SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
Form 10-K

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

  For fiscal year ended
    December 31, 1995    Commission File Number 0-15330

AMVESTORS FINANCIAL CORPORATION
_____________________________________
(Exact name of registrant as specified in its charter)
          Kansas                                       48-1021516

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

415 Southwest 8th Avenue, Topeka, Kansas                            66603
(Address of principal executive offices)                          (Zip code)
Registrant's telephone number, including area code:  (913) 232-6945
Securities registered pursuant to Section 12(g) of the Act:
Common Stock*
______________

Title of class
*Report being filed pursuant to Section 13 of the act.
    Indicate by check mark whether the registrant (2) has filed all reports 
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act 
of 1934 during the preceding 12 months (or for such shorter period that the 
registrant was required to file such reports), and (2) has been subject to 
such filing requirements for the past 90 days.
Yes  X     No
     ___      ___
        ___________________________________________________________________

    Indicate by check mark if the disclosure of delinquent filers pursuant to 
Item 405 of Regulation S-K is not contained herein, and will not be 
contained, to the best of 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 the Form 10-K. (   )
    The aggregate market value (based upon the last sale price as quoted by 
The New York Stock Exchange on February 21, 1996) of the shares held by 
non-affiliates was approximately $108,416,000.
         As of February 21, 1996, there were 10,154,995 shares of the 
registrant's common stock, no par value, outstanding.
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DOCUMENTS INCORPORATED BY REFERENCE

Documents                              Form 10-K Reference
__________                                ________________________



Proxy Statement - Annual Meeting of       Part III, Items 10,
Stockholders to be held May 16, 1996      12 and 13
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PART 1
Item 1.  Description of Business
__________________________________
Item 1. (a)  General Development of Business
_______________________________________________
        AmVestors Financial Corporation (AmVestors or the company) is an 
insurance holding company whose principal subsidiaries are American Investors 
Life Insurance Company, Inc. (American), American Investors Sales Group, Inc. 
(American Sales) and AmVestors Investment Group, Inc. (AIG). AmVestors was 
incorporated in 1986 to serve as a holding company for all of the common 
stock of American.
        American specializes in the sale of deferred annuity products 
throughout the United States. Deferred annuities accounted for approximately 
96% of all premiums received by the company in 1995. Other products offered 
include single premium immediate annuities (SPIAs) and flexible premium 
universal life policies (FPULs). As of December 31, 1995, the company had 
total annuity contracts in force of $2.1 billion.
        The company designs its products and directs its marketing efforts 
towards the savings and retirement market. U.S. Census Bureau statistics 
indicate that the pre-retirement segment of this market, ages 45 to 
64,("pre-retirement market") is the fastest growing age group in the country 
and also project a 30% increase in the number of individuals in this age 
group during the 1990s. Historically, the 50 and older age group has 
accounted for over 80% of all annuity premiums received by the company and, 
to date, the average premium received by it per annuity contract has been 
approximately $22,000. The company continues to target this age group because 
management believes that as this group ages, it will have an increasing 
interest in saving for retirement, nursing home care and unanticipated 
medical costs.
        The company seeks to make sales in the market for retirement savings 
products by offering annuity products that meet the demands of agents and the 
pre-retirement population. The company markets its annuity products through 
independent agents licensed in 47 states and the District of Columbia. Agents 
are recruited through the company's wholly-owned subsidiary, American Sales, 
as well as through various other marketing organizations. As of December 31, 
1995, the company had approximately 7,500 independent agents licensed to sell 
the company's products. The company does not market its annuity products 
through stockbrokers. The company endeavors to attract agents to sell its 
products by offering a broad selection of fixed annuity products, by 
providing timely, comprehensive services to agents and customers and by 
continuing to specialize in annuity products. Since 1990, over 34% of annuity 
premiums received by American have been produced by agents recruited by 
American Sales, resulting in commission savings for the company as compared 
with business produced by agents recruited through other NMOs.
        The company's strategy is to expand sales in a growing market, 
attract quality agents, sell products with profit potential and maintain a 
high quality investment portfolio.
        The company incorporates certain features in its annuity contracts 
that are designed to reduce the occurrence and effect of premature contract 
terminations and significant withdrawals. Such features include surrender 
charges which decline over time and which apply, subject to certain 
exceptions, to premature terminations during the first five to fourteen years 
of an annuity contract. In addition, annual withdrawals free of surrender 
charges are generally limited to 10% of an annuity's
3
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cash value. Certain of 
American's annuities also provide for deferred payments of the surrender 
value of the annuity over a five year period or market value adjustments of 
surrender value which reflect changes in interest rates.
        Certain annuity policies incorporate a "bailout" feature which 
generally allows policyowners to withdraw their account balances for a 
limited period of time, free of surrender charges, if credited rates fall 
below a specified level. The company experienced significant surrenders 
following the reduction of credited rates below specified "bailout" levels 
during 1992 and 1993.
        Founded in 1965, American has focused on the sale of single premium 
annuity products since 1984. On June 8, 1995, A.M. Best which rates insurance 
companies based on factors of concern to policyowners, reaffirmed American's 
"A-" (Excellent) rating. On February 15, 1995, Duff & Phelps reaffirmed 
American's claims paying ability rating of "A+" (Single-A-Plus).
        There were no material proceedings involving the company or any of 
its subsidiaries.
        On September 8, 1995, the company signed a merger agreement pursuant 
to which it will acquire all of the outstanding capital stock of Financial 
Benefit Group (FBG), a Delaware corporation, for $5.31 per share, payable in 
the company's common stock, warrants and cash.
        FBG is an insurance holding company which owns all of the shares of 
Financial Benefit Life Insurance Company, a Florida domiciled insurer which 
specializes in the sale and underwriting of annuity products and is admitted 
in 41 jurisdictions, which includes 39 states, the District of Columbia and 
the U.S. Virgin Islands. FBG also owns all of the shares of Annuity 
International Marketing Corporation and The Insurancemart, Inc. both of which 
specialize in the distribution and marketing of annuities.
Item 1. (b)  Financial Information About Industry Segments
_______________________________________________________________
  The company does not have any material reportable segments.
Item 1. (c)  Narrative Description of Business
_________________________________________________
        See Item 1. (c) (l) (i)
Item 1. (c) (1)  Business Done and Intended to be Done
___________________________________________________________
        See Item 1. (c) (l) (i)
Item 1. (c) (1) (i)  Principal Products
___________________________________________
Industry Overview
        Annuities have traditionally been used by individuals as a 
tax-deferred savings vehicle for retirement planning. U.S. Census Bureau 
statistics indicate that the 45 to 64 age group is the fastest growing age 
group in the country and project a 30% increase in the number of individuals 
in this age group during the 1990s. The company believes that this 
demographic trend, longer life expectancy, and rising per capita income, as 
well as the tax deferred savings advantage of annuity products relative to 
other savings products, will increase demand for single premium annuities for 
retirement planning.
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Company Overview
        Founded in 1965, American has focused on the sale of single premium 
annuities since 1984. During various periods prior to 1984, American offered 
participating and nonparticipating ordinary life insurance, flexible premium 
annuities and certain disability income and cancer expense policies. However, 
in the middle 1980s, American perceived greater opportunities in the savings 
and retirement market and began to concentrate its marketing efforts on the 
sale of single premium annuities.
Strategy
        The company has developed its business strategy to better enable it 
to capitalize on what it perceives as significant opportunities in the 
growing annuity market. The elements of this strategy are to (i) expand sales 
in a growing market while maintaining its focus on single premium annuities, 
(ii) attract quality agents, (iii) design and sell products with profit 
potential, and (iv) maintain a high quality investment portfolio.
        EXPAND SALES IN A GROWING MARKET. The company believes that its focus 
on deferred annuity products in the expanding savings and retirement market 
provides opportunity for growth. The company seeks to meet the needs of the 
savings and retirement market by offering a portfolio of single premium 
annuity products nationwide. Over 80% of American's premiums received have 
been from individuals ages 50 and over.
        ATTRACT QUALITY AGENTS. The company intends to pursue the growth of 
its business through increased production from existing agents and through 
the creation of new agent relationships. American believes that it is able to 
attract agents to sell its products by providing a broad selection of fixed 
annuity products and timely, comprehensive services to agents and customers. 
The company recruits agents through its wholly-owned subsidiary, American 
Sales, and through other marketing organizations, and regularly evaluates its 
distribution system for growth opportunities. American has approximately 
7,500 independent insurance agents licensed to sell its products in 47 states 
and the District of Columbia.
        DESIGN AND SELL PRODUCTS WITH PROFIT POTENTIAL. The company seeks to 
design its products to enhance the potential for profit and reduce the risk 
of loss. Management's philosophy is to limit sales of annuities when it 
believes that market conditions would prevent the company from achieving 
targeted spreads. The company adjusts credited rates based on prevailing 
market conditions and available investment yields, subject to certain 
interest rate guarantees. Annuities currently issued by the company include 
features such as surrender charges, limited free withdrawal privileges, 
market value adjustments and deferred payout provisions. These features are 
designed to encourage persistency and provide protection from losses due to 
premature termination. Management continuously monitors and adjusts its produc
t features and terms in response to market conditions.
        MAINTAIN A HIGH QUALITY INVESTMENT PORTFOLIO. The company seeks to 
maintain a high quality investment portfolio and to purchase investments 
taking into account the anticipated cash flows of its assets and liabilities. 
As of December 31, 1995, approximately 98% of the company's investment 
portfolio consisted of bonds approximately 92% of which were investment 
grade. The weighted average duration of the company's bond portfolio was 4.4 
years as of that date.
Marketing and Distribution
        To access the market of potential annuity buyers, the company 
maintains a network of independent agents licensed in 47 states and the 
District of Columbia. As of
5
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December 31, 1995, American had approximately 
7,500 agents contracted to sell its annuity products.
        The company also maintains contact with approximately 29,000 agents 
that are not currently licensed, but have either sold American's annuities in 
the past or have expressed an interest in doing so. These agents continue to 
receive periodic mailings related to interest rate and commission changes, 
and new product introductions, and are reappointed as required in order to 
represent the company in selling its products. However, in order to save 
costs associated with reappointing agents, the company does not automatically 
relicense an agent that has not written business for twelve months. Such 
costs include the annual licensing fee of $20 to $40 per agent.
        The company recruits new agents through American Sales and through 
other marketing organizations. Because both American Sales and other 
marketing organizations rely on independent agents, the company does not 
maintain an exclusive or captive sales force thereby avoiding the related 
costs. Since 1990, over 31% of annuity premiums received by American have 
been produced by agents recruited through American Sales. Marketing 
organizations are responsible for, and bear the cost of, recruiting agents. 
In accordance with industry custom, American Sales and the marketing 
organizations receive a gross commission from American for originating an 
annuity contract, a portion of which is paid to the originating agent (the 
"street commission"). The marketing organizations or American Sales retains 
the difference between the gross commission and the street commission (the 
"override commission"). The availability of override commissions provides an 
economic incentive to the marketing organizations to recruit agents who 
produce business.
        The company, through American Sales, recruits new agents principally 
through direct mail solicitations. The company analyzes the market for its 
products and reviews the number and geographical distribution of licensed 
agents regularly. Data reviewed include premiums received and agents licensed 
per capita by state. This allows the company to identify specific regions of 
the country where it believes it can most effectively recruit agents for the 
sales of its annuity products. The company develops a targeted list of 
potential agents from sources such as databases of licensed agents maintained 
by state insurance commissioners as well as industry associations such as the 
Million Dollar Round Table and the American Society of Chartered Life 
Underwriters. The company also regularly advertises its products, rates and 
commission levels in various industry trade publications. To be contracted by 
the company, agents must be licensed by state insurance regulatory 
authorities and have their applications approved by the company.
        Crediting rates, commissions, the perceived quality of the issuer, 
product features and services are generally the principal factors influencing 
an agent's willingness and ability to sell particular annuity products. The 
company believes that both agents and policyowners value the service provided 
by the company. For example, American generally issues a deferred annuity 
policy, together with the agent's commission check, within 72 hours of 
receiving the application and premium. The company also seeks to provide 
ongoing service to the agent. Towards that end, the company provides agents 
with access to the company's senior executives. The company had developed an 
interactive system accessible by all agents to obtain policy information. In 
addition, agents and annuitants can access information about their policies 
via a toll-free telephone number.
        The company collects premiums from policyowners throughout the United 
States. During 1995, 62.0% of its deferred annuity sales were in the 
following states:
6
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California (10.6%), Florida (8.7%),   Ohio (6.5%), Texas 
(6.1%),Illinois (6.0%),  New Jersey (5.5%), Pennsylvania (5.1%), Wisconsin 
(4.8%),  Kansas (4.6%) and Michigan (4.1%).
        The company is not dependent on any one agent or agency for any 
substantial amount of its business. No single agent accounted for more than 
1.0% of American's annual sales in 1995, and the top twenty individual agents 
accounted for approximately 10.6% of American's volume in 1995. The company 
does not have exclusive agency agreements with its agents and management 
believes most of these agents sell products, similar to those sold by 
American, for other insurance companies. This can result in sales declines if 
for any reason American is relatively less competitive or there are concerns 
such as existed in 1991, about asset quality, the downgrade in American's 
A.M.Best rating, and the insolvencies of other insurance companies.
        The four major independent marketing organizations through which the 
company recruits agents to sell its annuity products were responsible for the 
recruitment of agents that accounted for 62.0% of premiums received during 
1995. While the termination of the company's relationships with any of its 
marketing organizations could result in the loss of agents and could 
adversely affect the level of sales and surrenders, the company does not 
believe that the loss of any one marketing organization would have a material 
adverse effect on the financial condition of the company.
Products
        The company specializes in the sale of deferred annuity products to 
individuals. During each of the past three years, sales of deferred annuities 
have accounted for approximately 96% of the company's premiums received, 
while sales of SPIAs and FPULs have  accounted for virtually all remaining 
premiums received.
        Single premium deferred annuities involve a one-time premium deposit 
by the policyowner at the time of issuance. Following an accumulation period, 
the policyowner is entitled to receive the principal value plus accumulated 
interest credited to such annuity, payable either in a lump-sum or through 
annuity payments over a certain period or for life. Interest credited during 
the accumulation period generally is not subject to federal or state income 
tax. Payments are typically made to the annuitant after age 65 and are 
taxable at the tax rate then applicable to the annuitant.
        American currently sells annuity products with different benefits, 
interest rates and commission structures. These products offer tax-deferred 
accumulation of interest, various interest guarantees, guaranteed cash 
values, and a choice of guaranteed income options on the selected maturity 
date. The portfolio of products is continuously reviewed with new plans added 
and others discontinued in an effort to remain competitive.
        The company's operating earnings are derived primarily from its 
investment results, including realized gains (losses), less interest credited 
to annuity contracts and expenses. In determining credited rates, American 
takes into account the profitability of its annuity business and the relative 
competitive positions of its products. Credited rates during the initial and 
any renewal period are based on assumptions and estimates relating 
principally to persistency, investment yield and expenses as well as managemen
t's judgment as to certain market and competitive conditions.
        American's deferred annuities have an initial credited interest rate 
(currently 5.25% to 9.75%, depending on the features of the contract) 
guaranteed for a period
7
<PAGE>
of one to five years. Following the initial guarantee 
period, American may adjust the credited interest rate annually, subject to 
the guaranteed minimum interest rates specified in the contracts. Such 
minimum guaranteed rates typically range from 3% to 6%. The credited rates on 
deferred annuities with accumulated values of approximately $470.2 million 
are currently set at the minimum guaranteed rate. The accumulated values of 
deferred annuities by credited interest rates are as follows as of December 
31, 1995: $896.1 million-less than or equal to 5.5%; $611.6 million-greater 
than 5.5% but less than or equal to 6.5%; $332.3 million-greater than 6.5% 
but less than or equal to 7.5%; and $189.2 million-greater than 7.5%. The 
credited rates on deferred annuities representing a majority of total 
accumulated value may be reset by the company within a period of one year 
subject to the guaranteed minimum rate.
        The company incorporates a number of features in its annuity products 
designed to reduce the occurrence and adverse effect of premature termination 
of the policy. Premature termination of an annuity contract results in the 
loss of future investment earnings related to the annuity deposit and in the 
accelerated recognition of deferred expenses related to policy acquisition, 
principally commissions, which are otherwise recoverable over the life of the 
policy.
        The primary feature incorporated by the company to minimize premature 
terminations is a surrender charge. While the policyowner is permitted at any 
time to withdraw all or part of the accumulated value of his policy, such 
withdrawals are generally subject to a surrender charge for the period of 
years specified in the contract. The surrender charge, which is a percentage 
of the total accumulated value including accrued interest, is designed to 
discourage premature termination. Surrender charges, subject to certain 
exceptions, apply for the number of years specified in the contract and 
decline to zero over a period of five to fourteen years. All annuities 
currently issued by the company include surrender charges and approximately 
90% of the company's contracts in force currently have surrender charges. The 
company generally limits free annual withdrawal to 10% of accumulated value.
        When the company receives a request for surrender of an annuity 
policy, a conservation letter is mailed to the policyowner. This letter is 
designed to inform the policyowner of the possible tax implications and the 
surrender charge payable under the annuity policy. No surrender benefits are 
paid until the company receives a written response to the conservation 
letter. Typically policyowners who have requested a surrender of $10,000 or 
more are personally contacted by telephone. The company's conservation 
procedures are designed to (i) attempt to conserve the business, (ii) 
ascertain the causes of the surrenders, and (iii) identify and terminate 
agents who write low persistency business. In certain contracts, the 
surrender charge is waived for a period of 45 to 60 days following the 
crediting of a renewal rate below a specified rate (the "bailout" rate). Of 
the company's $2.1 billion annuity contracts in force as of December 31, 
1995, $213.1 million have a "bailout" feature remaining. The "bailout" rate 
on $211.0 million of this amount is 6% or less. Surrender charges also 
generally do not apply to one-time annual withdrawals by policyowners of up 
to 10% of the accumulated value of the annuity.
        Approximately 39% of the deferred annuity business in force as of 
December 31, 1995, provides that the company may pay any surrender value in 
level installments over 60 months in lieu of a lump sum payment. 
Additionally, at that date approximately 11% of the deferred annuity business 
in force had a market value adjustment provision that will provide American 
with additional protection during a period of rising interest rates through a 
reduction in the surrender value payable upon surrender of the policy.
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Investments
        The company's earnings are largely determined by its ability to 
maintain a spread between its investment results and the interest credited on 
its annuity products. As of December 31, 1995, the company had $2,143.8 
million of cash and invested assets of which $2,046.1 million or 
approximately 95% represented investments in bonds, which had a duration of 
4.4 years. At that date, approximately 92% of the company's bond portfolio 
was rated investment grade. As of December 31, 1995, the market value of the 
company's bond portfolio exceeded its book value by $96.8 million.
        The following table summarizes the company's investment results for 
the period indicated:
Investment Results
<TABLE>
<CAPTION>
                                       For the Year Ended December 31,
                                            1995         1994         1993
                                               (dollars in millions)
    <S>                                <C>         <C>            <C>

          Average invested assets <F1>.. $1,992.7     $ 1,862.3    $ 1,770.9
          Net investment income <F2>....    156.5         142.0       138.5
          Yield <F3>....................      7.9%         7.6%         7.8%
          Net investment gains <F4>.....       1.0            .8         17.0

          Trading losses.................       (.9)           -            -
________________
<FN><F1>  Average of cash, invested assets (before SFAS 115 adjustment) and
net 
amounts
    due to or from brokers on unsettled security trades at the beginning and 
end
     of period.
<F2>  Net of investment expenses.
<F3>  Net investment income divided by average invested assets.
<F4> Net invested gains (losses) include in 1994 and 1993 provisions for 
     impairments in value that were considered other than temporary.
</TABLE>
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        The following table sets forth the company's investment portfolio as 
of December 31, 1995:
Investment Portfolio
<TABLE>
<CAPTION>
                                         As of December 31, 1995
                                          Carrying
                                           Value       % of Total  
                                          (dollars in millions)
<S>                                     <C>               <C>
Debt Securities <F1>:
  Available-for-sale:
   U.S. Government.....................   $     52.7          2.5%
   Investment grade corporate..........      1,139.5         53.1
   Non-investment grade corporate......        151.5          7.0
   Mortgage-backed <F2>.................        700.9         32.7
                                           ____________      ____________
      Total debt securities
       available-for-sale.............       2,044.6         95.3
                                           ____________      ____________
  Trading:
   Investment grade corporate..........           .5          -
   Non-investment grade corporate......          1.0           .1
                                           ____________      ____________
      Total debt securities trading....           1.5          .1
                                           ____________      ____________
      Total debt securities............     2,046.1        95.4
                                           ____________      ____________


  Equity Securities<F3>:
   Available-for-sale
   Common stock........................          1.2          .1
   Preferred stock.....................          7.7           .3
       Total equity securities
        available-for-sale.............          8.9          .4
Trading:
   Preferred stock.....................           .6          -
      Total equity securities trading..           .6           -
      Total equity securities..........          9.5          .4
  Mortgage loans on real estate.....             5.4          .3
  Real estate <F4>...................             .3          -
  Policy loans......................             5.3          .3
  Other long-term investments <F5>...           28.5         1.3
  Short-term investments <F6>........             .4           -
      Total investments.............         2,095.5        97.7
  Cash..............................            48.3         2.3
      Total cash and investments....      $  2,143.8       100.0%
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<FN><F1> Debt securities classified as  "available-for-sale" or "trading" are 
carried
    at estimated market value. Total market value of debt securities as of 
    December 31, 1995, was approximately $2,046.1 million, representing net 
unre-
    alized investment gains of approximately $96.8 million.
<F2> Consist primarily of collateralized mortgage obligations ("CMOs").
<F3> Equity securities are stated at current market values. Original cost of
    equity securities as of December 31, 1995, was approximately $9.2 
million.
<F4> Real estate owned is carried at cost less depreciation.
<F5> Consist principally of investments in limited partnerships which are 
carried
    at an amount equal to the company's share of the partnerships' estimated
    market value with any unrealized gains or losses recorded in net 
investment
    income.
<FN><F6> Short-term investments are carried at amortized cost which
approximates
    market value.
</TABLE>
        Included in other Long Term Investments on December 31, 1995, were 
$23.1 million, at market, of limited partnership investments. These funds are 
managed by outside investment advisors. The investment guidelines of these 
partnerships allow for a very broad range of investment alternatives to 
include, but not limited to, derivatives, currencies, foreign and U.S. 
stocks, foreign and U.S. bonds, futures, options and commodities. Such 
partnerships are generically referred to as hedge funds. These investments 
were made with a goal of obtaining yield over time which exceeds the yield of 
the S&P 500 Index and are carried at market value with any unrealized gains 
and losses recorded in Net Investment Income in the company's statement of 
earnings. Net Investment Income (Loss) on these partnerships were $3.6 
million, ($1.9) million, and $1.2 million for 1995, 1994 and 1993, 
respectively. The company first invested in such partnerships in July 1993.; 
therefore, 1993 income represents partial year results. Management believes 
that the earnings on this class of investments could experience greater 
volatility than that which might be achieved by the S&P 500 Index and could, 
therefore, materially affect the company's earnings for any given period.
        Bonds and mortgage-backed securities often contain options which 
permit an issuer to call, prepay or repurchase a security at a specified 
price in the future. When a security is called, it is probable that American 
will have to reinvest the proceeds at a lower interest rate. Mortgage-backed 
securities are accounted for using expected prepayment assumptions. 
Accordingly, as prepayment rates on mortgage-backed securities change, the 
company adjusts its income realization on mortgage-backed securities to reflec
t its best estimate of future cash flows and the corresponding income 
resulting from the accretion of discounts and the amortization of premiums.
        Mortgage-backed securities are subject to prepayment risk. This is 
due to the fact that in periods of declining interest rates, the mortgages 
which collateralize the security may be repaid more rapidly than scheduled, 
as individuals refinance higher rate mortgages to take advantage of lower 
prevailing rates. As a result, holders of mortgage-backed securities could 
receive prepayments on their investments which the holder may not be able to 
reinvest at interest rates comparable to the rate on the prepaying security.
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<PAGE>
        The company has reduced this risk of prepayment by investing a 
majority (approximately 75%) of its mortgage-backed investment portfolio in 
planned amortization class ("PAC"), targeted amortization class ("TAC") and 
accretion directed class ("AD") instruments. These investments are designed 
to amortize in a more predictable manner by shifting the primary risk of 
prepayment of the underlying collateral to investors in other tranches 
("support classes") of the CMO. Sequential and pass-through classes represent 
approximately 23% of the book value of the company's mortgage-backed 
securities as of December 31, 1995.
        In some instances, American invests in non-agency, non-government 
sponsored enterprise mortgage-backed securities. Such investments comprised 
25% of the book value of American's mortgage-backed securities at December 
31, 1995. The credit risk associated with non-agency, non-government 
sponsored enterprise mortgage-backed securities generally is greater than 
that of an agency or government sponsored enterprise mortgage-backed 
securities which benefit from either explicit or implicit guarantees of the 
U.S. government or an agency or instrumentality thereof; however, with the 
exception of six issues, with a carrying value of $19.3 million as of 
December 31, 1995, all of the company's investments in other mortgage-backed 
securities are rated A or better by Standard & Poor's or Moody's. As of 
December 31, 1995, the company did not own any "interest only," "principal 
only," or "residual" classes of CMOs.
        For additional information on the company's investment in 
mortgage-backed securities see Note 2 of Notes to Consolidated Financial 
Statements.
        The company carries all investments which it believes have 
experienced other than temporary declines in value at estimated net 
realizable value. The following table indicates by quality rating the 
composition of the company's debt securities portfolio (at amortized cost and 
market value) excluding short-term investments as of December 31, 1995:
        Composition of Debt Securities by Quality Rating
<TABLE>
<CAPTION>
                                       As of December 31, 1995
                                   ___________________________________
                                           % of     Market or     % of         
       
                               Amortized    Debt     Estimated  Invested
                                 Cost   Securities Fair Value   Assets
                                         (dollars in millions)
<S>                            <C>        <C>      <C>          <C>
Investment Grade:
  U.S. Government, its agencies and
    government sponsored
     enterprises..................$ 556.9      28.6%  $  585.2   27.9%
  Aaa.............................   135.9       7.0     140.7    6.7
  Aa..............................   121.6       6.2     127.8    6.1
  A...............................   565.1      29.0     594.1   28.4
  Baa.............................   411.2      21.1     438.5   20.9
    Total investment grade........ 1,790.7      91.9   1,886.3   90.0
Non-investment grade:
  U.S. Government, its agencies and
    government sponsored
     enterprises                       9.6        .5       7.2      .4
  Ba..............................   134.9       6.9     139.2     6.6
  B...............................    14.1        .7      13.4      .6
    Total non-investment grade....   158.6       8.1     159.8     7.6
    Total debt securities.........$1,949.3     100.0% $2,046.1    97.6%
</TABLE>
12
<PAGE>
      As used in the above table and elsewhere in this report, book value 
is defined as amortized cost, including adjustments for any other then 
temporary dimunitions in value, prior to any market value adjustments.
        The company defines high-yield securities as those corporate debt 
obligations rated below investment grade by Standard & Poor's and Moody's or, 
if unrated, those that meet the objective criteria developed by the company's 
independent investment advisory firm. Management believes that the return on 
high-yield securities adequately compensates the company for additional 
credit and liquidity risks that characterize such investments. In some cases, 
the ultimate collection of principal and timely receipt of interest is 
dependent upon the issuer attaining improved operating results, selling 
assets or obtaining financing.
        Rising interest rates could encourage increased policy surrenders. 
This could create the need to sell bonds at a time when their market values 
are below their book values.
        The weighted average life and duration of the company's bond 
portfolio as of December 31, 1995, and for the past three years were as 
follows:
Weighted Average Life and Duration (expressed in years)
<TABLE>
<CAPTION>
                                       As of December 31,
                                   1995       1994        1993
<S>                               <C>          <C>         <C>
Weighted average life........       5.9         6.7        5.5
Weighted average duration<F1>       4.4         4.7         4.2
<FN><F1> Reflects average duration weighted by market value. Duration is a
measure
    of price sensitivity of a bond to changes in interest rates.
</TABLE>
        See Note 2 of Notes to Consolidated Financial Statements for 
information regarding the maturity of the company's bond portfolio as of 
December 31, 1995.
        The company attempts to manage its assets and liabilities so that 
income and principal payments received from investments are adequate to meet 
the cash flow requirements of its policyholder liabilities. The relatively 
short-term nature of the investment portfolio reflects the characteristics of 
the company's liabilities. Approximately 90% of the policy and deposit 
liabilities of the company represents reserves for deferred annuities that 
may be partially or totally surrendered at the policyholders' option, subject 
to surrender charges, market value adjustments or other limitations, when 
applicable. The cash flows of the company's liabilities are affected by 
actual maturities, surrender experience and credited interest rates. The 
company periodically performs cash flow studies under various interest rate 
scenarios to evaluate the adequacy of expected cash flows from its assets to 
meet the expected cash requirements of its liabilities. The company utilizes 
these studies to determine if it is necessary to lengthen or shorten the 
average life and duration of its investment portfolio. Because of the 
significant uncertainties involved in the estimation of asset and liability 
cash flows, there can be no assurance that the company will be able to 
effectively manage the relationship between its asset and liability cash 
flows.
        See "Management Discussion and Analysis of Financial Condition and 
Results of Operations" with respect to amounts of securities sold. See Notes 
1 and 2 of Notes to Consolidated Financial Statements for additional 
information with respect to investments.
13
<PAGE>
Other Insurance Products
        Prior to 1987, American sold, among other products, cancer expense 
plans and nonparticipating and participating life insurance. In 1982, 
American reinsured all of its cancer expense plans and in 1986, American 
reinsured approximately 65% of its nonparticipating life insurance in force 
through assumption reinsurance treaties. The total reserves on reinsurance 
ceded under assumption reinsurance treaties were approximately $11 million at 
the time of transfer. A recent federal district court decision held that in 
certain circumstances an insurer may remain contingently or primarily liable 
for policy liabilities transferred in assumption reinsurance transactions. 
Based on management's belief that the reinsurers are solvent and capable of 
meeting all obligations on the policies reinsured, management considers the 
likelihood that any liability would inure to the company remote. However, in 
the event of the insolvency of the reinsurers, it is possible that the 
company would be liable for the reinsured policies.
        American has $16.6 million face amount of participating life 
insurance policies in force, net of reinsurance, and $55.2 million of 
nonparticipating life insurance, net of reinsurance, in force. American has 
followed a plan of paying dividends on its outstanding participating life 
insurance policies in amounts determined annually by its Board of Directors 
and expects to continue doing so in the future. For the year ended December 
31, 1995, dividends paid under these policies totalled $.2 million. Actual mor
tality experience in a particular period may be different than actuarially 
expected mortality experience and, consequently, may adversely affect the 
company's operating results for such period.
Reinsurance
        American reinsures portions of life insurance risks with unaffiliated 
insurance companies under traditional indemnity reinsurance agreements. 
Generally, American enters into traditional reinsurance arrangements to 
assist in diversifying its risk and to limit its maximum loss exposure on 
risks that exceed American's policy retention limits, currently $150,000 per 
life. Reinsurance does not fully discharge American's obligation to pay 
policy claims on the reinsured business. American remains responsible for 
policy claims to the extent the reinsurer fails to pay claims. No reinsurer 
of business ceded by American has failed to pay any policy claims (either 
individually or in the aggregate) with respect to such ceded business. As of 
December 31, 1995, American had ceded to reinsurers $240.2 million of its 
$312.0 million of life insurance in force and had taken $145.2 million of 
related reserve credits against future policy benefits. Of the insurance 
ceded and reserve credits taken, $212.3 million and $143.6 million, 
respectively, relate to one reinsurance contract with Employers Reassurance 
Corporation (ERC). This reinsurance agreement pertains to the coinsurance of 
90% of all risks associated with all of the SPWL policies written by the 
company prior to 1989. Based on a review of the statutory Annual Statements 
filed by ERC with the Kansas Insurance Department and ERC's A.M. Best rating 
of "A+" (Superior), the company believes that ERC is solvent and capable of 
meeting its obligations on the policies reinsured.
Ratings
        American has been rated "A-" (Excellent) by A.M. Best since 1991. 
A.M. Best's ratings for insurance companies currently range from "A++" to 
"F," and some companies are not rated. Publications of A.M. Best indicate 
that "A" (Excellent) and "A-" (Excellent) ratings are assigned to those 
companies which, in A.M. Best's
14
<PAGE>
opinion, have achieved excellent overall 
performance when compared to the norms of the life insurance industry, and 
generally, have demonstrated a strong ability to meet their policyholder and 
other contractual obligations. In evaluating a company's financial and 
operating performance, A.M. Best reviews the company's profitability, 
leverage and liquidity as well as the company's book of business, the 
adequacy of its policy reserves and the experience and competency of its 
management. American has a claims paying ability rating from Duff & Phelps of 
"A+" (High). Duff & Phelps' claims paying ability ratings represent its 
opinion as to the financial ability of an operating insurance company to meet 
obligations under its insurance policies and are based on current information 
provided by the insurance company and other sources. Higher ratings generally 
indicate financial stability and a strong ability to pay claims. A.M. Best's 
and Duff & Phelps' ratings are based upon factors of concern to policyowners, 
agents and intermediaries and are not directed toward the protection of 
investors.
Regulation
        The company and American are subject to the insurance laws and 
regulations of Kansas, the domiciliary state of American, and the laws and 
regulations of the other states in which American is licensed to do business. 
At present, American is licensed to conduct business in 47 states and the 
District of Columbia. The insurance laws and regulations, as well as the 
level of supervisory authority that may be exercised by the various state 
insurance departments, vary by jurisdiction, but generally grant broad powers 
to supervisory agencies or state regulators to examine and supervise 
insurance companies and insurance holding companies with respect to every 
significant aspect of the insurance business. These laws and regulations 
generally require insurance companies to meet certain solvency standards and 
asset tests, to maintain minimum standards of business conduct and to file 
certain reports with regulatory authorities, including information concerning 
their capital structure, ownership and financial condition.
        American is required to file annual statutory financial statements in 
each jurisdiction in which it is licensed. Additionally, American is subject 
to periodic examination by the insurance departments of the jurisdictions in 
which it is licensed, authorized and accredited. The Kansas Insurance 
Department completed its most recent examination of American for the years 
ended December 31, 1990 through December 31, 1993. The results of this 
examination contained no material adverse findings.
        INSURANCE HOLDING COMPANY REGULATIONS; RESTRICTIONS ON DIVIDENDS AND 
DISTRIBUTIONS.  The company and American are subject to regulation under the 
insurance and insurance holding company statutes of Kansas. The insurance 
holding company laws and regulations vary from jurisdiction to jurisdiction, 
but generally require insurance and reinsurance subsidiaries of insurance 
holding companies to register with the applicable state regulatory 
authorities and to file with those authorities certain reports describing, 
among other information, their capital structure, ownership, financial 
condition, certain intercompany transactions and general business operations. 
The insurance holding company statutes also require prior regulatory  agency 
approval or, in certain circumstances, prior notice of certain material 
intercompany transfers of assets, as well as certain transactions between 
insurance companies, their parent companies and affiliates.
        The company is an insurance holding company and substantially all 
income
15
<PAGE>
reflected in its Consolidated Statements of Earnings is derived from 
the operations of American. The company's assets consist primarily of the 
stock of American and its other subsidiaries. Dividends, fees, rents and 
commissions received from American have been, and together with the company's 
retained funds and earnings thereon will be, the source of funds for the 
payment of debt service, operating and other expenses incurred by the 
company. Insurance laws and regulations of Kansas, the state of incorporation 
of American, restrict the flow of funds, including dividends, from American 
to the company. In addition, the payment of dividends, fees, rents and 
commissions by American reduces its capital and surplus, and therefore, can 
affect the amount of annuities it can write.
        Pursuant to the Kansas Insurance Holding Company Act, American may 
not, without prior approval of the Kansas Insurance Department, pay dividends 
if the amount of such dividends added to all other dividends or other 
distributions made by American within the preceding twelve months exceeds the 
greater of (i) its statutory net gain from operations for the prior calendar 
year or (ii) 10% of statutory surplus at the end of the preceding calendar 
year. During the year ended December 31, 1995, American had a statutory net 
gain from operations of $6.0 million. As of December 31, 1995, 10% of 
American's statutory surplus was $9.8 million. In addition, another provision 
of Kansas insurance law limits dividends that American may pay to the company 
to earned surplus calculated on a statutory basis, which totalled $16.8 
million as of December 31, 1995. Subject to the provisions of Kansas 
insurance law, American also may advance funds to the company in the form of 
loans.
        Under the Kansas Insurance Statute, unless (i) certain filings are 
made with the Kansas Insurance Department, (ii) certain requirements are met, 
including a public hearing and (iii) approval or exemption is granted by the 
insurance commissioner, no person may acquire any voting security or security 
convertible into a voting security of an insurance holding company ,such as 
the company, which controls a Kansas insurance company or merge with such a 
holding company, if as a result of such transaction such person would 
"control" the insurance holding company. "Control" is presumed to exist if a 
person directly or indirectly owns or controls 10% or more of the voting 
securities of another person.
        NAIC REGULATORY CHANGES. The NAIC and insurance regulators also have 
become involved in a process of re-examining existing laws and regulations 
and their application to insurance companies. In particular, this 
re-examination has focused on insurance company investment and solvency 
issues and, in some instances, has resulted in new interpretations of 
existing law, the development of new laws and the implementation of 
non-statutory guidelines.
        Regulations prescribed by the NAIC require the establishment of an 
Asset Valuation Reserve ("AVR") account designed to stabilize a company's 
statutory capital and surplus against fluctuations in the market value of 
stocks and bonds. The AVR consists of two main components: a "default 
component," which provides for potential credit related losses on 
debt-securities and an "equity component," which provides for potential 
losses on all types of equity investments, including real estate. The 
regulations also require the establishment of an Interest Maintenance Reserve 
("IMR"), which is credited with the portion of realized investment gains and 
losses net of tax from the sale of fixed maturities attributable to changes 
in interest rates. The IMR is required to be amortized into earnings over the 
remaining period to maturity of the fixed maturities sold.
        RISK-BASED CAPITAL REQUIREMENTS. The NAIC has adopted risk-based 
capital ("RBC")
16
<PAGE>
requirements that require insurance companies to calculate 
and report information under a risk-based formula that attempts to measure 
statutory capital and surplus needs based on the risks in a company's mix of 
product and investment portfolio. Under the formula, a company first 
determines its Authorized Control Level risk-based capital ("ACL") by taking 
into account (i) the risk with respect to the insurer's assets; (ii) the risk 
of adverse insurance experience with respect to the insurer's liabilities and 
obligations; (iii) the interest rate risk with respect to the insurer's 
business; and (iv) all other business risks and such other relevant risks as 
are set forth in the RBC instructions. A company's "Total Adjusted Capital" 
is the sum of statutory capital and surplus and such other items as the RBC 
instructions may provide.
        The requirements provide for four different levels of regulatory 
attention. The "Company Action Level" is triggered if a company's Total 
Adjusted Capital is less than 2.0 times its ACL but greater than or equal to 
1.5 times its ACL. At the Company Action Level, the company must submit a 
comprehensive plan to the regulatory authority which discusses proposed 
corrective actions to improve its capital position. The "Regulatory Action 
Level" is triggered if a company's Total Adjusted Capital is less than 1.5 
times but greater than or equal to 1.0 times its ACL. At the Regulatory 
Action Level, the regulatory authority will perform a special examination of 
the company and issue an order specifying corrective actions that must be 
followed. The "Authorized Control Level" is triggered if a company's Total 
Adjusted Capital is less than 1.0 times but greater than or equal to 0.7 
times its ACL, and the regulatory authority may take action it deems 
necessary, including placing the company under regulatory control. The 
"Mandatory Control Level" is triggered if a company's Total Adjusted Capital 
is less than 0.7 times its ACL, and the regulatory authority is mandated to 
place the company under its control. As of December 31, 1995, American's 
Total Adjusted Capital was $124.8 million and its Authorized Control Level 
risk-based capital was $26.3 million.
        Should a future deficiency occur, American would be subject to an 
increased level of regulatory attention and, depending on the capital 
deficiency, possibly to actual control by the appropriate regulatory 
authorities.
        ASSESSMENTS AGAINST INSURERS. Under the guaranty fund laws of all 
states in which the company operates, insurers can be assessed for losses 
incurred by policyholders of insolvent insurance companies. At present, most 
guaranty fund laws provide for assessments based upon the amount of direct 
insurance underwritten in a given jurisdiction. See Note 12 of Notes to 
Consolidated Financial Statements. The company has set up a reserve for its 
current estimate of future non-recoverable guaranty fund assessments.
        FEDERAL REGULATION. Although the federal government generally does 
not directly regulate the insurance industry, federal initiatives often have 
an impact on the business. Congress and certain federal agencies are 
investigating the current condition of the insurance industry in the United 
States in order to decide whether some form of federal role in the regulation 
of insurance companies would be appropriate. It is not possible to predict 
the outcome of any such congressional activity or the potential effects 
thereof on the company.
Item 1. (c) (1) (ii)  New Products
__________________________________
        The company introduced various versions of deferred annuities during 
1995. In addition, a flexible premium universal life policy was introduced, 
providing the company with a source of revenue diversification. The company 
had not marketed a
17
<PAGE>
life insurance policy since the first quarter of 1993.
Item 1. (c) (1) (iii)  Sources of Raw Materials
______________________________________________
        The company does not require any raw materials.
Item 1. (c) (iv)  Patents, Trademarks, Franchises, Etc.
_____________________________________________________
        The company does not hold any patents, trademarks, licenses, 
franchises, or concessions which are materially important.
Item 1. (c) (1) (v)  Seasonal Nature of Business
_______________________________________________
        The company is not engaged in a seasonal business.
Item 1. (c) (1) (vi)  Working Capital Items
___________________________________________
        Not applicable.
Item 1. (c) (1) (vii)  Dependence on Customers
____________________________________________
        The company is not dependent on a single customer or a few customers 
where the loss of any one or more of whom would have an adverse effect on the 
company.
Item 1. (c) (1) (viii)  Backlog of Orders
________________________________________
        There is no backlog of orders with respect to the company.
Item 1. (c) (1) (ix)  Portion(s) of Business Subject to Governmental 
Negotiations
______________________________________________________________________________
_
        There are no portions of the company's business which are subject to 
renegotiation or termination of governmental contracts.
Item 1. (c) (1) (x)  Competition in Registrant's Business
________________________________________________________
        The insurance industry is highly competitive and the company competes 
with individual companies and with groups of affiliated companies with 
substantially greater financial resources, larger sales forces and more 
widespread agency and brokerage relationships. In addition, in marketing 
annuity products, the company competes with other life insurance companies as 
well as financial institutions which market functionally competitive 
products.
        The company's marketing strategy is to provide products for the 
individual and business market through experienced, independent insurance 
agents and brokers licensed to sell life insurance. The company utilizes 
marketing agencies to recruit its agency force and also recruits agents 
directly, utilizing industry trade publications and direct mail. The agents 
and representatives contracted to sell for the company currently number 
approximately 7,500.
        The company's agents and brokers also represent other insurance 
companies and sell policies which may compete with those of the company. The 
company believes it has been successful in attracting and retaining brokers 
and agents because it has been able to offer a competitive package of 
innovative products, competitive commission structures, prompt policy 
issuance and responsive policyholder service.
        In addition to competing with other life insurance companies, the 
company also competes with financial institutions, including banks and mutual 
funds, which market annuities and other retirement savings products and have 
substantially grater resources than the company. Competition from financial 
institutions may be increased as a result of a ruling by the United States 
Supreme Court on January 18, 1995 in the case of NationsBank v. VALIC in 
which the Court concluded that for purposes of Section 92 of the National 
Bank Act, annuities are investment products
18
<PAGE>
rather than insurance products 
and that federal banks can therefore serve as agents for their customers in 
the purchase and sale of both fixed and variable annuities.
Item 1. (c) (1) (xi)  Research and Development
_____________________________________________
        The company made no material expenditures with respect to research 
and development.
Item 1. (c) (1) (xii)  Environmental Issues
__________________________________________
        Subsurface assessments and research conducted beneath the parking lot 
of the company's home office complex have indicted the possible existence of 
underground storage tanks and level of contamination which may require 
remedial action. The company does not believe that any required remedial 
action will result in an material capital expenditures.
Item 1. (c) (1) (xiii)  Numbers of Persons Employed
___________________________________________________
        On December 31, 1995, the company employed 100 persons in its home 
office and had approximately 7,500 full and part-time agents who are paid on 
a commission basis.
Item 1. (d)  Foreign Operations
_______________________________
        The company does not have any material operations in foreign 
countries nor does it derive any material portion of its revenue from 
customers in foreign countries.
Item 2.  Properties
___________________
        The company owns its home office complex consisting of four buildings 
and the adjacent property in Topeka, Kansas. Total floor space in the four 
buildings is approximately 31,000 square feet. During 1995, the company began 
construction of a six-story Home Office building in Topeka, Kansas to house 
all operations and plans to move into the new facility by early 1997.
Item 3.  Legal Proceedings
__________________________
        The company does not have any material legal proceedings pending 
against it.
Item 4.  Submission of Matters to a Vote of Security Holders
________________________________________________________________
        No matters were submitted to security holders during the fourth 
quarter of the fiscal year covered by this report.
19
<PAGE>
ITEM 5.--MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND 
RELATED STOCKHOLDER MATTERS

        The common stock of the company began trading on the New York Stock 
Exchange under the symbol AMV on November 30, 1994. Prior to that date the 
company's common stock traded in the over-the-counter market under the NASDAQ 
symbol AVFC. The following table shows the quarterly high and low sales price 
per share of common stock of the company as reported by the New York Stock 
Exchange and NASDAQ:
<TABLE>
<CAPTION>
                                  COMMON
                                  High     Low
                                ________ ________
       <S>                      <C>        <C>
                     1995
         Fourth Quarter........    117\8    107\8
          Third Quarter.........    127\8    107\8
          Second Quarter........    115\8     10
          First Quarter.........    103\4     91\4

          1994
          Fourth Quarter........    10        81\4
          Third Quarter.........    10        8
          Second Quarter........    101\2     83\4
          First Quarter.........    12        95\8
</TABLE>

    A dividend of 7.5 cents was paid on April 13, 1995 and no dividends paid 
during 1994.
    On February 23, 1996, the board of directors declared a divided of 7.5 
cents per common share, payable March 27, 1996, to stockholders of record on 
March 13, 1996.
    As of February 21, 1996, there were approximately 3,558 holders of record 
of the company's common stock.
    See Management's Discussion and Analysis of Liquidity and Capital 
Resources and Note 7 of the Notes to Consolidated Financial Statements for 
the statutory limitation on dividends payable from American under Kansas law.
20
<PAGE>
Item 6.  Selected Financial Data
________________________________
AMVESTORS FINANCIAL CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(NOT COVERED BY INDEPENDENT AUDITORS' REPORT)
    Following is a summary of selected financial data for the five years 
ended December 31, 1995:
<TABLE>
<CAPTION>
                                   (000's Omitted, except per share data)

                            1995       1994      1993       1992      1991 
<S>                         <C>        <C>       <C>       <C>        <C>      
                                         
Total Revenue <F1>........  $166,651    149,700  162,523    175,708   173,372  
                               
Earnings before income
    taxes and extraordinary
    item................... $ 25,129     19,286   26,755     17,318     6,675
Income tax expense
 (benefit)................     8,530      5,593    8,564        118    (3,444)
Earnings before
 extraordinary item......     16,599     13,693   18,191     17,200    10,119
Extraordinary item: Loss
 on early extinguishment
 of debt.................         -          -      (213)      (382)        -
Net earnings............    $ 16,599     13,693   17,978     16,818    10,119
Earnings per share of
    common stock:*
Primary:
    Earnings before
    extraordinary item.    $   1.60        1.32     2.62       2.94      1.84
    Extraordinary item....       -            -     (.03)      (.07)        -
    Net earnings.........  $   1.60        1.32     2.59       2.87      1.84
Fully diluted:
    Earnings before
    extraordinary item.... $   1.60        1.32     2.49       2.62      1.84
    Extraordinary item....        -           -     (.03)      (.06)        -
    Net earnings.......... $   1.60        1.32     2.46       2.56      1.84
    Cash dividends per
     share of common
      stock............... $   .075           -        -         -         -
Total Assets...........    $2,476,204 2,260,021  2,114,696 2,090,136 1,959,071
Capitalization:
Bank debt...........       $ 7,000            -         -    19,859     28,437
Stockholders' equity.      174,445      104,196   100,345    49,463     30,936
Total Capitalization..... $181,445      104,196   100,345    69,322     59,373
<FN><F1> Total revenue for the years 1995, 1994, 1993, 1992 and 1991 includes
net 
investment gains of $1.0, $.8, $17.0, $20.5 and $16.5 million, respectively.
</TABLE>
*Per share data for 1991 and 1992 has been restated to give effect to a 
one-for-two and one half reverse stock split effective June 11, 1993.
21
<PAGE>
Item 7.  Management's Discussion and Analysis of Financial Condition and 
Results of
Operations

General

    The company specializes in the sale of deferred annuity products as a 
retirement savings vehicle for individuals. During each of the past three 
years, sales of deferred annuities have accounted for at least 96% of the 
company's premiums received, while sales of SPIAs and FPULs have accounted 
for virtually all remaining premiums received.
    The company's operating earnings are derived primarily from its 
investment results, including realized gains (losses), less interest credited 
to annuity contracts and expenses. Under GAAP, premiums received on deferred 
annuities, SPIAs without life contingencies and FPULs are not recognized as 
revenue at the time of sale. Similarly, policy acquisition costs (principally 
commissions) related to such sales are not recognized as expenses but are 
capitalized as deferred acquisition costs, or "DAC". As a result of this 
deferral of costs and the lack of revenue recognition for premiums received, 
no profit or loss is realized on these contracts at the time of sale. 
Premiums received on deferred annuities, SPIAs without life contingencies and 
FPULs are reflected on the company's balance sheet by an increase in assets 
equal to the premiums received and by a corresponding increase in future 
policy liabilities.
    The company's earnings depend, in significant part, upon the persistency 
of its annuities. Over the life of the annuity, net investment income, net 
investment gains and policy charges are realized as revenue, and DAC is 
amortized as an expense. The timing of DACamortization is based on the 
projected realization of profits including realized gains (losses) for each 
type of annuity contract and is periodically adjusted for actual experience. 
If a policy is terminated prior to its expected maturity, any remaining 
related DAC is expensed in the current period. Most of American's annuity 
policies in force have surrender charges which are designed to discourage and 
mitigate the effect of premature withdrawals.As a result, the impact on 
earnings from surrenders will depend upon the extent to which available 
surrender charges offset the associated amortization of DAC. For the years 
ended 1995, 1994 and 1993, the company's weighted average expected surrender 
levels were 8.9%, 9.0% and 13.0%, compared to the weighted average actual 
surrenders of 14.2%, 9.8% and 14.7%. Historically the negative impact on 
earnings of any difference between the actual surrender levels and expected 
surrender levels has been more than offset by the realization of gains on the 
sale of securities and the change in future expected gross profits as the 
result of the company's reduction in credited rates.
    Recent periods of low interest rates have reduced the company's 
investment yields. As a result of the lower investment yields, the company 
elected to reduce credited interest rates on certain of its annuity products. 
Certain annuities issued by the company include a "bailout" feature. This 
feature generally allows policyowners to withdraw their entire account 
balance without surrender charge for a period of 45 to 60 days following the 
initial determination of a renewal crediting rate below a predetermined 
level. If a policyowner elects not to withdraw funds during this period, 
surrender charges are reinstated. On policies including a "bailout" feature, 
the company announces its renewal crediting rates on January 14 of each year. 
In January 1994 and 1993, the company deemed it advisable, due to the
22
<PAGE>
general 
decline in interest rates and the yield on its investment portfolio, to 
reduce credited interest rates on certain annuity contracts below the 
"bailout" level. The aggregate account values of annuity contracts on which 
the crediting rate was reduced below the "bailout" level totalled $109.8 
million and $326.2 million during 1994 and 1993, respectively. As a result, 
$18.3 million, or 17%, and $139.6 million, or 43%, of such policies were 
surrendered during 1994 and 1993, respectively. The company was able to 
offset the negative impact of "bailout" surrenders on its earnings through 
the realization of gains on the sale of its securities. Excluding surrenders 
from "bailout" products, American's annuity withdrawal rates were 9% for 
1994, and 7% for 1993. Although, as of December 31, 1995, approximately 
$213.1 million, or 12% of annuity account values contained a "bailout" 
provision, the current credited rates on these policies are above the 
"bailout" rate. The "bailout" rate on $211.0 million of this amount is 6% or 
less. If the company reduces credited rate below the "bailout" rates on 
policies containing "bailout" provisions in the future, it intends to pay any 
resulting surrenders from cash provided by operations and premiums received. 
In the event such sources are not sufficient to pay surrenders, the company 
would have to sell securities at the then current market prices. American 
expects that withdrawals on its annuity contracts will increase as such 
contracts approach maturity. The company may not be able to realize 
investment gains in the future to offset the adverse impact on earnings, 
should future "bailout" surrenders were to occur.
Margin Analysis
        The company's earnings are impacted by realized investment gains and 
losses and by the associated amortization of DAC. The actual timing and 
pattern of such amortization is determined by the actual profitability to 
date (which includes realized investment gains and losses) and the expected 
future profitability on a particular annuity contract. To the extent 
investment income is accelerated through realization of investment gains, the 
corresponding amortization of DAC is also accelerated as the stream of 
profitability on the underlying annuities is effectively accelerated. When 
investment losses are realized, the corresponding amortization of DAC is 
reduced as stream of profitability on the underlying annuities is effectively 
reduced. The following margin analysis depicts the effects of realized gains 
(losses) on the company's operating earnings (loss):
23
<PAGE>
<TABLE>
<CAPTION>        
          For the Year Ended December 31,                                      
    
                                           1995               1994    1993 
(dollars in millions) 
(percent of average invested assets)
<S>                         <C>       <C>    <C>      <C>     <C>     <C>
Average invested assets<F1> $1,992.7  100.0% $1,862.3 100.0%  $1,770.9  100.0%
Insurance premiums and
 policy charges..........   $    8.5    .43%     $6.3   .34%   $  6.6     .37%
Net investment income <F2>..   156.5   7.85     142.0  7.62     138.5    7.82
Net trading losses.........      (.9)  (.04)        -     -         -       -
Policyholder benefits.....    (118.9) (5.97)   (112.3)(6.03)   (113.8)  (6.43)
Gross interest margin....       45.2   2.27      36.0  1.93      31.3    1.76
Associated amortization
    of deferred
    acquisition costs.......   (12.1)  (.61)     (8.8) (.47)     (4.7)  (.26)
Net interest margin.........    33.1   1.66      27.2  1.46      26.6   1.50
Net investment gains.......      1.0    .05        .8   .04      17.0    .96
Associated amortization
    of deferred
    acquisition costs....       (.2)   (.01)      (.2) (.01)     (4.8)  (.27)

Net margin from investment
    gains............            .8     .04        .6    .03     12.2    .69
Total net margin.......        33.9    1.70      27.8   1.49     38.8   2.19
Expenses, net..........        (8.7)   (.44)     (8.5)  (.46)   (11.1)  (.62)
Operating earnings....         25.2    1.26      19.3   1.03     27.7   1.57
Interest expense.........       (.1)     -          -      -     (1.0)  (.06)
 Earnings before income
    taxes.................     25.1    1.26      19.3   1.03     26.7   1.51
Income tax (expense)
    benefit...............    (8.5)    (.43)     (5.6)  (.30)    (8.5)  (.48)
Earnings before
    extraordinary loss.....     16.6      .83       13.7    .73    18.2  1.03
Extraordinary loss on early
    extinguishment of debt..      -         -          -      -     (.2) (.01)
Net earnings................   $16.6       .83      $13.7   .73%   $18.0 1.02%
Operating earnings.........    $25.2      1.26%     $19.3  1.03%   $27.7 1.57%
Less: Net margin from
    investment gains......        .8       .04         .6   .03     12.2  .69
Operating earnings
    excluding net investment
    gains and associated
    amortization of deferred
    policy acquisition
    costs..................    $24.4       1.22%     $18.7  1.00%   $15.5 .88%
24
<PAGE>
<FN><F1>Average of cash, invested assets (before SFAS 115 adjustment) and net 
amounts
    due to or from brokers on unsettled security trades at the beginning and 
end of
    period.
<F2> Net investment income is presented net of investment expense.
</TABLE>
RESULTS OF OPERATIONS
Years Ended December 31, 1995, 1994 and 1993
        INSURANCE PREMIUMS AND POLICY CHARGES increased $2.2 million or 35%, 
to $8.5 million from $6.3 million in 1994, due to an increase in surrender 
charges assessed on the surrender of annuity policies. This follows a 
decrease of $.3 million or 5%, to $6.3 million in 1994 from $6.6 million in 
1993. This decrease reflects a $.5 million decrease in SPIA sales which was 
partially offset by a $.3 million increase in surrender charges assessed on 
the surrender of annuity policies. Surrender benefits increased $113.4 
million to $307.4 million in 1995 from $194.0 million in 1994. The 1994 
amount of $194.0 million represents a decrease of $76.8 million from $270.8 
million in 1993. The increase in surrenders realized in 1995 reflects both 
the increased number of policies no longer covered by a surrender charge and 
the returns available on alternative investments as annuity rates decline. 
The decrease realized in 1994 reflects the reduction in surrenders from 
"bailout" products to $18.3 million in 1994 from $139.6 million in 1993.
        NET INVESTMENT INCOME increased $14.5 million, or 10%, to $156.5 
million from $142.0 million in 1994. This increase resulted from both an 
increase in average invested assets from $1,862.3 million in 1994 to $1,992.7 
million in 1995 and an increase in the average yield on invested assets from 
7.6% in 1994 to 7.9% in 1995. Net investment income increased $3.5 million, 
or 3%, to $142.0 million in 1994 from $138.5 million in 1993. This increase 
resulted from an increase in average invested assets from $1,770.9 million in 
1993 to $1,862.3 million in 1994, offset in part by a reduction in the 
average yield on invested assets from 7.8% in 1993 to 7.6% in 1994. The 1994 
yield was impacted by losses generated by an investment in investment 
partnerships. These partnerships form a fund of funds totalling $23.1 million 
on December 31, 1995, which is structured in an attempt to consistently 
provide returns in excess of the Standard & Poor's (S&P) 500 over time 
without regard to the general direction of financial markets. This fund genera
ted income of $3.6 million in 1995 compared with a loss of $1.9 million in 
1994 and income of $1.2 million in 1993.
        NET TRADING LOSSES of $.9 million in 1995 primarily result from a 
program designed to create capital losses for tax purposes which can be 
carried back against capital gains realized in 1992. To accomplish this, the 
company utilized a preferred stock dividend roll program, buying the stock at 
prices which included the dividend, collecting the dividend and then selling 
the stock at prices excluding the dividend. The net effect of this program 
was to generate dividend income of $1.0 million, included in net investment 
income, and capital losses of $1.0 million. The company had no trading 
activity in either 1994 or 1993.
        NET INVESTMENT GAINS increased $.2 million, or 25%, to $1.0 million 
in 1995 from $.8 million in 1994. This follows a decrease of $16.2 million, 
or 95%, to $.8 million in 1994 from $17.0 million in 1993. The 1995 gain 
reflects the release of the allowance for credit losses that was first 
established in 1989. The release of this reserve increased 1995 investment 
gains by $2.2 million. Gains and losses may be realized upon securities which 
are disposed of for various reasons. The gains realized in 1994 are the 
result of general portfolio management while those taken in 1993 were to 
reduce the effects of the statutory losses resulting from
25
<PAGE>
surrenders 
following the reduction of interest crediting rates on certain annuity 
policies below the "bailout" rate. The decision to realize gains or losses 
lies to a great degree in management's discretion. Unrealized gains (losses) 
in the company's bond portfolio were $96.8 million, ($105.6) million and 
$81.4 million as of December 31, 1995, 1994 and 1993 respectively.
        OTHER REVENUE increased $.9 million, or 150%, to $1.5 million in 1995 
from $.6 million in 1994. This increase resulted from a gain of $.7 million 
recognized on the sale of Omni-Tech Medical Inc., and a $.3 million increase 
in Omni-Tech sales. Other revenue increased $.3 million to $.6 million in 
1994 from $.3 million in 1993. This increase is due to an increase in 
Omni-Tech sales.
        BENEFITS, CLAIMS AND INTEREST CREDITED TO POLICYHOLDERS increased 
$6.6 million, or 6%, to $118.9 million in 1995 from $112.3 million in 1994. 
This increase results primarily from an increase in the average interest rate 
credited on the company's annuity liabilities, from 5.8% as of December 31, 
1994 to 6.0% as of December 31, 1995, along with an increase in annuity 
liabilities to $2,082.0 million on December 31, 1995 from $1,971.6 million on 
December 31, 1994. In 1994, this expense decreased $1.5 million, to $112.3 
million from $113.8 million in 1993. This decrease resulted primarily from a 
reduction in the average interest rate credited on annuity liabilities, from 
6.2% as of December 31, 1993 to 5.8% as of December 31, 1994. This decrease 
was partially offset by an increase in annuity liabilities to $1,971.6 
million on December 31, 1994 from $1,826.9 million on December 31, 1993.
        AMORTIZATION OF DEFERRED POLICY ACQUISITION COSTS increased $3.4 
million, or 38%, to $12.4 million in 1995 from $9.0 million in 1994. 
Amortization of deferred policy acquisition costs (DAC) associated with gross 
interest margin increased $3.3 million to $12.1 million in 1995 from $8.8 
million in 1994. Amortization of DACassociated with investment gains was 
unchanged at an expense of $.2 million on gains of $1.0 million in 1995 and 
an expense of $.2 million on gains of $.8 million in 1994. The increase in 
1995 amortization associated with gross interest margin reflects the 
increased surrenders realized during 1995. Amortization of DACdecreased $.4 
million, to $9.0 million in 1994 from $9.4 million in 1993. Amortization of 
DAC associated with gross interest margins increased $4.1 million, to $8.8 
million in 1994, from $4.7 million in 1993. Amortization of DACassociated 
with investment gains decreased $4.6 million, to $.2 million in 1994, from 
$4.8 million in 1993. The 1993 amortization amounts reflect the lowering of 
interest crediting rates and the resulting increase in the estimates of 
future expected gross profits and the realization of $17.0 million of 
investment gains. Acquisition costs incurred in 1995 and deferred into future 
policy periods were $34.8 million, compared with $25.8 million in 1994 and 
$18.2 million in 1993.
        GENERAL INSURANCE EXPENSES increased $.8 million, or 11%, to $8.4 
million in 1995 from $7.6 million in 1994. Management believes this increase 
can be attributed to increases in business activity and assets under 
management. This follows a decrease of $1.2 million to $7.6 million in 1994 
from $8.8 million in 1993. This decrease is primarily attributable to the 
deferral of additional expenses related to the acquisition of annuity 
contracts in 1994.
        PREMIUM AND OTHER TAXES, LICENSES AND FEES INCREASED $.3 million, or 
23%, to $1.6 million in 1995 from $1.3 million in 1994 following a decrease 
of $1.1 million in 1994 from $2.4 million in 1993. The above amounts include 
charges of approximately $1.0 million, $.5 million and $1.6 million for 
the years 1995, 1994 and 1993, respectively, for nonrecoverable guaranty fund 
assessments resulting from the significant number of insolvencies that have 
occurred in recent years.
26
<PAGE>
        INTEREST EXPENSE increased $.1 million in 1995 as a result of $7.0 
million of borrowing under the company's credit agreement. The proceeds of 
this borrowing were contributed to the surplus of American. Interest expense 
decreased $1.0 million in 1994 following the repayment of all debt in 
November, 1993, with proceeds from the company's 1993 common stock offering.
        INCOME TAX EXPENSE increased $2.9 million to $8.5 million in 1995 
from $5.6 million in 1994. This follows a $3.0 million decrease in 1994 from 
$8.6 million in 1993. Taxes were provided at an effective rate of 34%, 29% 
and 32% in 1995, 1994 and 1993, respectively.
Liquidity and Capital Resources
        The company is an insurance holding company whose principal asset is 
the common stock of American. The company's primary cash requirements are to 
pay operating expenses.
        As a holding company, the company relies on funds received from 
American to meet its cash requirements at the holding company level. The 
company receives funds from American in the form of commissions paid to 
American Sales, fees paid to AIG, rent, administrative, printing and data 
processing charges and dividends. The insurance laws of Kansas generally 
limit the ability of American to pay cash dividends in excess of certain 
amounts without prior regulatory approval and also require that certain 
agreements relating to the payment of fees and charges to the company by 
American be approved by the Kansas Insurance Commissioner.
        The liquidity requirements of American are met by premiums received 
from annuity sales, net investment income received, and proceeds from 
investments upon maturity, sale or redemption. The primary uses of funds by 
American are the payment of surrenders, policy benefits, operating expenses 
and commissions, as well as the purchase of assets for investment.
        For purposes of the company's consolidated statements of cash flows, 
financing activities include premiums received from sales of deferred 
annuities, surrenders and death benefits paid, and surrender and policy 
charges collected on these contracts. The net cash provided by (used in) 
these particular financing activities for the years ended December 31, 1995, 
1994 and 1993, was ($7.6) million, $26.6 million and ($91.5) million, 
respectively.
        The decrease in net cash provided by annuity contracts without life 
contingencies in 1995 resulted primarily from a $125.6 million increase in 
surrender and death benefits paid from $246.6 million (approximately 11.5% of 
beginning reserves for future policy benefits) to $372.2 million 
(approximately 17.3% of beginning reserves for future policy benefits) along 
with a $89.9 million increase in premiums received from $267.8 million to 
$357.7 million. The increase in net cash provided by annuity contracts without
 life contingencies in 1994 resulted primarily from a $72.3 million decrease 
in surrender and death benefits paid from $318.9 million (approximately 16.1% 
of beginning reserves for future policy benefits) to $246.6 million, 
(approximately 12.3% of beginning reserves for future policy benefits) along 
with a $45.6 million increase in premiums received from $222.2 million to 
$267.8 million. 
        Net cash provided by the company's operating activities was $157.9 
million, $130.5 million and $129.7 million in 1995, 1994 and 1993, 
respectively.
        Cash provided by financing and operating activities and by the sale 
and maturity of portfolio investments is used primarily to purchase portfolio 
investments and
27
<PAGE>
for the payment of acquisition costs (commissions and 
expenses associated with the sale and issuance of policies). To meet its 
anticipated liquidity requirements, the company purchases investments taking 
into account the anticipated future cash flow requirements of its underlying 
liabilities. In addition, the company invests a portion of its assets in 
short-term investments and maturities of less than one year (4%, 2% and 3% as 
of December 31, 1995, 1994 and 1993, respectively). The weighted average 
duration of the company's bond portfolio was 4.4 years as of December 31, 
1995.
        The company continually assesses its capital requirements in light of 
business developments and various capital and surplus adequacy ratios which 
affect insurance companies. The company has met its capital needs and those 
of American through several different sources including bank borrowing and 
the sale of both preferred and common stock. On December 31, 1991, the 
company issued 172,000 shares of its $2.00 Series B Convertible Preferred 
Stock with a total stated value of $4.3 million. The Preferred Stock was 
convertible at $7.50 per share into 573,332 shares of the company's Common 
Stock. On December 30, 1992, the company issued and sold 235,294 shares of 
Common Stock at $10.625 per share to the company's Leveraged Employee Stock 
Ownership Plan ("LESOP"). This purchase was financed with the proceeds of a 
$2.5 million loan from American. For additional information regarding the 
LESOP, see Note 6 of Notes to Consolidated Financial Statements. In 1993, the 
company raised $29.4 million through the sale of 3,451,668 shares of Common 
Stock. In December, 1994, the company entered into a credit agreement with 
The First National Bank of Chicago and Boatmen's First National Bank of 
Kansas City, as Lenders. Under the terms of this agreement, the Lenders have 
committed to lend up to $15,000,000 in the form of a 5-year reducing credit 
facility, of which $7,000,000 had been borrowed at December 31, 1995. For 
additional information regarding this credit agreement, see Note 5 of Notes 
to Consolidated Financial Statements.
        As of December 31, 1995, the company owned bonds of 3 issuers in 
amounts exceeding 10% of stockholders' equity. The carrying value of such 
bonds was $58.0 million which represented 3% of the company's invested 
assets. See Note 2 of Notes to Consolidated Financial Statements. A default 
by any one of these issuers could materially adversely affect the results of 
operations and financial condition of the company.
        Recent regulatory actions against certain large life insurers 
encountering financial difficulty have prompted the various state guaranty 
associations to begin assessing life insurance companies for the resulting 
losses. For further information regarding the effects of guaranty fund 
assessments, see Note 12 of Notes to Consolidated Financial Statements.
        REINSURANCE. The company had amounts receivable under reinsurance 
agreements of $146.6 million and $149.7 million as of December 31, 1995 and 
1994, respectively. Of the amounts, $145.0 million and $147.9 million, 
respectively, were associated with a single insurer, ERC. In 1989, the 
company entered into a coinsurance agreement which ceded 90% of the risk on 
the company's block of SPWL written prior to 1989 to ERC. The agreement 
provides that ERC assumes 90% of all risks associated with each policy in the 
block. Under the terms of the contract the company continues to administer 
the policies and is reimbursed for all payments made under the terms of those 
policies. Additionally, the company receives a fee from the reinsurer for 
administering such policies. Cash settlements under the contract are
28
<PAGE>
made 
with ERC on a monthly basis. If ERC were to become insolvent, American would 
remain responsible for the payment of all policy liabilities.
        In addition, the company is a party to two assumption reinsurance 
agreements with other reinsurers. See Item 1. (c)(l) Business Done and 
Intended to be Done-Other Insurance Products.
        EFFECT OF INFLATION AND CHANGES IN INTEREST RATES. The company does 
not believe that inflation has had a material effect on its consolidated 
results of operations during the past three years. The company seeks to 
manage its investment portfolio in part to reduce its exposure to interest 
rate fluctuations. In general, the market value of the company's fixed income 
securities increases or decreases directly with interest rate changes. For 
example, if interest rates decline (as was the case in 1995 and 1993), the 
company's fixed income investments generally will increase in market value, 
while net investment income will decrease. Conversely, if interest rates rise 
(as was the case in 1994), fixed income investments generally will decrease 
in market value, while net investment income will increase.
        In a rising interest rate environment, (such as that experienced in 
1994), the company's average cost of funds would increase over time as it 
prices its new and renewing annuities to maintain a generally competitive 
market rate. During such a rise in interest rates, new funds would be 
invested in bonds with higher yields than the liabilities assumed. In a 
declining interest rate environment, the company's cost of funds would 
decrease over time, reflecting lower interest crediting rates on its fixed 
annuities.
        In addition to the increase in the company's average cost of funds 
caused by a rising interest rate environment, surrenders of annuities that 
are no longer protected by surrender charges increase. While the company 
experienced a decrease in total surrenders during 1994, the decrease was 
primarily due to the large number of bailout surrenders in 1993. Throughout 
1994, the company saw an increase in surrenders of policies which no longer 
were covered by surrender charges. Management believes the increased 
surrenders experienced in 1994 were due to the increasing interest rates 
throughout 1994. This trend has continued into 1995. Management believes that 
surrenders are lower during periods of declining interest rates.
        BOND PORTFOLIO RESTRUCTURING. During 1990, the quoted market values 
of many non-investment grade bonds substantially decreased. In response to 
this decrease, the company substantially increased the allowance for credit 
losses during the third quarter of that year, and completed a significant 
restructuring of its bond portfolio during 1991.
        During 1995, 1994 and 1993, the company disposed of bonds with book 
values of $144.7, $337.7 and $374.6 million for net gains (losses) of ($.1), 
($.8) and $18.6 million, respectively. In 1993, the company reduced credited 
interest rates below the "bailout" rates on certain annuity policies and the 
related surrenders experienced during the "bailout" period resulted in losses 
on a statutory basis. The company sold securities at gains to restore the 
statutory surplus lost. The following table sets forth the reasons that bonds 
were disposed of, the book value of bonds disposed of and the gains (losses) 
on dispositions for the years ended December 31, 1995, 1994 and 1993:
29
<PAGE>
<TABLE>
<CAPTION>
                                             Analysis of Bond Dispositions
                                                  Years Ended December 31,
                                   1995            1994           1993
                               Book    Gains   Book   Gains    Book   Gains
                               Value  (Losses) Value (Losses) Value  (Losses)
(dollars in millions)
<S>                            <C>      <C>     <C>    <C>   <C>       <C>
Bonds redeemed by issuer:
  Investment grade..........    $18.9    $.5    $9.3   $.1   $ 41.2    $  .7
  Non-investment grade......      4.2    (.1)    2.3   (.1)    10.1      1.3
Bonds sold to avoid
 further losses
 as a result of
 deteriorated credit
 worthiness:
  Investment grade..........     11.8   (1.2)    8.5   (.2)    12.4     (.1)
  Non-investment grade......      3.4      -     2.0   (.2)     1.8     (.1)
Bonds sold as part of
 normal portfolio
 management:
  Investment grade..........     91.3     .5   315.6   (.4)       -       -
  Non-investment grade.....      15.1     .2       -     -        -       -
Bonds sold to provide
 statutory capital:
  Investment grade..........       -       -       -     -     301.9    16.5
  Non-Investment grade......       -       -       -     -       7.2      .3

Subtotals:
    Investment grade..          122.0    (.2)   333.4   (.5)    355.5    17.1
    Non-investment grade....     22.7     .1      4.3   (.3)     19.1     1.5
    Total...................   $144.7   $(.1)  $337.7  $(.8)   $374.6   $18.6
</TABLE>      
        In managing the relationship between its assets and liabilities, the 
company utilizes models which determine the cash flows necessary to meet the 
expected cash needs on the underlying liabilities under various interest rate 
scenarios. The company also utilizes these models to determine the dollar 
value of securities that would need to be sold under each interest rate 
scenario so as to determine what portion of its investment portfolio needs to 
be carried on its balance sheet as "available-for-sale." In addition, certain 
conditions specific to an individual security (such as deterioration in 
credit quality) may result in a security being carried as 
"available-for-sale." For a discussion of the impact of SFAS No. 115, 
"Accounting for Certain Investments in Debt and Equity Securities" see Note 1 
of Notes to Consolidated Financial Statements.
        The book value, estimated market value, unrealized gains, and 
unrealized losses in non-investment grade bonds owned as of December 31, 
1995, and December 31, 1994, were $158.5 million and $136.9 million, 
respectively, $159.8 million and $126.5 million, respectively, $4.2 million 
and $.1 million, respectively, and $1.8 million and $9.3 million, 
respectively. The market values of corporate debt securities rated below 
investment grade and comparable unrated securities tend to be more sensitive 
to issuer-specific developments and changes in economic conditions than 
higher rated securities. Issuers of these securities are often highly 
leveraged, so
30
<PAGE>
that their ability to service their debt obligations during an 
economic downturn or during sustained periods of rising interest rates may be 
impaired. In addition, such issuers may not have other methods of financing 
available to them, and may be unable to repay debt at maturity by 
refinancing. The risk of loss due to default in payment of interest or 
principal by such issuers is significantly greater than with investment grade 
issuers for the previously mentioned reasons and because such securities 
frequently are subordinated to the prior payment of senior indebtedness. As 
of December 31, 1995, the carrying value of the company's five largest 
investments in securities rated non-investment grade by both Standard & 
Poor's Corporation ("S&P") and Moody's Investors Service, Inc. ("Moody's") 
aggregated $39.6 million, with an approximate market value of $38.0 million, 
none of which individually exceed $11.0 million. For a list of all 
investments exceeding 10% of stockholders' equity see Note 2 of Notes to 
Consolidated Financial Statements.
31
<PAGE>

Item 8.  Financial Statements and Supplemental Data
_______________________________________________________
                                                              Page Number
      Independent Auditors' Report                                   33

      Consolidated Balance Sheets - as of December 31,
      1995 and 1994                                               34-35
      Consolidated Statements of Earnings - for the years
      ended December 31, 1995, 1994 and 1993                         36
      Consolidated Statements of Stockholders' Equity
      for the years ended December 31, 1995, 1994 and 1993           37
      Consolidated Statements of Cash Flows - for the
      years ended December 31, 1995, 1994 and 1993                38-39
      Notes to Consolidated Financial Statements - for the
      years ended December 31, 1995, 1994 and 1993                40-60
32
<PAGE>

INDEPENDENT AUDITORS' REPORT
________________________________





To the Board of Directors and Shareholders of
AmVestors Financial Corporation
Topeka, Kansas

        We have audited the accompanying consolidated balance sheets of 
AmVestors Financial Corporation and subsidiaries (the company) as of December 
31, 1995 and 1994, and the related consolidated statements of earnings, 
stockholders' equity, and cash flows for each of the three years in the 
period ended December 31, 1995. These financial statements are the 
responsibility of the company's management. Our responsibility is to express 
an opinion on these financial statements based on our audits.
        We conducted our audits in accordance with generally accepted 
auditing standards. 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 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 consolidated financial statements present 
fairly, in all material respects, the financial position of AmVestors 
Financial Corporation and subsidiaries as of December 31, 1995 and 1994, and 
the results of their operations and their cash flows for each of the three 
years in the period ended December 31, 1995 in conformity with generally 
accepted accounting principles.
        The company adopted the provisions of Statement of Financial 
Accounting Standards No. 115, Accounting for Certain Investments in Debt and 
Equity Securities in 1994.





/s/ Deloitte & Touche LLP
_____________________________

Kansas City, Missouri
February 29, 1996
33
<PAGE>

AMVESTORS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(000's Omitted)
<TABLE>
<CAPTION>
                                                      As of December 31,
ASSETS                                              1995             1994
<S>                                                <C>            <C>
Investments:
Debt securities:
 Bonds:
  Held-to-maturity (market: $-0- and $1,145,692)...  $      -      1,237,185
  Available-for-sale (cost: $1,947,777 and
   $621,138)        .............................    2,044,606       607,046
  Trading (cost: $1,489 and $-0-)............            1,485             -
                                                     2,046,091     1,844,231
Equity securities:
 Common stock, available-for-sale
   (cost: $1,047 and $2,124)..................         1,181        2,325
 Preferred stock, available-for-sale (cost: $7,566
   and $45)         ........................           7,733           31
 Preferred stock, trading (cost: $619 and $-0-)...       629            -
                                                       9,543        2,356
Other long-term investments.......................    39,491       58,773
Short-term investments............................       436          520
                                                   2,095,561    1,905,880
Less allowance for credit losses.................          -       (2,231)
     Total investments.........................    2,095,561    1,903,649
Cash and cash equivalents....................         48,281       10,621
Accounts receivable (net of allowance for
 uncollectable accounts of $739 and $227)......          454        2,310
Amounts receivable under reinsurance agreements..    146,618      149,656
Amounts receivable on securities settlements
 in process         .........................         10,873          905
Accrued investment income.......................      29,357       29,296
Deferred policy acquisition costs...............     140,476      148,871
Deferred income taxes...........................           -       11,136
Other assets....................................       4,584        3,577
Total assets....................................  $2,476,204    2,260,021
</TABLE>
See notes to consolidated financial statements.
34
<PAGE>
AMVESTORS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(000's Omitted, except share and per share data)
<TABLE>
<CAPTION>
                                                    As of December 31,
LIABILITIES AND STOCKHOLDERS' EQUITY            1995              1994
<S>                                            <C>             <C>
Liabilities:

Policy liabilities:
  Future policy benefits..................    $ 2,259,028        2,148,763
  Other policy liabilities.............             7,312            2,983
                                                2,266,340        2,151,746
     Notes payable.......................           7,000                -
     Deferred income taxes...............          22,901                -
  Amounts due on securities settlements in
process                                             1,438              274
  Accrued expenses and other liabilities....        4,080            3,805
      Total liabilities.....................    2,301,759        2,155,825
Commitments and contingencies

Stockholders' equity:
  Preferred stock, $1.00 par value authorized-
    2,000,000 shares.........................           -                -
  Common stock, no par value, authorized - 
    25,000,000 shares; issued and outstanding
     - 10,140,738 shares in 1995 and 10,034,742
     shares in 1994............................    12,904            12,769
  Paid in capital                                  64,284            63,499
  Unrealized investment gains (losses)(net of 
    deferred policy acquisition cost amortization
     expense (benefit) of $27,327 and ($3,476) and
      deferred income tax expense (benefit) of
        $24,431 and ($2,616))...................   45,372            (7,813)
     Retained earnings..........................   54,714            38,876
                                                  177,274           107,331
  Less leveraged employee stock ownership
    trust (LESOP)                                  (2,829)            (3,135)
      Total stockholders' equity.........         174,445            104,196

   Total liabilities and stockholders' equity..   $2,476,204        2,260,021
</TABLE>
See note to consolidated financial statements.
35
<PAGE>
AMVESTORS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(000's Omitted, except per share data)
<TABLE>
<CAPTION>
                                             For the Year Ended December 31,
                                                 
                                                1995        1994       1993
<S>                                            <C>          <C>       <C>
Revenue:
  Insurance premiums and policy charges.......  $ 8,500      6,331      6,594
  Net investment income........................ 156,510    142,009    138,539
  Net trading losses...........................    (882)         -          -
  Net investment gains........................    1,038        803     17,049

  Other revenue................................   1,485        557        341
      Total revenue............................ 166,651    149,700    162,523
Benefits and expenses:
  Benefits, claims and interest credited
   to policyholders............................ 118,886     112,310   113,848
  Amortization of deferred policy acquisition
   costs.......................................  12,365       9,026     9,436
  General insurance expenses...................   8,370       7,587     8,830
  Premium and other taxes, licenses and fees...   1,603       1,252     2,395
  Other expenses...............................     221         239       265
      Total benefits and expenses.............. 141,445     130,414   134,774
Operating earnings.............................  25,206      19,286    27,749
Interest expense...............................      77          -        994
Earnings before income tax expense and
 extraordinary item............................  25,129      19,286    26,755
Income tax expense.............................   8,530       5,593     8,564
Earnings before extraordinary item.............  16,599      13,693    18,191
Extraordinary item: Loss on early
 extinguishment of debt (net of income tax
  benefit of $100).............................       -           -      (213)
Net earnings................................... $16,599      13,693    17,978
Earnings per share of common stock:
 Primary:
  Earnings before extraordinary item...........  $ 1.60        1.32      2.62
  Extraordinary item............................      -           -      (.03)
  Net earnings.................................  $ 1.60        1.32      2.59
 Fully diluted:
  Earnings before extraordinary item...........  $ 1.60        1.32      2.49
  Extraordinary item...........................       -           -      (.03)
  Net earnings.................................  $ 1.60        1.32      2.46
 Average shares outstanding:
 Primary........................................ 10,354      10,341     6,860
 Fully diluted.................................. 10,404      10,341     7,315
</TABLE>
See notes to consolidated financial statements.
36
<PAGE>
AMVESTORS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(000's Omitted, except share and per share data)
<TABLE>
<CAPTION>
                                     Unrealized
                                     Investment
                     Common   Paid-in   Gains  Retained  Treasury
                     Stock    Capital (Losses) Earnings   Stock   LESOP  Total

<S>                   <C>      <C>      <C>   <C>     <C>      <C>     <C>
Balance as of January
1, 1993                $8,186   45,016  (809)  7,441  (6,855)  (3,688)  49,463
Net earnings......          -       -      -  17,978       -        -   17,978
Change in unrealized
investment
 gains (losses).........    -       -   1,873     -        -         -   1,873
Cash dividends to stockholders
 ($1.50 per share on preferred
  stock)................    -       -       -   (236)       -        -   (236)
Cash paid on reverse stock
split.....                  -     (25)      -      -        -        -    (25)
Issuance of common stock:
 upon completion of stock
  offering............  4,392   25,014      -      -         -        - 29,406
 upon exercise of options 290    1,704<F1>  -      -         -        -  1,994
 upon conversion of preferred
  stock............       729     (557)     -      -         -        -     -
Retirement of treasury
stock..                  (690)  (6,165)     -      -     6,855        -    -
Repurchase of warrants on debt
 payment..............      -     (375)     -      -         -        -  (375)
Allocation of LESOPshares.  -       -       -      -         -      267   267
Balance as of December 31,
1993..................  12,907   64,612  1,064  25,183       -   (3,421) 100,345
Net earnings......          -        -      -   13,693       -        -  13,693
Cumulative effect of adoption
 of SFAS 115.....           -        -  19,613       -       -        - 19,613
Change in unrealized investment
 gains (losses)...........  -        - (28,490)      -       -        - (28,490)
Remaining offering costs... -     (135)      -       -       -        -  (135)
Redemption stockholders rights
 plan.....................  -     (101)      -       -       -        -  (101)
Issuance of common stock:
 upon exercise of options  28      143<F1>   -       -       -        -   171
Purchase of treasury shares -        -       -       -  (1,186)       - (1,186)
Retirement of treasury
stock..                  (166)    (1,020)    -       -   1,186        -    0
Allocation of LESOP
shares                      -          -     -       -       -      286   286
Balance as of December
31, 1994............... 12,769    63,499 (7,813) 38,876      -  (3,135) 104,196
Net earnings........        -         -      -   16,599      -        - 16,599
Change in unrealized investment
 gains (losses).........    -         -  53,185       -      -        - 53,185
Cash dividends to stockholders
 ($.075 per share on common
 stock)...............      -         -       -    (761)     -        -  (761)
Issuance of common stock:
 upon exercise of options. 135      785<F1>   -       -      -        -   920
Allocation of LESOPshares    -        -       -       -      -      306   306
Balance December 31,
1995.                  $12,904   64,284  45,372  54,714      -   (2,829) 174,445
<FN><F1> Net
1.    of income tax benefit of $440, $10 and $129 for the years ended 
December 31, 1995, 1994 and 1993, respectively.
</TABLE>
See notes to consolidated financial statements.
37
<PAGE>
AMVESTORS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
                                          (000's Omitted)
                                              For the Year Ended December 31,
                                                    1995       1994    1993
<S>                                            <C>        <C>       <C>
Operating Activities:
 Net earnings................                    $16,599    13,693    17,978
 Adjustments to reconcile net earnings to net
   cash provided by (used in) operating
    activities:
     Interest credited to policyholders.......   121,182   114,871   116,942
     Amortization of (discounts) premiums on
         debt securities, net...............      (1,561)  (2,347)    (1,905)
     Amortization of deferred policy acquisition
      costs.........................              12,365    9,026      9,436
     Net trading losses............                  882        -          -
     Net investment (gains)..........             (1,038)    (803)   (17,049)
     Accrued investment income................       (61)  (2,752)    (2,366)
     Deferred income taxes...................      6,990      651      4,635
     Other, net..............................      2,538   (1,830)     1,982
Net cash provided by operating activities....... 157,896  130,509    129,653
Investing Activities:
 Purchases of securities:
  Held-to-maturity............................    (5,052) (242,464) (578,918)
  Available-for-sale..........................  (343,322) (332,647)      -
  Trading....................................    (72,018)        -       -
 Proceeds from sale of securities:
  Held-to-maturity.........................            -     8,302   341,498
  Available-for-sale.......................      140,742   319,846         -
  Trading.............................            69,017         -         -
 Proceeds from maturity or redemption:
  Held-to-maturity.......................         26,303    35,375   184,280
  Available-for-sale.................             85,767    86,973         -
 Other long-term investments, net...........      19,271   (20,215)  (20,326)
 Short-term investments, net..................        83     1,392      (487)
 Capitalization of deferred policy acquisition
   costs..................................       (34,775)  (25,750)  (18,212)
 Other, net..................................     (1,741)     (413)     (497)
        Net cash used in investing activities.  (115,725) (169,601)  (92,662)
Financing Activities:
  Premiums received...........................   357,705   267,802   222,177
 Surrender and death benefits paid.........     (372,234) (246,632) (318,880)
 Surrender and risk charges collected........      6,971     5,409     5,161
 Securities settlements in process...........     (8,804)      573   (25,609)
 Proceeds from notes payable.................      7,000         -         -
 Payments on notes payable...................          -         -   (19,918)
 Cash dividends to stockholders.............        (761)        -         -
 Issuance of common stock...................         920       171    31,400
 Other, net.................................       4,692       608    (2,590)
      Net cash provided by (used in) financing
        activities...........................     (4,511)   27,931  (108,259)
Increase (Decrease) in Cash and Cash Equivalents  37,660   (11,161)  (71,268)
Cash and Cash Equivalents:
 Beginning of year.....................           10,621    21,782    93,050
  End of year........................            $48,281    10,621    21,782
</TABLE>
See notes to consolidated financial statements.
38
<PAGE>
AMVESTORS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
                                          (000's Omitted)
                                              For the Year Ended December 31,
                                                 1995         1994        1993
<S>                                            <C>          <C>        <C>
Supplemental schedule of cash flow
 information:
    Income tax payments (refunds).............  $ (1,507)     6,150      3,204 
  Interest payments.........................    $     43          -      1,071
Change in net unrealized investment gains
    (losses)................................... $ 111,035    (56,823)        -

Less: Associated reduction in amortization
        of deferred policy acquisition costs...   (30,803)    16,221         -

        Deferred income tax (expense) benefit.    (27,047)    13,177         -
Net change in net unrealized investment
  gains (losses)..............................   $ 53,185    (27,425)        -
</TABLE>                                                                       
See notes to consolidated financial statements.
39
<PAGE>
AMVESTORS FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 1995, 1994 and 1993

1.   Summary of Significant Accounting Policies:
______________________________________________________
A.  PRINCIPLES OF CONSOLIDATION:
              The consolidated financial statements include the accounts of 
AmVestors and its wholly-owned subsidiaries American Investors Life Insurance 
Company, Inc. (American), American Investors Sales Group, Inc. (American 
Sales), AmVestors Investment Group, Inc. (AIG), (collectively the company). 
All significant intercompany accounts and transactions have been eliminated.
B.  INVESTMENTS:
              Debt securities held-to-maturity are carried at amortized cost, 
except that those securities with an other than temporary impairment in value 
are carried at estimated net realizable value. Debt securities 
available-for-sale are carried at estimated market value, with any unrealized 
gains or losses recorded in stockholders' equity.
              Investments are reviewed on each balance sheet date to 
determine if they are impaired. In determining whether an investment is 
impaired, the company considers whether the decline in market value at the 
balance sheet date is an other than temporary decline; if so, then the 
investment's carrying value is reduced to a new cost basis which represents 
estimated net realizable value. The decline in value is reported as a 
realized loss, and a recovery from the new cost basis is recognized as a 
realized gain only at sale.
              The estimates of net realizable value are based on information 
obtained from published financial information provided by issuers, 
independent sources such as broker dealers or the company's independent 
investment advisor. Such amounts represent an estimate of the consideration 
to be received in the future when the defaulted company's debt is settled 
through the sale of their assets or the restructuring of their debt. These 
estimates do not represent the discounted present value of these future 
considerations.
              Investments in common stock and preferred stock are carried at 
market, with unrealized gains (losses) recorded in stockholders' equity for 
securities available-for-sale. 
              Investments in debt and equity securities which were purchased 
principally for the purpose of selling such securities in the near term are 
classified as trading securities and are carried at market. Unrealized gains 
(losses) are included currently in the results of earnings.
              The cost of securities sold is determined on the identified 
certificate basis.
              Other long-term investments include policy loans and mortgage 
loans on real estate which are carried at cost less principal payments since 
date of acquisition, and certain partnership investments which are carried at 
an amount equal to the partner's estimated market value with any unrealized 
gains or losses recorded in net investment income.
40
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
1.   Summary of Significant Accounting Policies (continued):
___________________________________________________________________
C.  FAIR VALUE OF FINANCIAL INSTRUMENTS:
              Estimated fair value amounts have been determined by the 
company using available market information and appropriate valuation 
methodologies. Due to the fact that considerable judgment is required to 
interpret market data to develop the estimates of fair value, the estimates 
presented are not necessarily indicative of the amounts that could be 
realized in a current market exchange.
        The carrying values and estimated fair values of the company's 
financial instruments as of December 31, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
                                               (000's Omitted)
                                           1995                   1994
                                  Carrying      Fair      Carrying     Fair
                                   Value        Value      Value      Value
<S>                            <C>          <C>         <C>         <C>
Assets:
 Debt securities............... $2,046,091   2,046,091  1,844,231   1,752,738
 Equity securities............       9,543       9,543      2,356       2,356
 Other long-term investments..      39,491      39,546     58,773      58,536
 Short-term investments.......         436         436        520         520
 Cash and cash equivalents.....     48,281      48,281     10,621      10,621
 Amounts receivable on securi-
  ties settlement in process..      10,873      10,873        905         905
 Accounts receivable and accrued
  investment income............     29,811      29,811     31,606      31,606
Liabilities:
 Future policy benefits - 
  investment contracts.......    2,022,653   1,900,895  1,917,066   1,799,090
 Other policy liabilities.....       7,312       7,312      2,983       2,983
 Notes payable...............        7,000       7,000          -           -
 Amounts due on securities
  settlements in process.....        1,438       1,438        274         274
 Accrued expenses and other 
  liabilities................        4,080       4,080      3,805       3,805
</TABLE>
           DEBT SECURITIES - Fair values are based on quoted market prices or
dealer quotes, if available. If a quoted market 
price is not available, fair value is estimated using quoted market prices 
for similar securities.
              EQUITY SECURITIES - Fair value equals the carrying value as 
these securities are carried at quoted market value.
              OTHER LONG-TERM INVESTMENTS - For certain homogeneous 
categories of mortgage loans, fair value is estimated using quoted market 
prices for securities backed by similar loans, adjusted for differences in 
loan characteristics. Fair value of policy loans and other long-term 
investments is estimated to approximate the assets' carrying value.
41
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
1.   Summary of Significant Accounting Policies (continued):
___________________________________________________________________
              SHORT-TERM INVESTMENTS AND CASH AND CASH EQUIVALENTS - The 
carrying amounts reported in the balance sheet approximate the assets' fair 
value.
              Amounts receivable on securities settlements in process - The 
carrying amount reported in the balance sheet approximate the fair value of 
this asset.
              ACCOUNTS RECEIVABLE AND ACCRUED INVESTMENT INCOME - The 
carrying amounts reported in the balance sheet for these assets approximates 
fair value.
              FUTURE POLICY BENEFITS FOR INVESTMENT CONTRACTS - The fair 
values for deferred annuities were estimated to be the amount payable on 
demand at the reporting date as those investment contracts have no defined 
maturity and are similar to a deposit liability. The amount payable at the 
reporting date was calculated as the account balance less any applicable 
surrender charges.
              Notes payable - The fair value of the company's note payable 
has been estimated to be an amount equal to the balance reported in the 
balance sheet.
              OTHER POLICY LIABILITIES - The carrying amount reported in the 
balance sheet approximates the fair value of these liabilities.
              AMOUNTS DUE ON SECURITIES SETTLEMENTS IN PROCESS - The carrying 
amount reported in the balance sheet approximates the fair value of this 
liability.
              ACCRUED EXPENSES AND OTHER LIABILITIES - The carrying amount in 
the balance sheet approximates the fair value of these liabilities.
              The use of different market assumptions and/or estimation 
methodologies could have a material effect on the estimated fair value 
amounts.
D. SIGNIFICANT RISKS AND UNCERTAINTIES
              NATURE OF OPERATIONS - The company specializes in the sale of 
deferred annuity products, the earnings on which are not currently taxable to 
the annuity owner. Any changes in tax regulation which eliminate or 
significantly reduce this advantage of tax deferred income would adversely 
impact the operations of the company. The company's products are marketed 
through a network of independent agents licensed in 47 states and the 
District of Columbia. The company is not dependent on any one agent or agency 
for a substantial amount of its business. No single agent accounted for more 
than 1% of annuity sales in 1995, and the top twenty individual agents 
accounted for approximately 11% of 1995 annuity sales.
              USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS - 
The preparation of financial statements in conformity with generally accepted 
accounting principles requires management to make estimates and assumptions 
that affect the reported amounts of assets and liabilities and disclosure of 
contingent assets and liabilities at the date of the financial statements and 
the reported amounts of revenues and expenses during the reporting period. 
Actual results may differ from those estimates.
              CERTAIN SIGNIFICANT ESTIMATES - Certain costs incurred to 
acquire new business are deferred and amortized in relation to the incidence 
of expected gross profits  over the expected life of the policies. 
Determination of expected gross profits includes management's estimate of 
certain elements over the life of the policies, including investment income, 
interest to be credited to the contract, surrenders and resultant surrender 
charges, deaths and in the case of life insurance, mortality charges to be 
collected. These estimates of expected gross profits are
42
<PAGE>
NOTES TO 
CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
1.   Summary of Significant Accounting Policies (continued):
___________________________________________________________________
used as a basis for amortizing deferred costs. These estimates are 
periodically reviewed by management and if actual experience indicates that 
the estimates should be revised the total amortization recorded to date is 
adjusted by a charge or credit to earnings.
E.  DEFERRED POLICY ACQUISITION COSTS:
              The costs of acquiring new business (primarily commissions and 
policy expenses), which vary with and are directly related to the production 
of new business, have been deferred. The deferred costs related to 
investment-type deferred annuity contracts are amortized in relation to the 
incidence of expected gross profits over the expected life of the policies. 
For single premium life insurance, deferred policy acquisition costs are 
amortized over the life of the policies, but not more than 20 years for polici
es issued before January l, 1987, and not more than 30 years for policies 
issued after December 31, 1986, based on the expected gross profits for the 
amortization periods. The deferred costs related to traditional life 
contracts are amortized over the premium paying period for the related 
policies using the same actuarial assumptions as to interest, mortality and 
withdrawals as are used to calculate the reserves for future benefits.
              Net investment gains realized in 1995, 1994 and 1993 resulted 
in the company experiencing investment margins greater than those estimated. 
As a result, $3,902, $203,940 and $4,790,523 of the unamortized balance of 
deferred policy acquisition costs were expensed in 1995, 1994 and 1993, 
respectively. The amount charged off is based on actual gross profits earned 
to date in relation to total gross profits expected to be earned over the 
life of the related contracts.
              Estimates of the expected gross profits to be realized in 
future years include the anticipated yield on investments. Deferred policy 
acquisition costs will be adjusted in the future based on actual investment 
income earned.
F.  FUTURE POLICY BENEFITS:
              Liabilities for future policy benefits under life insurance 
policies, other than single premium life insurance, have been computed by the 
net level premium method based upon estimated future policy benefits 
(excluding participating dividends), investment yield, mortality and 
withdrawals giving recognition to risk of adverse deviation. Interest rates 
range from 41\2% to 101\2% depending on the year of issue, with mortality and 
withdrawal assumptions based on company and industry experience prevailing at 
the time of issue.
              For single premium life insurance and single premium annuities, 
the future policy benefits are equal to the accumulation of the single 
premiums at the credited rate of interest and for single premium whole life, 
less any mortality charges.
G.  PARTICIPATING POLICIES:
              The company issued participating policies on which dividends 
are paid to policyholders as determined annually by the Board of Directors. 
The amount of dividends declared but undistributed is included in other 
liabilities. Policy benefit reserves do not include a provision for estimated 
future participating dividends.
43
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
1.   Summary of Significant Accounting Policies (continued):
___________________________________________________________________
H.  DEPRECIATION:
              The home office buildings are depreciated on the straight-line 
basis over estimated lives of 40 years. Other depreciation is provided on the 
straight-line basis over useful lives ranging from 5 to 8 years.
I.  INCOME TAXES:
              The company and its subsidiaries prepare and file their income 
tax returns on a consolidated basis.
              The company provides for the recognition of deferred tax assets 
and liabilities for the expected future tax consequences of events that have 
been reported in the financial statements on the liability method.
J.  EARNINGS PER SHARE:
              Primary earnings per share of common stock is computed by 
dividing net earnings (reduced by preferred dividend requirements in 1993) by 
the sum of the weighted average number of shares outstanding during the 
period plus dilutive common stock equivalents applicable to stock options and 
warrants, calculated using the treasury stock method. During 1993, 573,332 
common shares were issued upon conversion of $4,300,000 of Series B 
Convertible Preferred Stock. Had this conversion occurred on January 1, 1993, 
primary earnings per share would have been $2.46 for 1993. During 1993, 
1,646,883 shares of common stock were sold to retire debt in the amount of 
$14,030,289. Had this sale and the corresponding retirement of debt occurred 
on January 1, 1993, primary earnings per share would have been $2.25 for 
1993.
K. CONSOLIDATED STATEMENTS OF CASH FLOWS:
              For purposes of reporting cash flows, cash and cash equivalents 
includes cash and money market accounts and other securities with original 
maturities within three months.
L.  NEW ACCOUNTING STANDARDS:
              Effective January 1, 1994, the company adopted the provisions 
of SFAS No. 115, "Accounting for Certain Investments in Debt and Equity 
Securities." This Statement addresses the accounting and reporting for 
certain investments in debt and equity securities by requiring such 
investments to be classified in held-to-maturity, available-for-sale, or 
trading categories. The cumulative effect of the adoption of this Statement 
was an increase in stockholder's equity of $19,612,653 (net of related 
amortization of deferred policy acquisition costs of $12,745,031 and deferred 
income tax expense of $10,560,659), representing the aggregate excess fair 
value over cost for those securities included in the available-for-sale 
category, net of associated amortization of deferred policy acquisition costs 
and deferred income tax expense.
              Effective November 30, 1995, the company adopted the provisions 
of "A Guide to Implementation of Statement 115 on Accounting for Certain 
Investments in Debt and Equity Securities" and transferred all bonds with an 
amortized cost of $1,159,390,768 classified as held-to-maturity to 
available-for-sale. The effect of the adoption was an increase in 
stockholders' equity of $21,218,205(net of related amortization of deferred 
policy acquisition costs of $12,792,403 and deferred income taxes of 
$11,425,188). Net earnings for the year ended December 31, 1995 were not 
affected by the adoption of this implementation guide.
44
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
1.   Summary of Significant Accounting Policies (continued):
___________________________________________________________________
              Effective for fiscal years beginning after December 15, 1995, 
SFAS No. 121, "Accounting for the Impairment Of Long Lived Assets" 
establishes accounting standards for the impairment of long-lived assets, 
certain intangibles, and goodwill related to those assets. The company does 
not expect this Statement to have a material effect on its consolidated 
financial statements.
              Effective January 1, 1996, SFAS No. 123, "Accounting for 
Stock-Based Compensation," will require increased disclosure of compensation 
expense arising from stock compensation plans. The Statement encourages 
rather than requires companies to adopt a new method that accounts for stock 
compensation awards based on their estimated fair value at the date they are 
granted. Companies will be permitted, however, to continue accounting under 
APB Opinion No. 25 which requires compensation cost be recognized based on 
the difference, if any, between the quoted market price of the stock on the 
date of grant and the amount an employee must pay to acquire the stock. The 
company will continue to apply APB Opinion No. 25 in its consolidated 
financial statements and will disclose pro forma net income and earnings per 
share in a footnote to its consolidated financial statements, determined as 
if the new method were applied.
M.  RECLASSIFICATIONS:
              Certain reclassifications have been made to conform prior 
years' financial statements to the December 31, 1995, presentation.
2. INVESTMENTS:
A summary of investment income is as follows:
<TABLE>
<CAPTION>
(000's Omitted)
                                                                               
     For the Year Ended December 31,

                                    1995            1994            1993
<S>                             <C>             <C>           <C>
Net investment income:
  Debt securities.......         $  148,040       142,469         136,533
  Equity securities...                1,158            50              76
  Other long-term investments.        8,032           486           3,096
  Short-term investments......        1,612           830             931
                                    158,842       143,835         140,636
  Less investment expenses.           2,332         1,826           2,097
 Net investment income.......     $ 156,510       142,009         138,539
Net investment gains (losses):
    Debt securities.............. $     417          (533)         18,486
    Equity securities........           646         1,335            (274)
    Other......................         (25)            1          (1,163)
Net investment gains (losses)...  $   1,038           803          17,049
Net trading gains (losses):
    Debt securities............   $      68             -               -
    Equity securities.........         (950)            -               -
Net trading gains (losses).....   $    (882)            -               -
</TABLE>
45
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
2.   Investment (continued):
_______________________________
        Certain limited partnership investments are included in income from 
other long-term investments. These funds (commonly referred to as hedge 
funds) are managed by outside investment advisors. The investment guidelines 
of these partnerships provide for a broad range of investment alternatives, 
including stocks, bonds, futures, options, commodities, and various other 
financial instruments. These investments were purchased with the strategy to 
achieve a yield in excess of the S&P 500 Index. The partnerships are carried 
at an amount equal to the company's share of the partnerships' estimated 
market value with related unrealized gains and losses recorded in net 
investment income. In accordance with the permitted guidelines, the 
investments purchased by these partnerships may experience greater than 
normal volatility which could materially affect the company's earnings for 
any given period.
        The maturity of the company's debt and equity securities portfolio as 
of December 31, 1995 was as follows:
<TABLE>
<CAPTION>
                                                          (000's Omitted)
                                                     As of December 31, 1995
                                    Available-for-sale         Trading
                                               Estimated             Estimated
                                  Amortized      Market   Amortized     Market
                                   Cost          Value       Cost      Value
<S>                              <C>            <C>       <C>          <C>
Debt Securities:
Bonds:
One year or less.................  $ 25,660       23,361        -           -
Two years through five years....    461,364      478,490        -           -
Six years through ten years....   1,228,934    1,302,318      462         467
Eleven years and after...........   231,819      240,437    1,027       1,018
                                  1,947,777    2,044,606    1,489       1,485
Equity securities...............      8,613        8,914      619         629
                                 $1,956,390    2,053,520    2,108       2,114
</TABLE>        
        These tables include mortgage-backed securities based on the 
estimated future cash flows of the underlying mortgages.
46
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
2. Investments (continued):
        The amortized cost, estimated market value and unrealized market 
gains and losses of debt and equity securities as of December 31, 1995, and 
1994 were as follows:
<TABLE>
<CAPTION>
                                                         (000's Omitted)
                                                                               
         
                                                                   Estimated
                                 Amortized  Unrealized  Unrealized  Market
                                    Cost          Gains   Losses    Value
<S>                               <C>         <C>         <C>     <C>
         December 31, 1995
          ___________________
Bonds available-for-sale:
 Corporate debt obligations
  Investment grade..............    $1,076,873     63,321      724   1,139,470
  High-yield...............            147,878      5,468    1,810     151,536
                                     1,224,751     68,789    2,534   1,291,006
 U.S. Treasury obligations...           51,743        942      215       2,664
 Mortgage-backed securities
  Investment grade..............       661,652     32,062         1    693,713
  High-Yield....................         9,631          -     2,408      7,223
 Bonds available-for-sale.......     1,947,777    101,793     4,964  2,044,606
Bonds trading:
 Corporate debt obligations
 Investment grade...............           458          -         7        451
 High-Yield.....................         1,031          5         2      1,034
Bonds trading...................         1,489          5         9      1,485
 Total bonds....................     1,949,266    101,798     4,973  2,046,091
 Equity securities..............         9,232        614       303      9,543
                                    $1,958,498    102,412     5,276  2,055,634
         December 31, 1994
          ___________________
Bonds held-to-maturity:
 Corporate debt obligations
  Investment grade................   $ 792,746       1,160   62,907    730,999
  High-yield......................     135,698         108    9,267    126,539
                                       928,444       1,268   72,174    857,538
 U.S. Treasury obligations........       3,618           -      319      3,299
 Mortgage-backed securities.......     305,123           1   20,269    284,855
 Bonds held-to-maturity...........   1,237,185       1,269   92,762  1,145,692
Bonds available-for-sale:
 Corporate debt obligations
  Investment grade.................    253,055        1,005   5,633    248,427
  High-yield.......................      1,218            -       8      1,210
                                       254,273        1,005   5,641    249,637
 Mortgage-backed securities........    366,865          590  10,046    357,409
 Bonds available-for-sale..........    621,138        1,595  15,687    607,046 
 Total bonds.......................  1,858,323        2,864 108,449  1,752,738
 Equity securities.................      2,169          417     230      2,356
                                    $1,860,492        3,281 108,679  1,755,094
 </TABLE>
        The preceding table includes the carrying value and estimated market 
value of debt securities which the company has determined to be impaired 
(other than temporary decline in value) as follows:
47
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
2. Investments (continued):
______________________________
<TABLE>
<CAPTION>
                                 Accumulated              Estimated
                     Original        Write-     Carrying     Market
                       Cost         downs       Value        Value

<S>                    <C>           <C>          <C>        <C>
December 31, 1995      $ 7,545         7,545          _           _
December 31, 1994      $ 9,535        7,814       1,721       1,721
</TABLE>
        The company defines high-yield securities as those corporate debt 
obligations rated below investment grade by Standard & Poor's and Moody's or, 
if unrated, those that meet the objective criteria developed by the company's 
independent investment advisory firm. Management believes that the return on 
high-yield securities adequately compensates the company for additional 
credit and liquidity risks that characterize such investments. In some cases, 
the ultimate collection of principal and timely receipt of interest is 
dependent upon the issuer attaining improved operating results, selling 
assets or obtaining financing.
        The amortized cost, estimated market value and unrealized market 
gains and losses by type of mortgage-backed security as of December 31, 1995, 
and December 31, 1994 were as follows:
<TABLE>
<CAPTION>
                                                (000's Omitted)
                                                                               
         
                                                                     Estimated
                                    Amortized  Unrealized Unrealized   Market
                                     Cost        Gains      Losses    Value
<S>                                 <C>            <C>     <C>       <C>
            December 31, 1995
Government agency mortgage-backed
 securities:
  Planned amortization classes and
   accretion directed classes......... $  71,164     1,823      -      72,987
  Targeted amortization classes
   and accretion directed classes....      7,833       360      -       8,193
  Pass-throughs.....................          32         3      -          35
   Total government agency
    mortgage-backed securities.......     79,029     2,186      -      81,215
Government sponsored enterprise
 mortgage-backed securities:
  Planned amortization classes......     403,359    23,750      -     427,109
  Sequential classes...............       19,546     1,405      -      20,951
  Pass-throughs...................         3,258        21      -       3,279
   Total government sponsored
    enterprise mortgage-backed
     securities...................       426,163    25,176      -     451,339
 Other mortgage-backed securities:
  Planned amortization classes.....       18,574       172      -      18,746
  Sequential classes............         134,245     4,484      1     138,728
  Pass-throughs...................            11         -      -          11
  Subordinated classes............        13,261        44  2,408      10,897
   Total other mortgage-backed
    securities....................       166,091     4,700  2,409     168,382
Total mortgage-backed securities..      $671,283    32,062  2,409     700,936
</TABLE>
48
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
2. Investments (continued):
______________________________
<TABLE>
<CAPTION>
                                               (000's Omitted)
                                                                               
         
                                                                     Estimated
                                   Amortized Unrealized  Unrealized    Market
                                     Cost      Gains        Losses     Value
<S>                               <C>            <C>        <C>       <C>
           December 31, 1994
          ___________________
Government agency mortgage-backed
 securities:
  Planned amortization classes and
   accretion directed classes........  $75,557       12       5,614     69,955
  Targeted amortization classes
   and accretion directed classes....    7,729        -         319      7,410
  Pass-throughs...................          40        2           -         42
   Total government agency
    mortgage-backed securities.......   83,326       14       5,933     77,407
Government sponsored enterprise
 mortgage-backed securities:
  Planned amortization classes.......  410,313      104      15,852    394,565
  Sequential classes.................   19,705        -       1,087     18,618
  Pass-throughs.....................       299        -           2        297
   Total government sponsored
    enterprise mortgage-backed
     securities.....................   430,317       104      16,941   413,480
 Other mortgage-backed securities:
  Planned amortization classes......    22,686        22         745    21,963
  Sequential classes..............     125,100       451       5,345   120,206
  Pass-throughs...................          13         -           -        13
  Subordinated classes...........       10,546         -       1,351     9,195
   Total other mortgage-backed
    securities...................      158,345       473       7,441   151,377
Total mortgage-backed securities....  $671,988       591      30,315   642,264
</TABLE>
        Certain mortgage-backed securities are subject to significant 
prepayment risk. This is due to the fact that in periods of declining 
interest rates, mortgages may be repaid more rapidly than scheduled, as 
individuals refinance higher rate mortgages to take advantage of the lower 
current rates. As a result, holders of mortgage-backed securities may receive 
large prepayments on their investments which they are unable to reinvest at 
an interest rate comparable to the rate on the prepaying mortgages. Mortgage-b
acked pass-through securities and sequential classes, which comprised 23.4% 
and 21.6% of the carrying value of the company's mortgage-backed securities 
as of December 31, 1995 and December 31, 1994, respectively, are sensitive to 
this prepayment risk.
        A portion of the company's mortgage-backed securities portfolio 
consists of planned amortization class ("PAC"), targeted amortization class 
("TAC") and accretion directed class ("AD") instruments. These securities are 
designed to amortize in a more predictable manner by shifting the primary 
risk of prepayment to investors in other tranches (support classes) of the 
mortgage-backed security. PAC, TAC and ADsecurities comprised 74.6% and 76.8% 
of the carrying value of the company's mortgage-backed securities as of 
December 31, 1995 and December 31, 1994, respectively.
49
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
2. Investments (continued):
________________________________
        As of December 31, 1995, 75.3% of the company's mortgage-backed 
securities were issued by either government agencies or government sponsored 
enterprises, compared to 76.4% as of December 31, 1994. The credit risk 
associated with these securities is generally less than other mortgage-backed 
securities. With the exception of six issues, with a carrying value of $19.3 
million as of December 31, 1995, all of the company's investments in other 
mortgage-backed securities are rated A or better by Standard& Poor's or 
Moody's.
        The following investments held as of December 31, 1995, exceeded ten 
percent of stockholders' equity:
<TABLE>
<CAPTION>                                                  (000's Omitted)
                                                        As of December 31,
                                             1995                 1994
                                     Amortized   Estimated Amortized Estimated
                                        Cost       Market     Cost    Market
<S>                                  <C>         <C>          <C>       <C>
10% of Stockholders' Equity......     $ 17,444                 10,420 
Bonds:
FNMA 94 83 B, 7.5%, 7-2003......      $19,197       20,598     19,177   18,031
LA County Pension Oblig, various
interest
 rates and due dates through 2005..    18,633       20,675             
        
Quebec Province CDA, 8.625%,
due 01-2005..                          20,199       21,923
</TABLE>

        The amounts shown as "estimated market" are primarily based on 
quotations obtained from independent sources such as broker dealers who make 
markets in similar securities. Unless representative trades of securities 
actually occur at the balance sheet date, these quotes are generally 
estimates of market value based on an evaluation of appropriate factors such 
as institution-size trading in similar securities, yield, credit quality, 
coupon rate, maturity, type of issue and other market data. Losses are recogni
zed in the period they occur based upon specific review of the securities 
portfolio and other factors.
        The consideration received on sales of debt and equity securities, 
carrying value and realized gains and losses on those sales were as follows:
<TABLE>
<CAPTION>
                                                    (000's Omitted)
                                            For the Year Ended December 31,
                                            1995         1994         1993
<S>                                         <C>          <C>         <C>
        Consideration received..........    $275,012      462,138     393,142
        Carrying value.................      275,204      461,335     374,584
          Net investment gains (losses).    $   (192)         803      18,558
        Investment gains...............     $  2,773        4,268      18,677
        Investment losses..............       (2,965)      (3,465)       (119)
          Net investment gains (losses).     $  (192)         803      18,558
</TABLE>
50
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
2. Investments (continued):
______________________________
         During 1995, the company transferred bonds of four issuers from 
held-to-maturity to available-for-sale based upon a significant deterioration 
in the issuers' creditworthiness. The book value of these bonds at the time 
of transfer was $16,128,888. Included in the above table are 1995 losses of 
$2,151,154 on the sale of bonds of four issuers which the company had 
transferred from held-to-maturity to available-for-sale.
        The 1994 amounts include bonds of one issuer which the company had 
classified as held-to-maturity, the sale of which resulted in a loss of 
$205,526. The decision to sell these bonds was based upon a significant 
deterioration in the issuers' creditworthiness. The book value of these bonds 
at the time of sale was $8,507,732.
        Net unrealized gains (losses) on debt securities held-to-maturity, 
debt securities available-for-sale, equity securities available-for-sale and 
other long-term investments changed as follows:
<TABLE>
<CAPTION>
                                                      (000's) Omitted
                                               Net Unrealized Gains (Losses)


                    Debt      Debt               Equity
                Securities Securities  Debt    Securities  Equity  Other Long-
                  Held-to-  Available Securities  Available Securities term
                 Maturity   for-Sale  Trading   for-Sale   Trading Investments
<S>               <C>         <C>       <C>     <C>        <C>    <C>
Balance as of
 January 1, 1993   $  37,420    4,115      -       (809)       -       -
1993 Net Change..        911   38,920      -      1,091        -   1,330   
Balance as of
 December 31, 1993    38,331   43,035      -        282        -   1,330
1994 Net Change...  (129,824) (57,127)     -        (95)       -  (1,330)
Balance as of
 December 31, 1994.  (91,493) (14,092)     -        187        -       -
1995 Net change...    91,493  110,921     (4)       114       10       -
Balance as of
 December 31, 1995 $      -    96,829     (4)       301       10       -
 </TABLE>
        At December 31, 1995 and 1994, investments with statutory carrying 
values of $1,956,343,973 and $1,866,074,033, respectively, were on deposit 
with various insurance departments. These amounts exceeded the minimum 
required deposits by $53,856,902 and $66,325,834 as of December 31, 1995 and 
1994 respectively.
3. OTHER ASSETS:
                Other assets consist of the following:
<TABLE>
<CAPTION>
                                                                     
                                                (000's Omitted)
                                               As of December 31,
                                              1995            1994
 <S>                                          <C>             <C>       
  Property and equipment at cost:
    Home office building (including
     land of $352)......................        $3,643        2,152
    Furniture and equipment............          3,711        3,464
    Automobiles........................             99          115
                                                 7,453        5,731
    Less accumulated depreciation........        3,650        3,336
                                                 3,803        2,395
  Other  ................................          781        1,182
                                                $4,584        3,577
</TABLE>
51
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
4. Reinsurance:
_________________
        The company reinsures portions of insurance it writes. The maximum 
amount of risk retained by the company on any one life is $150,000.
        A summary of reinsurance data follows (000's Omitted):
<TABLE>
<CAPTION>
  For the                                         Ceded to
 Year Ended                            Gross        other         Net
December 31,       Descriptions         amount      companies     amount
<C>          <C>                   <C>             <C>         <C>
   1995       Life insurance
              in force              $   311,991      240,206      71,785
             Insurance premiums
              and policy charges     $    9,409          909       8,500
              Future policy
               benefits              $ 2,259,028     145,183    2,113,845
   1994       Life insurance
              in force              $   330,108       259,200      70,908
             Insurance premiums
              and policy charges     $     7,308           977       6,331
              Future policy
               benefits              $ 2,148,763       148,575    2,000,188
   1993       Life insurance
              in force              $   354,703       280,819      73,884
             Insurance premiums
              and policy charges     $     7,936         1,342       6,594
              Future policy
               benefits              $ 2,005,339       150,500    1,854,839
</TABLE>
        The company is contingently liable for the portion of the policies 
reinsured under each of its existing reinsurance agreements in the event the 
reinsurance companies are unable to pay their portion of any reinsured claim. 
Management believes that any liability from this contingency is unlikely.
        The company had amounts receivable under reinsurance agreements of 
$146,617,611 and $149,656,094 as of December 31, 1995, and December 31, 1994, 
respectively. Of the amounts, $144,965,371 and $147,949,099 were associated 
with a single reinsurer. In 1989, the company entered into a coinsurance 
agreement which ceded 90% of the risk on the company's block of single 
premium whole life policies written prior to 1989 to Employers Reassurance 
Corporation (ERC). The agreement provides that ERC assumes 90% of all risks 
associated with each policy in the block. Reimbursements received from ERC 
for amounts paid by the company on the reinsured risks totalled $12,044,418, 
$9,740,717 and $7,991,680 for the years ended December 31, 1995, 1994 and 
1993, respectively.
        The following table identifies the components of the amounts 
receivable from ERC:
<TABLE>
<CAPTION>
                                                       (000's Omitted)
                                                      As of December 31,
                                                      1995          1994
<S>                                                   <C>         <C>
   Reserve for future policy benefits.............  $ 143,558        146,919
   Reimbursement for benefit payments.............      1,407          1,030
                                                    $ 144,965        147,949
</TABLE>
52
<PAGE>   
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
5. Credit Agreement:
______________________
        On December 29, 1994, the company entered into a credit agreement 
with The First  National Bank of Chicago (First Chicago) and Boatmen's First 
National Bank of Kansas City (Boatmen's), as Lenders. On July 28, 1995, this 
agreement was amended to reduce the commitment from $25,000,000 to 
$15,000,000. The company has agreed to pay a commitment fee of .25% per annum 
on the unused portion of the commitment. Borrowings under this agreement may 
be used for general corporate purposes. During December, 1995, the company 
borrowed $7,000,000 (effective annual interest at December 31, 1995 of 6.91%) 
under the credit agreement and contributed the proceeds to the capital and 
surplus of American. Principal repayments for this borrowing are as follows: 
1996 - $-0- 1997 - $1,820,000 1998 - $2,240,000 1999 - $2,940,000.
        Interest on the borrowings under this agreement is determined at the 
option of the company to be: (i) a fluctuating rate of interest equal to the 
higher of the corporate base announced by First Chicago from time to time, 
and a fluctuating rate equal to the weighted average of rates on overnight 
Federal Funds transactions with members of the Federal Reserve System as 
published by the Federal Reserve Bank of New York plus .50% per annum, or 
(ii) a Eurodollar rate plus a margin ranging from 1.00% to 1.25%.
        In addition to general covenants which are customary for facilities 
such as this, the company has agreed to maintain minimum consolidated net 
worth, a minimum cash flow coverage ratio, minimum risk based capital for 
American, minimum capital, surplus and asset valuation reserve of American 
and to maintain a maximum debt to equity (including indebtedness) ratio.
        Additional covenants include: (i) limitations on acquisitions; (ii) 
maintenance of current lines of business; (iii) limitations on additional 
indebtedness; (iv) limitations on investments; (v) limitations on dividends 
and stock repurchases, and (vi) limitations on mergers, consolidations and 
sales of assets, typical of such facilities.
6. Retirement Plans:
______________________
        The company sponsors an Employee Stock Ownership Plan (ESOP) for all 
full-time employees with one year of service. Qualifying participants may 
contribute an amount not to exceed ten percent of covered compensation. The 
company made no contributions to the plan during the three years ended 
December 31, 1995.
        The company sponsors a Leveraged Employee Stock Ownership Plan 
(LESOP) for all full-time employees with one year of service.
        The LESOP has acquired 370,244 shares of the company's stock through 
the proceeds of a note payable to American. The note bears interest at 7.0% 
and is payable in annual installments through December 30, 2002. The note had 
unpaid principal balances of $3,010,882 and $3,336,038 as of December 31, 
1995 and 1994, respectively.
        Each year, the company will make contributions to the LESOP which are 
to be used to make loan interest and principal payments. On December 31 of 
each year, a portion of the common stock is allocated to participating 
employees. Of the 361,735 shares of the company's common stock now owned by 
the LESOP, 119,518 shares have been allocated to the participating employees 
with the remaining 242,217 shares being held by American as collateral for 
the loan.
53
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
6. Retirement Plans (continued):
____________________________________
        The unallocated portion of the company's common stock owned by the 
LESOP has been recorded as a separate reduction of stockholders' equity. 
Contributions to the LESOP during December 31, 1995, 1994 and 1993 were 
$305,564, $285,565 and $266,886, respectively.
        During 1992, the company's Board of Directors approved retirement 
plans for its members and members of the Board of Directors of certain of its 
subsidiaries. The plans provide that retired Directors shall serve as 
Advisory Members to the Board at a fee of $750 per meeting attended and a 
monthly lifetime benefit in the amount of $750 be paid to each qualified 
Director upon retirement. In addition, the company has agreed to continue any 
life insurance policies being provided as of the date of retirement.
        To qualify for this benefit, a Director must have reached the age of 
60 and meet years of service requirements thereafter. The plan also calls for 
a mandatory retirement on the date the Director's term expires following age 
70.
        A liability in the amount of $435,637, representing the present value 
of future benefits, has been established. Charges (credits) to earnings 
relating to the plans were ($85,543), ($40,244) and ($3,282), for the years 
ended December 31, 1995, 1994 and 1993, respectively.
        Effective January 1, 1993, the company adopted an Age-Weighted Money 
Purchase Plan for all full-time employees with one year of service. The full 
cost of this plan will be paid by the company with qualifying participants 
receiving contributions based upon their age at plan implementation and 
current salary. Contributions to the Age-Weighted Money Purchase Plan for the 
year ended December 31, 1995, 1994 and 1993, were $210,907, $215,664 and 
$213,059, respectively.
7. STOCKHOLDERS' EQUITY:
        Dividends by American to AmVestors are limited by laws applicable to 
insurance companies. Under Kansas law, American may pay a dividend from its 
surplus profits, without prior consent of the Kansas Commissioner of 
Insurance, if the dividend does not exceed the greater of 10% of statutory 
capital and surplus at the end of the preceding year or all of the statutory 
net gain from operations of the preceding year. As of December 31, 1995, 
surplus profits of American were $16,764,059 and 10% of statutory capital and 
surplus was $9,828,859. American is also required to maintain, on a statutory 
basis, paid-in capital stock and surplus (capital in excess of par value and 
unassigned surplus) of $400,000 each. As of December 31, 1995 and 1994 
American's statutory capital and surplus was $98,288,590 and $87,521,204 
respectively. Statutory net income (loss) for the years 1995, 1994 and 1993 
was $5,984,601, $4,167,120 and ($1,469,786), respectively.
        In connection with the original establishment of the Interest 
Maintenance Reserve (IMR), the Commissioner of Insurance of Kansas, the 
company's domiciliary state, ordered that American prepare its December 31, 
1992, NAIC Annual Statement Form to equitably allocate 1992 capital gains and 
losses, not included in the calculation of the Asset Valuation Reserve (AVR), 
on other than government securities, fifty (50%) percent to surplus and fifty 
(50%) percent to IMR, after calculation of the AVR pursuant to the 
instructions provided by the NAIC. This differs from prescribed statutory 
accounting practices.
54
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
7. STOCKHOLDERS' EQUITY (CONTINUED):
        This represented a permitted accounting practice for regulatory 
purposes, the effect of which was to increase statutory surplus by $8,168,000 
as of December 31, 1992 ($6,371,000 as of December 31, 1995).
        In addition, American received permission from the Commissioner of 
Insurance of Kansas to amortize the effects of changing to Actuarial 
Guideline No. 32 concerning the Commissioners Annuity Reserve Valuation 
Method for individual annuity contracts over a three-year period beginning in 
1995 rather than to record the full amount of the change of $2,176,000. The 
effect of this permitted accounting practice was to increase statutory 
surplus by $943,150 as of December 31, 1995.
        On March 17, 1989, the Board of Directors of the company adopted the 
1989 Nonqualified Stock Option Plan. The options granted under the 1989 
Nonqualified Plan will cover the same number of shares and have the same 
exercise price as the cancelled options, and none of such options may be 
exercised beyond ten years from the original date of grant of the cancelled 
option. A total of 839,841 options to acquire common stock are outstanding 
under the 1989 Nonqualified Plan.
        The 1989 Nonqualified Plan is administered by the Board of Directors 
and officers of the company and its subsidiaries. The terms of the options, 
including the number of shares, and the exercise price are subject to the 
sole discretion of the Board of Directors.
                Changes during the years were as follows:
<TABLE>
<CAPTION>
                                              For the Year Ended December 31,
                                           1995           1994      1993
<S>                                     <C>         <C>         <C>
  Options outstanding, beginning of year 859,837      816,107    757,340
  Options granted.....................    86,000       95,000    413,000
  Options exercised...................  (105,996)     (22,200)  (227,561)
  Options expired...................          -      (29,070)  (126,659)
  Options cancelled.................          -            -        (13)
  Options outstanding, end of year.....  839,841      859,837    816,107
  Outstanding options exercisable
   at end of year......................  779,841      764,837    403,107
  Options reserved for future grants
   at end of year......................   46,247      132,247     145,677
  Option prices per share:
     Exercised, during the year....... $4.84-$10.63   5.31-$7.50 $4.84-$9.60
     Outstanding, end of year.......   $4.84-$12.66   4.84-$12.66 $4.84-$13.75
</TABLE>
        On March 17, 1989, the Board of Directors also adopted the 1989 Stock
Appreciation Rights Plan (the SAR Plan) and the 
1989 Restricted Stock Plan (the Restricted Stock Plan). The SAR Plan 
authorized the Board of Directors to grant stock appreciation rights to 
employees, officers and directors in such amounts and with such exercise 
prices as it shall determine. No stock appreciation rights granted under the 
SAR Plan may be exercised more than five years from its date of grant. The 
SAR Plan authorized a maximum of 125,000 shares to be issued pursuant to 
stock appreciation rights granted thereunder.
55
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
7. STOCKHOLDERS' EQUITY (CONTINUED):
<TABLE>
<CAPTION>
                                                        For the Year
                                                     Ended December 31,
                                                1995        1994      1993
 <S>                                          <C>         <C>       <C>
  Rights outstanding, beginning
   of year..........................              -        30,000      60,000
  Rights granted....................              -             -           -
  Rights exercised..................              -             -     (30,000)
  Rights expired....................              -       (30,000)          -
  Rights cancelled..................              -             -           -
  Rights outstanding, end of year......           -             -      30,000
  Reserved for future grants............      5,000         5,000       5,000
</TABLE>
        The company recorded compensation expense relating to stock 
appreciation rights of $-0-, $-0- and $1,875, for the years ended December 
31, 1995, 1994, and 1993, respectively.
        The Restricted Stock Plan authorizes the Board of Directors to make 
restricted stock awards to employees, officers and directors in such amounts 
as it shall determine. The stock issued pursuant to such awards is subject to 
restrictions on transferability for a period of five years. Such stock is 
subject to a five-year vesting schedule, and the company is required to 
repurchase all vested stock from a grantee if such grantee's employment with 
the company is terminated prior to the lapse of the transfer restrictions. 
The Restricted Stock Plan authorizes a maximum of 125,000 shares to be issued 
thereunder. No restricted stock awards have been granted pursuant to the 
Restricted Stock Plan.
        In conjunction with a previous bank borrowing, the company issued 
ten-year warrants to purchase a total of 170,002 shares of its common stock 
as summarized in the following table:
<TABLE>
<CAPTION>
             Warrant               Issue       Number     Exercise  Expiration
             Holder                 Date     of Shares     Price      Date
  <S>                           <C>        <C>         <C>         <C>  
          Morgan Guaranty          12/8/88      75,000   $ 3.9688      12/9/98
                                   4/30/92      95,002     6.3855       5/1/02
                                               170,002
</TABLE>
8. Stockholders' Rights Plan:
_________________________________
        On June 30, 1994, the company's Board of Directors voted to repeal 
the 1988 Stockholders' Rights Plan and set the close of business on July 22, 
1994 as the record date for the payment of the one cent per share redemption 
price. 
        Stockholders of record were paid on August 8, 1994, in full 
redemption of the rights under the plan. The total amount to redeem the 
Rights was $101,432.
9. OTHER REVENUE:
        Effective December 1, 1989, the company entered into a coinsurance 
agreement with Employers Reassurance Corporation (ERC) which reinsured 90% of 
the risk on the company's block of SPWL policies written prior to 1989. The 
agreement provides that ERC assumes 90% of all risks associated with each 
policy in the block. These policies continue to be administered by American. 
In return, American receives an administrative allowance of $31.50 per policy 
per year. The total allowance received in 1995, 1994 and 1993 was $121,780, 
$129,972 and $136,912, respectively.
56
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
10. Income Taxes:
___________________
        The provision for income taxes charged to operations was as follows:
<TABLE>
<CAPTION>
                                                       (000's Omitted)
                                               For the Year Ended December 31,
                                                  1995      1994      1993
<S>                                           <C>           <C>       <C>
Current income tax expense..............       $ 1,540       4,942       4,477
Deferred income tax expense (benefit)..          6,990         651       4,087
   Total income tax expense (benefit).......   $ 8,530       5,593       8,564
</TABLE>
        The net deferred tax asset was comprised of the following:
<TABLE>
<CAPTION>                                                                      
                                                   (000's Omitted)
                                                 For the Year Ended
                                                     December 31,
                                                  1995        1994
<S>                                         <C>              <C>
  Gross deferred tax assets:
   Investments..........................      $  679           7,178
   Deferred policy acquisition costs........   9,565               _
   Property and equipment..................      314             341
   Other assets...........................       143              11
   Reserves for future policy benefits....   109,273         107,448
   Accrued expenses and other liabilities.     1,708           1,828
                                             121,682         116,806
  Gross deferred tax liabilities:
   Investments..........................      36,442           1,011
   Accounts receivable..................      50,708          51,940
   Accrued investment income............           -             193
   Deferred policy acquisition costs..        55,530          49,653
   Policy and contract claims.........           335             279
                                             143,015         103,076
                                             (21,333)         13,730
         Less valuation allowance.            (1,568)         (2,594)
         Net deferred tax asset (liability).$(22,901)         11,136
</TABLE>
        The company's net deferred tax asset (liability) consists of amounts 
that represent both ordinary tax deductions and capital losses in future tax 
returns and includes a valuation allowance as it is more likely than not that 
a portion of the deferred tax asset will not be realized. The inability to 
offset ordinary income with capital losses and uncertainty as to the timing 
of future losses and the ability to carry those losses back against prior 
income has resulted in the company establishing a valuation allowance.
57
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
10. Income taxes (continued):
_________________________________
        The actual tax expense (benefit) for each year differs from the 
"expected" tax expense (computed by applying the Federal tax rate of 35% to 
earnings before income taxes) as follows:
<TABLE>
<CAPTION>
                                                    (000's Omitted)
                                            For the Year Ended December 31,
                                             1995         1994         1993
<S>                                     <C>             <C>            <C>
Expected tax expense.................    $  8,795         6,750         9,091
State Income tax.....................          71           254           201
Change in valuation allowance on future
 deductions..........................         188          (153)         (470)
Change in valuation allowance on capital
 loss temporary differences.............     (179)         (597)         (555)
Change in expected tax rate on future
 deductions.........................            -          (321)            -
Change in other net temporary differences,
 not previously tax effected..............    (345)        (340)          297 
Actual income tax expense (benefit)......  $ 8,530        5,593         8,564
</TABLE>
        Deferred income taxes are provided for the tax effects of 
transactions that are reported in different periods for financial reporting 
and tax return purposes. The primary component of the deferred income tax 
provision are as follows:
<TABLE>
<CAPTION>                                                                      
                                               (000's Omitted)
                                        For the Year Ended December 31,
                                          1995        1994        1993
<S>                                    <C>          <C>        <C>
Investments....................         $  3,067       (692)         938
Accounts receivable............           (1,232)       843        4,447
Accrued investment income.....              (193)       204          (10)
Deferred policy acquisition costs..        7,094      6,629        2,488
Property and equipment............            27       (234)        (107)
Other assets.......................         (133)        (9)          (1)
Future policy benefits.............       (1,825)    (5,632)      (2,485)
Policy and contract claims.........           56        178            -
Accrued expenses and other liabilities       120        114         (440)
Operating loss carryfoward...........          -          -          282
Valuation allowance on future deductions
 and capital loss differences.........         9       (750)      (1,025)
 Deferred income tax expense (benefit)    $6,990        651        4,087
</TABLE>
58
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
11. ACQUISITION
        On September 8, 1995, the company signed a merger agreement pursuant 
to which it will acquire all of the outstanding capital stock of Financial 
Benefit Group (FBG), a Delaware corporation, for $5.31 per share, payable in 
the company's common stock, warrants and cash.
        FBG is an insurance holding company which owns all of the shares of 
Financial Benefit Life Insurance Company, a Florida domiciled insurer which 
specializes in the sale and underwriting of annuity products and is admitted 
in 41 jurisdictions, which includes 39 states, the District of Columbia and 
the U.S. Virgin Islands. FBG also owns all of the shares of Annuity 
International Marketing Corporation and The Insurancemart, Inc. both of which 
specialize in the distribution and marketing of annuities.
        The merger is subject to the approval of the stockholders of FBG and 
the company and the fulfillment of certain other conditions set forth in the 
merger agreement. Special Meetings of Stockholders for both FBG and the 
company will be held on April 8, 1996 to approve the acquisition, with the 
closing expected to occur as soon thereafter as practicable.
        In connection with the acquisition, the company received a bank 
commitment from First Chicago for borrowing of up to $35 million, the 
proceeds of which will be used to fund the cash portion of the purchase price 
and refinance existing indebtedness of the company and FBG.
        The transaction will be accounted for using the purchase method with 
any resulting goodwill being amortized over a period not to exceed 40 years.

12. Commitments and Contingencies:
______________________________________
        The company's insurance subsidiary is subject to state guaranty 
association assessments in all states in which it is admitted. Generally 
these associations guarantee specified amounts payable to residents of the 
state under policies issued by insolvent insurers. Most state laws permit 
assessments or some portion thereof to be credited against future premium 
taxes. Charges (credits) relating to guaranty fund assessments impacted 1995, 
1994 and 1993 income before taxes by approximately $1,001,000, $504,000 and 
$1,594,000, respectively. The company expects that further changes to income 
may be required in the future and will record such amounts when they become 
known.
13. Quarterly results (Unaudited):
______________________________________
        The company's quarterly results are set forth in the following table:
<TABLE>
<CAPTION>
                                        (000's Omitted, except per share data)
                                                  1995 Quarter Ended
                                   March 31     June 30     Sept. 30   Dec. 31
<S>                            <C>            <C>          <C>        <C>
Total revenue.............         $40,212       40,378      40,378     45,683
Earnings before income taxes..     $ 5,409        5,494       5,607      8,619
Income tax expense............       1,893        1,923       1,801      2,913
  Net earnings................     $ 3,516        3,571       3,806      5,706
Per share of common stock:
 Primary:
  Net earnings.............        $   .34          .35         .37        .55
 Fully diluted:
  Net earnings.............        $   .34          .34         .37        .55
</TABLE>
59
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued)
13. QUARTERLY RESULTS (UNAUDITED) (CONTINUED):
<TABLE>
<CAPTION>
                                                  1994 Quarter Ended
                          March 31      June 30    Sept. 30      Dec. 31
<S>                      <C>          <C>         <C>           <C>
Total revenue....         $ 37,491      35,594      37,519        38,188
Earnings before income
taxes........             $  5,412       3,771       4,833         5,270
Income tax expense...        1,840       1,282       1,628           843
  Net earnings......      $  3,572       2,489       3,205         4,427
Per share of common stock:
 Primary:
  Net earnings.........   $    .34         .24          .31          .43
 Fully diluted:
  Net earnings........    $    .34         .24          .31          .43
</TABLE>
Item 9. Changes in and Disagreements with Accountants and Accounting and 
Financial
Disclosure
        There have been no disagreements on accounting and financial 
disclosure within the twenty four months prior to the date of the most recent 
financial statements.

PART III

Item 10. Directors and Executive Officers of the Registrant
___________________________________________________________________
        The information set forth under the caption "Proposal A. Election of 
Directors" in the company's definitive Proxy Statement for the Annual Meeting 
of Stockholders to be held May 16, 1996, is incorporated herein by reference.
Item 11. Executive Compensation
___________________________________
        The information set forth under the caption "Executive Compensation" 
in the company's definitive Proxy Statement for the Annual Meeting of 
Stockholders to be held May 16, 1996, is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
______________________________________________________________________________
__
        The information set forth under the caption "Principal Holder of 
Voting Securities" in the company's definitive Proxy Statement for the Annual 
Meeting of Stockholders to be held May 16, 1996, is incorporated herein by 
reference.
Item 13. Certain Relationships and Related Transactions
______________________________________________________________
        The information set forth under the caption "Compensation Committee 
Interlocks and Insider Participation" in the company's definitive Proxy 
Statement for the Annual Meeting of Stockholders to be held May 16, 1996, is 
incorporated herein by reference.
60
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
______________________________________________________________________________
(a)  1.  Financial Statements
         See index to Financial Statements at Item 8.
(b)  2.  Financial Statement Schedules
<TABLE>
<CAPTION>
 Schedule                                                            Page
  Number                           Description                      Number
<S>         <C>                                                   <C>
            Independent Auditors' Report                               65
   I        Summary of Investments                                     66
  II        Condensed Financial Information of Registrant           67-68
 III        Supplementary Insurance information                        69
   V        Valuation and Qualifying Account and Reserves             70
 </TABLE>
        All other schedules are omitted because they are not required or 
because the required information is included in the consolidated financial 
statements and the notes thereto.
<TABLE>
<CAPTION>
Exhibit                                           Page Number or Incorporation
 Number                   Description                       by Reference
<C>     <C>                                        <C>
(2)(a)  Plan and Agreement of Union dated July 10,    Exhibit (2) Registration
        1986, between AmVestors Financial             Form S-2, File #2-82811
          Corporation and American Investors Life     Dated November 26, 1986
          Insurance Company, Inc.
(2)(b)   Agreement and Plan of Merger                 Exhibit (2.1) to
                                                      Registration
                                                      statement on Form S-4,   
                                                      File No. 333-01309 dated
                                                      March 1, 1996
(2)(c)   Resolutions of the Board of Directors        Exhibit (2)(a) to Form 
         dated January 7, 1988, providing for         10-Q dated May 11, 1988.
         succession to the position of Chairman
         of the Board of Directors
(3)(a)  Articles of Incorporation as Amended       Exhibit (3)(a) to Form 10-Q
         and Restated                              dated October 26, 1993
(3)(b)  Bylaws of the company                      Exhibit (4.2) to 
                                                Registration
                                                statement on Form S-8, File
                                                No. 33-31155 dated September
                                                19, 1989
(4)(a)  Specimen Common Stock Certificate       Exhibit (4)(a) to Form 10-K
         expiring December 9, 1998              dated March 30, 1995
(4)(b)  Common Stock Purchase Warrant           Exhibit (10)(o) to Form 10-K
         expiring December 9, 1998              dated April 12, 1989
(4)(c)  Common Stock Purchase Warrant           Exhibit (10)(v) to Form 10-Q
         expiring May 1, 2002                   dated May, 13, 1992
</TABLE>
61
<PAGE>
<TABLE>
<CAPTION>
Exhibit                                           Page Number or Incorporation
 Number                   Description                       by Reference
<C>      <C>                                    <C>
(10)(a)  Form of Indemnification Agreement        Exhibit (10)(a) to Form 10-K
         between company and its officers and      dated March 29, 1988
         directors
(10)(b)  1989 Non-Qualified Stock Option Plan      Exhibit (10)(q)to Form 10-K
         adopted March 17, 1989                   dated April 12, 1989
(10)(c)  Stock Appreciation Rights Plan adopted   Exhibit (10)(r) to Form 10-K
         March 17, 1989                           dated April 12, 1989
(10)(d)  Restricted Stock Plan adopted            Exhibit 4.4 to Registration
         March 17, 1989                          statement on Form S-8 dated
                                                 September 19, 1989
                                                 Registration No. 33-31155
(10)(e)  Employment Agreement dated December 17, Exhibit (10)(l) to Form 10-K
         1992, among the company, it's             dated March 30, 1993
         subsidiaries and Mark V. Heitz
(10)(f)  Employment Agreement dated October 3,   Exhibit (10)(a) to Form 10-Q
         1994, among the company, its subsidiaries  dated November 10, 1994
         and Ralph W. Laster, Jr
(10)(g)  Bonus Compensation Agreement dated       Exhibit (10)(b) to Form 10-Q
         September 30, 1994, between the company    dated November 10, 1994
         and Ralph W. Laster, Jr.
(10)(h)  Bonus Compensation Agreement dated       Exhibit (10)(c) to Form 10-Q
         September 30, 1994, between the company    dated November 10, 1994
         and Mark V. Heitz
(10)(i)  Credit Agreement dated December 29, 1994 Exhibit (10)(i) to Form 10-K
         between the company, First National Bank   dated March 30, 1995
         of Chicago and Boatmen's First National
         Bank of Kansas City
(10)(j)  Amendment No. 1 to Credit Agreement dated Exhibit (10)(a)to Form 10-Q
         December 29, 1994, between the company,    dated August 11, 1995
          First National Bank of Chicago and
          Boatmen's First National Bank of Kansas
          City

(10)(k)  1994 Stock Purchase Plan for Non-        Exhibit (10)(j) to Form 10-K
         Employee Directors effective              dated March 30, 1995
         February 24, 1994
(10)(l)  Incentive Compensation Plan between the  Exhibit (10)(k) to Form 10-K
         company and certain designated employees   dated March 30, 1995
         effective for the calendar year 1994
(10)(m)  1995 Special Incentive Bonus Agreement     PP 71-72
          between the company and Ralph W. Laster,
          Jr. dated April 27, 1995
</TABLE>
62
<PAGE>
<TABLE>
<CAPTION>
Exhibit                                           Page Number or Incorporation
 Number                   Description                       by Reference
<C>       <C>                                    <C>
 (10)(n)  1995 Special Incentive Bonus Agreement     PP 73-74
          between the company and Mark V. Heitz
          dated April 27, 1995

    (11)  Calculation of Earnings per Share         P 75

    (20)  Reports on Form 8-K
         The company filed a report on
         Form 8-K on September 22, 1995

    (21)  Wholly-owned subsidiaries of the registrant

          American Investors Life Insurance Company, Inc.
          415 Southwest Eighth Avenue
          Topeka, Kansas 66603

          American Investors Sales Group, Inc.
          (formerly Gateway Corporation)
          415 Southwest Eighth Avenue
          Topeka, Kansas 66603

          AmVestors Investment Group, Inc.
          (formerly American Investors Sales Group, Inc.)
          415 Southwest Eighth Avenue
          Topeka, Kansas 66603

    (23)  Independent Auditors' Consent             P 76

    (27)  Financial Data Sheet

</TABLE>
63
<PAGE>
SIGNATURES
_____________________________

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

AMVESTORS FINANCIAL CORPORATION

                        By: /s/Ralph W. Laster, Jr.
                           _______________________________
                         Ralph W. Laster, Jr.
                         Chairman of the Board
                         Chief Executive Officer
                        (Principal Executive Officer)
                         and Chief Financial Officer
                        (Principal Accounting Officer)

Date:  March 14, 1996
       ________________

        Pursuant to the requirements of the Securities Exchange Act of 1934, 
this report has been signed below by the following persons on behalf of the 
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
<C>                       <C>                              <C>
  /s/Ralph W. Laster, Jr.                                      March 14, 1996
Ralph W. Laster, Jr           Chief Executive Officer
                             (Principal Executive Officer)
                              and Chief Financial Officer
                             (Principal Accounting Officer)

/s/Mark V. Heitz            President, General Counsel          March 14, 1996 
  Mark V. Heitz              and Director

/s/Janis L. Andersen        Director                            March 14, 1996 
   Janis L. Andersen

                             Director  
  Robert G. Billings

  /s/Jack H. Brier             Director                         March 14, 1996
  Jack H. Brier

                              Director      
  Robert T. McElroy, M.D.

  /s/R. Rex Lee                Director                         March 14, 1996
  R. Rex Lee, M.D.

  /s/Robert R. Lee              Director                        March 14, 1996
  Robert R. Lee

  /s/James V. O'Donnell         Director                        March 14, 1996
  James V. O'Donnell
</TABLE>
64
<PAGE> 
INDEPENDENT AUDITORS' REPORT
_______________________________


        We have audited the consolidated financial statements of AmVestors 
Financial Corporation and subsidiaries as of December 31, 1995 and 1994, and 
for each of the three years in the period ended December 31, 1995, and have 
issued our report thereon dated February 29, 1996; such report is included 
elsewhere in this Form 10-K. Our audits also included the financial statement 
schedules of AmVestors Financial Corporation and subsidiaries, listed in Item 
14. These financial statement schedules are the responsibility of the 
company's management. Our responsibility is to express an opinion based on 
our audits. In our opinion, such financial statement schedules, when 
considered in relation to the basic consolidated financial statements taken 
as a whole, present fairly in all material respects the information set forth 
therein.





/s/Deloitte & Touche LLP
___________________________

Kansas City, Missouri
February 29, 1996
65
<PAGE>
AMVESTORS FINANCIAL CORPORATION AND SUBSIDIARIES
SUMMARY OF INVESTMENTS
SCHEDULE I
As of December 31, 1995
(000's Omitted)
<TABLE>
<CAPTION>
                                                                   Amount at
                                                                    which
                                                                     shown
                                                                    in the
                                                       Market        balance
         Type of Investment                 Cost         Value         sheet
<S>                                     <C>          <C>          <C>
Debt securities:
 Bonds:
  Available-for-sale:
   U.S. treasury obligations              $ 51,743        52,664      52,664  
   Mortgage-backed securities              671,283       700,936     700,936
   Public utilities                        150,536       158,695     158,695
   All other corporate bonds             1,074,215     1,132,311   1,132,311
  Trading:
   All other corporate bonds                 1,489         1,485       1,485
Total debt securities                    1,949,266     2,046,091   2,046,091
Equity securities:
  Available-for-sale:
    Banks, trust and insurance
     companies                                198            465         465
    Public utilities                          237             67          67
    All other common stock                    612            649         649
  Preferred stock                           7,566          7,733       7,733
 Trading:
  Preferred stock                             619            629         629   
Total equity securities                     9,232          9,543       9,543
Mortgage loans on real estate               5,391          5,445       5,391
Other long-term investments                34,100         34,100      34,100
Short-term investments                        436            436         436
Total investments                      $1,998,425      2,095,615   2,095,561
</TABLE>
66
<PAGE>
AMVESTORS FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED FINANCIAL INFORMATION OF REGISTRANT

SCHEDULE II
BALANCE SHEETS
(000's Omitted)
<TABLE>
<CAPTION>                                       As of December 31, 
                                               1995            1994
                                            ___________       ___________
<S>                                       <C>               <C>
ASSETS
_______
Investments in subsidiaries                $   182,723         107,744
Long-term investments                                                          
                                                    -              635
Cash and cash equivalents                         756              (33)
Other assets                                    3,424            2,683
Total Assets                               $  186,903          111,029
LIABILITIES AND STOCKHOLDERS' EQUITY
_________________________________________

Liabilities:
 Notes payable                             $   12,084             5,434
 Other liabilities                                374             1,399
  Total liabilities                            12,458             6,833
Stockholders' Equity:
 Preferred stock                                     -                -
 Common stock                                   12,904           12,769
 Paid-in capital                                64,284           63,499
 Unrealized investment gains (losses)           45,372           (7,813)
 Retained earnings                              54,714           38,876
                                               177,274          107,331
 Less leveraged employee stock ownership
trust                                           (2,829)          (3,135)
  Total stockholders' equity                  174,445           104,196
  Total liabilities and stockholders' equity $186,903           111,029
                                            STATEMENTS OF EARNINGS
                                         For the year ended December 31,
                                          1995        1994          1993
Equity in earnings of subsidiaries      $15,799      13,748       17,732
Net investment income                        93          67           23
Other revenues                            3,676       4,149        4,103
Operating expense                        (2,624)     (3,867)      (2,921)
Interest expense                           (518)       (466)      (1,533)
Net investment gains                        177           -            -
 Net earnings before income taxes and
  extraordinary item                     16,603      13,631       17,404
Income tax expense (benefit)                  4         (62)        (787)
 Net earnings before extraordinary item  16,599      13,693       18,191
Extraordinary loss                           -            -         (213)
 Net earnings                           $16,599      13,693       17,978
</TABLE>
67
<PAGE>

AMVESTORS FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
SCHEDULE II (cont.) STATEMENTS OF CASH FLOWS (000's Omitted)
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
                                         For the Year Ended December 31,
                                         1995         1994        1993
<S>                                     <C>          <C>         <C>
Operating Activities:
  Net earnings                         $ 16,599       13,693       17,978
  Adjustments to reconcile net
    earnings to net cash provided by
   (used in) operating activities:
  Equity in earnings of subsidiaries    (15,799)     (13,748)      (17,732)
  Amortization of discount on notes
    payable                                   -           -             59
  Net investment gains                     (177)          -              -
  Accrued investment income                   4           -              -
  Other liabilities                      (1,075)       (656)         1,368
  Other assets                             (847)        160            877
  Other, net                                338         134           (372)
Net cash provided by (used in)
 operating activities                      (957)       (417)         2,178

Investing Activities:
  Investment in subsidiaries             (6,457)       (135)       (14,600)
  Dividends from subsidiaries               690       1,900          2,680
  Sale of equity securities                 223          -               -
  Purchase of equity securities            (300)         -               -
  Proceeds from sale of debt securities       -          -              75
  Purchases of long-term investments       (601)      (233)           (494)
  Short-term investments, net               266          -               -
  Principal payments on long-term
   investments                              809        190               -
Net cash provided by (used in)
 investing activities                   (5,370)        1,722       (12,339)
Financing Activities:
  Proceeds from notes payable            7,000             -             -
  Payments on notes payable               (350)         (326)      (20,855)
  Cash dividends to stockholders          (761)            -          (236)
  Redemption of stockholder plan             -          (101)            -
  Fractional cash on reverse stock split     -             -           (25)
  Issuance of common stock                 791            27        31,400
  Purchase of treasury stock                 -        (1,186)            -
  Repurchase of warrants                     -             -          (375)
  Allocation of LESOPshares                306           286           267
  Other, net                               130            10             -
Net cash provided by (used in)
 financing activities                    7,116        (1,290)       10,176
Increase (Decrease) in Cash and Cash
  Equivalents                              789            15            15
Cash and Cash Equivalents:
  Beginning of year                        (33)          (48)          (63)
    End of year                         $  756           (33)          (48)
Supplemental schedule of cash flow
 information:
  Income tax payments                   $(1,507)        6,150        3,204
  Interest payments                     $   485             -        1,614
</TABLE>
68
<PAGE>
AMVESTORS FINANCIAL CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY INSURANCE INFORMATION

SCHEDULE III
(000's Omitted)
<TABLE>
<CAPTION>

                 Future
                 Policy                                   Amortization
Year   Deferred  Benefits   Other Premium    Benefits      of Deferred
Ended   Policy   Losses,      Claims & Policy  Net       Claims &   Policy
Other
 DecemberAcquisition Claims &   &    Charges Investment Settlement Acquisition
Operating
 31,     Costs   Loss ExpenseBenefits Revenue Income Expenses Costs  Expenses
<S>     <C>       <C>        <C>    <C>     <C>        <C>    <C>     <C>
1993    $128,671  2,005,339   157   6,594    138,539    4,257  9,436   11,285
1994    $148,871  2,148,763   134   6,331    142,009    3,570  9,026    8,883
1995    $140,476  2,259,028    76   8,500    156,510    3,067 12,365   10,006
</TABLE>
69
<PAGE>

AMVESTORS FINANCIAL CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

SCHEDULE V
(000's Omitted)
<TABLE>
<CAPTION>
                                          Additions
                                    ________________________
                           Balance   Charged to Charged to          Balance at
                          Beginning  Costs and    Other               End of
                          of Period  Expenses   Accounts  Deductions   Period
<S>                       <C>        <C>       <C>        <C>         <C>

Year Ended December 31, 1993:
 Allowance for Credit Losses  $  2,500     -       1,442     1,442      2,500
 Allowance for Deferred
  Tax Asset                      3,335     -           -     1,025      2,310
 Allowance for Uncollectable
  Agent Balances                   277   141           -        70        348
                              $  6,112   141       1,442     2,537      5,158
Year Ended December 31, 1994:
 Allowance for Credit Losses  $  2,500     -         360       629      2,231
 Allowance for Deferred
  Tax Asset                      2,310   284           -         -      2,594
 Allowance for Uncollectable
  Agent Balances                   348    88           -       209        227
                              $  5,158   372         360       838      5,052
Year Ended December 31, 1995:
 Allowance for Credit Losses  $  2,231     -            -    2,231          -
 Allowance for Deferred
  Tax Asset                      2,594     -            -    1,026      1,568  
             
 Allowance for Uncollectable
  Agent Balances                   227   512            -        -        739
                              $  5,052   512            -    3,257      2,307
</TABLE>
70