20   $   2,301
                              ==========   =========   =========
</Table>

8.  COMMITMENTS AND CONTINGENT LIABILITIES

REGULATION AND LEGAL PROCEEDINGS
The Company's business is subject to the effects of a changing social, economic
and regulatory environment. State and federal regulatory initiatives have varied
and have included employee benefit regulations, removal of barriers preventing
banks from engaging in the securities and insurance businesses, 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, and the overall expansion of regulation. 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 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. Amounts assessed to each
company are typically related to its proportion of business written in a
particular state. The Company's expenses related to these funds are immaterial
and are ceded to ALIC under reinsurance agreements.

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.

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 liabilities at December 31, are as
follows:

<Table>
<Caption>
                                                 2001       2000
(in thousands)                                 --------   --------
<S>                                            <C>        <C>
DEFERRED LIABILITIES
Difference in tax bases of investments          $2,561     $2,405
Unrealized net capital gains                     2,655      1,137
Other liabilities                                  971      1,065
                                                ------     ------
  Total deferred liabilities                    $6,187     $4,607
                                                ======     ======
</Table>

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

<Table>
<Caption>
                                        2001       2000       1999
(in thousands)                        --------   --------   --------
<S>                                   <C>        <C>        <C>
Current                                $3,706     $2,032    $ 3,645
Deferred                                   62      2,189     (1,085)
                                       ------     ------    -------
  Total income tax expense             $3,768     $4,221    $ 2,560
                                       ======     ======    =======
</Table>

The Company paid income taxes of $2.8 million, $2.7 million and $3.8 million in
2001, 2000 and 1999, respectively.

                                      F-12
<Page>
                          LINCOLN BENEFIT LIFE COMPANY
                         NOTES TO FINANCIAL STATEMENTS
-------------------------------------------------------------------

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>
                                         2001       2000       1999
                                       --------   --------   --------
<S>                                    <C>        <C>        <C>
Statutory federal income tax rate       35.0%      35.0%      35.0%
Other                                   (0.1)      (0.1)      (1.0)
                                        ----       ----       ----
Effective income tax rate               34.9%      34.9%      34.0%
                                        ====       ====       ====
</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, 2001, approximately $340
thousand, will result in federal income taxes payable of $119 thousand 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.

10.  STATUTORY FINANCIAL INFORMATION
The following table reconciles Net income for the year ended December 31, and
Shareholder's equity at December 31, as reported herein in conformity with GAAP
with total statutory net income and capital and surplus of the Company,
determined in accordance with statutory accounting practices prescribed or
permitted by insurance regulatory authorities:

<Table>
<Caption>
                                                         SHAREHOLDER'S
                                 NET INCOME                 EQUITY
                          -------------------------   -------------------
                           2001     2000     1999       2001       2000
(IN THOUSANDS)            ------   ------   -------   --------   --------
<S>                       <C>      <C>      <C>       <C>        <C>
Balance per GAAP          $7,024   $7,878   $ 4,966   $188,603   $178,761
Unrealized gain/loss on
  fixed income securities    --       --         --     (7,585)    (3,249)
Deferred income taxes        18    1,370     (1,363)     8,406      5,059
Employee benefits           (73)      --          2        758        676
Reserves and non-admitted
  assets                    245      446        259    (16,188)   (13,628)
Other                       229     (417)       242     12,343      1,817
                          ------   ------   -------   --------   --------
Balance per statutory
  accounting practices    $7,443   $9,277   $ 4,106   $186,337   $169,436
                          ======   ======   =======   ========   ========
</Table>

The Company prepares its statutory financial statements in accordance with
accounting practices prescribed or permitted by the State of Nebraska.
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.

Effective January 1, 2001, the State of Nebraska required insurance companies
domiciled in its state to prepare statutory-basis financial statements in
accordance with the NAIC Accounting Practices and Procedures Manual--Version
effective January 1, 2001 ("codification") subject to any deviations prescribed
or permitted by the State of Nebraska insurance commissioner.

Accounting changes adopted to conform to the provisions of codification are
reported as changes in accounting principles. The cumulative effect of changes
in accounting principles is reported as an adjustment to unassigned funds
(surplus) in the period of the change in accounting principle. The cumulative
effect is the difference between the amount of capital and surplus at the
beginning of the year and the amount of capital and surplus that would have been
reported at that date if the new accounting principles had been applied
retroactively for all prior periods. The Company reported an increase to surplus
of $2.0 million effective January 1, 2001 as a result of recognizing a net
deferred tax asset.

The NAIC is currently in the process of clarifying and interpreting requirements
as the insurance industry implements codification. As the NAIC announces changes
and as they are approved by the Nebraska Department of Insurance, the impact of
the changes will be recorded.

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 by Nebraska law to formula amounts based on
statutory surplus and statutory net gain from operations, 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 2002 without prior approval
of the Nebraska Department of Insurance is $18.3 million.

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 requirement consists of a
formula for determining each insurer's RBC and a model law specifying regulatory
actions if an insurer's RBC falls below specified levels. At December 31, 2001,
RBC for the Company was significantly above levels that would require regulatory
action.

                                      F-13
<Page>
                          LINCOLN BENEFIT LIFE COMPANY
                         NOTES TO FINANCIAL STATEMENTS
-------------------------------------------------------------------

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>
                                           2001                              2000                              1999
                              -------------------------------   -------------------------------   -------------------------------
                               PRETAX      TAX      AFTER-TAX    PRETAX      TAX      AFTER-TAX    PRETAX      TAX      AFTER-TAX
(IN THOUSANDS)                --------   --------   ---------   --------   --------   ---------   --------   --------   ---------
<S>                           <C>        <C>        <C>         <C>        <C>        <C>         <C>        <C>        <C>
UNREALIZED CAPITAL GAINS AND
  LOSSES:
----------------------------
Unrealized holding gains
  (losses) arising during
  the period                  $ 2,984    $(1,045)    $1,939      $4,683    $(1,639)    $3,044     $(11,528)   $4,035     $(7,493)
Less: reclassification
  adjustments                  (1,352)       473       (879)        (95)        33        (62)        (913)      320        (593)
                              -------    -------     ------      ------    -------     ------     --------    ------     -------
Unrealized net capital gains
  (losses)                      4,336     (1,518)     2,818       4,778     (1,672)     3,106      (10,615)    3,715      (6,900)
                              -------    -------     ------      ------    -------     ------     --------    ------     -------
Other comprehensive income
  (loss)                      $ 4,336    $(1,518)    $2,818      $4,778    $(1,672)    $3,106     $(10,615)   $3,715     $(6,900)
                              =======    =======     ======      ======    =======     ======     ========    ======     =======
</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 thousand
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 $1.2 million related to unamortized building
improvements recognized in the third quarter of 1999 when the building was
vacated by the Company.

                                      F-14
<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, 2001
Life insurance in force............................  $138,566,651   $138,566,651   $         --
                                                     ============   ============   ============
Premiums and contract charges:
  Life and annuities...............................  $    532,235   $    532,235   $         --
  Accident and health..............................        40,718         40,718             --
                                                     ------------   ------------   ------------
                                                     $    572,953   $    572,953   $         --
                                                     ============   ============   ============
</Table>

<Table>
<Caption>
                                                        GROSS                          NET
                                                        AMOUNT         CEDED          AMOUNT
                                                     ------------   ------------   ------------
<S>                                                  <C>            <C>            <C>
YEAR ENDED DECEMBER 31, 2000
Life insurance in force............................  $120,555,954   $120,555,954   $         --
                                                     ============   ============   ============
Premiums and contract charges:
  Life and annuities...............................  $    447,683   $    447,683   $         --
  Accident and health..............................        22,656         22,656             --
                                                     ------------   ------------   ------------
                                                     $    470,339   $    470,339   $         --
                                                     ============   ============   ============
</Table>

<Table>
<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   $         --
                                                     ============   ============   ============
</Table>

                                      F-15
<Page>

                                                                    Exhibit 3(i)

                              AMENDED AND RESTATED

                            ARTICLES OF INCORPORATION

                                       OF

                          LINCOLN BENEFIT LIFE COMPANY

                               SEPTEMBER 26, 2000


                                    ARTICLE I

                                NAME AND LOCATION


     SECTION 1. The name of this Corporation shall be LINCOLN BENEFIT LIFE
COMPANY, and its principal place of business shall be in the City of Lincoln,
Lancaster County, Nebraska.

     SECTION 2. The principal office of the Corporation shall be located at 2940
South 84th Street, Lincoln, Nebraska.


                                   ARTICLE II

                               NATURE OF BUSINESS


     SECTION 2. The nature of the business to be transacted, and the objects and
purposes of the Company are:

     (a)  To make insurance upon the lives of persons, including endowments and
          annuities and every insurance pertaining thereto and disability
          benefits.

     (b)  To make insurance against loss or expense resulting from the sickness
          of the insured, or from bodily injury or death of the insured by
          accident, or both, and every insurance pertaining thereto, including
          quarantine.

     SECTION 2. The Company may issue every kind of insurance permitted by the
Statutes of the State of Nebraska, and any amendments thereto.


                                       1
<Page>

     SECTION 3. The Company may issue all types of life insurance and sickness
and accident insurance permitted by the laws of the State of Nebraska, and any
amendments thereto, to individuals, to "groups of persons" and to "groups of
insureds."

     SECTION 4. The Company, in addition to the powers herein conferred, shall
have all the privileges and powers, and may engage in any activity, permitted
insurance corporations organized under the laws of the State of Nebraska; and
may do and perform all and every lawful act required as deemed expedient for the
conduct of its business, the ownership of its property, or the maintenance,
perpetuity, prosperity or welfare of the Company.

SECTION 5. The Company shall be authorized to establish separate accounts for
amounts which, pursuant to applicable contracts, are paid to the Company in
connection with pension, retirement or profit sharing plans or annuities. The
income, if any, and the gains or losses, realized or unrealized, on each such
account may be credited to or charged against the amount allocated to such
account in accordance with such contract without regard to other income, gains
or losses of the Company.


                                   ARTICLE III

                                   INVESTMENTS


     The Company shall be authorized to invest its funds in a manner not
prohibited by the laws of the State of Nebraska.

                                   ARTICLE IV

                                ADDITIONAL POWERS


     Section 1. The Board of Directors may from time to time vote to indemnify
and reimburse any director or officer or former director or officer of the
corporation, or any person who may have served at its request as a director or
officer of another corporation in which it owns shares of capital stock or of
which it is a creditor, his or her heirs, estate or personal representatives,
for any loss, cost or expense he or she may suffer, including court costs,
attorneys' fees and incidental expenses, and further including the amount of any
payment properly made to settle or


                                       2
<Page>

compromise any proceedings in which such director or officer is made a party to
any legal proceedings, including appeals therefrom, because of his or her being
or having been a director or officer of the Company. Provided, however, the
directors shall have no power to indemnify or reimburse a director or officer or
former director or officer of the Corporation in any cause in which he or she
shall finally be adjudged in such proceedings to be liable for negligence or
misconduct in the performance of his or her duties as such officer or director
or former director or officer. The foregoing right of indemnity and
reimbursement shall not be exclusive of other rights to which a director or
officer may be entitled by law, agreement, vote of stockholders, or otherwise.

                                    ARTICLE V

                             PLAN AND CAPITAL STOCK


     SECTION 1. The Company shall do business upon the stock legal reserve plan.

     SECTION 2. The authorized capital stock of this Company shall be $3,000,000
divided into 30,000 shares of a par value of $100 each.

     SECTION 3. The stock shall be transferable only by the actual delivery of
the stock certificate or certificates properly endorsed, and the transfer duly
recorded on the stock transfer books of the Company.

     The Board of Directors, after an affirmative vote at an annual or special
shareholders' meeting of at least one-half of the outstanding shares, shall be
authorized and empowered to issue and dispose of all or any of the authorized
but unissued shares of the capital stock of the Company, at not less than par,
from time to time as it may determine to be in the best interests of the Company
and the stockholders thereof.


                                   ARTICLES VI

                              TIME OF COMMENCEMENT


     The Corporation shall begin transaction of business under these articles
when the same have been filed and approved according to the laws of the State of
Nebraska, and shall have perpetual existence, unless sooner resolved by or in
accordance with the laws of the State of Nebraska.


                                       3
<Page>

                                   ARTICLE VII

                            PROPERTY OF SHAREHOLDERS


     The private property of the shareholders shall not be subject to the debts
of the Corporation. The shares of the Corporation shall be fully paid and
nonassessable.


                                  ARTICLE VIII

                             OFFICERS AND DIRECTORS


     SECTION 1. The Board of Directors shall consist of not less than five (5)
nor more than twenty-one (21) persons. At each annual meeting of the
stockholders the number to be elected and their election shall take place as
provided by the By-Laws of the Company. The personnel of the directors shall be
made up of qualified persons, as provided under the laws of the State of
Nebraska.

     SECTION 2. The Board of Directors shall have the general management and
control of the business of the Company.

     SECTION 3. The officers of the Company shall consist of a President, one or
more Vice Presidents, a Secretary, one or more Assistant Secretaries, a
Treasurer, one or more Assistant Treasurers, and such other officers as may be
provided for in the By-Laws, and all the officers shall be elected by the Board
of Directors in such manner and for such terms as the By-Laws may prescribe.


                                   ARTICLE IX

                       ANNUAL MEETING OF THE STOCKHOLDERS


     SECTION 1. The stockholders shall meet annually on a date prescribed in the
By-Laws at the home office of the Company for the purpose of electing directors
and transacting such other business as may properly come before the
stockholders.


                                       4
<Page>

     SECTION 2. Each stockholder shall have the right to vote in person or by
proxy, and shall be entitled to one vote for each share of stock held by him or
her according to the stock transfer books of the Company at the annual meetings
and at all special meetings legally called. They By-Laws of the Company shall
provide a date when the stock transfer books of the Company shall be closed for
the purposes of determining the stockholders of record for the annual or special
meeting to be held.


                                    ARTICLE X

                                   AMENDMENTS


     Amendments to these Articles of Incorporation shall be adopted by
two-thirds vote of all the directors, thereafter approved by the Department of
Insurance, and thereafter approved by two-thirds vote of all the stock voting in
person or by proxy at that annual or legally called special meeting. Notice of
such proposed amendments to these Articles of Incorporation shall be sent to all
stockholders of record as required in the By-Laws of the Company.


                                   ARTICLE XI

                                 CORPORATE SEAL


     The corporate seal of the Company shall contain the words, "Lincoln Benefit
Life Company", surrounding the words "Corporate Seal".

                                        LINCOLN BENEFIT LIFE COMPANY


                                        By:
                                           ------------------------------
                                           B. Eugene Wraith, President
Attest:


-----------------------------
Carol S. Watson, Secretary



SEAL

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