UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

Registrant  meets the conditions  set forth in General  Instruction H (1)(a) and
(b) of Form 10-Q and is therefore  filing this Form with the reduced  disclosure
format.

              [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                                       OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002

                                       OR

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

                        Commission file number: 333-66452

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

      Nebraska                                          47-0221457
  (State of incorporation)              (I.R.S. Employer Identification No.)


    2940 South 84th Street
    Lincoln, Nebraska                                   68506-4142
 (Address of principal executive offices)               (zip code)

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

REGISTRANT HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS, AND (2) HAS
BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS.

                                 Yes /X/ No / /

AS OF OCTOBER 31, 2002, THE REGISTRANT HAD 25,000 COMMON SHARES, $100 PAR VALUE,
OUTSTANDING, ALL OF WHICH ARE HELD BY ALLSTATE LIFE INSURANCE COMPANY.


<PAGE>
                          LINCOLN BENEFIT LIFE COMPANY
                     INDEX TO QUARTERLY REPORT ON FORM 10-Q
                               SEPTEMBER 30, 2002

<TABLE>
<CAPTION>

PART 1.          FINANCIAL INFORMATION

<S>              <C>                                                                                            <C>
Item 1.          Financial Statements

                 Condensed Statements of Operations for the Three Month and Nine Month
                 Periods Ended September 30, 2002 and 2001 (unaudited)                                           3

                 Condensed Statements of Financial Position as of September 30, 2002
                 (unaudited) and December 31, 2001                                                               4

                 Condensed Statements of Cash Flows for the Nine Month Periods Ended
                 September 30, 2002 and 2001 (unaudited)                                                         5

                 Notes to Condensed Financial Statements (unaudited)                                             6

Item 2.          Management's Discussion and Analysis of Financial Condition and
                 Results of Operations                                                                           9

Item 4.          Controls and Procedures                                                                        17

PART II.         OTHER INFORMATION

Item 1.          Legal Proceedings                                                                              18

Item 6.          Exhibits and Reports on Form 8-K                                                               18

                 Signature Page                                                                                 19

                 Certifications                                                                                 19

</TABLE>

                                       2

<PAGE>
                          PART 1. FINANCIAL INFORMATION
                     ITEM 1. CONDENSED FINANCIAL STATEMENTS

                          LINCOLN BENEFIT LIFE COMPANY
                       CONDENSED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                   Three Months Ended            Nine Months Ended
                                                                     September 30,                 September 30,
                                                               ---------------------------    ------------------------
(in thousands)                                                    2002            2001          2002           2001
                                                               -----------     -----------    ----------     ---------

                                                                      (Unaudited)                   (Unaudited)
<S>                                                            <C>            <C>             <C>           <C>
Revenues
Net investment income                                          $      2,962     $     3,115    $    8,832     $   9,148
Realized capital gains and losses                                    (1,610)              -        (1,273)       (1,352)
                                                               ------------     -----------    ----------     ---------
Income from operations before income tax expense                      1,352           3,115         7,559         7,796
Income tax expense                                                      471           1,088         2,639         2,722
                                                               ------------     -----------    ----------     ---------
Net income                                                     $        881     $     2,027    $    4,920     $   5,074
                                                               ============     ===========    ==========     =========

</TABLE>




                                    See notes to condensed financial statements.

                                       3
<PAGE>

                          LINCOLN BENEFIT LIFE COMPANY
                   CONDENSED STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>

                                                                                  September 30,        December 31,
                                                                                       2002                 2001
                                                                                 -----------------     ---------------
                                                                                   (Unaudited)
(in thousands, except par value data)
<S>                                                                                    <C>                  <C>
Assets
Investments
   Fixed income securities, at fair value (amortized cost
     $186,927 and $179,124)                                                      $        202,622      $      186,709
   Short-term                                                                               2,953               6,856
                                                                                 ----------------      --------------
     Total investments                                                                    205,575             193,565

Cash                                                                                       43,648              43,796
Reinsurance recoverable from Allstate Life Insurance Company, net                      11,499,848           9,600,660
Reinsurance recoverable from non-affiliates, net                                          528,442             458,563
Other assets                                                                               34,059              39,144
Separate Accounts                                                                       1,339,203           1,565,708
                                                                                 ----------------     ---------------
         Total assets                                                            $     13,650,775     $    11,901,436
                                                                                 ================     ===============

Liabilities
Contractholder funds                                                             $     11,109,753     $     9,287,599
Reserve for life-contingent contract benefits                                             915,118             760,264
Current income taxes payable                                                                3,207               3,645
Deferred income taxes                                                                       8,417               6,187
Other liabilities and accrued expenses                                                     50,856              70,237
Payable to affiliates, net                                                                 25,426              19,193
Separate Accounts                                                                       1,339,203           1,565,708
                                                                                 ----------------     ---------------
         Total liabilities                                                             13,451,980          11,712,833
                                                                                 ----------------     ---------------

Commitments and Contingent Liabilities (Note 4)

Shareholder's equity
   Common stock, $100 par value, 30,000 shares authorized, 25,000
        shares issued and outstanding                                                       2,500               2,500
Additional capital paid-in                                                                126,750             126,750
Retained income                                                                            59,343              54,423
Accumulated other comprehensive income:
   Unrealized net capital gains and losses                                                 10,202               4,930
                                                                                 ----------------     ---------------
         Total accumulated other comprehensive income                                      10,202               4,930
                                                                                 ----------------     ---------------
         Total shareholder's equity                                                       198,795             188,603
                                                                                 ----------------     ---------------
         Total liabilities and shareholder's equity                              $     13,650,775     $    11,901,436
                                                                                 ================     ===============

</TABLE>


                   See notes to condensed financial statements.

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


<TABLE>
<CAPTION>
                                                                                                      Nine Months Ended
                                                                                                        September 30,
                                                                                                 -----------------------------
(in thousands)                                                                                      2002             2001
                                                                                                 ------------    -------------
                                                                                                         (Unaudited)

Cash flows from operating activities
<S>                                                                                              <C>              <C>
Net income                                                                                       $    4,920      $      5,074
Adjustments to reconcile net income to net cash provided by operating activities:
         Amortization and other non-cash items                                                         (165)             (405)
         Realized capital gains and losses                                                            1,273             1,352
         Changes in:
           Life-contingent contract benefits and contractholder funds, net of
              reinsurance recoverables                                                                7,941             2,995
           Income taxes payable                                                                      (1,046)             (124)
           Receivable/payable to affiliates, net                                                      6,233            (7,023)
           Other operating assets and liabilities                                                   (14,399)           45,421
                                                                                                 ----------      ------------
              Net cash provided by operating activities                                               4,757            47,290
                                                                                                 ----------      ------------
Cash flows from investing activities
Fixed income securities
         Proceeds from sales                                                                         12,544            10,922
         Investment collections                                                                      17,993            11,737
         Investments purchases                                                                      (39,345)          (22,103)
Change in short-term investments, net                                                                 3,903            (9,282)
                                                                                                 ----------      ------------
                     Net cash used in investing activities                                           (4,905)           (8,726)
                                                                                                 ----------      ------------
Net (decrease) increase in cash                                                                        (148)           38,564
Cash at beginning of period                                                                          43,796                76
                                                                                                 ----------      ------------
Cash at end of period                                                                            $   43,648      $     38,640
                                                                                                 ==========      ============

</TABLE>





                  See notes to condensed financial statements.

                                       5
<PAGE>

                          LINCOLN BENEFIT LIFE COMPANY
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.   Basis of Presentation

          The accompanying  condensed financial  statements include the accounts
     of Lincoln Benefit Life Company ("the Company"),  a wholly owned subsidiary
     of Allstate  Life  Insurance  Company  ("ALIC"),  which is wholly  owned by
     Allstate  Insurance  Company  ("AIC"),  a wholly  owned  subsidiary  of The
     Allstate Corporation (the "Corporation").

          The condensed financial statements and notes as of September 30, 2002,
     and for the three-month and nine-month periods ended September 30, 2002 and
     2001,  are  unaudited.  The  condensed  financial  statements  reflect  all
     adjustments  (consisting only of normal recurring accruals),  which are, in
     the  opinion of  management,  necessary  for the fair  presentation  of the
     financial  position,  results of operations  and cash flows for the interim
     periods.  These condensed financial  statements and notes should be read in
     conjunction with the financial statements and notes thereto included in the
     Lincoln  Benefit Life Company Annual Report on Form 10-K for the year ended
     December 31, 2001. The results of operations for the interim periods should
     not be considered indicative of results to be expected for the full year.

          To conform  with the 2002 and  year-end  2001  presentations,  certain
     amounts  in the  prior  year's  condensed  financial  statements  have been
     reclassified.

     Pending Accounting Standard

          On  July  31,  2002,  the  American   Institute  of  Certified  Public
     Accountants issued an exposure draft Statement of Position ("SOP") entitled
     "Accounting   and   Reporting   by   Insurance   Enterprises   for  Certain
     Nontraditional  Long-Duration  Contracts  and for Separate  Accounts".  The
     accounting guidance contained in the proposed SOP applies to several of the
     Company's products and product features. The proposed effective date of the
     SOP is fiscal  years  beginning  after  December  15,  2003,  with  earlier
     adoption  encouraged.  Initial application should be as of the beginning of
     the fiscal year;  therefore,  if adopted  during an interim period of 2003,
     prior interim  periods should be restated.  Most provisions of the proposed
     SOP will have a minimal  impact to the Company.  With respect to guaranteed
     minimum income benefits  (contract features that guarantee a minimum amount
     for  annuitization),  the Company's policy of not recognizing any liability
     during  the  accumulation  phase is  consistent  with the SOP.  However,  a
     provision that requires the establishment of a liability in addition to the
     account  balance  for  contracts  that  contain  death or  other  insurance
     benefits, which are not currently recognized as a liability by the Company,
     may have a material impact on amounts ceded to and reinsurance  recoverable
     from ALIC or other  reinsurers  depending on the market  conditions  at the
     time of adoption. Contracts that would be affected by this provision of the
     SOP  are  those  that  specify  that  the  amounts   assessed  against  the
     contractholder  each  period  for the  insurance  benefit  feature  are not
     proportionate  to the  insurance  coverage  provided for the period.  These
     contract  provisions are commonly  referred to as guaranteed  minimum death
     benefits.

2.   Reinsurance

          The Company has reinsurance agreements whereby all premiums,  contract
     charges,  credited interest, policy benefits and expenses are ceded to ALIC
     and certain non-affiliates and are reflected net of such reinsurance in the
     condensed  statements of operations.  The Company  follows a  comprehensive
     evaluation   process  involving  credit  scoring  and  capacity  to  select
     reinsurers.   Reinsurance   recoverable   and  the   related   reserve  for
     life-contingent  contract  benefits and  contractholder  funds are reported
     separately in the condensed  statements of financial position.  The Company
     continues  to have  primary  liability  as the  direct  insurer  for  risks
     reinsured.

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

                                       6
<PAGE>
                         LINCOLN BENEFIT LIFE COMPANY
                   NOTES TO THE CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)

          The effects of  reinsurance  on premiums and  contract  charges are as
     follows:

<TABLE>
<CAPTION>
                                                             Three Months Ended                    Nine Months Ended
                                                                September 30,                        September 30,
                                                        -------------------------------     --------------------------------
                                                           2002              2001               2002              2001
                                                        -------------    --------------     --------------    --------------
      (in thousands)
<S>                                                      <C>             <C>                     <C>             <C>
      Premiums and Contract charges
      Direct                                            $   150,732      $      161,918     $     465,800     $     408,375
      Assumed                                                     -                   -                 -                 1
      Ceded
         Affiliate                                          (80,242)           (100,229)         (276,283)         (242,299)
         Non-Affiliate                                      (70,490)            (61,689)         (189,517)         (166,077)
                                                        -----------      --------------     -------------     -------------
           Premiums and contract charges,
            net of reinsurance                          $         -      $            -     $           -     $           -
                                                        ===========      ==============     =============     =============

           The effects of reinsurance on credited interest, policy benefits and
other expenses are as follows:

                                                             Three Months Ended                    Nine Months Ended
                                                                September 30,                        September 30,
                                                        -------------------------------     --------------------------------
                                                            2002             2001               2002              2001
                                                        --------------   --------------     --------------    --------------
      (in thousands)

      Credited interest, Policy benefits
        and Other expenses
      Direct                                            $    291,694     $      259,981     $     880,683     $     722,097
      Ceded
         Affiliate                                          (212,002)          (177,459)         (644,513)         (521,661)
         Non-Affiliate                                       (79,692)           (82,522)         (236,170)         (200,436)
                                                        ------------     --------------     -------------     -------------
         Credited interest, policy benefits
           and other expenses, net of reinsurance       $          -     $            -     $           -     $           -
                                                        ============     ==============     =============     =============

3.   Comprehensive Income

       The components of other comprehensive income on a pretax and after-tax
basis are as follows:

                                                                      Three Months Ended September 30,
                                            ----------------------------------------------------------------------------------
    (in thousands)                                           2002                                       2001
                                            ---------------------------------------    ---------------------------------------
                                                                           After-                                    After-
                                                               Tax          tax             Pretax         Tax           tax
                                               Pretax
                                               ---------    ----------   ----------       ----------   ----------    ---------
    Unrealized capital gains and losses:

    Unrealized holding gains
      arising during the period                $   5,057    $  (1,770)  $    3,287       $   5,731    $  (2,006)    $   3,725
    Less: reclassification adjustments            (1,610)         563       (1,047)              -            -             -
                                               ---------    ---------   ----------       ---------    ---------     ---------
    Unrealized net capital gains                   6,667       (2,333)       4,334           5,731       (2,006)        3,725
                                               ---------    ---------   ----------       ---------    ---------     ---------
    Other comprehensive income                 $   6,667    $  (2,333)       4,334       $   5,731    $  (2,006)        3,725
                                               =========    =========                    =========    =========

    Net income                                                                 881                                      2,027
                                                                        ----------                                  ---------
    Comprehensive income                                                $    5,215                                  $   5,752
                                                                        ==========                                  =========



                                       7
<PAGE>



                          LINCOLN BENEFIT LIFE COMPANY
                   NOTES TO THE CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)



                                                                      Nine Months Ended September 30,
                                            ----------------------------------------------------------------------------------
    (in thousands)                                           2002                                       2001
                                            ---------------------------------------    ---------------------------------------
                                                                           After-                                    After-
                                                               Tax          tax             Pretax         Tax           tax
                                               Pretax
                                               ---------    ----------   ----------       ----------   ----------    ---------
    Unrealized capital gains and losses:

    Unrealized holding gains
      arising during the period                $  6,837     $   (2,392)  $    4,445       $    5,556    $  (1,945)   $   3,611
    Less: reclassification adjustments           (1,273)           446         (827)          (1,352)         473         (879)
                                               --------     ----------   ----------       ----------    ---------    ---------
    Unrealized net capital gains                  8,110         (2,838)       5,272            6,908       (2,418)       4,490
                                               --------     ----------   ----------       ----------   ----------    ---------
    Other comprehensive income                 $  8,110     $   (2,838)       5,272       $    6,908   $   (2,418)       4,490
                                               ========     ==========                    ==========   ==========

    Net income                                                                4,920                                      5,074
                                                                         ----------                                  ---------
    Comprehensive income                                                 $   10,192                                  $   9,564
                                                                         ==========                                  =========

</TABLE>

4.   Commitments and Contingent Liabilities

     Regulation and Legal Proceedings

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

          The Company is currently defending a nationwide class action, alleging
     among other things,  breach of contract and breach of the implied  covenant
     of good faith and fair  dealing as a result of a change in the rate and cap
     on an annuity product. The Company has been vigorously defending this suit.
     The outcome of the suit is currently uncertain.

          Various other legal and regulatory  actions are currently pending that
     involve the Company and specific  aspects of its conduct of  business.  The
     Company  is  defending  various  lawsuits  that  allege  that it engaged in
     business or sales  practices  inconsistent  with state of federal  law. The
     Company has been vigorously defending these lawsuits,  but their outcome is
     currently  uncertain.  Like other  members of the insurance  industry,  the
     Company is the  potential  target of an  increasing  number of class action
     lawsuits and other types of litigation  based on a variety of issues,  some
     of which  involve  claims  for  substantial  and/or  indeterminate  amounts
     (including  punitive  and treble  damages)  and the  outcomes  of which are
     unpredictable.  However, at this time, based on their present status, it is
     the opinion of management  that the ultimate  liability,  if any, in one or
     more of these other actions in excess of amounts  currently  accrued is not
     expected to have a material effect on the results of operations,  liquidity
     or financial position of the Company.

                                       8
<PAGE>
ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS FOR THE THREE MONTH AND NINE MONTH PERIODS
                           ENDED SEPTEMBER 30, 2002 AND 2001

     The following discussion highlights significant factors influencing results
of operations and changes in financial  position of Lincoln Benefit Life Company
(the "Company").  It should be read in conjunction with the condensed  financial
statements  and related  notes  thereto  found  under Part I. Item 1.  contained
herein and with the discussion, analysis, financial statements and notes thereto
in Part I. Item 1. and Part II. Item 7. and Item 8. of the Lincoln  Benefit Life
Company Annual Report on Form 10-K for the year ended  December 31, 2001,  which
includes a discussion of the Company's Critical Accounting Policies.

OVERVIEW

     The Company,  a wholly owned subsidiary of Allstate Life Insurance  Company
("ALIC"),  which is a wholly  owned  subsidiary  of Allstate  Insurance  Company
("AIC"),   a  wholly  owned   subsidiary  of  The  Allstate   Corporation   (the
"Corporation"),  markets a  diversified  group of  products  to meet  consumers'
lifetime  needs in the areas of  protection  and  retirement  solutions  through
independent  insurance  agents;   broker/dealers,   including  master  brokerage
agencies;  and Allstate  agencies.  Products include term life insurance;  whole
life  insurance;  universal life insurance;  variable  universal life insurance;
single premium life insurance; fixed deferred annuities,  including market value
adjusted annuities, and equity-indexed annuities; immediate annuities; immediate
annuities; variable deferred annuities and long-term care products.

     The Company has identified itself as a single segment entity.

     The assets  and  liabilities  related to  variable  contracts  are  legally
segregated  and  reflected  as  Separate  Accounts.  The assets of the  Separate
Accounts are carried at fair value.  Separate Accounts liabilities represent the
contractholders'  claims to the related assets and are carried at the fair value
of the assets.  Investment  income and realized  capital gains and losses of the
Separate Accounts accrue directly to the  contractholders  and therefore are not
included in the Company's  condensed  statements of operations.  Revenues to the
Company  from  the  Separate  Accounts  consist  of  contract   maintenance  and
administration fees and mortality,  surrender and expense charges,  all of which
are ceded to ALIC.

     Absent any  contract  provision  wherein  the Company  guarantees  either a
minimum return or account value upon death or  annuitization,  variable  annuity
and variable life insurance  contractholders  bear the investment  risk that the
Separate Accounts' funds may not meet their stated objectives.  The amounts that
represent  these contract  provisions  are ceded to ALIC in accordance  with the
reinsurance agreements.

RESULTS OF OPERATIONS
<TABLE>
<CAPTION>

                                                  Three Months Ended                  Nine Months Ended
                                                     September 30,                      September 30,
                                             ------------------------------     ------------------------------
 (in thousands)                                 2002              2001             2002              2001
                                             ------------      ------------     ------------      ------------
<S>                                          <C>               <C>              <C>               <C>
 Net investment income                       $    2,962        $     3,115      $      8,832      $      9,148
 Realized capital gains and losses               (1,610)                 -            (1,273)           (1,352)
 Income tax expense                                 471              1,088             2,639             2,722
                                             ----------        -----------      ------------      ------------

 Net income                                  $      881        $     2,027      $      4,920      $      5,074
                                             ==========        ===========      ============      ============
</TABLE>

     The Company has reinsurance agreements whereby premiums,  contract charges,
credited  interest,  policy  benefits and expenses are ceded to ALIC and certain
non-affiliates,   and  reflected  net  of  such  reinsurance  in  the  condensed
statements  of  operations.  The  Company's  results of  operations  include net
investment  income and realized capital gains and losses earned on the assets of
the Company that are not transferred under the reinsurance agreements.

                                       9
<PAGE>
ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS FOR THE THREE MONTH AND NINE MONTH PERIODS
                            ENDED SEPTEMBER 30, 2002 AND 2001

     Net income  decreased  56.5% in the third  quarter of 2002  compared to the
same period in 2001 due to  realized  capital  losses.  Net income for the first
nine months of 2002  decreased 3.0% compared to the same period last year due to
lower net investment  income  compared to the prior period  partially  offset by
lower realized capital losses in 2002 as compared to 2001.

     Pretax net investment income in the third quarter of 2002 decreased 4.9% to
$3.0 million  from $3.1  million in the same period in 2001.  For the first nine
months of 2002, pretax net investment income decreased 3.5% to $8.8 million from
$9.1 million in the same period last year. The decrease in net investment income
in both periods is due to lower investment  yields partially offset by increased
investment  balances.  Lower portfolio  yields were due to funds from operations
and reinvestments being invested at current market rates. Investment balances at
September 30, 2002,  excluding Separate Accounts and unrealized gains and losses
on fixed income securities, increased 2.1% compared to September 30, 2001.

     After-tax realized capital losses were $1.0 million in the third quarter of
2002,  all of  which  resulted  from  write-downs  of fixed  income  securities,
compared to no after-tax  realized  capital losses in the same period last year.
For the nine months ended September 30, 2002,  after-tax realized capital losses
were  $827  thousand  compared  to  after-tax  realized  capital  losses of $879
thousand for the same period in 2001. Sales gains on fixed income  securities of
$220 thousand were more than offset by write-downs on fixed income securities of
$1,047 thousand for the nine months ended September 30, 2002.  Realized  capital
gains and losses result from the sale or write-down of fixed income  securities.
Period to period  fluctuations  in  realized  capital  gains and  losses are the
result  of  timing  of  sales  decisions  reflecting  management's  decision  on
positioning the portfolio,  assessments of individual securities, overall market
conditions and  write-downs  when the Company  determines  that a decline in the
value of a security is other than temporary.

<TABLE>
<CAPTION>
FINANCIAL POSITION

(in thousands)
                                                                September 30,            December 31,
                                                                     2002                    2001
                                                               -----------------        ----------------
<S>                                                            <C>                    <C>
Fixed income securities (1)                                    $         202,622        $        186,709
Short-term                                                                 2,953                   6,856
                                                               -----------------        ----------------
         Total investments                                     $         205,575        $        193,565
                                                               =================        ================
Cash                                                           $          43,648        $         43,796
                                                               =================        ================
Reinsurance recoverable from ALIC, net                         $      11,499,848        $      9,600,660
                                                               =================        ================
Contractholder funds                                           $      11,109,753        $      9,287,599
                                                               =================        ================
Reserve for life-contingent contract benefits                  $         915,118        $        760,264
                                                               =================        ================
Separate Accounts assets and liabilities                       $       1,339,203        $      1,565,708
                                                               =================        ================
</TABLE>

(1) Fixed income securities are carried at fair value. Amortized cost for these
securities was $186.9 million and $179.1 million at September 30, 2002 and
December 31, 2001, respectively.

     Total  investments  were $205.6  million at September  30, 2002 compared to
$193.6 million at December 31, 2001. The increase was due to positive cash flows
generated  from  operations  and  increased  unrealized  gains on  fixed  income
securities.  At September 30, 2002 unrealized  gains on fixed income  securities
were $15.7 million compared to $7.6 million at December 31, 2001.

     At  September  30, 2002,  98.0% of the  Company's  fixed income  securities
portfolio  was rated  investment  grade,  which is defined  by the  Company as a
security   having  a  rating  from  the   National   Association   of  Insurance
Commissioners  ("NAIC") of 1 or 2, a Moody's  equivalent rating of Aaa, Aa, A or
Baa, or a comparable Company internal rating.

                                       10

<PAGE>
ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS FOR THE THREE MONTH AND NINE MONTH PERIODS
                            ENDED SEPTEMBER 30, 2002 AND 2001

     The Company monitors the quality of its fixed income portfolio, in part, by
categorizing certain investments as problem, restructured, or potential problem.
Problem fixed income securities are generally securities in default with respect
to principal  and/or  interest and/or  securities  issued by companies that have
entered  bankruptcy  subsequent  to the Company's  acquisition  of the security.
Restructured  fixed income  securities  have modified terms and conditions  that
were  not  reflective  of  current  market  rates  or  terms  at the time of the
restructuring.  Potential  problem  fixed  income  securities  are current  with
respect to contractual principal and/or interest, but because of other facts and
circumstances,  the Company has concerns regarding the borrower's ability to pay
future interest and principal in accordance with contractual terms, which causes
the  Company  to  believe  these  securities  may be  classified  as  problem or
restructured in the future. Provisions for losses are recognized for declines in
value of fixed  income  securities  that are deemed  other than  temporary.

     At September 30, 2002, the Company had fixed income  securities with a fair
value of $4.0 million and amortized cost of $4.8 million categorized as problem,
representing 2.0% of the fixed income  securiites  portoflio and no fixed income
securities  categorized as  restructured or potential  problem.  At December 31,
2001,  the Company had no securities  categorized  as problem,  restructured  or
potential problem. Due to the continued declining economic and market conditions
during 2002,  there is potential  for these  balances to increase in the future,
but the total amount of securities  in these  categories is expected to remain a
relatively low percentage of the total fixed income securities portfolio.

     In October 2002,  the  corporate  bond market  experienced  the fifth worst
month  on  record  for  downgrades   according  to  Moody's  Investor   Service.
Accordingly,  securities  in which  the  Company  has  holdings,  may have  been
adversely  affected.  These  downgrades are indicative of a continued  difficult
credit  environment  that may lead to increased  recognition of realized capital
losses from investment write-downs and sales activities in subsequent periods.

     The Company  writes  down to fair value a security  that is  classified  as
other than temporarily impaired in the period the security is deemed to be other
than temporarily impaired.  The assessment of other than temporary impairment is
performed on a case-by-case basis considering a wide range of factors.  Inherent
in the  Company's  evaluation  of a  particular  security  are  assumptions  and
estimates about the operations of the issuer and its future earnings  potential.
Some of the factors  considered in evaluating whether a decline in fair value is
other than  temporary  are:

     o    The Company's ability and intent to retain the investment for a period
          of time sufficient to allow for an anticipated recovery in value;

     o    The duration for and extent to which the fair value has been less than
          amortized cost for fixed income securities; and

     o    The financial  condition,  near-term prospects and long-term prospects
          of the issuer; and

     o    The specific  reasons that a security is in a  significant  unrealized
          loss position.

     There are a number of risks and  uncertainties  inherent  in the process of
monitoring  impairments  and  determining if impairment is other than temporary.
These risks and uncertainties  include the risks that:

     o    The  economic  outlook  is worse  than  anticipated  and has a greater
          adverse impact on a particular issuer than anticipated;

     o    The Company's  assessment of a particular issuer's ability to meet all
          of its contractual obligations changes; and

     o    New  information  is obtained or facts and  circumstances  change that
          cause a change in the  Company's  ability or intent to hold a security
          to maturity or until it recovers in value.

     These  risks and  uncertainties  could  result in a charge to  earnings  in
future periods to the extent related losses are realized. The charge to earnings
would not have a significant  impact on Shareholder's  equity since the majority
of the portfolio is held at fair value and as a result,  the related  unrealized
gain  (loss),   net  of  tax,  is  currently   reflected  as  Accumulated  other
comprehensive income in Shareholder's equity.


                                       11
<PAGE>
ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS FOR THE THREE MONTH AND NINE MONTH PERIODS
                           ENDED SEPTEMBER 30, 2002 AND 2001


     The Company has a monitoring  process to identify  fixed income  securities
whose  carrying  value may be other  than  temporarily  impaired.  This  process
includes a  quarterly  review of all  securities  using a  screening  process to
identify those securities whose market value compared to amortized cost is below
established  thresholds or are identified through other monitoring criteria such
as ratings  downgrades  or  payment  defaults.  The  securities  identified,  in
addition  to other  securities  for  which  the  Company  may have  concern,  or
securities   considered  to  be  problem,   restructured  or  potential  problem
securities,  are evaluated based on facts and circumstances for inclusion on the
"watchlist."  Securities  on the  watchlist  are reviewed in detail to determine
whether any other than temporary impairment exists.

     The Company recorded  after-tax  losses on fixed income  securities of $827
thousand for the nine months ended  September 30, 2002,  which was driven by the
write-down of a security issued by a global energy company and power  generator,
which had missed  coupon  payments  in  September  due to  severely  constrained
liquidity. Some sectors of the utility industry are under severe fundamental and
technical pressure and we are monitoring the industry very closely.

     At September 30, 2002,  cash of $43.6 million was comparable to the balance
of $43.8 million at December 31, 2001.

     At September  30, 2002,  Contractholder  funds  increased  $1.82 billion to
$11.11 billion from $9.29 billion at December 31, 2001 as the result of deposits
from  fixed  annuities  and  credited  interest  that were  partially  offset by
surrenders and withdrawals.  At September 30, 2002, reserves for life-contingent
contract benefits increased $154.8 million to $915.1 million from $760.3 million
at December 31, 2001 resulting  from increased  sales of term products and sales
of immediate  annuities with life  contingencies  that were partially  offset by
benefits paid.  Reinsurance  recoverable from ALIC increased  correspondingly by
$1.90  billion due to the  increase in  contractholder  funds and  reserves  for
life-contingent contract benefits.

     At September 30, 2002 Separate  Accounts assets and  liabilities  decreased
14.5% to $1.34  billion as  compared  to the  December  31,  2001  balance.  The
decrease  was  primarily  attributable  to  declines  in the  fair  value of the
Separate  Accounts  investment  portfolios  due  to  equity  market  conditions,
surrenders and withdrawals  and expense  charges,  partially  offset by sales of
variable annuity  contracts and transfers from the fixed account contract option
to variable Separate Accounts funds.

CAPITAL RESOURCES AND LIQUIDITY

Capital Resources
     The Company's capital resources consist of shareholder's equity. The
following table summarizes the Company's capital resources.
<TABLE>
<CAPTION>

                                                      September 30,         December 31,
(in thousands)                                             2002                 2001
                                                     -----------------    -----------------
<S>                                                  <C>                   <C>
Common stock and retained income                     $        188,593     $        183,673
Accumulated other comprehensive income                         10,202                4,930
                                                     ----------------     ----------------
   Total shareholder's equity                        $        198,795     $        188,603
                                                     ================     ================
</TABLE>

Shareholder's equity
     Shareholder's equity increased $10.2 million in the first nine months of
2002 when compared to December 31, 2001, due to an increase in unrealized net
capital gains and net income.

Debt
     The Company had no outstanding debt at September 30, 2002 and December 31,
2001.

Financial Ratings and Strength
     Insurance   financial   strength   ratings  are  an  important   factor  in
establishing the competitive  position of insurance  companies and generally may
be expected to have an effect on an  insurance  company's  sales.  On an ongoing
basis,  rating  agencies  review the  financial  performance  and  condition  of
insurers. A multiple level downgrade,  while not expected, could have a material
adverse  effect on the Company's  business,  financial  condition and results of
operations.  The Company shares the insurance  financial strength ratings of its
parent,  ALIC, due to the reinsurance  agreements.  ALIC's  insurance  financial
strength was rated Aa2, AA+, and A+ by Moody's, Standard & Poor's and A.M. Best,
respectively, at September 30, 2002.

                                       12
<PAGE>
ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS FOR THE THREE MONTH AND NINE MONTH PERIODS
                           ENDED SEPTEMBER 30, 2002 AND 2001

     In October  2002,  Standard & Poor's  affirmed its ratings and its negative
outlook  for ALIC and its  rated  subsidiaries  and  affiliates,  including  the
Company.  The  outlook  had been  changed  in  February  2002 from  "stable"  to
"negative" as part of an ongoing life insurance  industry review being conducted
by  Standard  & Poor's.  Since  December  31,  2001,  there have been no ratings
changes for ALIC or the Company from A.M. Best or Moody's.

Liquidity

The principal, potential sources of funds for the Company include the following
activities:

       Premiums and deposits
       Reinsurance recoveries
       Receipts of principal, interest and dividends on investments
       Sales of investments
       Capital contributions from ALIC
       Inter-company loans

The principal, potential uses of funds for the Company include the following
activities:

       Payment of contract benefits, maturities, surrenders and withdrawals
       Reinsurance cessions and payments
       Operating expenses
       Purchase of investments
       Repayment of inter-company loans
       Dividends to ALIC

     Under the terms of reinsurance agreements, premiums and deposits, excluding
those relating to Separate  Accounts,  are transferred  primarily to ALIC, which
maintains the investment portfolios supporting the Company's products.  Payments
of policyholder claims, benefits,  including guaranteed minimum income and death
benefits,  contract maturities,  contract surrenders and withdrawals and certain
operating  costs,  excluding  investment-related  expenses,  are also reimbursed
primarily by ALIC,  under the terms of the reinsurance  agreements.  The Company
continues to have primary liability as a direct insurer for risks reinsured. The
Company's  ability to meet  liquidity  demands is dependent on ALIC's ability to
meet those obligations under the reinsurance program.

     The Company has  entered  into an  inter-company  loan  agreement  with the
Corporation.  The amount of  inter-company  loans available to the Company is at
the discretion of the  Corporation.  The maximum amount of loans the Corporation
will have  outstanding  to all its eligible  subsidiaries  at any given point in
time is limited to $1.00 billion.  No amounts were  outstanding  for the Company
under the  inter-company  loan  agreement at September 30, 2002 and December 31,
2001, respectively.

FORWARD-LOOKING STATEMENTS AND RISK FACTORS

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

     Forward-looking  statements do not relate strictly to historical or current
facts and may be  identified  by their  use of words  like  "plans,"  "expects,"
"will," "anticipates,"  "estimates,"  "intends," "believes," "likely," and other
words with similar meanings.  These statements may address,  among other things,
the Company's strategy for growth,  product development,  regulatory  approvals,
market  position,  expenses,  financial  results and  reserves.  Forward-looking
statements are based on management's  current expectations of future events. The
Company cannot  guarantee that any  forward-looking  statement will be accurate.
However,  management believes that our  forward-looking  statements are based on
reasonable,  current  expectations and  assumptions.  We assume no obligation to
update any  forward-looking  statements as a result of new information or future
events or developments.
                                       13
<PAGE>
ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS FOR THE THREE MONTH AND NINE MONTH PERIODS
                           ENDED SEPTEMBER 30, 2002 AND 2001

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

o    There  is   uncertainty   involved  in  estimating  the   availability   of
     non-affiliate   reinsurance  and  the  collectibility  of  reinsurance  and
     recoverables.  This uncertainty arises from a number of factors,  including
     whether losses meet the qualifying  conditions of the reinsurance contracts
     and if the reinsurers have the financial capacity and willingness to pay.

o    Currently,  the  Corporation  is examining  the  potential  exposure of its
     insurance  operations  to  acts  of  terrorism.  The  Corporation  is  also
     examining  how best to address this exposure  considering  the interests of
     policyholders,  shareholders, the lending community, regulators and others.
     The Company's life insurance  policies and annuities do not have exclusions
     for terrorist events. In the event that a terrorist act occurs, the Company
     may be  adversely  impacted,  depending  on the nature of the  event.  With
     respect to the Company's investment portfolio, in the event that commercial
     insurance  coverage for terrorism  becomes  unavailable  or too  expensive,
     there could be significant adverse impacts on some portion of the Company's
     portfolio,  particularly  in sectors such as airlines and real estate.  For
     example,  certain debt obligations  might be adversely  affected due to the
     inability  to obtain  coverage to restore the related  real estate or other
     property, thereby creating the potential for increased default risk.

o    Changes in market interest rates can have an adverse impact on the value of
     the investment portfolio and investment income.  Increasing market interest
     rates have an adverse impact on the value of the investment portfolio,  for
     example,  by  decreasing  the  fair  values  of  fixed  income  securities.
     Declining  market interest rates could have an adverse impact on investment
     income as the Company  reinvests  proceeds  from  positive  cash flows from
     operations and from  maturities,  calls and prepayments of investments into
     new investments that could yield less than the portfolio's average rate.

o    Changes in  interest  rates  could also  reduce  the  profitability  of the
     Company's  spread-based  products,   particularly  interest-sensitive  life
     insurance and investment  products,  as the  difference  between the amount
     that the Company is required to pay on such products and the rate of return
     earned on the  related  investments  could be  reduced.  Changes  in market
     interest  rates as  compared  to  rates  offered  on some of the  Company's
     products  could  make  those   products  less   attractive  if  competitive
     investment  margins  are not  maintained,  leading  to lower  sales  and/or
     changes in the level of surrenders and withdrawals for these products.  The
     Company's products generally have the flexibility to adjust crediting rates
     to reflect higher or lower investment returns. However, this flexibility is
     limited by contractual minimum crediting rates. Additionally, unanticipated
     surrenders  could cause  acceleration  of  amortization  of deferred policy
     acquisition  costs ("DAC") or impact the  recoverability of DAC and thereby
     increase expenses ceded to ALIC and reduce current period  profitability of
     ALIC. The Company seeks to limit its exposure to this risk by  periodically
     reviewing and revising  crediting rates and providing for surrender charges
     in the event of early withdrawal.

o    The Company amortizes DAC related to interest-sensitive  life insurance and
     investment  contracts in  proportion  to gross  profits over the  estimated
     lives of the contracts.  Periodically,  the Company updates the assumptions
     underlying  the estimated  future gross  profits,  which include  estimated
     future  contract  charges,  investment  margins and  expenses,  in order to
     reflect  actual and expected  experience  and its  potential  impact to the
     valuation of DAC. Updates to these  assumptions  could result in adjustment
     to the  cumulative  amortization  of DAC.  For example,  reduced  estimated
     future gross profits  resulting from declines in contract  charges assessed
     against declining  Separate  Accounts'  balances resulting from poor equity
     market  performance  could result in  accelerated  amortization  of DAC. An
     adjustment,  if any,  may have a material  effect on results of  operations
     ceded to ALIC.

o    The impact of decreasing Separate Accounts balances resulting from volatile
     market  conditions,  underlying  fund  performance  and the  performance of
     distributors  could cause contract  charges earned by the Company and ceded
     to ALIC to decrease  and lead to an increase of exposure to pay  guaranteed
     minimum  death and  income  benefits  and could  also  result in  increased
     statutory  reserves  for these  benefits  ceded to ALIC,  thereby  reducing
     ALIC's statutory capital and surplus. In addition,  it is possible that the
     assumptions and projections used by the Company in establishing  prices for
     the  guaranteed  minimum  death  benefits  and  guaranteed  minimum  income
     benefits on variable  annuities,  particularly  assumptions and projections
     about  investment  performance,  do not accurately  anticipate the level of
     costs the Company will ultimately incur and cede to ALIC in providing those
     benefits,  resulting  in adverse  mortality  margin  trends that may have a
     material effect on results of operations ceded to ALIC.

o    Conditions in the U.S. and  international  stock markets can have an impact
     on the Company's  variable  annuity  sales.  In general,  sales of variable
     annuities  increase  when the stock  markets  are rising  over an  extended
     period of time and decrease when stock markets are falling over an extended
     period of time.
                                       14
<PAGE>
ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS FOR THE THREE MONTH AND NINE MONTH PERIODS
                          ENDED SEPTEMBER 30, 2002 AND 2001

o    In order to  manage  interest  rate  risk,  from  time to time the  Company
     manages  the  effective  duration  of assets in the  investment  portfolio.
     Adjustments made to modify durations may have an impact on the value of the
     investment portfolio and on investment income.

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

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

o    The  Company is  affiliated  with  various  entities  registered  under the
     federal  securities  laws as  broker-dealers,  investment  advisers  and/or
     investment  companies.   These  entities  are  subject  to  the  regulatory
     jurisdiction  of the  Securities  and  Exchange  Commission,  the  National
     Association of Securities  Dealers and/or, in some cases,  state securities
     administrators.  The laws regulating the securities products and activities
     of the entities are  complex,  numerous and subject to change.  As with any
     highly  regulated  industry,  there is some  degree  of risk of  regulatory
     non-compliance;  however  the  Company  has  in  place  various  legal  and
     compliance personnel,  procedures and systems designed to reasonably assure
     compliance with these requirements.

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

o    The events of  September  11, 2001,  and the  resulting  disruption  in the
     financial  markets  revealed  weaknesses  in the physical  and  operational
     infrastructure  that  underlies the U.S. and worldwide  financial  systems.
     Those  weaknesses  did not impair the  Company's  liquidity  in the wake of
     September 11, 2001.  However,  if an event of similar or greater  magnitude
     occurred  in  the  future  and  if  the  weaknesses  in  the  physical  and
     operational  infrastructure of the U.S. and worldwide financial systems are
     not  remedied,  the Company could  encounter  significant  difficulties  in
     transferring  funds,  buying and selling  securities  and engaging in other
     financial transactions that support its liquidity.

o    While  positive  operating  cash flows are expected to continue to meet the
     Corporation's liquidity requirements,  the Corporation's liquidity could be
     constrained  by a catastrophe  which  results in  extraordinary  losses,  a
     downgrade of the  Corporation's  current long-term debt rating of A1 and A+
     (from Moody's and Standard & Poor's,  respectively) to non-investment grade
     status  of  below  Baa3/BBB-,  a  downgrade  of AIC's  insurance  financial
     strength  rating from Aa2, AA and A+ (from  Moody's,  Standard & Poor's and
     A.M. Best,  respectively) to below  Baa/BBB/B,  or a downgrade in ALIC's or
     the  Company's  insurance  financial  strength  rating from Aa2, AA+ and A+
     (from  Moody's,  Standard & Poor's and A.M.  Best,  respectively)  to below
     Aa3/AA-/A-.  In the  event of a  downgrade  of the  Corporation's  or AIC's
     rating,  ALIC  and its  subsidiaries  including  the  Company,  could  also
     experience a similar downgrade.

o    Insurance   financial   strength   ratings  are  an  important   factor  in
     establishing the competitive  position of insurance companies and generally
     may be expected to have an effect on an insurance company's business. On an
     ongoing  basis,  rating  agencies  review  the  financial  performance  and
     condition of insurers and could downgrade or change a company's ratings due
     to, for example, a decline in the value of a company's investment portfolio
     or increased  reserves due to  additional  minimum  income or death benefit
     exposure resulting from market declines.  A multiple level downgrade of the
     Corporation, AIC, ALIC or the  Company,  while not  expected,  could have a
     material   adverse   affect  on  the   Company's   sales,   including   the
     competitiveness of the Company's product  offerings,  its ability to market
     products, and its financial condition and results of operations.  Also, the
     rating  agencies  have a variety of policies and  practices  regarding  the
     relationships among ratings of affiliated entities. As such, the ratings of
     the  Company or ALIC could be  affected by changes in ratings of AIC and/or
     the Corporation.
                                       15
<PAGE>
ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS FOR THE THREE MONTH AND NINE MONTH PERIODS
                        ENDED SEPTEMBER 30, 2002 AND 2001

o    State  insurance  regulatory  authorities  require  insurance  companies to
     maintain  specified levels of statutory  capital and surplus.  In addition,
     competitive  pressures require the Company to maintain insurance  financial
     strength ratings.  These  restrictions  affect the Company's ability to pay
     shareholder dividends to ALIC and to use its capital in other ways.

o    The Company currently has Separate Accounts liabilities which contain death
     benefit  features  covered by the  exposure  draft  Statement  of  Position
     ("SOP")  entitled  "Accounting  and Reporting by Insurance  Enterprises for
     Certain Nontraditional  Long-Duration Contracts and for Separate Accounts".
     The Company does not currently hold  liabilities for death benefit features
     covered by the SOP. If the SOP is adopted,  the Company's  establishment of
     liabilities  with respect to the contracts  could have a material impact on
     the amounts ceded to and reinsurance  recoverable from ALIC;  however,  the
     market  values  at the time of  adoption  will  affect  the  amount  of the
     liability required.

o    Following  enactment  of  the   Gramm-Leach-Bliley  Act  of  1999,  federal
     legislation that allows mergers that combine commercial banks, insurers and
     securities  firms,  state  insurance   regulators  have  been  collectively
     participating in a reexamination of the regulatory framework that currently
     governs the United States insurance  business in an effort to determine the
     proper role of state insurance  regulation in the U.S.  financial  services
     industry.  In addition,  members of Congress  have  introduced or discussed
     measures to permit optional federal  chartering,  and thus  regulation,  of
     some types of insurance business,  such as life insurance and annuities. We
     cannot  predict  whether any state or federal  measures  will be adopted to
     change the nature or scope of the  regulation of the insurance  business or
     what effect any such measures would have on the Company.

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

o    Like other members of the insurance industry,  the Company is the potential
     target of an increasing  number of class action lawsuits and other types of
     litigation  based on a variety of issues,  some of which involve claims for
     substantial and/or  indeterminate  amounts  (including  punitive and treble
     damages) and the outcomes of which are  unpredictable.  Generally  accepted
     accounting  principles ("GAAP") prescribe when the Company has a contingent
     liability  and may  reserve  for  particular  risks,  including  litigation
     exposures.  Therefore,  results  ceded to ALIC for a given  period could be
     significantly   adversely  affected  when  a  reserve  is  established  for
     litigation.

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

o    The design of any system of controls  and  procedures,  including  internal
     controls  and  disclosure  controls and  procedures,  is based in part upon
     assumptions about the likelihood of future events.  As a result,  there can
     be no assurance  that any design will succeed in achieving its stated goals
     under all potential future conditions, regardless of how remote.

o    The impact of The Sarbanes-Oxley Act of 2002 on the business of the Company
     is being  evaluated  but  cannot be  completely  determined  at this  time,
     particularly as it relates to split-dollar life insurance products.

                                       16
<PAGE>



                         ITEM 4. CONTROLS AND PROCEDURES

     Within the 90 days prior to the date of the filing of this report and under
the  supervision  and  with  the  participation  of  the  Company's  management,
including the principal executive officer and principal  financial officer,  the
Company evaluated the effectiveness of the design and operation of the Company's
disclosure controls and procedures with respect to its quarterly reports on Form
10-Q and its  current  reports on Form 8-K to be filed with the  Securities  and
Exchange Commission ("SEC"). Based upon that evaluation, the principal executive
officer and the principal  financial  officer  concluded  that these  disclosure
controls  and  procedures  are  effective  in timely  alerting  them to material
information  relating  to the Company  required to be included in the  Company's
quarterly reports on Form 10-Q and its current reports on Form 8-K.  "Disclosure
controls and  procedures" are those controls and procedures that are designed to
ensure that  information  required to be disclosed by the Company in the reports
that it files or submits under the Securities  Exchange Act of 1934 is recorded,
processed,  summarized  and reported,  within the time periods  specified in the
SEC's rules and forms.  They include controls and procedures  designed to ensure
that  information  required to be  disclosed  by the Company in reports  that it
files or submits under that Act is accumulated and communicated to the Company's
management,  including the principal  executive officer and principal  financial
officer, as appropriate to allow timely decisions regarding required disclosure.

     In addition,  there were no significant  changes in the Company's  internal
controls or in other  factors that could  significantly  affect  these  internal
controls subsequent to the date of their evaluation.


                                       17

<PAGE>




         PART II - OTHER INFORMATION

         Item 1.      Legal Proceedings

                  The discussion "Regulation and Legal Proceedings" in Part I,
         Item 1, Note 4 of this Form 10-Q is incorporated herein by reference.

         Item 6.  Exhibits and Reports on Form 8-K

                (a)   Exhibits

                      None.

                (b) Reports on Form 8-K

                      None.

                                       18
<PAGE>




                                   SIGNATURES


         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                           Lincoln Benefit Life Company
                                  (Registrant)

November 14, 2002          /s/  Samuel H. Pilch
                                Samuel H. Pilch
                                (chief accounting officer and duly
                                authorized officer of the Registrant)


                                 CERTIFICATIONS
I, Casey J. Sylla, certify that:

1. I have reviewed this  quarterly  report on Form 10-Q of Lincoln  Benefit Life
Company;

2. Based on my  knowledge,  this  quarterly  report  does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed  such  disclosure  controls and  procedures  to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others  within those  entities,  particularly  during the
period in which this quarterly report is being prepared;

b) evaluated  the  effectiveness  of the  registrant's  disclosure  controls and
procedures  as of a date  within  90  days  prior  to the  filing  date  of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of
the  disclosure  controls  and  procedures  based  on our  evaluation  as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

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

b) any  fraud,  whether  or not  material,  that  involves  management  or other
employees who have a significant role in the registrant's internal controls; and

6. The  registrant's  other  certifying  officers  and I have  indicated in this
quarterly  report  whether or not there  were  significant  changes in  internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant  deficiencies and material weaknesses.

Date: November 14, 2002             /s/ Casey J. Sylla
                                   Chairman of the Board and Chief  Executive
                                        Officer
                                       19
<PAGE>

I. Steven E. Shebik, certify that:

1. I have reviewed this  quarterly  report on Form 10-Q of Lincoln  Benefit Life
Company;

2. Based on my  knowledge,  this  quarterly  report  does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed  such  disclosure  controls and  procedures  to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others  within those  entities,  particularly  during the
period in which this quarterly report is being prepared;

b) evaluated  the  effectiveness  of the  registrant's  disclosure  controls and
procedures  as of a date  within  90  days  prior  to the  filing  date  of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of
the  disclosure  controls  and  procedures  based  on our  evaluation  as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

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

b) any  fraud,  whether  or not  material,  that  involves  management  or other
employees who have a significant role in the registrant's internal controls; and

6. The  registrant's  other  certifying  officers  and I have  indicated in this
quarterly  report  whether or not there  were  significant  changes in  internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant  deficiencies and material weaknesses.

 Date: November 14, 2002         /s/ Steven E. Shebik
                                 Senior Vice President and Chief Financial
                                   Officer

                                       20

<PAGE>



                                  CERTIFICATION
                   Pursuant to 18 United States Code ss. 1350

     Each  of  the  undersigned  hereby  certifies  that  to his  knowledge  the
Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2002 of
Lincoln  Benefit Life  Company (the  "Company")  filed with the  Securities  and
Exchange  Commission  fully complies with the  requirements  of Section 13(a) or
15(d) of the Securities Exchange Act of 1934 and that the information  contained
in  such  report  fairly  presents,  in all  material  respects,  the  financial
condition and results of operations of the Company.

Date:  November 14, 2002
                                  /s/  Casey J. Sylla
                                  Casey J. Sylla
                                  Chairman of the Board and
                                  Chief Executive Officer

                                  /s/  Steven E. Shebik
                                  Steven E. Shebik
                                  Senior Vice President and
                                  Chief Financial Officer


                                       21