UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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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.

|ý                                             | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|--------------------------------------------- | ----------------------------------------------------------------------------------------
|FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2004
|OR                                           
|o                                             | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|Commission file number: 333-111553           

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

|Nebraska(State of Incorporation)                                                 |  | 47-0221457(I.R.S. Employer Identification No.)
|-------------------------------------------------------------------------------- |  | ----------------------------------------------
|2940 South 84th Street
Lincoln, Nebraska(Address of principal executive offices) |  | 68506(Zip Code)                               
|Registrant's telephone number, including area code:800/525-9287                 

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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 ý
No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act.

Yes o
No ý

As of April 30, 2004, the registrant had 25,000 common shares, $100 par value, outstanding, all of which are held by Allstate Life Insurance Company



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LINCOLN BENEFIT LIFE COMPANY
INDEX TO QUARTERLY REPORT ON FORM 10-Q
March 31, 2004

|PART I.  |  | FINANCIAL INFORMATION                                                                                    |  |   
|-------- |  | -------------------------------------------------------------------------------------------------------- |  | --
|Item 1.  |  | Financial Statements                                                                                     |  |   
|         |  | Condensed Statements of Operations for the Three-Month Periods Ended March 31, 2004 and 2003 (unaudited) |  | 3 
|         |  | Condensed Statements of Financial Position as of March 31, 2004 (unaudited) and December 31, 2003        |  | 4 
|         |  | Condensed Statements of Cash Flows for the Three-Month Periods Ended March 31, 2004 and 2003 (unaudited) |  | 5 
|         |  | Notes to Condensed Financial Statements (unaudited)                                                      |  | 6 
|Item 2.  |  | Management's Discussion and Analysis of Financial Condition and Results of Operations                    |  | 12
|Item 4.  |  | Controls and Procedures                                                                                  |  | 16
|PART II. |  | OTHER INFORMATION                                                                                        |  |   
|Item 1.  |  | Legal Proceedings                                                                                        |  | 16
|Item 6.  |  | Exhibits and Reports on Form 8-K                                                                         |  | 16

2

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PART I.    FINANCIAL INFORMATION

Item 1.    Financial Statements

LINCOLN BENEFIT LIFE COMPANY
CONDENSED STATEMENTS OF OPERATIONS

|                                                 |                                   | Three Months Ended March 31,
|------------------------------------------------ | --------------------------------- | ----------------------------
|
|
|Revenues                                         |                                   |                             
|                                                 | Net investment income             |                             
|                                                 | Realized capital gains and losses |                             
|                                                 |                                   |                             
|Income from operations before income tax expense |                                   |                             
|Income tax expense                               |                                   |                             
|                                                 |                                   |                             
|Net income                                       |                                   | $                           
|                                                 |                                   |                             

See notes to condensed financial statements.

3

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LINCOLN BENEFIT LIFE COMPANY
CONDENSED STATEMENTS OF FINANCIAL POSITION

|(in thousands, except par value data)                                                                  |                                                                               | March 31,
2004    |                                              | December 31,
2003
|------------------------------------------------------------------------------------------------------ | ----------------------------------------------------------------------------- | ----------------- | -------------------------------------------- | -----------------
|
|Assets                                                                                                 |                                                                               |                   |                                              |                  
|Investments                                                                                            |                                                                               |                   |                                              |                  
|                                                                                                       | Fixed income securities, at fair value (amortized cost $197,966 and $197,942) |                   | $                                            | 212,885          
|                                                                                                       | Short-term                                                                    |                   |                                              | 5,993            
|                                                                                                       |                                                                               |                   |                                              |                  
|                                                                                                       |                                                                               | Total investments |                                              |                  
|Cash                                                                                                   |                                                                               |                   | 23,453                                       |                  
|Reinsurance recoverable from Allstate Life Insurance Company, net                                      |                                                                               |                   | 15,160,610                                   |                  
|Reinsurance recoverable from non-affiliates, net                                                       |                                                                               |                   | 718,211                                      |                  
|Receivable from affiliates, net                                                                        |                                                                               |                   | 1,284                                        |                  
|Current income taxes receivable                                                                        |                                                                               |                   | 474                                          |                  
|Other assets                                                                                           |                                                                               |                   | 72,268                                       |                  
|Separate Accounts                                                                                      |                                                                               |                   | 2,043,363                                    |                  
|                                                                                                       |                                                                               |                   |                                              |                  
|                                                                                                       |                                                                               |                   | Total assets                                 |                  
|                                                                                                       |                                                                               |                   |                                              |                  
|Liabilities                                                                                            |                                                                               |                   |                                              |                  
|Contractholder funds                                                                                   |                                                                               | $                 | 14,355,494                                   |                  
|Reserve for life-contingent contract benefits                                                          |                                                                               |                   | 1,512,161                                    |                  
|Unearned premiums                                                                                      |                                                                               |                   | 20,402                                       |                  
|Deferred income taxes                                                                                  |                                                                               |                   | 5,496                                        |                  
|Payable to affiliates, net                                                                             |                                                                               |                   |                                             |                  
|Other liabilities and accrued expenses                                                                 |                                                                               |                   | 87,374                                       |                  
|Separate Accounts                                                                                      |                                                                               |                   | 2,043,363                                    |                  
|                                                                                                       |                                                                               |                   |                                              |                  
|                                                                                                       |                                                                               |                   | Total liabilities                            |                  
|                                                                                                       |                                                                               |                   |                                              |                  
|Commitments and Contingent Liabilities (Note 3)                                                        |                                                                               |                   |                                              |                  
|Shareholder's equity                                                                                   |                                                                               |                   |                                              |                  
|Common stock, $100 par value, 30 thousand shares authorized, 25 thousand shares issued and outstanding |                                                                               |                   | 2,500                                        |                  
|Additional capital paid-in                                                                             |                                                                               |                   | 130,305                                      |                  
|Retained income                                                                                        |                                                                               |                   | 71,749                                       |                  
|Accumulated other comprehensive income:                                                                |                                                                               |                   |                                              |                  
|                                                                                                       | Unrealized net capital gains and losses                                       |                   |                                              | 9,697            
|                                                                                                       |                                                                               |                   |                                              |                  
|                                                                                                       |                                                                               |                   | Total accumulated other comprehensive income |                  
|                                                                                                       |                                                                               |                   |                                              |                  
|                                                                                                       |                                                                               |                   | Total shareholder's equity                   |                  
|                                                                                                       |                                                                               |                   |                                              |                  
|                                                                                                       |                                                                               |                   | Total liabilities and shareholder's equity   |                  
|                                                                                                       |                                                                               |                   |                                              |                  

See notes to condensed financial statements.

4

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LINCOLN BENEFIT LIFE COMPANY
CONDENSED STATEMENTS OF CASH FLOWS

|                                     |                                                                                   | Three Months Ended
March 31,          |                                                                                                        
|------------------------------------ | --------------------------------------------------------------------------------- | ------------------------------------- | -------------------------------------------------------------------------------------------------------
|
|
|Cash flows from operating activities |                                                                                   |                                       |                                                                                                        
|                                     | Net income                                                                        |                                       | $                                                                                                      
|                                     | Adjustments to reconcile net income to net cash provided by operating activities: |                                       |                                                                                                        
|                                     |                                                                                   | Amortization and other non-cash items |                                                                                                        
|                                     |                                                                                   | Realized capital gains and losses     |                                                                                                        
|                                     |                                                                                   | Changes in:                           |                                                                                                        
|                                     |                                                                                   |                                       | Reserve for life-contingent contract benefits and contractholder funds, net of reinsurance recoverables
|                                     |                                                                                   |                                       | Income taxes payable                                                                                   
|                                     |                                                                                   |                                       | Receivable/payable to affiliates, net                                                                  
|                                     |                                                                                   |                                       | Other operating assets and liabilities                                                                 
|                                     |                                                                                   |                                       |                                                                                                        
|                                     |                                                                                   |                                       |                                                                                                        
|                                     |                                                                                   |                                       |                                                                                                        
|Cash flows from investing activities |                                                                                   |                                       |                                                                                                        
|                                     | Fixed income securities                                                           |                                       |                                                                                                        
|                                     |                                                                                   | Proceeds from sales                   |                                                                                                        
|                                     |                                                                                   | Investment collections                |                                                                                                        
|                                     |                                                                                   | Investment purchases                  |                                                                                                        
|                                     | Change in short-term investments                                                  |                                       |                                                                                                        
|                                     |                                                                                   |                                       |                                                                                                        
|                                     |                                                                                   |                                       |                                                                                                        
|                                     |                                                                                   |                                       |                                                                                                        
|Net decrease in cash                 |                                                                                   |                                       | (3                                                                                                     
|Cash at beginning of period          |                                                                                   |                                       | 23,456                                                                                                 
|                                     |                                                                                   |                                       |                                                                                                        
|Cash at end of period                |                                                                                   | $                                     | 23,453                                                                                                 
|                                     |                                                                                   |                                       |                                                                                                        

See notes to condensed financial statements.

5

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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 March 31, 2004, and for the three-month periods ended March 31, 2004 and 2003, 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
Company's Annual Report on Form 10-K for the year ended December 31, 2003. The results of operations for the interim periods should not be considered indicative of results to
be expected for the full year.

Adopted accounting standard

Statement of Position 03-1, "Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for
Separate Accounts" ("SOP 03-1")

On
January 1, 2004, the Company adopted SOP 03-1. The major provisions of the SOP affecting the Company require:





The cumulative effect of the change in accounting principle from implementing SOP 03-1 was a loss of $26.9 million,
after-tax ($41.4 million, pre-tax) that was ceded to ALIC under the terms of the reinsurance agreement. It was comprised of increases in contractholder funds of
$30.0 million, pre-tax, and reserves for life-contingent contract benefits of $11.4 million, pre-tax.



The Company offers various guarantees to variable contractholders including a return of no less than (a) total deposits made on the contract less any
customer withdrawals, (b) total deposits made on the contract less any customer withdrawals plus a minimum return or (c) the highest contract value on a specified anniversary date minus
any customer withdrawals following the contract anniversary. These guarantees include benefits that are payable in the event of death, upon annuitization, or at specified dates during the accumulation
period.

The
table below presents information regarding the Company's variable contracts with guarantees. The Company's variable annuity contracts may offer more than one type of guarantee in
each contract; therefore, the sum of amounts listed exceeds the total account balances of variable annuity contracts' separate accounts with guarantees.

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|($ in millions)                 |                                                                       | March 31, 2004
|------------------------------- | --------------------------------------------------------------------- | --------------
|In the event of death           |                                                                       |               
|                                | Account value                                                         |               
|                                | Net amount at risk(1)                                                 |               
|                                | Average attained age of contractholders                               |               
|At annuitization                |                                                                       |               
|                                | Account value                                                         |               
|                                | Net amount at risk(2)                                                 |               
|                                | Weighted average waiting period until annuitization options available |               
|Accumulation at specified dates |                                                                       |               
|                                | Account value                                                         |               
|                                | Net amount at risk(3)                                                 |               
|                                | Weighted average waiting period until guarantee date                  |               

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Account
balances of variable contracts' separate accounts with guarantees were invested as follows:

|(in millions)                                                     |  | March 31, 2004
|----------------------------------------------------------------- |  | --------------
|Equity securities (including mutual funds)                        |  | $             
|Cash and cash equivalents                                         |  |               
|                                                                  |  |               
|Total variable contracts' separate account assets with guarantees |  | $             
|                                                                  |  |               

Pending accounting standard

Emerging Issues Task Force Topic No. 03-01, "The Meaning of Other-Than-Temporary Impairment and Its Application to Certain
Investments" ("EITF No. 03-01")

In March 2004, the Emerging Issues Task Force ("EITF") reached a final consensus on EITF No. 03-01, which is effective for reporting
periods beginning after June 15, 2004. EITF No. 03-01 requires that when the fair value of an investment security is less than its carrying value an impairment exists for
which a determination must be made as to whether the impairment is other-than-temporary. An impairment loss should be recognized equal to the difference between the
investment's carrying value and its fair value when an impairment is other-than-temporary. The EITF No. 03-01 impairment model applies to all investment
securities accounted for under Statement of Financial Accounting Standard ("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity Securities" and to investment securities
accounted for under the cost method to the extent an impairment indicator exists or the reporting entity has estimated the fair value of the investment security in connection with SFAS No. 107,
"Disclosures about Fair Value of Financial Instruments". The disclosures required for investment securities accounted for under the cost method are effective for annual periods for fiscal years ending
after June 15, 2004. The adoption of EITF No. 03-01 is not expected to result in a material change in the Company's Condensed Statements of Operations or Financial Position.

2.     Reinsurance

The Company has reinsurance agreements whereby all premiums, contract charges, interest credited to contractholder funds, contract benefits and certain 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.

7

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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
Statements of Operations as those assets are owned and managed by ALIC or third party reinsurers under terms of the reinsurance agreements.

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

|                              |               | Three months ended
March 31,                      |        
|----------------------------- | ------------- | ------------------------------------------------- | -------
|
|Premiums and contract charges |               |                                                   |        
|Direct                        |               | $                                                 | 168,305
|Assumednon-affiliate         |               |                                                   | 650    
|Ceded                         |               |                                                   |        
|                              | Affiliate     |                                                   |        
|                              | Non-affiliate |                                                   |        
|                              |               |                                                   |        
|                              |               | Premiums and contract charges, net of reinsurance |        
|                              |               |                                                   |        

The effects of reinsurance on interest credited to contractholder funds, contract benefits and certain other expenses are as follows:

|                                                                                        |               | Three months ended
March 31,                                                                                |        
|--------------------------------------------------------------------------------------- | ------------- | ----------------------------------------------------------------------------------------------------------- | -------
|
|Interest credited to contractholder funds, contract benefits and certain other expenses |               |                                                                                                             |        
|Direct                                                                                  |               | $                                                                                                           | 414,452
|Assumednon-affiliate                                                                   |               |                                                                                                             | 461    
|Ceded                                                                                   |               |                                                                                                             |        
|                                                                                        | Affiliate     |                                                                                                             |        
|                                                                                        | Non-affiliate |                                                                                                             |        
|                                                                                        |               |                                                                                                             |        
|                                                                                        |               | Interest credited to contractholder funds, contract benefits and certain other expenses, net of reinsurance |        
|                                                                                        |               |                                                                                                             |        

3.     Guarantees and Contingent Liabilities

Guarantees

The Company has issued universal life insurance contracts to third parties who finance the premium payments on the universal life insurance contracts through a
commercial paper program. The Company has issued a repayment guarantee on the outstanding commercial paper balance which is fully collateralized by the cash surrender value of the universal life
insurance contracts. At March 31, 2004, the amount due under the commercial paper program is $300 million and the cash surrender value of the policies is $307.2 million. The
repayment guarantee expires April 30, 2006. These contracts are ceded to ALIC under the terms of the reinsurance agreements.

In
the normal course of business, the Company provides standard indemnifications to counterparties in contracts in connection with numerous transactions, including indemnifications for
breaches of representations and warranties, taxes and certain other liabilities, such as third party lawsuits. The
indemnification clauses are often standard contractual terms and were entered into in the normal course of business based on an assessment that the risk of loss would be remote. The terms of the
indemnifications vary in duration and nature. In many cases, the maximum obligation is not explicitly stated and the contingencies triggering the obligation to indemnify have not occurred and are not
expected to occur. Because the obligated amounts of the indemnifications are not explicitly stated in many cases, the maximum amount of the obligation under such

8

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indemnifications
is not determinable. Historically, the Company has not made any material payments pursuant to these obligations.

In
addition, the Company indemnifies its directors, officers and other individuals to the extent provided in its charter and by-laws. Since these indemnifications are
generally not subject to limitation with respect to duration or amount, the Company does not believe that it is possible to determine the maximum potential amount due under these indemnifications.

The
aggregate liability balance related to all guarantees was not material as of March 31, 2004.

Regulation

The Company is subject to changing social, economic and regulatory conditions. Recent state and federal regulatory initiatives and proceedings have included
efforts to remove barriers preventing banks from engaging in the securities and insurance businesses, change tax laws affecting the taxation of insurance companies and the tax treatment of insurance
products or competing non-insurance products that may impact the relative desirability of various personal investment products and otherwise expand overall regulation of insurance products
and the insurance industry. The ultimate changes and eventual effects of these initiatives on the Company's business, if any, are uncertain.

Legal Proceedings

As described below, the Company is named as a defendant in a number of lawsuits and other legal proceedings arising out of various aspects of its business. These
matters raise difficult and complicated factual and legal issues and are subject to many uncertainties and complexities, including but not limited to, the underlying facts of each matter, novel legal
issues, variations between jurisdictions in which matters are being litigated, differences in applicable laws and judicial interpretations, the length of time before many of these matters might be
resolved by settlement or through litigation and, in some cases, the timing of their resolutions relative to other similar cases brought against other companies, the fact that some of these matters
involve multi-state class actions in which the applicable law(s) for the claims at issue is in dispute
and therefore unclear, and the current challenging legal environment faced by large corporations and insurance companies.

In
these matters, plaintiffs seek a variety of remedies including equitable relief in the form of injunctive and other remedies and monetary relief in the form of contractual and
extra-contractual damages. In some cases, the monetary damages sought include punitive or treble damages or are not specified. Often more specific information beyond the type of relief sought is not
available because plaintiffs have not requested more specific relief in their court pleadings. In those cases where plaintiffs have made a specific demand for monetary damages, whether to support
minimum jurisdictional requirements or otherwise, it is our experience that such demands may be misleading indicators of what the ultimate loss, if any, will be to the Company.

It
is not possible to make meaningful estimates of the amount or range of loss that could result from these matters. The Company reviews these matters on an on-going basis.
In the opinion of the Company's management, while some of these matters may be material to the Company's operating results for any particular period if an unfavorable outcome results, none will have a
material adverse effect on the financial condition of the Company.

Legal
proceedings involving Allstate agencies and AIC may impact the Company, even when the Company is not directly involved, because the Company sells its products through a variety of
distribution channels including Allstate agencies. Consequently, information about the more significant of these proceedings is provided below.

AIC
is defending various lawsuits involving worker classification issues. These lawsuits include a number of putative class actions and one certified class action challenging the
overtime exemption claimed by AIC under the Fair Labor Standards Act or state wage and hour laws. Plaintiffs seek monetary relief, such as penalties and liquidated damages, and
non-monetary relief, such as injunctive relief and an accounting. These class actions mirror similar lawsuits filed recently against other carriers in the industry and other employers. A
putative nationwide class action filed by former employee agents also includes a worker classification issue; these agents are challenging certain amendments to the Agents Pension Plan

9

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and
are seeking to have exclusive agent independent contractors treated as employees for benefit purposes. AIC has been vigorously defending these and various other worker classification lawsuits. The
outcome of these disputes is currently uncertain.

AIC
is also defending certain matters relating to its agency program reorganization announced in 1999. These matters include an investigation by the U.S. Department of Labor, a lawsuit
filed in December 2001 by the U.S. Equal Employment Opportunity Commission ("EEOC") alleging retaliation under federal civil rights laws and a class action filed in August 2001 by former
employee agents alleging retaliation and age discrimination under the Age Discrimination in Employment Act, breach of contract and ERISA violations. In April 2004, the U.S. Department of Labor
notified AIC that it has closed its investigation and contemplates no further action on this matter at this time. In March 2004, in the EEOC and class action
lawsuits, the trial court issued a memorandum and order that, among other things, certified classes of agents, including a mandatory class of agents who had signed a release for purposes of effecting
the court's declaratory judgment that the release is voidable at the option of the release signer. The court also ordered that an agent who voids the release must return to AIC "any and all benefits
received by the [agent] in exchange for signing the release." The court also "concluded that, on the undisputed facts of record, there is no basis for claims of age
discrimination." The EEOC and plaintiffs have asked the court to clarify and/or reconsider its memorandum and order. The case otherwise remains pending. A putative nationwide class action has also
been filed by former employee agents alleging various violations of ERISA. This matter was dismissed with prejudice in March 2004 by the trial court but will be the subject of further
proceedings, which may include appeals. In these matters, plaintiffs seek compensatory and punitive damages, and equitable relief. AIC has been vigorously defending these lawsuits and other matters
related to its agency program reorganization. In addition, AIC is defending certain matters relating to its life agency program reorganization announced in 2000. These matters include an investigation
by the EEOC with respect to allegations of age discrimination and retaliation. AIC is cooperating fully with the agency investigation and will continue to vigorously defend these and other claims
related to the life agency program reorganization. The outcome of these disputes is currently 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 court certified the class and entered summary judgment in favor of the Company and against the certified class. Plaintiff filed notice
of appeal and the Company filed a cross appeal. The outcome of the appeal is currently uncertain. The Company has been vigorously defending this suit.

Various
other legal and regulatory actions are currently pending that involve the Company and specific aspects of its conduct of business. Like other members of the insurance industry,
the Company is the target of an increasing number of lawsuits, some of which involve claims for substantial or indeterminate amounts. This litigation is based on a variety of issues including
insurance and claim settlement practices. The outcome of these disputes is currently unpredictable. However, at this time, based on their present status and the existence of the reinsurance agreement
with ALIC, 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 reserved is not expected to have a material effect
on the results of operations, liquidity or financial position of the Company.

10

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4.     Other Comprehensive Income

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

|                                                            |  | Three months ended March 31, |      
|----------------------------------------------------------- |  | ---------------------------- | -----
|
|
|Unrealized capital gains and losses                         |  |                              |      
|Unrealized holding gains (losses) arising during the period |  | $                            | 3,742
|Less: reclassification adjustments                          |  |                              |     
|                                                            |  |                              |      
|Unrealized net capital gains (losses)                       |  |                              | 3,742
|                                                            |  |                              |      
|Other comprehensive income (loss)                           |  | $                            | 3,742
|                                                            |  |                              |      
|Net income                                                  |  |                              |      
|                                                            |  |                              |      
|Comprehensive income (loss)                                 |  |                              |      
|                                                            |  |                              |      

11

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Item 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2004 AND 2003

OVERVIEW

The following discussion highlights significant factors influencing financial position and results of operations of Lincoln Benefit Life Company (referred to in
this document as "we", "our", "us" or the "Company"). It should be read in conjunction with the condensed financial statements and 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 2003. We operate as a single segment entity, based on the manner in which financial information is used internally to evaluate performance and
determine the allocation of resources.

RESULTS OF OPERATIONS

|                                  |  | Three months ended
March 31,
|--------------------------------- |  | ----------------------------
|
|Net investment income             |  | $                           
|Realized capital gains and losses |  |                             
|Income tax expense                |  |                             
|                                  |  |                             
|Net income                        |  | $                           
|                                  |  |                             

We have reinsurance agreements whereby all premiums, contract charges, interest credited to contractholder funds, contract benefits and certain expenses are ceded
to Allstate Life Insurance Company ("ALIC") and certain non-affiliated reinsurers, and reflected net of such reinsurance in the Condensed Statements of Operations. Our results of
operations include net investment income and realized capital gains and losses on our assets that are not transferred under the reinsurance agreements.

Net
income decreased $152 thousand to $1.8 million in the first quarter of 2004 from $2.0 million in the same period last year due to decreases in net investment
income and realized capital gains, partially offset by lower income tax expense.

Net
investment income decreased 7.6% in the first quarter of 2004 compared to the same period in 2003, primarily due to lower portfolio yields partially offset by higher portfolio
balances. Lower portfolio yields were due to purchases of fixed income securities with yields lower than the current portfolio average. Higher portfolio balances resulted from the investment of cash
flows from operating activities. Investment balances as of March 31, 2004, excluding unrealized net capital gains on fixed income securities, increased 8.2% from March 31, 2003.

Pre-tax
realized capital gains and losses were $6 thousand in the first quarter of 2003 that resulted from sales of fixed income securities. There were no realized
capital gains or losses in the first quarter of 2004.

12

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FINANCIAL POSITION

(in thousands)

March 31, 2004Fixed income securities(1)

$
212,885Short-term


5,993Total investments

$
218,878Cash

$
23,453Reinsurance recoverable from ALIC, net


15,160,610Reinsurance recoverable from non-affiliates, net


718,211Contractholder funds


14,355,494Reserve for life-contingent contract benefits


1,512,161Separate Accounts assets and liabilities


2,043,363


---

Total
investments increased to $218.9 million at March 31, 2004 from $210.2 million at December 31, 2003 due to cash flows from operating activities and
increased unrealized gains on fixed income securities.

At
March 31, 2004, the entire fixed income securities portfolio was rated investment grade, which is defined 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, an S&P equivalent rating of AAA, AA, A or BBB, or a comparable internal rating when an external rating is
not available.

The
unrealized net capital gains on fixed income securities at March 31, 2004 were $14.9 million, an increase of $3.7 million or 33.5% since December 31,
2003. The net unrealized gain was comprised of $15.6 million of unrealized gains and $0.7 million of unrealized losses at March 31, 2004. This is compared to a net unrealized
gain for the fixed income portfolio totaling $11.2 million at December 31, 2003, comprised of $12.8 million of unrealized gains and $1.6 million of unrealized losses. Of
the gross unrealized losses in the fixed income portfolio, 71.3% were concentrated in the corporate fixed income portfolio. The losses were primarily comprised of securities in the capital goods,
transportation and financial services sectors. The gross unrealized losses in these sectors were primarily interest rate related. While we expect eventual recovery of these securities and the related
sectors, we included every security in our portfolio monitoring process.

Our
portfolio monitoring process identifies and evaluates fixed income securities whose carrying value may be other than temporarily impaired. The process includes a quarterly review of
all securities using a screening process to identify those securities whose fair value compared to amortized cost for fixed income securities is below established thresholds for certain time periods,
or which are identified through other monitoring criteria such as ratings downgrades or payment defaults.

We
also monitor the quality of our fixed income portfolio by categorizing certain investments as "problem", "restructured" or "potential problem." Problem fixed income securities are
securities in default with respect to principal or interest and/or securities issued by companies that have gone into bankruptcy subsequent to our acquisition of the security. Restructured fixed
income securities have rates and terms that are not consistent with market rates or terms prevailing 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, we have serious concerns regarding the borrower's ability to pay future principal and interest, which
causes us to believe these securities may be classified as problem or restructured in the future.

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As
of March 31, 2004 and December 31, 2003, we had no securities categorized as "problem", "restructured" or "potential problem".

While
we may classify securities as "problem", "restructured" or "potential problem" in the future, particularly if economic conditions are unfavorable, we expect that the total amount
of securities in these categories would be low relative to the total fixed income securities portfolio.

Net Realized Capital Gains and LossesThe following table presents the components of realized capital gains and losses and
the related tax effect.

|                                             |  | Three Months Ended
March 31, |  
|-------------------------------------------- |  | ---------------------------- | -
|
|Sales                                        |  | $                            | 
|                                             |  |                              |  
|Realized capital gains and losses, pretax    |  |                              | 
|Income tax expense                           |  |                              | 
|                                             |  |                              |  
|Realized capital gains and losses, after-tax |  | $                            | 
|                                             |  |                              |  

We may sell securities during the period in which fair value has declined below amortized cost. Recognizing in certain situations new factors such as negative
developments, subsequent credit deterioration, relative value opportunities, market liquidity concerns and portfolio reallocations, we can subsequently change our previous intent to continue holding a
security. Sales in the above table also include dispositions such as call and prepayment transactions.

Reinsurance recoverable, Contractholder funds and Reserve for life-contingent contract benefits

Contractholder funds increased to $14.36 billion at March 31, 2004, from $13.80 billion at December 31, 2003 as a result of deposits
from fixed annuities and interest-sensitive life policies, interest credited to contractholder funds and the initial adoption of the provisions ofStatement of Position
03-1, "Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts" ("SOP
No. 03-1"),partially offset by surrenders, withdrawals, benefit payments and contract charges. The reserve for life-contingent contract benefits
increased $35.8 million to $1.51 billion at March 31, 2004 resulting from new sales of structured settlement and immediate annuities and other life-contingent
products, additional reserves recorded due to the recognition of reserves for guaranteed minimum death benefits in conjunction with adopting the provisions of
SOP 03-1,partially offset by benefits paid. Reinsurance recoverable from ALIC and reinsurance recoverable from
non-affiliates increased correspondingly by $566.4 million and $25.2 million, respectively, because all contractholder obligations are reinsured.

We
purchase reinsurance after evaluating the financial condition of the reinsurer, as well as the terms and price of coverage. We reinsure certain of our risks to
non-affiliated reinsurers under yearly renewable term and coinsurance agreements. Yearly renewable term and coinsurance agreements result in the passing of the agreed-upon
portion of risk to the reinsurers in exchange for negotiated reinsurance premium payments.

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CAPITAL RESOURCES AND LIQUIDITY

Capital Resourcesconsist of shareholder's equity. The following table summarizes our capital resources:

|(in thousands)                                               |                            | March 31,
2004 |         | December 31,
2003
|------------------------------------------------------------ | -------------------------- | -------------- | ------- | -----------------
|Common stock, additional capital paid-in and retained income |                            | $              | 204,554 |                  
|Accumulated other comprehensive income                       |                            |                | 9,697   |                  
|                                                             |                            |                |         |                  
|                                                             | Total shareholder's equity |                | $       | 214,251          
|                                                             |                            |                |         |                  

Shareholder's equityincreased in the first quarter of 2004 when compared to December 31, 2003, due to net income and an increase
in net unrealized capital gains and losses.

Financial Ratings and StrengthWe share the insurance financial strength ratings of our parent, ALIC, because business is
reinsured to ALIC. There have been no changes in ALIC's insurance financial strength ratings since December 31, 2003. However, in February 2004, A.M. Best revised the outlook to
stable from positive for the insurance financial strength ratings of ALIC and certain rated subsidiaries and affiliates, including the Company.

FORWARD-LOOKING STATEMENTS

This document contains "forward-looking statements" that anticipate results based on our estimates, assumptions and 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. We assume no obligation to update any forward-looking statements as a
result of new information or future events or developments.

These
forward-looking statements do not relate strictly to historical or current facts and may be identified by their use of words like "plans," "seeks," "expects," "will," "should,"
"anticipates," "estimates," "intends," "believes," "likely," "targets" and other words with similar meanings. These statements may address, among other things, our strategy for growth, product
development, regulatory approvals, market position, expenses, financial results, litigation and reserves. We believe that these statements are based on reasonable estimates, assumptions and plans.
However, if the estimates, assumptions or plans underlying the forward-looking statements prove inaccurate or if other risks or uncertainties arise, actual results could differ materially from those
communicated in these forward-looking statements. Factors which could cause actual results to differ materially from those suggested by such forward-looking statements are incorporated in this
Part I, Item 2 by reference to the information set forth in our Annual Report on Form 10-K, Part II, Item 7, under the caption "Forward-Looking
Statements and Risk Factors."

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Item 4.    Controls and Procedures

With the participation of our principal executive officer and principal financial officer, we carried out an evaluation of the effectiveness of the design and
operation of our disclosure controls and procedures as of the end of the period covered by this report. Based upon this evaluation, the principal executive officer and the principal financial officer
concluded that our disclosure controls and procedures are effective in timely alerting them to material information required to be included in our periodic reports filed with the Securities and
Exchange Commission. However, the design of any system of controls and procedures is based in part upon assumptions about the likelihood of future events and there can be no assurance that any design
will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. Our disclosure controls and procedures are designed to provide reasonable assurance of
achieving their objectives and are effective at the "reasonable assurance" level.

During
the fiscal quarter ended March 31, 2004, there have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely
to materially affect, our internal control over financial reporting.

PART II.    OTHER INFORMATION

Item 1.    Legal Proceedings

Information required for this Part II, Item 1, is incorporated by reference to the discussion under the heading "Regulation" and under the heading
"Legal proceedings" in Note 3 of the Company's Condensed Financial Statements in Part I, Item 1, of this Form 10-Q.

Item 6.    Exhibits and Reports on Form 8-K



SIGNATURE

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)                                                                               
|----------- | ------------------------------------------------------------------------------------------------------------------------
|May 6, 2004 | By /s/SAMUEL H. PILCHSamuel H. Pilch
Controller
(chief accounting officer and duly
authorized officer of the registrant)

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|Exhibit No. |  | Description                                                
|----------- |  | -----------------------------------------------------------
|31.1        |  | Rule 15d-14(a) Certification of Principal Executive Officer
|31.2        |  | Rule 15d-14(a) Certification of Principal Financial Officer
|32          |  | Section 1350 Certifications                                

E-1

---