UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K/A

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

                            FOR THE FISCAL YEAR ENDED
                                DECEMBER 31, 2000
                          COMMISSION FILE NO. 333-45862

                       JOHN HANCOCK LIFE INSURANCE COMPANY
             (Exact name of registrant as specified in its charter)

         MASSACHUSETTS                                            04-1414660
(State or other jurisdiction of                                (I.R.S. Employer
 incorporation or organization)                              Identification No.)

                               John Hancock Place
                              Post Office Box 0111
                           Boston, Massachusetts 0111
                                 (617) 572-6000
               (Address, including zip code, and telephone number,
        including area code, of Registrant's principal executive offices)

           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
     Title of each class           Name of each exchange on which registered

                                      NONE
--------------------------------------------------------------------------------

           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                                      NONE
--------------------------------------------------------------------------------
                                (Title of class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes |_| No |X|

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

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

At February 28, 2001 there were outstanding 1,000 shares of the registrant's
common stock, $10,000 par value per share of the registrant, all of which are
owned by John Hancock Financial Services, Inc.


                                       1
<PAGE>
Item 7 of this Form 10-K/A is being amended to revise certain information
contained in Management's Discussion and Analysis of Financial Condition and
Results of Segment Operations, principally to properly exclude amounts relating
to an affiliate that we sold to our parent during 2000, and to correct certain
clerical and mathematical errors.

ITEM 7. Management's Discussion and Analysis of Financial Condition and Results
        of Segment Operations

     Management's discussion and analysis reviews our consolidated segment
financial condition as of December 31, 2000 and 1999, the consolidated results
of operations for the years ended December 31, 2000, 1999, and 1998 and, where
appropriate, factors that may affect future financial performance. This
discussion should be read in conjunction with the audited consolidated financial
statements and related notes, included elsewhere in this Form 10-K.

Forward-Looking Statements

     The statements, analyses, and other information contained herein relating
to trends in the Company's operations and financial results, the markets for the
Company's products, the future development of the Company's business, and the
contingencies and uncertainties to which the Company may be subject, as well as
other statements including words such as "anticipate," "believe," "plan,"
"estimate," "expect," "intend," "will," "should," "may," and other similar
expressions, are "forward-looking statements" under the Private Securities
Litigation Reform Act of 1995. Such statements are made based upon management's
current expectations and beliefs concerning future events and their effects on
the Company and may not be those anticipated by management. John Hancock's
actual results may differ materially from the results anticipated in these
forward-looking statements.

     These forward-looking statements are subject to risks and uncertainties
including, but not limited to, the risks that (1) a significant downgrade in our
ratings for claims-paying ability and financial strength may lead to policy and
contract withdrawals and materially harm our ability to market our products, (2)
elimination of Federal tax benefits for our products and other changes in laws
and regulations (including in particular the possible amendment or repeal of the
Federal Estate Tax) which the Company expects would adversely affect sales of
our insurance and investment advisory products, (3) Massachusetts insurance law
may restrict the ability of John Hancock Variable Life Insurance Company to pay
dividends to us, (4) we face increasing competition in our retail and
institutional businesses from mutual fund companies, banks and investment
management firms as well as from other insurance companies, (5) a decline or
increased volatility in the securities markets, and other economic factors, may
adversely affect our business, particularly our variable life insurance, mutual
fund, variable annuity and investment business, (6) our life insurance sales are
highly dependent on a third party distribution relationship, (7) interest rate
volatility may adversely affect our profitability, (8) our net income and
revenues will suffer if customers surrender annuities and variable and universal
life insurance policies or redeem shares of our open-end mutual funds, (9) the
independent directors of our variable series trusts and of our mutual funds
could reduce the compensation paid to us or could terminate our contracts to
manage the funds, (10) under our Plan of Reorganization, we were required to
establish the "closed block" a special arrangement for the benefit of a group of
our policyholders and we may have to fund deficiencies in our closed block, and
any overfunding of the closed block will benefit only the holders of policies
included in the closed block, not any affiliate, or our stockholder, (11) we
will face losses if the claims on our insurance products, or reductions in rates
of mortality on our annuity products, are greater than we projected, (12) we
face risks relating to our investment portfolio, (13) we may experience
volatility in net income due to changes in standards for accounting for
derivatives, (14) we are subject to risk-based capital requirements and possible
guaranty fund assessments, (15) the National Association of Insurance
Commissioners' codification of statutory accounting practices will adversely
affect our statutory surplus, (16) we may be unable to retain personnel who are
key to our business, (17) we face risks from assumed reinsurance business in
respect of personal accident insurance and the occupational accident component
of workers compensation insurance, (18) litigation and regulatory proceedings
may result in financial losses, harm our reputation and divert management
resources, and (19) we face unforeseen liabilities arising from our acquisitions
and dispositions of businesses.

     Readers are also directed to other risks and uncertainties discussed, as
well as to further discussion of the risks described above, in other documents
that may be filed by the Company with the United States Securities and Exchange
Commission from time to time. The Company specifically disclaims any
<PAGE>

obligation to update or revise any forward-looking information, whether as a
result of new information, future developments, or otherwise.

Overview

     John Hancock Life Insurance Company (the Company) is a leading financial
services company providing a broad range of products and services in two major
businesses: (1) the retail business, which offers insurance protection and asset
gathering products and services primarily to retail consumers; and (2) the
institutional business, which offers guaranteed and structured financial
products and investment management products and services primarily to
institutional customers. In addition, we have a Corporate and Other Segment.

     Our revenues are derived principally from:

     o    premiums on individual life insurance, individual and group long-term
          care insurance, annuities with life contingencies, single premium
          annuity contracts and group life insurance;

     o    product charges from variable and universal life insurance products
          and annuities;

     o    asset management fees from mutual fund and institutional investment
          management products;

     o    sales charges and commissions derived from sales of investment and
          insurance products and distribution fees; and

     o    net investment income and realized investment gains on general account
          assets.

     Our expenses consist principally of insurance benefits provided to
policyholders, interest credited on policyholders' general account balances,
dividends to policyholders, other operating costs and expenses, which include
commissions and general business expenses, net of expenses deferred,
amortization of deferred policy acquisition costs, and premium and income taxes.

     Our profitability depends in large part upon: (1) the adequacy of our
product pricing, which is primarily a function of competitive conditions, our
ability to assess and manage trends in mortality and morbidity experience, our
ability to generate investment earnings and our ability to maintain expenses in
accordance with pricing assumptions; (2) the amount of assets under management;
and (3) the maintenance of our target spreads between the rate of earnings on
our investments and credited rates on policyholders' general account balances.

     Our sales and financial results of our retail business over the last
several years have been affected by general economic and industry trends.
Variable products, including variable life insurance and variable annuities,
have accounted for the majority of recent increases in total premiums and
deposits for the insurance industry as a result of the strong equity market
growth in recent years and the "baby boom" generation reaching its high-earnings
years and seeking tax-advantaged investments to prepare for retirement. As sales
of variable products have increased, sales of traditional life insurance
products have experienced continued declines. With respect to our long-term care
insurance products, premiums have increased due to the aging of the population
and the expected inability of government entitlement programs to meet retirement
needs.


     Premiums and deposits of our individual annuity products increased 37.7% to
$2,061.4 million in 2000 as compared to 1999. Our variable life insurance
product deposits in 2000 increased 11.1% to $922.0 million compared to 1999,
while premiums on our individual and group long-term care insurance increased
44.3%, to $309.1 million in 2000 due to the acquisition of the long-term care
business of Fortis, Inc. (Fortis) on March 1, 2000. Primarily due to aggressive
marketing of both retail and institutional investment management services, new
fund offerings, and refocusing the sales organization on regional broker/dealers
and financial planners, mutual fund deposits and reinvestments increased
$1,561.1 million, or 34.7%, to $6,066.2 million in 2000. In addition to the
increase in sales and deposits, redemptions decreased $1,489.0

<PAGE>

million, or 19.6%, to $6,111.7 million in 2000 due to conservation initiatives.
We have reduced operating expenses to protect profit margins as we work to
stabilize and grow assets under management in the mutual funds business.
However, our mutual fund operations are impacted by general market trends, and a
continued downturn in the mutual fund market may negatively affect our future
operating results.


     Recent economic and industry trends also have affected the sales and
financial results of our institutional business. Sales of fund-type products
decreased $314.6 million, or 7.6%, to $3,830.4 million. The decrease is
primarily due to declining demand for general account GICs in the 401(k) plan
market. In response to this trend, we have created new products for the
non-qualified institutional marketplace.

     Premiums from single premium annuity contracts increased to $598.5 million
in 2000 from $286.3 million in 1999, driven by the sale of two significant
single premium annuity contracts during the period. Moreover, our investment
management services provided to domestic and international institutions include
services such as investment advisory client portfolios, individually managed and
pooled separate accounts, registered investment company funds, bond and mortgage
securitizations, and mutual fund management capabilities. Assets under
management of our Investment Management Segment decreased to $32,651.6 million
as of December 31, 2000.


The Reorganization

     The board of directors of John Hancock Mutual Life Insurance Company
unanimously adopted the Plan of Reorganization on August 31, 1999. Under the
terms of the Plan of Reorganization, effective February 1, 2000, John Hancock
Mutual Life Insurance Company converted from a mutual life insurance company to
a stock life insurance company and became a wholly owned subsidiary of John
Hancock Financial Services, Inc., which is a holding company. In connection with
the reorganization, John Hancock Mutual Life Insurance Company changed its name
to John Hancock Life Insurance Company.

     Under the Plan of Reorganization, as of February 1, 2000, John Hancock Life
Insurance Company, created a closed block for the benefit of policies included
therein. The purpose of the closed block is to protect the policy dividend
expectations of the policies included in the closed block after demutualization.
Unless the Massachusetts Commissioner of Insurance and, in certain
circumstances, the New York Superintendent of Insurance, consent to an earlier
termination, the closed block will continue in effect until the date none of
such policies is in force. As of February 1, 2000, John Hancock Life Insurance
Company segregated closed block assets of $9,343.0 million, an amount that is
expected to produce cash flows which, together with anticipated revenues from
policies included in the closed block, is expected to be reasonably sufficient
to provide for payment of policy benefits, taxes and direct asset acquisition
and disposal costs, and for continuation of policy dividend scales payable in
1999, so long as the experience underlying such dividend scales continues. The
assets allocated to the closed block and any cash flows provided by these assets
will solely benefit the holders of policies included in the closed block. Total
closed block liabilities were $12,118.3 million as of February 1, 2000.

     For additional information on the creation of the closed block see Note 6
to our audited consolidated financial statements.


     Costs relating to the demutualization, excluding costs relating to the
offering, were $119.6 million net of income taxes, of which $7.5 million was
recognized in the year ended December 31, 2000. Demutualization expenses include
printing and mailing costs and our aggregate cost of engaging independent
accounting, actuarial, financial, investment banking, legal and other
consultants to advise us. In addition, our costs include the costs of the staff
and advisors of the Massachusetts Division of Insurance, the New York Insurance
Department as to the demutualization process and related matters.


Transactions Affecting Comparability of Results of Operations

Disposed Business
<PAGE>

     We have completed a number of transactions which have affected the
comparability of our results of operations. On March 31, 1999, we completed the
sale of Unigard Security Insurance Company ("USIC") and John Hancock Insurance
Co. of Bermuda Ltd. ("John Hancock Bermuda"). The sale of USIC was completed by
entering into a 100% quota share reinsurance agreement with a third party
reinsurer and then through a stock sale. We also sold 100% of the stock of John
Hancock Bermuda, which offered reinsurance products and services. Assets and
liabilities transferred in connection with both sales amounted to $381.0 million
and $161.8 million, respectively. The sale of USIC resulted in an after-tax loss
of $21.4 million. John Hancock Bermuda was sold for its net book value which
resulted in the recognition of no gain or loss.

Corporate Account Asset Transfer

     We established a "corporate account" as part of our Corporate and Other
Segment to facilitate our capital management process. The corporate account
contains capital not allocated to support the operations of our business
segments.

     Late in the fourth quarter of 1999, we transferred certain assets from the
business segments to the corporate account. These assets include investments in
certain subsidiaries and the home office real estate complex (collectively
referred to as "corporate purpose assets"). Historically, we have allocated the
investment performance or other earnings of corporate purpose assets among all
of our business segments. However, subsequent to the conversion to a stock life
insurance company, we centrally manage the performance of corporate purpose
assets through the corporate account.

     We accounted for the transfer of the corporate purpose assets between the
business segments and the corporate account at historical cost. Because of the
participating features of the affected group participating contracts, we believe
that the transfer of corporate purpose assets was analogous to their sale. Group
participating contractholders are entitled to receive the proceeds from assets
sold from the segment. As a result, we recognized an expense to increase our
liability to affected group participating contractholders for their
proportionate share of the appreciation of the corporate purpose assets
transferred. For the other business segments, differences between the historical
cost of the assets transferred and the fair value of amounts received by the
business segments was recorded as a capital adjustment by each segment. The
transfer during the fourth quarter of 1999 resulted in a charge to operations in
1999 of $205.8 million, net of tax. The Company recorded a $5.7 million
after-tax credit to operations in the first quarter of 2000 related to revised
estimates for the transaction.

Transactions Occurring Subsequent to Year End


     In February 2001, the Company announced that it signed letters of intent
with two reinsurers covering 50% of its closed block business. The treaties are
structured so they will not affect policyholder dividends or any other financial
items reported within the closed block, which was established at the time of the
Company's demutualization to protect the reasonable dividend expectations of
certain participating life insurance policyholders. The reinsurance agreements
cost is expected to be approximately $3.0 million pre-tax and result in making
several hundred million dollars in statutory capital available for further
business development or other purposes, the timing of which will be dependent on
a number of circumstances. In addition, on March 2, 2001, the Company announced
the sale of the retirement plan recordkeeping business operated out of the
mutual fund subsidiary of the Company, John Hancock Funds. It is estimated that
an after-tax charge of approximately $9 million will be recorded in the first
quarter of 2001 and that the Company will initially sever 31 employees, with
additional severances planned. The Company will continue to manage the assets of
the business, the purchaser will assume the recordkeeping and support
responsibility.

<PAGE>

Results of Operations

     The table below presents our consolidated results of operations and
consolidated financial information for the years ended 2000, 1999 and 1998.


<TABLE>
<CAPTION>
                                                                    For the Year Ended December 31,
                                                 ---------------------------------------------------------------------
                                                                   2000
                                                 -----------------------------------------
                                                                             (in millions)
                                                 Non Closed                    Result of
                                                    Block      Closed Block    Operations        1999           1998
                                                 ---------------------------------------------------------------------
<S>                                               <C>            <C>            <C>            <C>            <C>
Revenues
  Premiums .................................      $2,190.4       $  865.0       $3,055.4       $2,411.3       $2,109.0
  Universal life and investment-
    type product charges ...................         746.7             --          746.7          703.3          597.0
  Net investment income ....................       3,251.0          591.6        3,842.6        3,568.5        3,328.0
  Net realized investment gains
    (losses), net of related
    amortization of deferred
    policy acquisition costs and
    amounts credited to
    participating pension
    contractholders (1) ....................          83.9           11.7           95.6          175.2          106.1
  Investment management revenues,
    commissions, and other fees ............         764.8             --          764.8          680.9          659.7
  Other revenue (expense) ..................         (13.9)          (0.6)         (14.5)           0.1           10.3
                                                  --------       --------       --------       --------       --------

    Total revenues .........................       7,022.9        1,467.7        8,490.6        7,539.3        6,810.1

Benefits and expenses
  Benefits to policyholders,
    excluding amounts related
    to net realized investment
    gains credited to
    participating pension
    contractholders (2) ....................       4,092.5          870.0        4,962.5        5,133.0        4,082.6
  Other operating costs and
    expenses ...............................       1,507.7          (10.0)       1,497.7        1,384.4        1,357.8
  Amortization of deferred
    policy acquisition costs,
    excluding amounts related
    to net realized investment
    gains (3) ..............................         183.8           76.5          260.3          164.2          261.2
  Dividends to policyholders ...............         157.3          407.1          564.4          501.6          473.2
  Demutualization expenses .................          10.6             --           10.6           96.2           18.0
                                                  --------       --------       --------       --------       --------

    Total benefits and expenses ............       5,951.9        1,343.6        7,295.5        7,279.4        6,192.8
                                                  --------       --------       --------       --------       --------
Income before income taxes,
    minority interest and
    cumulative effect of
    accounting change ......................       1,071.0          124.1        1,195.1          259.9          617.3
Income taxes ...............................         344.4             --          344.4           97.9          174.1
                                                  --------       --------       --------       --------       --------
Income before minority interest
    and cumulative effect of
    accounting change ......................         726.6          124.1          850.7          162.0          443.2
Minority interest ..........................         (10.6)            --          (10.6)          (1.6)          (1.1)
                                                  --------       --------       --------       --------       --------
  Income before cumulative effect
      of accounting change .................         716.0          124.1          840.1          160.4          442.1
  Cumulative effect of accounting change ...            --             --             --           (9.7)            --
                                                  --------       --------       --------       --------       --------
Net income .................................      $  716.0       $  124.1       $  840.1       $  150.7       $  442.1
                                                  ========       ========       ========       ========       ========
</TABLE>


(1)  Net of related amortization of deferred policy acquisition costs and
     amounts credited to participating pension contractholders of $6.0 million,
     $85.8 million, and $120.3 million for the years ended 2000, 1999, and 1998,
     respectively.

(2)  Excluding amounts related to net realized investment gains credited to
     participating pension contractholders of $6.9 million, $35.3 million, and
     $79.1 million for the years ended 2000, 1999, and 1998, respectively.
<PAGE>

(3)  Excluding amounts related to net realized investment gains of $(0.9)
     million, $50.5 million, and $41.2 million for the years ended 2000, 1999,
     and 1998, respectively.

Year Ended December 31, 2000 Compared to Year Ended December 31, 1999


     Consolidated income before income taxes, minority interest and cumulative
effect of accounting change of $1,195.1 million for the year ended December 31,
2000 increased by $935.2 million, or 359.8%, as compared to consolidated income
before income taxes, minority interest and cumulative effect of accounting
change of $259.9 million for the year ended December 31, 1999. The increase was
primarily attributable to increases in income before income taxes, minority
interest and cumulative effect of accounting change of $235.2 million in the
Guaranteed and Structured Financial Products Segment, $626.3 million in the
Corporate and Other Segment, $65.9 million in the Asset Gathering Segment and
$20.7 million in the Investment Management Segment. These increases were offset
by a decrease in the Protection Segment of $12.9 million. The increase in the
Guaranteed and Structured Financial Products Segment was primarily due to the
recognition of a $345.5 million pre-tax charge in the prior year for
compensation of group participating contractholders for assets transferred in
conjunction with the formation of the corporate account. The increase in the
Corporate and Other Segment was primarily due to a $208.6 million pre-tax charge
in the prior year for our exposure to losses under our Workers' Compensation
reinsurance programs, including Unicover Managers, Inc., that was associated
with the group business we sold in 1998 and a $140.2 million pre-tax charge in
the prior year in connection with the class action settlement. The increase in
the Asset Gathering Segment was primarily due to an improvement in realized
gains from the prior year: $15.4 million in realized gains were recognized in
2000 compared to $11.0 million in realized losses in 1999. In addition,
demutualization and restructuring expenses decreased compared to the prior year.
The increase in the Investment Management Segment was due primarily to higher
investment advisory fees resulting from an incentive fee on contract
restructuring and performance fees earned by the mezzanine fund manager. The
decrease in the Protection Segment was primarily due to decreased realized
gains.

     Premium revenue was $3,055.4 million for 2000, an increase of $644.1
million, or 26.7%, from $2,411.3 million in 1999. The increase was primarily due
to an increase in premiums in the Guaranteed and Structured Financial Products
Segment, including the sale of two significant single premium annuity contracts,
and an increase in the Protection Segment primarily due to premiums on
individual long-term care insurance products from the acquisition of a block of
business.


     Universal life and investment-type product charges were $746.7 million for
2000, an increase of $43.4 million, or 6.2%, from $703.3 million in 1999. These
product charges consist primarily of cost of insurance fees on our variable life
insurance and universal life insurance products and mortality and expense fees
on our variable annuity products. The increase was primarily due to higher cost
of insurance fees resulting from growth in the average account values in
universal life insurance products and higher average variable annuity
liabilities and surrender fees.


     Net investment income was $3,842.6 million for 2000, an increase of $274.1
million, or 7.7%, from $3,568.5 million in 1999. Net investment income in the
prior year includes $9.0 million in net investment income earned in operations
of disposed businesses in 1999. The increase was primarily the result of higher
average invested assets, which increased $3,423.2 million, or 7.3%, to $50,318.3
million in 2000, as compared to $46,895.1 million in 1999. The net yield on
average invested assets increased to 7.64% in 2000. The increase in yield from
the prior year is consistent with the average market rates in 2000 compared to
1999, the average 10-year U.S. Treasury rate in 2000 was 34 basis points higher
than in 1999.


     Net realized gains on investments were $95.6 million for 2000, a decrease
of $79.6 million from $175.2 million in 1999. Net realized gains in the prior
year include $23.0 million in net realized losses in the operations of disposed
businesses in 1999. The decrease was primarily the result of 1999 gains on sales
of real estate relating to the planned program to divest the Company of much of
its real estate portfolio. The Company recognized an estimated $115.1 million in
realized gains from the sales of real estate in the prior year compared to net
realized losses of approximately $21.1 million in 2000.
<PAGE>

     Investment management revenues, commissions, and other fees were $764.8
million, an increase of $83.9 million, or 12.3%, from $680.9 million in 1999.
The increase was the result of an increase in the Investment Management segment
which increased $45.9 million primarily due to the $45.3 million incentive fee
received on the restructuring of a timber management contract and the favorable
settlement of a lawsuit.Underwriting and distribution fees increased $25.7
million primarily resulting from the increase in front-end load mutual fund
sales, partially offset by a decrease in deferred sales charges due to improved
retention of existing accounts. Mutual fund advisory fees declined $6.4 million
in 2000, primarily due to lower average assets under management along with a
slight decline in the average investment advisory fee rate, as fixed income
assets, which bear a lower advisory fee than equity assets, increased as a
percentage of total assets.


      Other revenue was $(14.5) million in 2000, a decrease of $14.6 million
from $0.1 million reported in 1999. Other revenue in the prior year includes
$2.9 million in other losses in the operations of disposed businesses in 1999.

     Benefits to policyholders were $4,962.5 million for 2000, a decrease of
$170.5 million, or 3.3%, from $5,133.0 million in 1999. Benefits to
policyholders in the prior year includes $243.6 million in the operations of
disposed businesses in 1999. The decrease was primarily due to recognizing a
$345.5 million pre-tax charge in the prior year for compensation of group
participating contractholders for assets transferred in conjunction with the
formation of the corporate account, a $208.6 million pre-tax charge in the prior
year for our exposure to losses under our Workers' Compensation reinsurance
programs, including Unicover Managers, Inc., that was associated with the group
business we sold in a prior year, a $140.2 million pre-tax charge in the prior
year in connection with the class action settlement involving individual life
insurance policies sold from 1979 through 1996, and $61.7 million in reserves
established in the prior year for incurred but unreported deaths identified as a
result of the policyholder demutualization mailing. Partially offsetting these
decreases in benefits to policyholders from the prior year were a $358.0 million
increase in the Guaranteed and Structured Financial Products Segment primarily
due to increased single premium annuity business, a $200.2 million increase
primarily attributable to the acquisition of Aetna Canada which is included in
our results for a full year in 2000, and a $72.0 million increase due to our
Fixed Annuities business on the sales of single premium immediate annuities. In
addition, we experienced an increase of $88.1 million increase in benefits on
individual long-term care insurance products, primarily due to the acquisition
of the long-term care business of Fortis, Inc. as of March 1, 2000.


     Other operating costs and expenses were $1,497.7 million for 2000, an
increase of $113.3 million, or 8.2%, from $1,384.4 million for 1999. The
increase was primarily due to the acquisition of Aetna Canada as of October 1,
1999 and the long-term care business of Fortis, Inc. as of March 1, 2000. In
addition, other operating costs increased in the Investment Management Segment
primarily resulting from the $15.7 million in incentive compensation payments
related to incentive fees on a timber management contract and $9.1 million in
performance fees paid for the management of the mezzanine fund.

     Amortization of deferred policy acquisition costs was $260.3 million for
2000, a increase of $96.1 million, or 58.5%, from $164.2 million for 1999. The
increase was primarily due to higher amortization expense on non-traditional
life insurance products resulting from higher current net investment income
increasing margins in the business during 2000 which increased amortization of
deferred acquisition costs. In addition, amortization expense increased in the
Variable Annuity business, primarily resulting from poor separate account
performance during 2000, which resulted in revised projections of estimated
gross profits based upon decreases in estimated future margins thus increasing
current amortization.

     Dividends to policyholders were $564.4 million in 2000, an increase of
$62.8 million, or 12.5%, from $501.6 million in 1999. The increase primarily
resulted from normal growth in dividends on traditional life insurance products.

     Demutualization expenses were $10.6 million for 2000, a decrease of $85.6
million, or 89.0%, from $96.2 million for 1999. The decrease was related to the
extensive preparations for the demutualization occurring in 1999. These expenses
include printing and mailing fees, fees of the regulators' advisors and our
financial, legal, actuarial and accounting advisors. While demutualization
expenses were previously
<PAGE>

classified as an extraordinary item in our financial results, recent accounting
literature now requires demutualization expenses be classified as a single line
item within income from continuing operations.


     Income taxes were $344.4 million in 2000, compared to $97.9 million for
1999. Income taxes in the prior year includes $113.8 million in income tax
credits due to the loss from operations of disposed businesses in 1999. Our
effective tax rate was 28.8% in 2000, as compared to 37.7% in 1999, taking into
account the prior year income tax credit generated from operations of disposed
businesses . We had been subject to the surplus tax (add-on tax) imposed on
mutual life insurance companies which disallows a portion of mutual life
insurance company's policyholder dividends as a deduction from taxable income.
As a stock company, we are no longer subject to the surplus tax.


     Minority interest of $10.6 million in 2000 increased from $1.6 million in
1999 primarily due to the sale of a portion of an affiliate to our parent
company.

Year Ended December 31, 1999 Compared to Year Ended December 31, 1998


     Consolidated income before income taxes, minority interest and cumulative
effect of accounting change of $259.9 million for the year ended December 31,
1999 decreased by $357.4 million, or 57.9%, as compared to consolidated income
before income taxes, minority interest and cumulative effect of accounting
change of $617.3 million for the year ended December 31, 1998. The decrease was
primarily attributable to decreases in income before income taxes and cumulative
effect of accounting change of $208.8 million in the Guaranteed and Structured
Financial Products Segment, $193.6 million in the Corporate and Other Segment,
and $45.2 million in the Asset Gathering Segment. These decreases were offset by
increases of $50.7 million in the Protection Segment and $39.5 million in the
Investment Management Segment. The decrease in the Guaranteed and Structured
Financial Products Segment was primarily due to recognizing a $345.5 million
pre-tax charge for compensation of group participating contractholders for
assets transferred in conjunction with the formation of the corporate account.
The decrease in the Corporate and Other Segment was primarily due to a $208.6
million pre-tax charge for our exposure to losses under our Workers'
Compensation reinsurance programs, including Unicover Managers, Inc., that was
associated with the group business we sold in 1997 partially offset by lower
pre-tax charges in connection with the class action settlement of $140.2 million
in 1999 compared to $230.8 million in 1998. The decrease in the Asset Gathering
Segment was primarily due to lower investment advisory fees earned from our
mutual fund operations. The increase in the Protection Segment was primarily due
to higher realized investment gains on real estate, higher fee income on
variable life insurance products, and favorable claims experience on long-term
care insurance products. The increase in the Investment Management Segment was
due primarily to higher investment advisory fees resulting from growth in assets
under management and higher realized investment gains on sales of mortgage
loans.

     Premium revenue was $2,411.3 million for 1999, an increase of $302.3
million, or 14.3%, from $2,109.0 million in 1998. The increase was primarily due
to an increase in premiums in the Guaranteed and Structured Financial Products
Segment, including the sale of one significant single premium annuity contract
during the period, and a $21.6 million increase, or 13.9%, in the Protection
Segment for premiums on individual long-term care insurance products.


     Universal life and investment-type product charges were $703.3 million for
1999, an increase of $106.3 million, or 17.8%, from $597.0 million in 1998.
These product charges consist primarily of cost of insurance fees on our
variable life insurance and universal life insurance products and mortality and
expense fees on our variable annuity products. The increase was primarily due to
higher cost of insurance fees resulting from growth in the average amount of
variable life insurance in force and higher average variable annuity separate
account liabilities. Investment-type product charges in the Guaranteed and
Structured Financial Products Segment also increased as a result of higher sales
of single premium annuity contracts and separate account GICs.


     Net investment income was $3,568.5 million for 1999, an increase of $240.5
million, or 7.2%, from $3,328.0 million in 1998. The increase was primarily the
result of higher average invested assets, which increased $3,584.8 million, or
8.0%, to $46,895.1 million in 1999, as compared to $43,310.3 million in

<PAGE>

1998. The net yield on average invested assets was 7.62% for 1999 and 1998.
Yields were positively impacted in 1999 from lower investment expenses offset by
the general decline in market interest rates.

     Net realized gains on investments were $175.2 million for 1999, an increase
of $69.1 million from $106.1 million in 1998. The increase was primarily the
result of increased gains on sales of real estate relating to the program
initiated in 1998 to sell more than 150 of the properties in our real estate
portfolio in order to take advantage of the strong real estate market and reduce
our general account investment in real estate.

     Realized gains on sales of real estate increased $66.6 million to $115.1
million in 1999 from $48.5 million in 1998.

     Investment management revenues, commissions, and other fees were $680.9
million, an increase of $21.2 million, or 3.2%, from $659.7 million in 1998. The
increase was the result of higher institutional investment advisory fees which
increased $18.3 million primarily due to growth in average institutional assets
under management at Independence Investment Advisors, our investment advisory
subsidiary. Average institutional assets under management increased 13.5% to
$40,554.7 million in 1999. Underwriting and distribution fees increased $12.2
million primarily resulting from our acquisition of the Essex Corporation, a
distributor of annuities and mutual funds through banks, in January 1999.

     Partially offsetting these increases, mutual fund advisory fees declined
$8.1 million in 1999, primarily due to lower average assets under management
along with a slight decline in the average investment advisory fee rate, as
fixed income assets, which bear a lower advisory fee than equity assets,
increased as a percentage of total assets.

     Other revenue was $0.1 million in 1999, a decrease of $10.2 million, or
99.0%, from $10.3 million reported in 1998.


     Benefits to policyholders were $5,133.0 million for 1999, an increase of
$1,050.4 million, or 25.7%, from $4,082.6 million in 1998. The increase was
primarily due to higher sales of single premium annuity contracts, a $345.5
million increase in benefits related to the compensation of group participating
contractholders for assets transferred in conjunction with the formation of the
corporate account, a $140.7 million increase in benefits on traditional life
insurance products due to higher death benefits, including $61.7 million of
reserves established for incurred but unreported deaths identified as a result
of the policyholder demutualization mailing, a $113.2 million increase in
benefits related to the settlement of a class action lawsuit involving
individual life insurance policies sold from 1979 through 1996 and a $31.0
million increase in benefits on individual long-term care insurance products,
resulting from higher sales.


     Other operating costs and expenses were $1,384.4 million for 1999, an
increase of $26.6 million, or 2.0%, from $1,357.8 million for 1998. The increase
was primarily due to $26.3 million in restructuring charges during 1999 and
increased interest and related expenses of $9.0 million in the Investment
Management Segment primarily resulting from the formation of a collateralized
bond obligation during the second quarter of 1998. These increases were
partially offset by a $20.9 million decrease in interest expense on prior year
taxes.

     Amortization of deferred policy acquisition costs was $164.2 million for
1999, a decrease of $97.0 million, or 37.1% from $261.2 million for 1998. The
decrease was primarily due to lower amortization expense on non-traditional life
insurance products resulting from revised projections of estimated gross profits
based upon increases in estimated future interest margins and mortality margins.
In addition, amortization expense on traditional life insurance products
decreased due to lower profits, primarily resulting from $61.7 million of
previously unreported deaths identified as a result of the policyholder
demutualization mailing.

     Dividends to policyholders were $501.6 million in 1999, an increase of
$28.4 million, or 6.0%, from $473.2 million in 1998. The increase primarily
resulted from normal growth in dividends on traditional life insurance products.
<PAGE>

     Demutualization expenses were $96.2 million for 1999, an increase of $78.2
million, or 434.4%, from $18.0 million for 1998. The increase was related to the
extensive preparations in 1999 for the demutualization. These expenses include
printing and mailing fees, fees of the regulators' advisors and our financial,
legal, actuarial and accounting advisors. While demutualization expenses were
previously classified as an extraordinary item in our financial results, recent
accounting literature now requires demutualization expenses be classified as a
single line item within income from continuing operations.


     Income taxes were $97.9 million in 1999, compared to $174.1 million for
1998. Our effective tax rate before the surplus tax was 29.1% in 1999, as
compared to 30.7% in 1998. We had been subject to the surplus tax (add-on tax)
imposed on mutual life insurance companies which disallows a portion of mutual
life insurance company's policyholder dividends as a deduction from taxable
income. As a stock company, we are no longer subject to the surplus tax.


     Minority interest of $1.6 million was consistent with the prior year
balance of $1.1 million.

     Cumulative effect of accounting change, net of tax was $9.7 million in
1999. During 1999, we adopted Statement of Position 98-5, Reporting the Costs of
Start-up Activities, which requires that start-up costs capitalized prior to
January 1, 1999 be written off and any future start-up costs be expensed as
incurred. We wrote off the unamortized balance of capitalized start-up costs
related to our closed-end mutual funds in 1999.

Results of Operations by Segment

     We evaluate segment performance and base management's incentives on segment
after-tax operating income, which excludes the effect of net realized investment
gains and losses and unusual or non-recurring events and transactions. Segment
after-tax operating income is determined by adjusting GAAP net income for net
realized investment gains and losses, and certain other items which we believe
are not indicative of overall operating trends. While these items may be
significant components in understanding and assessing our consolidated financial
performance, we believe that the presentation of segment after-tax operating
income enhances the understanding of our results of operations by highlighting
net income attributable to the normal, recurring operations of the business.
However, segment after-tax operating income is not a substitute for net income
determined in accordance with GAAP.

     A discussion of the adjustments to GAAP reported income, many of which
affect each operating segment, follows. A reconciliation of segment after-tax
operating income, as adjusted, to GAAP reported net income precedes each segment
discussion.

<TABLE>
<CAPTION>
                                                                 For the Year Ended December 31,
                                                                --------------------------------
                                                                 2000         1999         1998
                                                                ------       ------       ------
Segment Data: (1)                                                        (in millions)
<S>                                                             <C>          <C>          <C>
Segment after-tax operating income:
  Protection Segment .....................................      $252.2       $188.7       $166.1
  Asset Gathering Segment ................................       128.8        115.1        111.1
                                                                ------       ------       ------
     Total Retail ........................................       381.0        303.8        277.2
  Guaranteed and Structured Financial Products Segment ...       211.6        201.7        145.7
  Investment Management Segment ..........................        46.8         37.3         15.4
                                                                ------       ------       ------
     Total Institutional .................................       258.4        239.0        161.1
  Corporate and Other Segment ............................       104.0         67.8         56.3
                                                                ------       ------       ------
  Total segment income ...................................       743.4        610.6        494.6

After-tax adjustments: (1)
  Realized investment gains, net (1) .....................        64.5        120.0         93.7
  Class action lawsuit ...................................          --        (91.1)      (150.0)
  Workers' compensation reinsurance reserve ..............          --       (133.7)          --
  Restructuring charges ..................................       (12.0)       (17.0)          --
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
                                                                 For the Year Ended December 31,
                                                                --------------------------------
                                                                 2000         1999         1998
                                                                ------       ------       ------
Segment Data: (1)                                                        (in millions)
<S>                                                             <C>          <C>          <C>
  Corporate account asset transfer .......................         5.7       (205.8)          --
  Demutualization expenses ...............................         2.5        (93.6)       (11.7)
  Other demutualization related costs ....................       (10.0)        (6.8)          --
  Surplus tax ............................................        46.0        (22.2)        15.5
                                                                ------       ------       ------
  Total after-tax adjustments ............................        96.7       (450.2)       (52.5)
                                                                ------       ------       ------

GAAP Reported:
  Income before cumulative effect ........................       840.1        160.4        442.1
      of accounting change
  Cumulative effect of accounting change .................          --         (9.7)          --
                                                                ------       ------       ------
  Net income .............................................      $840.1       $150.7       $442.1
                                                                ======       ======       ======
</TABLE>

(1)  See "Adjustments to GAAP Reported Net Income" included in this Management's
     Discussion and Analysis.

Adjustments to GAAP Reported Net Income

     Our GAAP reported net income was significantly affected by net realized
investment gains and losses and unusual or non-recurring events and transactions
presented above as after-tax adjustments. A description of these adjustments
follows.

     In all periods, net realized investment gains and losses, except for gains
and losses from mortgage securitizations and investments backing our short-term
funding agreements, have been excluded from segment after-tax operating income
due to their volatility between periods and because such data are often excluded
by analysts and investors when evaluating the overall financial performance of
insurers. The volatility between periods can be impacted by fluctuations in the
market, as well as by changes in the volume of activity which can be influenced
by us and our investment decisions. Realized investment gains and losses from
mortgage securitizations and investments backing our short-term funding
agreements were not excluded from segment after-tax operating income because we
view the related gains and losses as an integral part of the core business of
those operations.

     Net realized investment gains have been reduced by: (1) amortization of
deferred policy acquisition costs to the extent that such amortization results
from realized gains and losses and (2) the portion of realized gains and losses
credited to certain participating contractholder accounts. We believe presenting
realized investment gains and losses in this format provides information useful
in evaluating our operating performance. This presentation may not be comparable
to presentations made by other insurers. Summarized below is a reconciliation of
(a) net realized investment gains per the consolidated financial statements and
(b) the adjustment made for net realized investment gains to calculate segment
after-tax operating income for the years ended December 31, 2000, 1999 and 1998.

<TABLE>
<CAPTION>
                                                            For the Year Ended December 31,
                                                           --------------------------------
                                                            2000         1999         1998
                                                           ------       ------       ------
                                                                    (in millions)
<S>                                                        <C>          <C>          <C>
Net realized investment gains .......................      $ 89.9       $261.0       $226.4
Add capitalization/less (amortization) of
   deferred policy acquisition costs related to
   net realized investment gains ....................         0.9        (50.5)       (41.2)
Less amounts credited to participating pension
   contractholder accounts ..........................        (6.9)       (35.3)       (79.1)
                                                           ------       ------       ------
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
                                                            For the Year Ended December 31,
                                                           --------------------------------
                                                            2000         1999         1998
                                                           ------       ------       ------
                                                                    (in millions)
<S>                                                        <C>          <C>          <C>
Net realized investment gains, net of related
   amortization of deferred policy acquisition
   costs and amounts credited to participating
   pension contractholders per consolidated
   financial statements .............................        83.9        175.2        106.1
Less realized investment (losses) attributable
   to mortgage securitizations and investments
   backing short-term funding agreements ............         3.2        (27.7)       (42.1)
Net realized investment gains in the closed block ...        11.7           --           --
Less gain on sale of business .......................          --        (33.0)          --
                                                           ------       ------       ------
Realized investment gains, net - pre-tax ............        92.4        169.9        148.2
   adjustment to calculate segment operating
   income
Less income tax effect ..............................       (27.9)       (49.9)       (54.5)
                                                           ------       ------       ------
Realized investment gains (losses), net -
   after-tax adjustment to calculate segment
   operating income .................................      $ 64.5       $120.0       $ 93.7
                                                           ======       ======       ======
</TABLE>

     During 2000 and 1999, we incurred restructuring charges to reduce costs and
increase future operating efficiency by consolidating portions of our
operations. For additional information regarding restructuring charges see Note
1 to our audited consolidated financial statements, included elsewhere in this
Form 10-K.

     During 2000 and 1999, we recorded amounts for the transfer of certain
assets from the Guaranteed and Structured Financial Products Segment to the
corporate account. These assets included investments in certain subsidiaries and
the home office real estate complex (collectively referred to as "corporate
purpose assets"). Certain group contracts have participating features, under
which crediting rates and dividends are affected directly by portfolio earnings.
Certain participating contractholders participate in contract experience related
to net investment income and realized capital gains and losses in the general
account. These participating contractholders were compensated for transferred
assets based on the fair value of the assets transferred. The difference between
the fair value and carrying value of the assets transferred were credited to
affected participating contractholders through the crediting rates and dividends
on their contracts.

     In December 2000, the American Institute of Certified Public Accountants
(AICPA) issued Statement of Position (SOP) 00-3, "Accounting by Insurance
Enterprises for Demutualizations and Formations of Mutual Insurance Holding
Companies and Certain Long-Duration Participating Contracts." The SOP, which was
adopted with respect to accounting for demutualization expenses by the Company
on December 15, 2000, requires that demutualization related expenses be
classified as a single line item within income from continuing operations and
should not be classified as an extraordinary item. The adoption of SOP 00-3
resulted in the reclassification of demutualization expenses previously recorded
as an extraordinary item in 1999 and 1998 of $93.6 million and $11.7 million,
respectively (net of tax of $2.6 million and $6.3 million, respectively). In
addition, the Company recognized $6.8 million (net of tax of $3.8 million) of
demutualization expenses for the year ended December 31, 2000. The Company
considers demutualization expenses to be an adjustment to GAAP recorded net
income.

     During 2000 and 1999, we incurred demutualization related expenses to
improve our financial analysis and financial reporting abilities. These charges
primarily included consulting fees and planning and expense management costs.

     During 1997, we entered into a court approved settlement relating to a
class action lawsuit involving individual life insurance policies sold from 1979
through 1996, as specified in the Legal Proceedings section of this Form 10-K.
In entering into the settlement, we specifically denied any wrongdoing. The
reserve held in connection with the settlement to provide for relief to class
members and for legal and administrative costs associated with the settlement
amounted to $172.8 million and $496.6 million at December 31, 2000 and 1999,
respectively. Given the uncertainties associated with estimating the reserve, it
is reasonably possible that the final cost of the settlement could differ
materially from the amounts presently provided for by the Company. The Company
will continue to update its estimate of the final cost of the settlement as the
claims are processed and more specific information is developed, particularly as
the actual cost of the claims subject to alternative dispute resolution becomes
available. However, based on
<PAGE>

information available at this time, and the uncertainties associated with the
final claim processing and alternative dispute resolution, the range of any
additional costs related to the settlement cannot be estimated with precision.

     Through our group health insurance operations, which we sold in 1997, we
entered into a number of reinsurance arrangements in respect of personal
accident insurance and the occupational accident component of workers
compensation insurance, a portion of which was originated through a pool managed
by Unicover Managers, Inc. Under these arrangements, we both assumed risks as a
reinsurer, and also passed 95% of these risks on to other companies. This
business had originally been reinsured by a number of different companies, and
has become the subject of widespread disputes. During the fourth quarter of 1999
and early 2000, we received additional information about our exposure to losses
under the various reinsurance programs. As a result of this additional
information and in connection with global settlement discussions initiated in
late 1999 with other parties involved in the reinsurance programs, our present
best estimate of our remaining loss exposure to this issue is $133.7 million,
after-tax, which we recognized in 1999. The Company believes that any exposure
to loss from this issue, in addition to amounts already provided for as of
December 31, 2000, would not be material.

     We had been subject to the surplus tax imposed on mutual life insurance
companies which disallows a portion of mutual life insurance company's
policyholder dividends as a deduction from taxable income. As a stock company,
we are no longer subject to surplus tax and have excluded the surplus tax from
segment after-tax operating income in all periods.

Amortization of Goodwill

     The excess of cost over the fair value of the net assets of businesses
acquired was $228.6 million and $155.3 million at December 31, 2000 and 1999,
respectively. Goodwill is amortized on systematic basis over periods not
exceeding 40 years, which correspond with the benefits estimated to be derived
from the acquisitions. Accumulated amortization was $63.6 million and $43.3
million at December 31, 2000 and 1999, respectively. Amortization expense
included in other operating costs and expenses was $20.3 million, $9.7 million,
and $9.1 million in 2000, 1999 and 1998, respectively. The Company reevaluates
the recoverability of recorded goodwill based on the undiscounted cash flows of
the related business whenever significant events or changes indicate an
impairment may exist. If the undiscounted cash flows do not support the amount
recorded, an impairment is recognized by a charge to current operations to
reduce the carrying value of the goodwill based on the expected discounted cash
flows of the related business. The following table shows the amount of goodwill
amortization for each applicable segment:

<TABLE>
<CAPTION>
                                                              For the Year Ended December 31,
                                                              -------------------------------
                                                                 2000       1999       1998
                                                                -----      -----      -----
                                                                       (in millions)
<S>                                                             <C>        <C>        <C>
Amortization of Goodwill:
  Protection Segment .....................................      $ 3.8      $  --      $  --
  Asset Gathering Segment ................................        6.8        6.8        6.5
                                                                -----      -----      -----
     Total Retail ........................................       10.6        6.8        6.5
  Guaranteed and Structured Financial Products Segment ...         --         --         --
  Investment Management Segment ..........................        1.1        1.1        1.1
                                                                -----      -----      -----
     Total Institutional .................................        1.1        1.1        1.1
  Corporate and Other Segment ............................        8.6        1.8        1.5
                                                                -----      -----      -----
  Total goodwill amortization expense ....................      $20.3      $ 9.7      $ 9.1
                                                                =====      =====      =====
</TABLE>

Segment Allocations

     We allocate surplus to the segments in amounts sufficient to support the
associated liabilities of each segment and to maintain capital levels consistent
with the overall business segment and corporate strategies. Allocations of net
investment income are based on the amount of assets owned by each segment.
<PAGE>

Other costs and operating expenses are allocated to each segment based on a
review of the nature of such costs, cost allocations utilizing time studies, and
other allocation methodologies.

Retail-Protection Segment

     The following table presents certain summary financial data relating to
the Protection Segment for the periods indicated.


<TABLE>
<CAPTION>
                                                                       For the Year Ended
                                                                           December 31,
                                                              --------------------------------------
                                                                2000           1999           1998
                                                              --------       --------       --------
                                                                          (in millions)
<S>                                                           <C>            <C>            <C>
Operating Results:
Revenues
  Premiums .............................................      $1,295.6       $1,291.0       $1,262.5
  Universal life and investment-type product
    charges ............................................         388.3          361.1          333.3
  Net investment income (1) ............................       1,196.4        1,101.9        1,061.2
  Other revenue ........................................          (7.1)           2.9           10.6
                                                              --------       --------       --------
    Total revenues (1) .................................       2,873.2        2,756.9        2,667.6

Benefits and expenses
   Benefits to policyholders ...........................       1,503.5        1,595.0        1,424.4
   Other operating costs and expenses ..................         383.8          381.0          418.3
   Amortization of deferred policy acquisition
    costs, excluding amounts related to net realized
    investment gains ...................................         132.0           69.2          165.4
 Dividends to policyholders ............................         475.6          452.0          422.8
                                                              --------       --------       --------
    Total benefits and expenses ........................       2,494.9        2,497.2        2,430.9

Segment pre-tax operating income (2) ...................         378.3          259.7          236.7

Income taxes ...........................................         126.1           71.0           70.6
                                                              --------       --------       --------

Segment after-tax operating income (2)  ................         252.2          188.7          166.1

After-tax adjustments:(2)
   Realized investment (losses) gains, net .............         (11.5)         108.6           49.0
   Restructuring charges ...............................          (6.7)          (8.6)            --
   Demutualization expenses ............................           1.6          (61.3)          (7.9)
   Other demutualization related costs .................          (6.8)          (4.6)            --
   Surplus tax .........................................          20.8          (12.5)          11.7
                                                              --------       --------       --------
     Total after-tax adjustments .......................          (2.6)          21.6           52.8
                                                              --------       --------       --------
GAAP Reported:
Net income .............................................      $  249.6       $  210.3       $  218.9
                                                              ========       ========       ========
Amortization of goodwill, net of tax ...................           2.2             --             --
                                                              --------       --------       --------
Net income before amortization of goodwill .............      $  251.8       $  210.3       $  218.9
                                                              ========       ========       ========
Other Data:
Segment after-tax operating income (loss)
  Non-traditional life (variable life  and universal
     life) .............................................      $   97.0       $   92.8      $   74.6
  Traditional life .....................................         110.5           68.2          73.0
  Individual long-term care ............................          39.9           25.9          15.7
  Group long-term care .................................           6.7            0.7           2.3
  Other ................................................          (1.9)           1.1           0.5
</TABLE>

<PAGE>


<TABLE>
<CAPTION>
                                                                       For the Year Ended
                                                                           December 31,
                                                              --------------------------------------
                                                                2000           1999           1998
                                                              --------       --------       --------
                                                                          (in millions)
<S>                                                           <C>            <C>            <C>
Statutory premiums (3)
  Variable life ........................................      $  922.0       $  829.8      $  810.8
  Universal life (4) ...................................         173.5          117.9         436.8
  Traditional life .....................................         965.5        1,043.6       1,051.3
  Individual long-term care ............................         277.3          177.3         152.6
  Group long-term care .................................          14.7           18.9          31.0
</TABLE>


(1)  The consolidated statement of income includes in revenues the contribution
     from the closed block of $124.1 million for the period ended December 31,
     2000. The contribution from the closed block includes closed block revenues
     of $1,467.7 million and closed block benefits and expenses of $1,343.6
     million for the period ended December 31, 2000. For purposes of this
     Management's Discussion and Analysis the impact of the closed block is
     represented within each line of operations of the Protection Segment. For
     details of closed block activity as of and for the period ended December
     31, 2000 see Note 6 -- Closed Block to the audited consolidated financial
     statements as of the same time period.

(2)  See "Adjustments to GAAP Reported Net Income" included in this Management's
     Discussion and Analysis.

(3)  Statutory data have been derived from the annual statements of John Hancock
     Life Insurance Company (formerly John Hancock Mutual Life Insurance
     Company), John Hancock Variable Life Insurance Company and Investors
     Partner Life (formerly John Hancock Life Insurance Company of America) as
     filed with insurance regulatory authorities and prepared in accordance with
     statutory accounting practices.

(4)  Includes bank owned life insurance premiums of $340.0 million for the year
     ended December 31, 1998, respectively. There were no bank owned life
     insurance premiums for the years ended December 31, 1999 and 2000,
     respectively.

Year Ended December 31, 2000 Compared to Year Ended December 31, 1999


     Segment after-tax operating income was $252.2 million in 2000, an increase
of $63.5 million, or 33.6%, from $188.7 million in 1999. Non-traditional life
insurance segment after-tax operating income increased $4.2 million, or 4.5%,
primarily due to an increase in net investment income resulting from higher
yields on higher net average invested assets. Traditional life insurance segment
after-tax operating income increased $42.3 million, or 62.0%, primarily
resulting from higher net investment income due to higher portfolio rates, lower
operating expenses, and not repeating a $29.3 million charge, net of deferred
acquisition costs, taken in 1999 for previously unreported claims associated
with the demutualization. Individual long-term care insurance segment after-tax
operating income increased $14.0 million, or 54.1%, resulting from an increase
in net investment income due to the addition of the Fortis business and growth
in average net invested assets. Group long-term care insurance segment after-tax
operating income increased by $6.0 million.

     Total revenues were $2,873.2 million in 2000, an increase of $116.3
million, or 4.2%, from $2,756.9 million in 1999. Premiums increased $4.6
million, or 0.4%, primarily due to an increase in individual long-term care
insurance premiums from both additional premiums assumed relating to the
acquisition of Fortis and continued growth in the business. Partially offsetting
this increase was a decline in traditional life insurance premiums. Universal
life and investment-type product charges consist primarily of cost of insurance
fees and separate account fees and were $388.3 million in 2000, an increase of
$27.2 million, or 7.5%, from $361.1 million in 1999. The increase was primarily
due to growth in average account values. Net investment income increased $94.5
million, or 8.6%, primarily due to increases in average net invested assets and
portfolio yields.

<PAGE>


     Total benefits and expenses were $2,494.9 million in 2000, an decrease of
$2.3 million, or 0.1%, from $2,497.2 million in 1999. Benefits to policyholders
decreased $91.5 million, or 5.7%, due to several offsetting items, including a
decrease of $193.8 million in benefits to policyholders on traditional life
insurance products due to improved mortality, and not repeating the prior year
$61.7 million higher benefits to policyholders for previously unreported death
claims identified as part of the demutualization. Offsetting this decrease was
an increase in benefits to policyholders in the individual long-term care
insurance business due to both the acquisition of Fortis and growth in the
business. Other increases in benefits to policyholders included a $20.7 million
increase on non-traditional life insurance products and an increase in group
long-term care insurance. Other operating costs and expenses increased $2.8
million, or 0.7%, to $383.8 million in 2000 from $381.0 million in 1999,
primarily due to an increase of $18.7 million in operating expenses associated
with the individual long-term care business due to the acquisition of Fortis and
growth in the business. Amortization of deferred policy acquisition costs of
$132.0 million in 2000 increased $62.8 million, or 90.7%, from $69.2 million in
1999. The increase resulted from lower amortization of deferred acquisition
costs in the prior year for Traditional life products due to revised projections
of estimated gross profits based on the recording of additional unreported
claims to the demutualization. In addition, amortization expense on
Non-Traditional life products increased due to revised projections of estimated
gross profits based upon changes in estimated future interest margins. Dividends
to policyholders increased $23.6 million, or 5.2%, primarily due to aging of the
in-force business on traditional life insurance products. The segment's
effective tax rate increased to 33.3% in 2000 from 27.3% in 1999, primarily due
to the transfer of tax-preferenced assets to the Corporate and Other Segment in
the fourth quarter of 1999.


     Amortization of goodwill in 2000 relates to the acquisition of the
individual long-term care business from Fortis.

Year Ended December 31, 1999 Compared to Year Ended December 31, 1998


     Segment after-tax operating income was $188.7 million in 1999, an increase
of $22.6 million, or 13.6%, from $166.1 million in 1998. Non-traditional life
insurance segment after-tax operating income increased $18.2 million, or 24.4%,
primarily due to an increase in universal life and investment-type product
charges due to growth in variable life insurance in-force. Traditional life
insurance segment after-tax operating income decreased $4.8 million, or 6.6%,
primarily resulting from higher death benefits and a $29.3 million charge net of
deferred acquisition costs for the incurred but not reported reserve associated
with the demutualization, partially offset by a decrease in interest expense on
prior year taxes. Individual long-term care insurance segment after-tax
operating income increased $12.5 million, or 93.3%, primarily due to higher net
investment income resulting from an increase in invested assets, partially
offset by unfavorable persistency. Group long-term care insurance segment
after-tax operating income decreased by $3.9 million, or 84.8%.


     Total revenues were $2,756.9 million in 1999, an increase of $89.3 million,
or 3.3%, from $2,667.6 million in 1998. Premiums increased $28.5 million, or
2.2%, primarily due to an increase in individual long-term care insurance
premiums. Universal life and investment-type product charges consist primarily
of cost of insurance fees and separate account fees and were $361.1 million in
1999, an increase of $27.8 million, or 8.3%, from $333.3 million in 1998. The
increase was primarily due to higher cost of insurance fees resulting from
growth in the average amount of variable life insurance in-force, which
increased 10.7% to $54,622.0 million in 1999 from $49,364.1 million in 1998. Net
investment income increased $40.7 million, or 3.8%, primarily due to an increase
in the segment's average invested assets and lower investment expenses.


     Total benefits and expenses were $2,497.2 million in 1999, an increase of
$66.3 million, or 2.7%, from $2,430.9 million in 1998. Benefits to policyholders
increased $170.6 million, or 12.0%, primarily due to a $140.7 million increase
in benefits on traditional life insurance products due to higher death benefits,
including $61.7 million of benefits from previously unreported deaths identified
as a result of the policyholder demutualization mailing, and a $31.0 million
increase in benefits on individual long-term care insurance products, due to
higher sales. Other operating costs and expenses decreased $37.3 million, or
8.9%, to $381.0 million in 1999 from $418.3 million in 1998, primarily due to a
decrease in interest

<PAGE>

expense on prior year taxes. Amortization of deferred policy acquisition costs
of $69.2 million in 1999 decreased $96.2 million, or 58.2%, from $165.4 million
in 1998. The decrease was primarily due to lower amortization expense on
non-traditional life insurance products resulting from revised projections of
estimated gross profits based upon increases in estimated future interest
margins and mortality margins. In addition, amortization expense on traditional
life insurance products decreased due to lower profits, primarily resulting from
$61.7 million of previously unreported death claims identified as a result of
the policyholder demutualization mailing. Dividends to policyholders increased
$29.2 million, or 6.9%, primarily due to normal growth of dividends on
traditional life insurance products. The segment's effective tax rate declined
to 27.3% in 1999 from 29.8% in 1998, due to non-deductible losses in 1998.

Retail-Asset Gathering Segment

     The following table presents certain summary financial data relating to the
Asset Gathering Segment for the periods indicated.

<TABLE>
<CAPTION>
                                                                 For the Year Ended December 31,
                                                             --------------------------------------
                                                               2000           1999           1998
                                                             --------       --------       --------
                                                                         (in millions)
<S>                                                          <C>            <C>            <C>
Operating Results:
Revenues
  Premiums ............................................      $   63.4       $   17.2       $   19.8
  Investment-type product charges .....................         138.3          120.6           99.9
  Net investment income ...............................         445.8          388.6          378.0
  Investment management revenues, commissions, and
   other fees .........................................         547.1          528.8          516.8
  Other revenue .......................................           1.3            2.1            0.8
                                                             --------       --------       --------
    Total revenues ....................................       1,195.9        1,057.3        1,015.3

Benefits and expenses
  Benefits to policyholders ...........................         371.3          299.3          296.3
  Other operating costs and expenses ..................         552.9          529.3          504.9
  Amortization of deferred policy
    acquisition costs, excluding amounts related to
    net realized investment gains .....................          78.8           53.4           46.8
  Dividends to policyholders ..........................           0.1            0.1            0.1
                                                             --------       --------       --------
    Total benefits and expenses .......................       1,003.1          882.1          848.1

Segment pre-tax operating income (1) ..................         192.8          175.2          167.2

Income taxes ..........................................          64.0           60.1           56.1
                                                             --------       --------       --------

Segment after-tax operating income (1) ................         128.8          115.1          111.1

After-tax adjustments (1):
  Realized investment gains (losses), net .............          18.6           (6.9)          12.0
  Restructuring charges ...............................          (1.4)          (7.3)            --
  Demutualization expenses ............................           0.4          (13.0)          (1.8)
  Other demutualization related costs .................          (1.3)          (0.9)            --
  Surplus tax .........................................           0.6           (1.0)           0.3
                                                             --------       --------       --------
     Total after-tax adjustments ......................          16.9          (29.1)          10.5
                                                             --------       --------       --------
</TABLE>
<PAGE>


<TABLE>
<CAPTION>
                                                                 For the Year Ended December 31,
                                                             ---------------------------------------
                                                               2000           1999           1998
                                                             ---------      ---------      ---------
                                                                         (in millions)
<S>                                                          <C>            <C>            <C>
GAAP Reported:
  Income before cumulative effect
     of accounting change ............................           145.7           86.0          121.6
  Cumulative effect of accounting change .............              --           (9.6)            --
                                                             ---------      ---------      ---------
Net income ...........................................       $   145.7      $    76.4      $   121.6
                                                             =========      =========      =========
Amortization of goodwill, net of tax .................             4.5            4.4            4.2
                                                             ---------      ---------      ---------
Net income before amortization of goodwill ...........       $   150.2      $    80.8      $   125.8
                                                             =========      =========      =========

Other Data:
Segment after-tax operating income
    Annuity ..........................................       $    87.5      $    67.0      $    53.2
    Mutual funds .....................................            46.3           46.9           57.0
    Other ............................................            (5.0)           1.2            0.9
Annuity premiums and deposits (2)
    Fixed ............................................       $   854.3      $   621.0      $   360.6
    Variable .........................................         1,145.8          847.7          882.7
Mutual fund assets under management, end of year .....       $31,725.8      $32,696.6      $34,945.2
</TABLE>


----------
(1)  See "Adjustments to GAAP Reported Net Income" included in this Management's
     Discussion and Analysis.

(2)  Statutory data have been derived from the annual statements of John Hancock
     Life Insurance Company and John Hancock Variable Life Insurance Company, as
     filed with insurance regulatory authorities and prepared in accordance with
     statutory accounting practices.

Year Ended December 31, 2000 Compared to Year Ended December 31, 1999


     Segment after-tax operating income was $128.8 million in 2000, an increase
of $13.7 million, or 11.9%, from $115.1 million in 1999. Annuity segment
after-tax operating income increased $20.5 million, or 30.6%, primarily due to
an increase in investment spread and higher invested assets on fixed annuity
products, partially offset by a decrease in after-tax operating income in the
variable annuity business. Spreads increased 18 basis points to 2.28% for the
year ended December 31, 2000. Mutual fund segment after-tax operating income
decreased $0.6 million, or 1.3%, primarily due to an increase in operating
expenses, partially offset by a 1.0% increase in management advisory fees.

     Total revenues increased $138.6 million, or 13.1%, to $1,195.9 million in
2000 from $1,057.3 million in 1999. Premiums increased $46.2 million, or 268.6%,
due to increased sales of immediate fixed annuities with life contingencies.
Investment-type product charges increased $17.7 million, or 14.7%, due to growth
in average variable annuity liabilities, which increased 3.6% from 1999 and
increased fees earned on surrenders. Mortality and expense fees as a percentage
of average account balances increased 6 basis points in 2000. Net investment
income increased $57.2 million, or 14.7%, primarily due to a higher level of
invested assets backing fixed annuity products, and an increase in the average
investment yield on invested assets backing fixed annuity products. The average
investment yield on invested assets backing fixed annuity products increased 43
basis points from 1999, reflecting higher market interest rates on new fixed
income investments.


     Investment management revenues, commissions, and other fees increased $18.3
million, or 3.5%, to $547.1 million in 2000 from $528.8 million in 1999. Average
mutual fund assets under management decreased $742.8 million, or 2.2%, to
$32,605.2 million in 2000 from $33,348.0 million in 1999, primarily due to
market depreciation of $476.4 million and fees in 2000. During 2000 sales
increased $1,561.1 million and redemptions decreased $1,489.0 million compared
to the prior year. The result was net redemptions of $45.5 million for the year
ended December 31, 2000 compared to net redemptions of $3,095.6 million for the
year ended December 31, 1999, an improvement of $3,050.1 million. The
improvement in sales and redemptions is primarily due to the aggressive
marketing of both retail and
<PAGE>

institutional investment management services in addition to the launch of a
multi-sector fund in September 2000 and lower redemptions in the financial
sector funds and private managed accounts from the prior year. Investment
advisory fees decreased $6.4 million, or 3.1%, to $193.9 million in 2000 and
were 0.59% and 0.61% of average mutual fund assets under management for the
years ended December 31, 2000 and 1999, respectively. The decline in the
investment advisory fee rate occurred primarily because fixed income assets,
which bear a lower advisory fee than equity assets, increased as a percentage of
total assets. Underwriting and distribution fees increased $25.7 million, or
9.2%, to $304.6 million in 2000 primarily due to the increase in front-end load
mutual fund sales, and accordingly, commission revenue. The increase in
front-end load charges was partially offset by a decrease in deferred sales
charges due to improved retention of existing accounts.

     Shareholder service and other fees were $48.6 million in 2000 compared to
$49.6 million in 1999, primarily reflecting lower assets under management.

     Total benefits and expenses increased $121.0 million, or 13.7%, to $1,003.1
million in 2000 from $882.1 million in 1999. Benefits to policyholders increased
$72.0 million, or 24.1%, primarily due to an increase in benefits paid on
immediate annuities and interest credited on fixed annuity account balances. The
increase in benefits paid on immediate annuities is the result of increased
premiums in this business. Premiums on immediate annuities increased $45.0
million, or 316.9%, for the year ended December 31, 2000. Interest credited on
fixed annuity account balances increased primarily due to higher average fixed
annuity account balances of $5,211.6 million in 2000, as compared to $4,862.2
million in 1999. In addition to the increase in average fixed annuity account
balances, the average interest credited rate on fixed annuity account balances
increased to 5.83% in 2000 from 5.59% in 1999. The average interest credited
rate pattern is dependent upon the general trend of market interest rates,
frequency of credited rate resets and business mix. Deferred fixed annuities'
interest credited rates generally are reset annually on the policy anniversary.
Other operating costs and expenses increased $23.6 million, or 4.5%, to $552.9
million in 2000 from $529.3 million in 1999. The increase was primarily due to
an increase in the commission fees incurred in the mutual funds business,
primarily the result of increased front-end load charge mutual fund sales. In
addition, other operating costs and expenses increased due to increased
commission expense in Signator, partially offset by a decrease in the annuities
business. The increase in other operating costs were partially offset by
additional deferrals of acquisition expenses in the annuities business.
Amortization of deferred policy acquisition costs increased $25.4 million, or
47.6%, to $78.8 million in 2000 from $53.4 million in 1999, primarily due to
poor separate account performance and increased surrenders in the variable
annuities business which accelerated current amortization. The segment's
effective tax rate was 33.2% and 34.3% in 2000 and 1999, respectively.

     Amortization of goodwill increased $0.1 million in 2000 as compared to
1999. No new acquisitions were entered into by the Asset Gathering Segment in
2000.

Year Ended December 31, 1999 Compared to Year Ended December 31, 1998

     Segment after-tax operating income was $115.1 million in 1999, an increase
of $4.0 million, or 3.6%, from $111.1 million in 1998. Annuity segment after-tax
operating income increased $13.8 million, or 25.9%, primarily due to an increase
in variable annuity product charges, resulting from higher average account
balances, and higher investment spread on fixed annuity products, primarily
resulting from a decline in the average interest credited rate. Mutual fund
segment after-tax operating income decreased $10.1 million, or 17.7%, primarily
due to lower advisory fees as a result of lower assets under management and
exiting the New Mexico Capital Management business, partially offset by a
decline in operating expenses.

     Total revenues increased $42.0 million, or 4.1%, to $1,057.3 million in
1999 from $1,015.3 million in 1998. Premiums decreased $2.6 million, or 13.1%,
due to lower sales of immediate fixed annuities with life contingencies.
<PAGE>

     Investment-type product charges increased $20.7 million, or 20.7%, due to
growth in average variable annuity separate account liabilities, which increased
21.3% to $6,955.7 million in 1999 from $5,736.0 million in 1998. Mortality and
expense fees as a percentage of average account balances were 1.41% and 1.37%
for the years ended December 31, 1999 and 1998, respectively. Net investment
income increased $10.6 million or 2.8%, primarily due to a higher level of
invested assets backing fixed annuity products, partially offset by a decrease
in the average investment yield on invested assets backing fixed annuity
products. The average investment yield on invested assets backing fixed annuity
products was 7.77% in 1999 compared to 7.91% in 1998, reflecting lower market
interest rates on new fixed income investments.

     Investment management revenues, commissions, and other fees increased
$12.0 million, or 2.3%, to $528.8 million in 1999 from $516.8 million in 1998.
Average mutual fund assets under management decreased $882.0 million, or 2.6%,
to $33,348.0 million in 1999 from $34,230.0 million in 1998, primarily due to
net redemptions of $3,095.6 million in 1999 compared to net sales of $3,107.2
million in 1998. Investment advisory fees decreased $8.1 million, or 3.9%, to
$200.3 million in 1999 and were .60% and .62% of average mutual fund assets
under management for the years ended December 31, 1999 and 1998, respectively.
The decline in the investment advisory fee rate occurred primarily because fixed
income assets, which bear a lower advisory fee than equity assets, increased as
a percentage of total assets. Underwriting and distribution fees increased $12.2
million, or 4.6%, to $278.9 million in 1999 primarily due to our acquisition of
the Essex Corporation, a distributor of annuities and mutual funds through
banks, in January 1999. Shareholder service and other fees were $49.6 million in
1999 compared to $41.7 million in 1998, primarily reflecting the increase in
average number of customer accounts.

     Total benefits and expenses increased $34.0 million, or 4.0%, to $882.1
million in 1999 from $848.1 million in 1998. Benefits to policyholders increased
$3.0 million, or 1.0%, primarily due to an increase in interest credited on
fixed annuity account balances. Interest credited on fixed annuity account
balances increased primarily due to higher average fixed annuity account
balances of $4,862.2 million in 1999, as compared to $4,673.2 million in 1998.
The increase in average fixed annuity account balances was partially offset by a
decline in the average interest credited rate on fixed annuity account balances
to 5.59% in 1999 from 5.96% in 1998. The average interest credited rate pattern
is dependent upon the general trend of market interest rates, frequency of
credited rate resets and business mix. Deferred fixed annuities' interest
credited rates generally are reset annually on the policy anniversary. Other
operating costs and expenses increased $24.4 million, or 4.8%, to $529.3 million
in 1999 from $504.9 million in 1998. The increase was primarily due to our
acquisition of the Essex Corporation and higher amortization of mutual fund
deferred selling commissions, resulting from higher redemptions in 1999. These
increases were partially offset by a decrease in operating expenses related to
our mutual fund operations and annuities operations. Amortization of deferred
policy acquisition costs increased $6.6 million, or 14.1%, to $53.4 million in
1999 from $46.8 million in 1998, primarily due to higher profits. The segment's
effective tax rate was 34.3% and 33.6% in 1999 and 1998, respectively.

     Amortization of goodwill increased $0.2 million in 1999 as compared to 1998
due to the acquisition of the Essex Corporation in 1999.

Institutional-Guaranteed and Structured Financial Products Segment

     The following table presents certain summary financial data relating to the
Guaranteed and Structured Financial Products Segment for the periods indicated.
<PAGE>


<TABLE>
<CAPTION>
                                                                  For the Year Ended December 31,
                                                               ------------------------------------
                                                                 2000          1999          1998
                                                               --------      --------      --------
                                                                          (in millions)
<S>                                                            <C>           <C>           <C>
Operating Results:
Revenues
  Premiums .............................................       $  620.3      $  298.2      $  121.4
  Investment-type product charges ......................           64.7          79.3          71.4
  Net investment income ................................        1,741.9       1,681.3       1,576.3
  Realized investment losses, net (1) ..................             --         (31.2)        (37.7)
  Other expense ........................................          (17.5)         (5.8)         (0.2)
                                                               --------      --------      --------
    Total revenues .....................................        2,409.4       2,021.8       1,731.2

Benefits and expenses
  Benefits to policyholders, excluding amounts
   related to net realized investment gains credited
   to participating pension contractholders ............        1,972.4       1,614.4       1,411.5
  Other operating costs and expenses ...................           70.8          85.6          92.6
  Amortization of deferred policy
    acquisition costs ..................................            2.6           3.1           3.7
  Dividends to policyholders ...........................           43.5          25.9          20.8
                                                               --------      --------      --------
    Total benefits and expenses ........................        2,089.3       1,729.0       1,528.6

Segment pre-tax operating income (1) ...................          320.1         292.8         202.6

Income taxes ...........................................          108.5          91.1          56.9
                                                               --------      --------      --------

Segment after-tax operating income (1) .................          211.6         201.7         145.7

After-tax adjustments: (1)
  Realized investment (losses) gains, net ..............          (40.5)         58.4          17.2
  Restructuring charges ................................           (2.6)         (0.6)           --
  Corporate account asset transfer .....................            5.7        (205.8)           --
  Demutualization expenses .............................            0.4         (16.1)         (1.5)
  Other demutualization related costs ..................           (1.7)         (1.1)           --
  Surplus tax ..........................................            6.5          (6.5)          2.0
                                                               --------      --------      --------
     Total after-tax adjustments .......................          (32.2)       (171.7)         17.7
                                                               --------      --------      --------
GAAP Reported:
Net income .............................................       $  179.4      $   30.0      $  163.4
                                                               ========      ========      ========
Amortization of goodwill, net of tax ...................             --            --            --
                                                               --------      --------      --------
Net income before amortization
of goodwill ............................................       $  179.4      $   30.0      $  163.4
                                                               ========      ========      ========

Other Data:
Segment after-tax operating income
   Spread-based products
      GIC's and funding agreements .....................       $  133.1      $  131.5      $   83.7
      Single premium annuities .........................           45.0          32.5          33.8
   Fee-based products ..................................           33.5          37.7          28.2
Statutory premiums and deposits (2)
   Spread-based products
     GICs and funding agreements .......................        4,457.3       4,917.4       4,995.0
     Single premium annuities ..........................          741.6         451.8         111.8
   Fee-based products
     Participating contracts and
         conversion annuity contracts ..................          467.0         527.9         566.7
     Separate account GICs .............................           50.3         615.7         459.9
     Other separate account contracts ..................          242.6         272.7         145.6
</TABLE>


(1)  See "Adjustments to GAAP Reported Net Income" included in this
     Management's Discussion and Analysis.
<PAGE>

(2)  Statutory data has been derived from the annual statements, as filed with
     insurance regulatory authorities and prepared in accordance with statutory
     accounting practices.

Year Ended December 31, 2000 Compared to Year Ended December 31, 1999


     Segment after-tax operating income was $211.6 million in 2000, an increase
of $9.9 million, or 4.9% from $201.7 million in 1999. Spread-based products'
segment after-tax operating income increased $14.1 million, or 8.5%, to $178.1
million primarily due to higher investment spread as a result of an increase in
average invested assets backing spread-based products. Fee-based products'
segment after-tax operating income decreased $4.2 million, or 11.1%, to $33.5
million in 2000 from $37.7 million in 1999 primarily due to lower separate
account GIC fees partially offset by increased gains from non-participating
annuities.


     Total revenues increased $387.6 million, or 19.2%, to $2,409.4 million in
2000 from $2,021.8 million in 1999, primarily due to a $322.1 million increase
in premiums. During 2000, we sold two significant single premium annuity
contracts during the period. Investment-type product charges were $64.7 million
for 2000, a decrease of $14.6 million, or 18.4%, primarily due to lower general
account expense recoveries and slower separate account GIC sales in the current
year. Investment-type product charges were 0.56% and 0.65% of average fee-based
policy reserves in 2000 and 1999, respectively. The decrease primarily reflects
lower expense charges on participating contracts and the impact of slower sales
in the current year. Net investment income increased $60.6 million, or 3.6%, to
$1,741.9 million in 2000 compared to $1,681.3 million in 1999, primarily as a
result of a higher yield on average invested assets backing spread-based
products. Average invested assets backing spread-based products decreased $196.5
million, or 1.2%, to $16,879.8 million in 2000 from $17,076.3 million in 1999
reflecting the termination of the short-term funding agreements in 1999, largely
offset by asset growth in 2000. The average investment yield on these invested
assets increased to 8.64% in 2000 compared to 8.10% in 1999, reflecting the
reinvestment of proceeds from lower-yielding assets into relatively
higher-yielding securities. Realized investment losses associated with the
termination of the short-term funding agreement business in 1999 were not
repeated in 2000.


     Total benefits and expenses increased $360.3 million, or 20.8%, to $2,089.3
million in 2000 from $1,729.0 million in 1999. The increase was primarily due to
a $358.0 million increase in benefits to policyholders as a result of increased
sales of single premium annuity contracts. Benefits to policyholders also
includes interest credited on account balances for spread-based products, which
was $1,163.8 million in 2000, an increase of $45.5 million, or 4.2%, from
$1,118.3 million in 1999. Excluding interest credited in 1999 on short-term
funding agreements that were terminated in that year, the interest credited for
spread-based products increased $101.6 million, or 9.6%. The increase was
primarily due to an increase in average account balances for spread-based
products of $810.8 million, excluding short-term funding agreement balances from
1999, to $16,185.2 million in 2000 from $15,374.4 million in 1999 and an
increase in the average interest credited rate on account balances for
spread-based products, which was 7.18% in 2000 compared to 6.81% in 1999. The
increase in the average interest credited rate on account balances for
spread-based products was primarily due to the sale of GICs and funding
agreements with higher average interest credited rates. Other operating costs
and expenses were $70.8 million in 2000, a decrease of $14.8 million, or 17.3%,
from $85.6 million in 1999. The decrease was primarily due to lower deficiency
interest charges. Dividends of $43.5 million in 2000, increased $17.6 million,
or 68.0%, from $25.9 million in 1999, reflecting higher earnings on
participating contractholders' accounts. The segment's effective tax rate was
33.9% in 2000, as compared to 31.1% in 1999.


Year Ended December 31, 1999 Compared to Year Ended December 31, 1998


     Segment after-tax operating income was $201.7 million in 1999, an increase
of $56.0 million, or 38.4%, from $145.7 million in 1998. Spread-based products
segment after-tax operating income increased $46.9 million, or 39.9%, primarily
due to higher investment spread as a result of an increase in average invested
assets backing spread-based products and the receipt of $14.7 million of
interest on a defaulted fixed maturity investment. Fee-based products' segment
after-tax operating income increased $9.5 million

<PAGE>


to $37.7 million in 1999 from $28.2 million in 1998 primarily due to an increase
in separate account GIC fees and lower operating expenses.


     Total revenues increased $290.6 million, or 16.8%, to $2,021.8 million in
1999 from $1,731.2 million in 1998, primarily due to a $176.8 million increase
in premiums. During the second quarter of 1999, we sold a significant single
premium annuity contract which drove the increase in premiums. Investment-type
product charges were $79.3 million for 1999, an increase of $7.9 million, or
11.0%, primarily due to higher sales of single premium annuity contracts and
higher product charges from separate account GICs due to higher average account
balances resulting from sales. Investment-type product charges were .65% and
 .59% of average fee-based policy reserves in 1999 and 1998, respectively. The
increase primarily reflects higher expense charges on participating contracts
and the recognition of fee income upon the sale of single premium annuity
contracts and separate account GICs. Net investment income increased $105.0
million, or 6.7%, in 1999 compared to 1998, primarily as a result of a higher
level of average invested assets backing spread-based products. Average invested
assets backing spread-based products increased $1,924.5 million, or 12.7%, to
$17,076.3 million in 1999 from $15,151.8 million in 1998. The average investment
yield on these invested assets declined to 8.10% in 1999 compared to 8.18% in
1998, reflecting the reinvestment of proceeds from higher-yielding fixed
maturities into relatively lower-yielding securities. Realized investment losses
associated with our short-term funding agreements, which were terminated in
1999, improved $6.5 million in 1999 primarily due to a narrowing of interest
rate spreads on mortgage-backed securities and corporate bonds relative to U.S.
Treasury securities, resulting in higher prices upon the sale of the securities
in 1999 as compared to 1998.

     Total benefits and expenses increased $200.4 million, or 13.1%, to $1,729.0
million in 1999 from $1,528.6 million in 1998. The increase was primarily due to
a $202.9 million increase in benefits to policyholders as a result of increased
sales of single premium annuity contracts. Benefits to policyholders also
includes interest credited on account balances for spread-based products, which
was $1,118.3 million in 1999, an increase of $69.2 million, or 6.6%, from
$1,049.1 million in 1998. The increase was primarily due to an increase in
average account balances for spread-based products of $1,356.7 million to
$16,429.1 million in 1999 from $15,072.4 million in 1998 partially offset by a
decline in the average interest credited rate on account balances for
spread-based products, which was 6.81% in 1999 compared to 7.21% in 1998. The
decline in the average interest credited rate on account balances for
spread-based products was primarily due to sales of GICs and funding agreements
with lower average interest credited rates. Other operating costs and expenses
were $85.6 million in 1999, a decrease of $7.0 million, or 7.6%, from $92.6
million in 1998. The decrease was primarily due to lower guaranty fund
assessments. Dividends of $25.9 million in 1999, increased $5.1 million, or
24.5%, from $20.8 million for 1998, reflecting higher earnings on participating
contractholders' accounts. The segment's effective tax rate was 31.1% in 1999,
as compared to 28.1% in 1998.

Institutional-Investment Management Segment

     The following table presents certain summary financial data relating to the
Investment Management Segment for the periods indicated.

<TABLE>
<CAPTION>
                                                              For the Year Ended December 31,
                                                         ----------------------------------------
                                                            2000           1999            1998
                                                         ---------      ---------       ---------
                                                                      (in millions)
<S>                                                      <C>            <C>             <C>
Operating Results:
Revenues
  Net investment income ...........................      $    22.7      $    45.9       $    24.1
  Realized investment gains (losses), net (1) .....            3.2            3.5            (4.4)
  Investment management revenues,
     commissions, and other fees ..................          186.1          140.2           123.8
  Other revenue ...................................             --            0.3             0.4
                                                         ---------      ---------       ---------
     Total revenues ...............................          212.0          189.9           143.9
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
                                                              For the Year Ended December 31,
                                                         ----------------------------------------
                                                            2000           1999            1998
                                                         ---------      ---------       ---------
                                                                      (in millions)
<S>                                                      <C>            <C>             <C>
Benefits and expenses
  Other operating costs and expenses ..............          132.7          127.2           117.8
                                                         ---------      ---------       ---------
  Total benefits and expenses .....................          132.7          127.2           117.8

Segment pre-tax operating income (1) ..............           79.3           62.7            26.1

Income taxes ......................................           32.5           25.4            10.7
                                                         ---------      ---------       ---------

Segment after-tax operating income (1) ............           46.8           37.3            15.4

After-tax adjustments: (1)
   Realized investment gains, net .................            4.4            2.0             0.1
                                                         ---------      ---------       ---------

GAAP Reported:
  Income before cumulative effect of accounting
    change ........................................           51.2           39.3            15.5
   Cumulative effect of accounting change .........             --           (0.1)             --
                                                         ---------      ---------       ---------

Net income ........................................      $    51.2      $    39.2       $    15.5
                                                         =========      =========       =========
Amortization of goodwill, net of tax ..............            0.8            0.7             0.7
                                                         ---------      ---------       ---------
Net Income before amortization of goodwill ........      $    52.0      $    39.9       $    16.2
                                                         =========      =========       =========

Other Data:
Assets under management, end of year (2) ..........      $32,651.6      $40,211.7       $39,637.7
                                                         =========      =========       =========
</TABLE>

(1)  See "Adjustments to GAAP Reported Net Income" included in this Management's
     Discussion and Analysis.

(2)  Includes general account cash and invested assets of $106.9 million, $164.5
     million, and $88.1 million as of December 31, 2000, 1999, and 1998,
     respectively.

Year Ended December 31, 2000 Compared to Year Ended December 31, 1999

     Segment after-tax operating income was $46.8 million in 2000, an increase
of $9.5 million, or 25.5%, from $37.3 million in 1999. The increase was
primarily due to higher investment advisory fees.

     Total revenues increased $22.1 million, or 11.6%, to $212.0 million in 2000
from $189.9 million in 1999. Net investment income was $22.7 million in 2000, a
decrease of $23.2 million from $45.9 million for 1999. The decrease in net
investment income was partially due to the purchased equity interest in
collateralized bond obligations by other business segments of $31.7 million.
Offsetting this decrease was a $7.8 million increase in interest income on
mortgage loans held for sale. Investment management revenues, commissions, and
other fees increased $45.9 million, or 32.7% in 2000, due primarily to an
increase investment advisory fees, which increased $47.0 million to $180.6
million compared to $133.6 million reported in 1999. The increase in investment
advisory fees was primarily due to the $45.3 million in incentive fee receipts
in connection with the restructuring of timber management contracts and $15.3
million in performance fees earned by the mezzanine fund manager. Investment
advisory fees were .50% and .34% of average advisory assets under management in
2000 and 1999, respectively. Mortgage origination and servicing fees were $5.4
million compared to $6.6 million in 1999. Realized investment gains decreased
$0.3 million due to lower securitization activity in 2000.

     Other operating costs and expenses were $132.7 million in 2000, an increase
of $5.5 million, or 4.3%, from $127.2 million in 1999. The increase was
primarily due to $15.7 million in incentive compensation payments related to the
receipt of incentive fees on timber management contracts and $9.1 million in
<PAGE>

performance fees paid for the management of the mezzanine fund. Offsetting these
increases was a $19.8 million transfer of expenses on equity interest in
collateralized bond obligations to the other business segments owning these
assets. The segment's effective tax rate on operating income was 41.0% in 2000
and 1999. The effective tax rate for the Investment Management Segment is higher
than our other business segments due to the state tax on certain subsidiaries.

Year Ended December 31, 1999 Compared to Year Ended December 31, 1998

     Segment after-tax operating income was $37.3 million in 1999, an increase
of $21.9 million, or 142.2%, from $15.4 million in 1998. The increase was
primarily due to higher investment advisory fees resulting from an increase in
average assets under management and higher realized investment gains on sales of
mortgage loans.

     Total revenues increased $46.0 million, or 32.0%, to $189.9 million in 1999
from $143.9 million in 1998. Net investment income was $45.9 million in 1999, an
increase of $21.8 million from $24.1 million for 1998. The increase in net
investment income was due to a higher level of average invested assets due to
the formation of a collateralized bond obligation in the fourth quarter of 1998.
Investment management revenues, commissions, and other fees increased $16.4
million, or 13.2%, in 1999, primarily due to an increase in investment advisory
fees, which increased $18.3 million to $133.6 million in 1999 compared to $115.3
million in 1998. The increase in investment advisory fees was primarily due to a
higher level of average assets under management, which increased $4,824.5
million, or 13.5%, to $40,554.7 million in 1999 from $35,730.2 million in 1998.
Investment advisory fees were .33% and .32% of average advisory assets under
management in 1999 and 1998, respectively. This increase primarily reflects the
receipt of a fee in connection with the termination of a timber management
contract. Mortgage origination and servicing fees were $6.6 million in 1999
compared to $8.5 million in 1998. Realized investment gains increased $7.9
million in 1999 primarily due to a narrowing of interest rate spreads in 1999,
as compared to 1998, on mortgage loans held for sale.


     Other operating costs and expenses were $127.2 million in 1999, an increase
of $9.4 million, or 8.0%, from $117.8 million in 1998. The increase was
primarily due to a $8.5 million increase in interest expense in connection with
our collateralized bond obligation. Other operating costs and expenses were
0.22% and 0.24% of average advisory assets under management in 1999 and 1998,
respectively. The segment's effective tax rate was 41.0% in 1999 and 1998.


Corporate and Other Segment

     The following table presents certain summary financial data relating to the
Corporate and Other Segment for the periods indicated.


<TABLE>
<CAPTION>
                                                         For the Year Ended December 31,
                                                        --------------------------------
                                                           2000       1999       1998
                                                         -------    -------    -------
                                                                  (in millions)
<S>                                                      <C>        <C>        <C>
Operating Results:
Segment after-tax operating income (loss): (1)
  International insurance operations .................   $  27.1    $  26.0    $  25.3
  Corporate operations ...............................      69.3       31.2        8.7
  Non-core businesses ................................       7.6       10.6       22.3
                                                         -------    -------    -------
    Total ............................................     104.0       67.8       56.3

After-tax adjustments (1):
  Realized investment gains (losses), net ............      93.5      (42.1)      15.4
  Class action lawsuit ...............................        --      (91.1)    (150.0)
  Restructuring charges ..............................      (1.3)      (0.5)        --
  Demutualization expenses ...........................       0.1       (3.2)      (0.5)
  Other demutualization related costs ................      (0.2)      (0.2)        --
  Workers' compensation reinsurance reserve ..........        --     (133.7)        --
  Surplus tax ........................................      18.1       (2.2)       1.5
                                                         -------    -------    -------
     Total after-tax adjustments .....................     110.2     (273.0)    (133.6)
                                                         -------    -------    -------
GAAP Reported:
Net income (loss) ....................................   $ 214.2    $(205.2)   $ (77.3)
                                                         =======    =======    =======
Amortization of goodwill, net of tax .................       8.6        1.2        0.9
                                                         -------    -------    -------
Net income (loss) before amortization
of goodwill ..........................................   $ 222.8    $(204.0)   $ (76.4)
                                                         =======    =======    =======
</TABLE>

<PAGE>

(1)  See "Adjustments to GAAP Reported Net Income" included in this Management's
     Discussion and Analysis.

Year Ended December 31, 2000 Compared to Year Ended December 31, 1999


     Segment after-tax operating income from international insurance operations
was $27.1 million for 2000, an increase of $1.1 million from $26.0 million for
1999. On October 1, 1999, The Maritime Life Assurance Company (Maritime), our
Canadian subsidiary, purchased Aetna Holdings Canada Limited (Aetna).
Accordingly, Aetna's results of operations are included with Maritime's from the
date of the acquisition. The increase in segment after-tax operating income
primarily resulted from the inclusion of Aetna's operations for a full year in
2000 compared to one quarter in 1999.

     Segment after-tax operating income from corporate operations was $69.3
million in 2000, an increase of $38.1 million from $31.2 million in 1999. During
the fourth quarter of 1999, a corporate account was formed and all corporate
type assets, including certain tax advantaged assets, were moved from the other
segments to the Corporate and Other Segment. Tax credits, associated with the
tax advantaged assets, were $15.9 million in 2000 and $0.5 million in 1999. In
addition, as part of this move, the group pension participating contractholders
were reimbursed at fair market value for these contracts. Because of this
transaction, in 2000 there was no longer a need to credit participating
policyholders with a share of the change in these assets which amounted to a
charge to this segment of $13.7 million for the first nine months of 1999.


     Segment after-tax operating income from non-core businesses was $7.6
million in 2000, a decrease of $3.0 million from $10.6 million in 1999. The
decrease was due primarily to lower net investment income resulting from the
previously described disposals.

     Amortization of goodwill increased $7.4 million in 2000, as compared to
1999, due to the acquisition of Aetna in the fourth quarter of 1999.

Year Ended December 31, 1999 Compared to Year Ended December 31, 1998

     Segment after-tax operating income from international insurance operations
was $26.0 million for 1999, an increase of $0.7 million from $25.3 million for
1998. On October 1, 1999, The Maritime Life Assurance Company (Maritime), our
Canadian subsidiary, purchased Aetna Holdings Canada Limited (Aetna).
Accordingly, Aetna's results of operations are included with Maritime's from the
date of the acquisition. The increase in segment after-tax operating income
primarily resulted from the inclusion of Aetna's after-tax operating income of
$5.2 million partially offset by a decrease in Maritime's after-tax operating
income due to unfavorable group claims experience.

     Segment after-tax operating income from corporate operations was $31.2
million in 1999, an increase of $22.5 million from $8.7 million in 1998. The
increase was primarily due to a $13.7 million decrease in unallocated corporate
overhead and expenses associated with the disposed businesses and higher net
investment income due to a higher level of corporate purpose assets. During the
fourth quarter of 1999, a corporate account was formed and all corporate type
assets were removed from the business units to the Corporate and Other Segment.
As part of this move, the group pension participating contractholders were
<PAGE>

reimbursed at fair market value for these contracts. Because of this
transaction, there was no longer a need to calculate the participating
policyholders share of the change in these assets. As a result, 1999's segment
after-tax operating income includes a charge for this item for nine months
versus a full year in 1998, an improvement of $9.4 million.

     Segment after-tax operating income from non-core businesses was $10.6
million in 1999, a decrease of $11.7 million from $22.3 million in 1998. The
decrease was due primarily to lower net investment income resulting from the
previously described disposals.

     Amortization of goodwill increased $0.3 million in 1999, as compared to
1998, due to the acquisition of Aetna in 1999 partially offset by completing the
amortization period for Investors Guarantee Life in 1998.

General Account Investments

On the effective date of the Plan of Reorganization, the Company's invested
assets were allocated between the closed block and operations outside the closed
block. In view of the similar asset quality characteristics of the major asset
categories in the two portfolios, the invested assets in the closed block have
been combined with the Company's invested assets outside the closed block for
purposes of the following discussion and analysis.

Overall Composition of the General Account


     Invested assets, excluding separate accounts, totaled $52.0 billion and
$48.6 billion as of December 31, 2000 and December 31, 1999, respectively. The
most significant difference between the portfolio composition as of December 31,
2000 compared to December 31, 1999 is the growth of cash and cash equivalents.
This is primarily the result of the sale of non-participating pension contracts
in December 2000, which had yet to be placed in permanent investments as of the
end of the year.


<TABLE>
<CAPTION>
                                                     As of December 31,
                                                     ------------------
                                             2000                           1999
                                   -------------------------------------------------------
                                   Carrying         % of          Carrying         % of
                                     Value          Total           Value          Total
                                   -------------------------------------------------------
                                          (in millions)                  (in millions)
<S>                                <C>                <C>         <C>                <C>
Fixed maturity securities (1)      $32,535.0           62.5%      $30,749.4           63.3%
Mortgage loans (2)                  10,899.5           20.9        10,733.0           22.1
Real estate                            519.0            1.0           548.5            1.1
Policy loans (3)                     1,969.2            3.8         1,938.8            4.0
Equity securities                    1,332.8            2.6         1,314.3            2.7
Other invested assets                1,393.7            2.7         1,311.1            2.7
Short-term investments                 214.0            0.4           166.9            0.4
Cash and cash equivalents (4)        3,146.8            6.1         1,797.7            3.7
                                   ---------      ---------       ---------      ---------
    Total invested assets          $52,010.0          100.0%      $48,559.7          100.0%
                                   =========      =========       =========      =========
</TABLE>


(1)  In addition to bonds, the fixed maturity security portfolio contains
     redeemable preferred stock with a carrying value of $732.0 million and
     $630.6 million as of December 31, 2000 and December 31, 1999, respectively.
     Carrying value is composed of investments categorized as
     'held-to-maturity,' which are carried at amortized cost, and investments
     categorized as 'available-for-sale,' which are carried at fair value. The
     total fair value of our fixed maturity security portfolio was $32,355.1 and
     $30,397.9 million, at December 31, 2000 and December 31, 1999,
     respectively.

(2)  The fair value for our mortgage loan portfolio was $11,337.4 and $10,681.8
     million as of December 31, 2000 and December 31, 1999, respectively.

<PAGE>

(3)  Policy loans are secured by the cash value of the underlying life insurance
     policies and do not mature in a conventional sense, but expire in
     conjunction with the related policy liabilities.

(4)  Cash and cash equivalents are included in total invested assets in the
     table above for the purposes of calculating yields on the income producing
     assets for the Company. Cash and cash equivalents are not considered part
     of Total Investments of the Company of $48,863.2 million and $46,762.0
     million at December 31, 2000 and December 31, 1999, respectively. Closed
     block Total Investments of $8,203.2 million as of December 31, 2000 are
     presented in closed block assets on the Consolidated Balance Sheets but
     remain part of the Company's total invested assets.

     Consistent with the nature of our product liabilities, our assets are
heavily oriented toward fixed maturity securities. We determine the allocation
of our assets primarily on the basis of cash flow and return requirements of our
products and secondarily by the level of investment risk.

     Fixed Maturity Securities. Our fixed maturity securities portfolio is
predominantly comprised of low risk, investment grade, publicly and privately
traded corporate bonds and senior tranches of asset-backed securities (ABS) and
mortgage- backed securities (MBS). Our fixed maturity securities portfolio also
includes redeemable preferred stock. As of December 31, 2000, fixed maturity
securities represented 62.6% of general account investment assets with a
carrying value of $32.5 billion, roughly comprised of 50% public securities and
50% private securities. Each year we direct the majority of our net cash inflows
into investment grade fixed maturity securities. We typically invest between 5%
and 15% of funds allocated to fixed maturity securities in
below-investment-grade bonds while maintaining our policy to limit the overall
level of these bonds to no more than 10% of invested assets. Allocations are
based on our assessment of relative value and the likelihood of enhancing
risk-adjusted portfolio returns. While the general account has profited from the
below-investment-grade asset class in the past, care is taken to manage its
growth strategically by limiting its size relative to our total invested assets.

     The following table shows the composition by issuer of our fixed maturity
securities portfolio.

                     Fixed Maturity Securities -- By Issuer


<TABLE>
<CAPTION>
                                                                        As of December 31,
                                                                        ------------------
                                                               2000                           1999
                                                     -------------------------------------------------------
                                                     Carrying         % of          Carrying          % of
                                                       Value          Total           Value           Total
                                                     -------------------------------------------------------
                                                           (in millions)                  (in millions)
<S>                                                  <C>                <C>         <C>                <C>
Corporate securities ..........................      $25,159.3           77.4%      $23,498.9           76.4%
MBS/ABS .......................................        5,480.6           16.8         5,265.6           17.1
U.S. Treasury securities and obligations of
   U.S. government agencies ...................          205.8            0.6           297.2            1.0
Debt securities issued by foreign
   Governments ................................        1,548.7            4.8         1,554.1            5.1
Obligations of states and political
   Subdivisions ...............................          140.6            0.4           133.6            0.4
                                                     ---------      ---------       ---------      ---------

     Total ....................................      $32,535.0          100.0%      $30,749.4          100.0%
                                                     =========      =========       =========      =========
</TABLE>


     Our MBS and ABS holdings, in keeping with our investment philosophy of
tightly managing interest rate risk, are heavily concentrated in commercial MBS
where the underlying loans are largely call protected, which means they are not
pre-payable without penalty prior to maturity at the option of the issuer,
rather than in residential MBS where the underlying loans typically have no call
protection. By investing in MBS and ABS securities with relatively predictable
repayments, we add high quality, liquid assets to our portfolios without
incurring the risk of excessive cash flow in periods of low interest rates or a
cash flow deficit in periods of high interest rates. We believe the portion of
our MBS/ABS portfolio subject
<PAGE>

to prepayment risk as of December 31, 2000 and December 31, 1999 was limited to
3.3% and 3.9% of our total MBS/ABS portfolio and 0.6% and 0.7% of our total
fixed maturity securities holdings, respectively.

      The securities valuation office (SVO) of the National Association of
Insurance Commissioners evaluates all public and private bonds purchased as
investments by insurance companies. The SVO assigns one of six investment
categories to each security it reviews. Category 1 is the highest quality
rating, and Category 6 is the lowest. Categories 1 and 2 are the equivalent of
investment grade debt as defined by rating agencies such as S&P and Moody's
(i.e., BBB-/Baa3 or higher), while Categories 3-6 are the equivalent of
below-investment grade securities. SVO ratings are reviewed and may be revised
at least once a year.


     The following table sets forth the SVO ratings for our bond portfolio
along with an equivalent S&P rating agency designation. The majority of our
bonds are investment grade, with 86.3% invested in Category 1 and 2 securities
as of December 31, 2000. As a percent of total invested assets, our below
investment grade bonds, at 8.3% as of December 31, 2000, are higher than the
American Council of Life Insurers (ACLI) industry average of 5.9%, last
published as of December 31, 1999. This allocation reflects our strategy of
avoiding the unpredictability of interest rate risk in favor of relying on our
bond analysts' ability to better predict credit or default risk. Our bond
analysts operate in an industry-based, team-oriented structure that permits the
evaluation of a wide range of below investment grade offerings in a variety of
industries, resulting in a well-diversified high yield portfolio. A majority
(64.3%) of our below investment grade bonds are in category 3, the highest
quality below investment grade. Category 6 bonds represent securities that were
originally acquired as long-term investments, but subsequently became
distressed. The fair value of our category 6 bonds was $216.7 million and $167.4
million as of December 31, 2000 and 1999, respectively. For the years ended
December 31, 2000, 1999 and 1998, $49.4 million, $25.5 million and $31.2 million
of interest on Category 6 bonds has been recognized in income but was
delinquent.


                 Fixed Maturity Securities -- By Credit Quality

<TABLE>
<CAPTION>
                                                              As of December 31,
                                          ---------------------------------------------------------
                                                      2000                           1999
                                          --------------------------     --------------------------
   SVO            S&P Equivalent            Carrying          % of         Carrying         % of
Rating (1)        Designation (2)           Value (3)        Total         Value (3)        Total
----------        ---------------           ---------        -----         ---------        -----
                                          (in millions)                  (in millions)
<S>         <C>                             <C>                <C>         <C>                <C>
    1       AAA/AA/A .................      $14,609.4           45.9%      $14,722.5           48.8%
    2       BBB ......................       12,850.9           40.4        11,014.2           36.6
    3       BB .......................        2,790.3            8.8         2,886.7            9.6
    4       B ........................        1,066.0            3.4           867.7            2.9
    5       CCC and lower ............          269.7            0.8           460.3            1.5
    6       In or near default .......          216.7            0.7           167.4            0.6
                                            ---------      ---------       ---------      ---------
            Total ....................      $31,803.0          100.0%      $30,118.8          100.0%
                                            =========      =========       =========      =========
</TABLE>

(1)  With respect to securities that are awaiting an SVO rating, we have
     assigned a rating based on an analysis that we believe is equivalent to
     that used by the SVO.

(2)  Comparisons between SVO and S&P ratings are published by the National
     Association of Insurance Commissioners.

(3)  Does not include redeemable preferred stock with a carrying value of $732.0
     million and $630.6 million as of December 31, 2000 and 1999, respectively.

Mortgage Loans. As of December 31, 2000, we held mortgage loans with a carrying
value of $10.9 billion, including $2.5 billion of agricultural loans and $1.2
billion of loans managed by our Canadian subsidiary, The Maritime Life Assurance
Company, of which $0.6 billion are government-insured by the Canada Mortgage and
Housing Corporation (CMHC).
<PAGE>

     The following table shows the distribution of our mortgage loan portfolio
by property type as of the dates indicated. Our commercial mortgage loan
portfolio consists primarily of non-recourse fixed-rate mortgages on fully, or
nearly fully, leased commercial properties.

<TABLE>
<CAPTION>
                                                   As of December 31,
                                -------------------------------------------------------
                                          2000                           1999
                                ------------------------       ------------------------
                                Carrying         % of          Carrying         % of
                                  Value          Total           Value          Total
                                ---------      ---------       ---------      ---------
                              (in millions)                  (in millions)
<S>                             <C>                <C>         <C>                <C>
Apartment ................      $ 2,393.1           22.0%      $ 2,493.7           23.2%
Office Buildings .........        2,465.1           22.6         2,551.8           23.7
Retail ...................        1,623.7           14.9         1,844.8           17.2
Agricultural .............        2,510.6           23.0         1,891.4           17.6
Industrial ...............          905.8            8.3         1,005.1            9.4
Hotels ...................          414.7            3.8           425.5            4.0
Multi-Family .............           71.8            0.7            80.7            0.8
Mixed Use ................          274.7            2.5           140.2            1.3
Other ....................          240.0            2.2           299.8            2.8
                                ---------      ---------       ---------      ---------
     Total ...............      $10,899.5          100.0%      $10,733.0          100.0%
                                =========      =========       =========      =========
</TABLE>

The following table shows the distribution of our mortgage loan portfolio by
geographical region.

                        Mortgage Loans -- By ACLI Region

<TABLE>
<CAPTION>
                                                  As of December 31,
                        ------------------------------------------------------------------------
                                          2000                                   1999
                        ----------------------------------------    ----------------------------
                          Number       Carrying          % of         Carrying           % of
                         of Loans        Value          Total           Value            Total
                        ---------      ---------      ---------       ---------       ---------
                                     (in millions)                  (in millions)
<S>                         <C>        <C>                <C>         <C>                 <C>
East North Central ...        153      $ 1,101.0           10.1%      $ 1,106.7            10.3%
East South Central ...         41          530.4            4.9%          299.0             2.8%
Middle Atlantic ......        115        1,481.3           13.6%        1,675.9            15.6%
Mountain .............         96          401.9            3.7%          355.5             3.3%
New England ..........        129          838.6            7.7%          896.5             8.4%
Pacific ..............        288        1,969.0           18.0%        2,117.8            19.7%
South Atlantic .......        206        2,048.6           18.8%        1,926.9            18.0%
West North Central ...         70          368.2            3.4%          377.3             3.5%
West South Central ...        151          817.2            7.5%          742.9             6.9%
Canada ...............        883        1,343.3           12.3%        1,234.5            11.5%
                        ---------      ---------      ---------       ---------       ---------
     Total ...........      2,132      $10,899.5          100.0%      $10,733.0           100.0%
                        =========      =========      =========       =========       =========
</TABLE>

     The allowance for losses on mortgage loans on real estate and real estate
is maintained at a level that we believe to be adequate to absorb estimated
probable credit losses. Our periodic evaluation of the adequacy of the allowance
for losses is based on past experience, known and inherent risks, adverse
situations that may affect the borrower's ability to repay (including the timing
of future payments), the estimated value of the underlying security, the general
composition of the portfolio, current economic conditions and other factors.
This evaluation is inherently subjective and is susceptible to significant
changes and no assurance can be given that the allowances taken will in fact be
adequate to cover all losses or that additional valuation allowances or asset
write-downs will not be required in the future. The portion of the investment
valuation allowance for our mortgage loan portfolio was $83.5 million, or 0.8%
of carrying value before reserves and $110.4 million, or 1.0% of carrying value
before reserves as of December 31, 2000 and 1999, respectively. The portion of
the investment valuation allowance for our real
<PAGE>

estate to be disposed of was $43.5 million, or 7.7% of carrying value before
reserves and $58.1 million, or 9.6% of carrying value before reserves as of
December 31, 2000 and 1999, respectively.

Investment Results

     The following table summarizes the Company's investment results for the
periods indicated. Overall, the yield, net of investment expenses, on our
general account portfolio increased from the year ended December 31, 1999. The
improved yield was primarily generated by favorable interest rates achieved on
our 2000 fixed maturity security acquisitions. In particular, 2000 bond
acquisitions benefited from a combination of higher U.S. Treasury rates and
relatively wide spreads in both the public and private sectors. While interest
rates declined substantially during the fourth quarter of 2000, they were well
above 1999 rates on a full calendar year basis. The average 10-year U.S.
Treasury rate in 2000 was 34 basis points higher than the average 10-year U.S.
Treasury rate in 1999.


<TABLE>
<CAPTION>
                                                             For the Year Ended
                                                                December 31,
                                           -------------------------------------------------------
                                                  2000                            1999
                                           Yield         Amount             Yield        Amount
                                           -------------------------------------------------------
                                                     (in millions)                   (in millions)
<S>                                        <C>         <C>                  <C>        <C>
General account assets-excluding
policy loans
  Gross income                             8.26%       $ 3,991.5            8.43%      $ 3,794.8
  Ending assets-excluding policy
    Loans                                               50,040.8                        46,620.9
Policy loans
  Gross income                             6.07%           118.6            5.75%          109.8
Ending assets                                            1,969.2                         1,938.8
   Total gross income                      8.18%         4,110.1            8.32%        3,904.6
    Less: investment expenses                             (267.5)                         (336.1)
                                                       ---------                       ---------
      Net investment income                7.65%       $ 3,842.6            7.58%      $ 3,568.5
                                                       =========                       =========
</TABLE>


(1)  Total Company net investment income of $3,842.6 million is discussed in
     this Management's Discussion and Analysis, which includes net investment
     income of $3,251.0 million in the consolidated statements of income and
     $591.6 million in Note 6 -- Closed Block to the audited consolidated
     financial statements for the year ended December 31, 2000.

Liquidity and Capital Resources

     Liquidity describes the ability of a company to generate sufficient cash
flows to meet the cash requirements of business operations. Historically, our
principal cash flow sources have been premiums, deposits and charges on policies
and contracts, investment income, maturing investments, and proceeds from sales
of investment assets. In addition to the need for cash flow to meet operating
expenses, our liquidity requirements relate principally to the liabilities
associated with our various life insurance, annuity, and structured investment
products, and to the funding of investments in new products, processes, and
technologies. Our product liabilities include the payment of benefits under life
insurance, annuity and structured investment products and the payment of policy
surrenders, withdrawals and policy loans.

     John Hancock Life Insurance Company is wholly-owned by, and the primary
operating subsidiary of, John Hancock Financial Services, Inc. (JHFS). As an
insurance holding company JHFS is reliant on dividends of the Company for its
operating cash flows. State insurance laws generally restrict the ability of
insurance companies to pay cash dividends in excess of prescribed limitations
without prior approval. The Company's limit is the greater of 10% of the
statutory surplus or the prior calendar year's statutory net gain from
operations of the Company. The ability of the Company to pay shareholder
dividends is and will continue to be subject to restrictions set forth in the
insurance laws and regulations of Massachusetts, its domiciliary state. The
Massachusetts insurance law limits how and when the Company can pay shareholder
dividends. The Company, in the future, could also be viewed as being
commercially domiciled in New York. If so, dividend payments may also be subject
to New York's holding company act as well as
<PAGE>

Massachusetts law. Currently, the Company does not expect such regulatory
requirements to impair its ability to dividend sufficient cash flows to sustain
JHFS' liquidity and capital needs. However, the Company can give no assurance it
will declare or pay dividends on a regular basis.

     In September, October and December 2000, the Commissioner of Insurance for
the Commonwealth of Massachusetts approved, and the Company paid, dividends to
JHFS in the amount of $200.0 million, $200.0 million and $66.0 million,
respectively. None of these dividends were classified as extraordinary by state
regulators. During the fourth quarter of 2000, JHFS used funds from the
aforementioned dividends and other of its own cash flows, to fund a $267.2
million capital contribution to the Company. As of October 1, 2000, JHFS
purchased John Hancock Reinsurance Company and 45% of John Hancock Canadian
Holdings from the Company.

     Sources of cash for the Company's insurance businesses are from premiums,
deposits and charges on policies and contracts, investment income, maturing
investments, and proceeds from sales of investment assets. In addition to the
need for cash flow to meet operating expenses, our liquidity requirements relate
principally to the liabilities associated with various life insurance, annuity,
and structured investment products, and to the funding of investments in new
products, processes, and technologies. Product liabilities include the payment
of benefits under life insurance, annuity and structured investment products and
the payment of policy surrenders, withdrawals and policy loans. The Company
periodically adjusts its investment policy to respond to changes in short-term
and long-term cash requirements and provide adequate funds to pay benefits
without forced sales of investments.


     The liquidity of our insurance operations is also related to the overall
quality of our investments. As of December 31, 2000, $27,460.3 million, or 86.3%
of the fixed maturity securities held by us and rated by Standard & Poor's
Ratings Services, a division of the McGraw-Hill Companies, Inc. (S&P) or the
National Association of Insurance Commissioners were rated investment grade (BBB
or higher by S&P or 1 or 2 by the National Association of Insurance
Commissioners). The remaining $4,342.7 million of fixed maturity investments
were rated non-investment grade. For additional discussion of our investment
portfolio see the General Account Investments section above in this Management's
Discussion and Analysis of Financial Condition and Results of Segment
Operations.


     We employ an asset/liability management approach tailored to the specific
requirements of each of our product lines. Each product line has an investment
strategy based on the specific characteristics of the liabilities in the product
line. As part of this approach, we develop investment policies and operating
guidelines for each portfolio based upon the return objectives, risk tolerance,
liquidity, and tax and regulatory requirements of the underlying products and
business segments.


     Net cash provided by operating activities was $1,564.7 million, $1,621.9
million, and $1,290.8 million for the years ended December 31, 2000, 1999 and
1998, respectively. The decrease in 2000 compared to 1999 resulted primarily
from cash transferred to the closed block of $158.6 million, income attributed
to the closed block of $124.1 million, and an increase in purchases of trading
securities of $147.5 million, partially offset by an increase in net income of
$689.4 million. The increase in 1999 as compared to 1998 resulted primarily from
a decrease in benefits paid to policyholders, partially offset by an decrease in
net income.


     Net cash used in investing activities was $1,318.5 million, $1,933.6
million and $1,303.1 million for the years ended December 31, 2000, 1999, and
1998, respectively. The decrease in cash used in 2000 as compared to 1999
resulted from fewer acquisitions of fixed maturities during the year ended
December 31, 2000 than the comparable prior year period, prior year cash
payments related to acquisitions and disposals of subsidiaries which resulted in
cash receipts in 2000 and a decrease in the issuance of mortgage loans on real
estate. The increase in net cash used in 1999 as compared to 1998 resulted
primarily from net cash paid related to acquisitions and disposals of
subsidiaries and a decrease in maturities, prepayments and scheduled redemptions
of fixed maturities partially offset by an increase in sales of real estate.

     Net cash provided by financing activities was $797.3 million, $250.1
million and $850.0 million, for the years ended December 31, 2000, 1999 and
1998, respectively. The increase in 2000 as compared to
<PAGE>

1999 resulted from a reduction in cash payments made on withdrawals of universal
life insurance and investment-type contracts. Deposits on such universal life
insurance and investment-type contracts exceeded withdrawals by $989.5 million
for the year ended December 31, 2000. The decrease in 1999 as compared to 1998
resulted primarily from cash payments made on withdrawals of universal life
insurance and investment-type contracts which exceeded cash received from
deposits on such contracts by $221.9 million.

     Cash flow requirements also are supported by a committed line of credit of
$1.0 billion. The line of credit agreement provides for two facilities: one for
$500 million pursuant to a 364-day commitment (subject to renewal) and a second
for $500 million pursuant to a five-year facility. The line of credit is
available for general corporate purposes. The line of credit agreement contains
various covenants, among these being that shareholders' equity meet certain
requirements. To date, we have not borrowed any amounts under the line of
credit.

     As of December 31, 2000, we had $779.3 million of debt outstanding
consisting of $222.3 million of commercial paper borrowings, $447.2 million of
surplus notes, and $109.8 million of other notes payable. A new commercial paper
program has been established at the Company that will ultimately replace the
commercial paper program now in place at its indirect subsidiary, John Hancock
Capital Corporation.

     A primary liquidity concern with respect to life insurance and annuity
products is the risk of early policyholder and contractholder withdrawal. The
following table summarizes our annuity policy reserves and deposit fund
liabilities for the contractholder's ability to withdraw funds for the indicated
periods:


<TABLE>
<CAPTION>
                                                                                   As of December 31,
                                                             ----------------------------------------------------------
                                                                         2000                          1999
                                                             ---------------------------   ----------------------------
                                                                 Amount             %          Amount              %
                                                             -------------       -------   -------------         ------
                                                             (in millions)                 (in millions)
<S>                                                            <C>                <C>         <C>                <C>
Not subject to discretionary withdrawal provisions ......      $21,698.0           72.6%      $19,335.2           70.4%
Subject to discretionary withdrawal adjustment:
   With market value adjustment .........................          824.2            2.8         1,126.3            4.1
   At contract value ....................................        1,877.6            6.3         1,540.6            5.6
Subject to discretionary withdrawal at contract value
   less surrender charge ................................        5,455.8           18.3         5,461.1           19.9
                                                             ----------------------------------------------------------
Total annuity reserves and deposit funds liability ......      $29,855.6          100.0%      $27,463.2          100.0%
                                                             ==========================================================
</TABLE>


     Individual life insurance policies are less susceptible to withdrawal than
are annuity contracts because policyholders may incur surrender charges and
undergo a new underwriting process in order to obtain a new insurance policy. As
indicated in the table above, there is a substantial percentage of annuity
reserves and deposit fund liabilities that are not subject to withdrawal. As a
matter of policy, we seek to include provisions limiting withdrawal rights from
general account institutional structured investment products. These include GICs
and funding agreements sold to plan sponsors where the contract prohibits the
contractholder from making withdrawals other than on a scheduled maturity date.

     Individual life insurance policies (other than term life insurance
policies) increase in cash values over their lives. Policyholders have the right
to borrow from us an amount generally up to the cash value of their policy at
any time. As of December 31, 2000, we had approximately $17.1 billion in cash
values in which policyholders have rights to policy loans. The majority of cash
values eligible for policy loans are at variable interest rates which are reset
annually on the policy anniversary. Moreover, a portion of our fixed interest
rate policy loans have features that provide for reduced crediting rates on the
portion of cash values loaned. The amount of policy loans has remained
consistent over the past three years, at approximately $1.9 billion, $1.5
billion of which are in the closed block at December 31, 2000.

     The risk-based capital standards for life insurance companies, as
prescribed by the National Association of Insurance Commissioners, establish a
risk-based capital ratio comparing adjusted surplus to
<PAGE>

required surplus for each of our United States domiciled insurance subsidiaries.
If the risk-based capital ratio falls outside of acceptable ranges, regulatory
action may be taken ranging from increased information requirements to mandatory
control by the domiciliary insurance department. The risk-based capital ratios
of all our insurance subsidiaries as of December 31, 2000, were above the ranges
that would require regulatory action.

     We maintain reinsurance programs designed to protect against large or
unusual losses. Based on our review of our reinsurers' financial statements and
reputations in the reinsurance marketplace, we believe that our reinsurers are
financially sound, and, therefore, that we have no significant exposure to
uncollectable reinsurance in excess of uncollectable amounts recognized in our
audited consolidated financial statements.

     Given the historical cash flow of our subsidiaries and current financial
results, management believes that the cash flow from the operating activities
over the next year will provide sufficient liquidity for our operations, as well
as to satisfy debt service obligations and to pay other operating expenses.
Although we anticipate that we will be able to meet our cash requirements, we
can give no assurances in this regard.

Accounting Standards

For a discussion of accounting standards, see Note 1 to our audited consolidated
financial statements.
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Form 10-K/A to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                    JOHN HANCOCK LIFE INSURANCE COMPANY


                                    By: /s/ THOMAS E. MOLONEY
                                        -----------------------------------
                                        Thomas E. Moloney
                                        Chief Financial Officer
Date: June 26, 2001