<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D. C. 20549

                                   FORM 10-Q

               QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934


        For Quarter Ended June 30, 1999 Commission File Number 0-11773


                               ALFA CORPORATION
                               ----------------
            (Exact name of registrant as specified in its charter)


            Delaware                                            063-0838024
            --------                                            -----------
(State of Other Jurisdiction of                                (IRS Employer
Incorporation or Organization)                              Identification No.)

2108 East South Boulevard, Montgomery, Alabama  36116
(Mail:P. O Box 11000, Montgomery, Alabama  36191-0001)
-------------------------------------------------------
(Address and Zip Code of Principal Executive Offices)

Registrant's Telephone Number
Including Area Code                                           (334) 288-3900
                                                              --------------


              None
              ----

Former name, former address and former fiscal year if changed since last report

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  X       No _____
                            ----

Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the close of the period covered by this report.


          Class                                        Outstanding June 30, 1999
          -----                                        -------------------------
Common Stock, $1.00 par value                              39,689,794 shares
<PAGE>

                               ALFA CORPORATION

                                     INDEX

<TABLE>
<CAPTION>
                                                                     Page No.
                                                                     --------
<S>                                                                  <C>
Part I.   Financial Information
          (Condensed Consolidated Unaudited)

       Item 1.

               Financial Statements

               Balance Sheets -June 30, 1999 and
               December 31, 1998                                          3

               Statements of Income, Six Months and Three Months
               ended June 30, 1999 and 1998                               4

               Statements of Comprehensive Income, Six Months
               and Three Months ended June 30, 1999 and 1998              5

               Statements of Cash Flows, Six Months
               ended June 30, 1999 and 1998                               6

               Notes to Financial Statements                              7

       Item 2.

               Management's Discussion and Analysis of
               Financial Condition and Results of Operations             11

       Item 3.
               Market Risk Disclosures                                   21

Part II.  Other Information                                              22

       Item 4.

               Submission of Matters to a Vote of Security Holders       22

       Item 6.

               Exhibits and Reports on Form 8-K                          22
</TABLE>

                                       2
<PAGE>

                               ALFA CORPORATION
                            CONSOLIDATED CONDENSED
                                BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                   June 30,          December 31,
                                                              -------------------------------------
                                                                     1999                1998
                                                              -------------------------------------
<S>                                                           <C>                 <C>
Assets                                                           (Unaudited)
  Investments:
     Fixed Maturities Held for Investment, at amortized cost
       (market value $1,251,306 in 1999 and $1,560,903 in
       1998)                                                   $     1,185,097    $     1,471,113
     Fixed Maturities Available for Sale, at market value
       (amortized cost $803,427,276 in 1999 and $741,583,948
       in 1998)                                                    801,248,328        774,346,360
     Equity Securities, at market (cost $57,230,612
       in 1999 and $40,833,150 in 1998)                            121,521,762        103,055,465
     Mortgage Loans on Real Estate                                     357,724            404,432
     Investment Real Estate (net of accumulated
       depreciation of $1,154,286 in 1999 and
       $1,587,634 in 1998)                                           1,888,428          1,482,647
     Policy Loans                                                   40,871,679         38,645,185
     Other Long-term Investments                                   128,796,059        110,022,016
     Short-term Investments                                         57,272,645         54,637,029
-------------------------------------------------------------------------------------------------
       Total Investments                                         1,153,141,722      1,084,064,247
  Cash                                                               3,313,687          5,948,409
  Accrued Investment Income                                         12,989,135         11,394,940
  Accounts Receivable                                               14,721,165         23,378,825
  Reinsurance Balances Receivable                                    1,848,793          1,121,089
  Due from Affiliates                                                7,539,818          1,677,667
  Deferred Policy Acquisition Costs                                126,283,216        114,141,870
  Other Assets                                                       5,832,587          4,932,090
-------------------------------------------------------------------------------------------------
        Total Assets                                           $ 1,325,670,123    $ 1,246,659,137
=================================================================================================

Liabilities
  Policy Liabilities and Accruals - Property and Casualty      $   145,615,677    $   138,030,306
  Policy Liabilities and Accruals - Life Insurance                 442,028,825        410,398,102
  Unearned Premiums                                                113,084,150        105,464,480
  Dividends to Policyholders                                         9,534,448          9,337,982
  Premium Deposit and Retirement Deposit Funds                       6,054,831          6,217,463
  Deferred Income Taxes                                             33,796,767         41,788,715
  Other Liabilities                                                 51,204,333         44,677,579
  Due to Affiliates                                                 14,341,442            318,113
  Commercial Paper                                                  92,717,886         57,259,518
  Notes Payable                                                        105,874            106,765
  Notes Payable to Affiliates                                        8,903,029          9,438,129
-------------------------------------------------------------------------------------------------
        Total Liabilities                                          917,387,262        823,037,152
-------------------------------------------------------------------------------------------------
Commitments and Contingencies (Note 3)
Stockholders' Equity
  Preferred Stock, $1 par value
     Shares authorized: 1,000,000
     Issued: None
  Common Stock, $1 par value
     Shares authorized: 110,000,000
     Issued: 41,891,512
     Outstanding:  1999 - 39,689,794; 1998 - 40,879,911             41,891,512         41,891,512
  Capital in Excess of Par Value                                    22,766,979         22,355,934
  Accumulated Other Comprehensive Income                            39,626,712         57,577,202
  Retained Earnings                                                329,773,319        306,268,833
  Treasury Stock: at cost (1999-2,201,718 shares;
    1998-1,011,601 shares)                                         (25,775,661)        (4,471,496)
-------------------------------------------------------------------------------------------------
        Total Stockholders' Equity                                 408,282,861        423,621,985
-------------------------------------------------------------------------------------------------
        Total Liabilities and
        Stockholders' Equity                                   $ 1,325,670,123    $ 1,246,659,137
=================================================================================================
</TABLE>

The accompanying notes are an integral part of these consolidated condensed
unaudited financial statements.

                                       3
<PAGE>


                               ALFA CORPORATION
                       CONSOLIDATED CONDENSED UNAUDITED
                             STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                            Six Months Ended            Three Months Ended
                                                                June 30,                    June 30,
                                                      --------------------------    --------------------------
                                                          1999          1998            1999          1998
                                                      ----------    ------------    -----------    -----------
<S>                                                   <C>           <C>             <C>            <C>
 Revenues
   Premiums - Property and Casualty Insurance         $176,518,203  $170,746,830    $ 88,813,579   $86,034,998
   Premiums and Policy Charges - Life Insurance         24,853,426    23,338,970      12,180,980    11,014,293
   Net Investment Income                                32,664,773    30,825,971      16,270,579    15,307,378
   Realized Investment Gains                             5,495,441     4,074,883          16,357     1,496,215
   Other Income                                          1,264,244     1,087,865         690,736       468,646
--------------------------------------------------------------------------------------------------------------
     Total Revenues                                    240,796,087   230,074,519     117,972,231   114,321,530
--------------------------------------------------------------------------------------------------------------
 Benefits and Expenses
   Benefits & Settlement Expenses                      140,134,172   142,493,468      70,308,367    73,593,015
   Dividends to Policyholders                            1,758,413     1,737,188         834,262       835,611
   Amortization of Deferred Policy
     Acquisition Costs                                  29,840,636    28,911,359      15,007,798    14,555,752
     Other Operating Expenses                           24,031,606    16,596,884      10,385,510     8,411,132
--------------------------------------------------------------------------------------------------------------
     Total Expenses                                    195,764,827   189,738,899      96,535,937    97,395,510
 --------------------------------------------------------------------------------------------------------------

 Income Before Provision for Income Taxes               45,031,260    40,335,620      21,436,294    16,926,020

 Provision for Income Taxes                             12,833,516    12,393,803       5,519,127     5,044,445
--------------------------------------------------------------------------------------------------------------

     Net Income                                       $ 32,197,744  $ 27,941,817    $ 15,917,167   $11,881,575
==============================================================================================================

  Net Income Per Share - Basic                        $       0.80  $       0.68    $       0.40   $      0.29

 Net Income Per Share - Diluted                              $0.79  $       0.68    $       0.40   $      0.29
==============================================================================================================

 Operating Income                                     $ 28,625,707  $ 25,293,143    $ 15,906,535   $10,909,035

 Operating Income Per Share - Basic and Diluted       $       0.71  $       0.62    $       0.40   $      0.27
==============================================================================================================

 Average Shares Outstanding - Basic                     40,329,016    40,813,636      39,927,689    40,830,127

 Average Shares Outstanding - Diluted                   40,600,606    41,098,166      40,152,132    41,149,299

==============================================================================================================
</TABLE>

The accompanying notes are an integral part of these consolidated condensed
unaudited financial statements.

                                       4


















































<PAGE>


                               ALFA CORPORATION
                       CONSOLIDATED CONDENSED UNAUDITED
                      STATEMENTS OF COMPREHENSIVE INCOME

<TABLE>
<CAPTION>
                                                                   Six Months Ended             Three Months Ended
                                                                       June 30,                      June 30,
                                                              --------------------------   ---------------------------
                                                                  1999          1998            1999          1998
                                                              --------------------------   ---------------------------
<S>                                                           <C>            <C>           <C>             <C>
Net Income                                                     $32,197,744   $27,941,817     $15,917,167   $11,881,575
Other Comprehensive Income, net of tax:
  Unrealized Investment Gains (Losses) on Securities
    available for sale                                         (14,378,453)   11,454,728      (6,576,078)    1,213,885
  Less: Realized Investment Gains                                3,572,037     2,648,674          10,632       972,540
                                                              ------------   -----------     -----------   -----------
    Total Other Comprehensive Income                           (17,950,490)    8,806,054      (6,586,710)      241,345
                                                              ------------   -----------     -----------   -----------
      Total Comprehensive Income                               $14,247,254   $36,747,871      $9,330,457   $12,122,920
                                                              ============   ===========     ===========   ===========
</TABLE>

The accompanying notes are an integral part of these consolidated condensed
unaudited financial statements.

                                       5

<PAGE>


                               ALFA CORPORATION
                       CONSOLIDATED CONDENSED UNAUDITED
                           STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                Six Months Ended
                                                                    June 30,
                                                         ------------------------------
                                                              1999           1998
                                                         ------------------------------
 <S>                                                     <C>              <C>
 Cash Flows From Operating Activities:
  Net Income                                             $  32,197,744    $  27,941,817
  Adjustments to Reconcile Net Income to Net Cash
  Provided by Operating Activities:
    Policy Acquisition Costs Deferred                      (36,238,906)     (32,378,773)
    Amortization of Deferred Policy Acquisition Costs       29,840,636       28,911,359
    Depreciation and Amortization                              227,163        1,777,542
    Provision for Deferred Taxes                             1,842,645        1,241,547
    Interest on Policyholders' Funds                         8,946,987        7,754,450
    Net Realized Investment Gains                           (5,484,543)      (4,074,882)
    Other                                                      (69,441)      (2,091,222)
    Changes in Operating Assets and Liabilities:
      (Increase) in Accrued Investment Income               (1,594,195)      (1,163,979)
      Decrease in Accounts Receivable                           72,203          952,684
      (Increase) in Reinsurance Balances Receivable           (727,704)        (439,870)
      (Increase) in Amounts Due From Affiliates             (5,862,151)      (7,318,956)
      Increase in Amounts Due to Affiliates                 14,023,329
      Decrease in Other Assets                                (900,497)         (27,324)
      Increase in Liability for Policy Reserves             11,981,745       10,108,407
      Increase in Liability for Unearned Premiums            7,619,670        5,633,166
      Increase (Decrease) in Amounts Held for Others            33,834          (45,429)
      Increase in Other Liabilities                          7,209,022        5,328,643
                                                         -------------    -------------
       Net Cash Provided by Operating Activities            63,117,541       42,109,180
                                                         -------------    -------------
Cash Flows From Investing Activities:
    Maturities and Redemptions of Fixed Maturities Held
    for investment                                             296,021          291,525
    Maturities and Redemptions of Fixed Maturities
    Available for sale                                      61,507,161       26,799,008
    Maturities and Redemptions of Other Investments         63,377,699       71,546,004
    Sales of Fixed Maturities Available for Sale             9,392,842       38,647,363
    Sales of Other Investments                              31,195,925       27,954,521
    Purchase of Fixed Maturities Available for Sale       (130,983,243)     (96,252,946)
    Purchase of Other Investments                         (129,217,259)     (90,123,910)
    Net (Increase) in Short-term Investments               (12,837,825)      (2,825,639)
    Net Decrease in Receivable/Payable on Securities        18,783,194        1,471,124
                                                         -------------    -------------
       Net Cash (Used in) Investing Activities             (88,485,485)     (22,492,950)
                                                         -------------    -------------
Cash Flows From Financing Activities:
    Increase (Decrease) in Commercial Paper                 35,458,368      (29,571,865)
    (Decrease) in Notes Payable                                   (891)      (1,870,612)
    (Decrease) in Notes Payable to Affiliates                 (535,100)        (260,475)
    Stockholder Dividends Paid                              (9,375,951)      (8,674,053)
    Purchase of Treasury Stock                             (21,529,795)
    Proceeds from Exercise of Stock Options                    544,992          479,346
    Deposits of Policyholders' Funds                        38,304,300       35,879,891
    Withdrawal of Policyholders' Funds                     (20,132,701)     (18,432,434)
                                                         -------------    -------------
       Net Cash Provided by (Used in) Financing
          Activities                                        22,733,222      (22,450,202)
                                                         -------------    -------------
Net (Decrease) in Cash                                      (2,634,722)      (2,833,972)
Cash - Beginning of Period                                   5,948,409        5,820,597
                                                         -------------    -------------
Cash - End of Period                                     $   3,313,687    $   2,986,625
                                                         =============    =============
Supplemental Disclosures of Cash Flow Information
Cash Paid as of June 30 for:
    Interest                                             $   1,707,968    $   2,350,142
    Income Taxes                                         $  13,104,000    $   8,985,000
</TABLE>

The accompanying notes are an integral part of these consolidated condensed
unaudited financial statements.

                                       6
<PAGE>

                               ALFA CORPORATION
        NOTES TO CONSOLIDATED CONDENSED UNAUDITED FINANCIAL STATEMENTS
                                 June 30, 1999


1.   Significant Accounting Policies
     -------------------------------

     In the opinion of the Company, the accompanying consolidated condensed
unaudited financial statements contain all adjustments (consisting of only
normal recurring accruals) necessary to present fairly its financial position,
results of operations and cash flows. The accompanying financial statements have
been prepared on the basis of generally accepted accounting principles. A
summary of the more significant accounting policies related to the Company's
business is set forth in the notes to its audited consolidated financial
statements for the fiscal year ended December 31, 1998. The results of
operations for the six month and three month periods ended June 30, 1999 are not
necessarily indicative of the results to be expected for the full year. For
purposes of this report, the Company has defined operating income as income
excluding net realized investment gains. Certain reclassifications have been
made to conform previous classifications to June 30, 1999 classifications and
descriptions.

2.   Pooling Agreement
     -----------------

     Effective August 1, 1987, the Company property and casualty subsidiaries
entered into a property and casualty insurance Pooling Agreement (the "Pooling
Agreement") with Alfa Mutual Insurance Company (Mutual), and other members of
the Mutual Group. The Mutual Group is a direct writer primarily of personal
lines of property and casualty insurance in Alabama. The Company's subsidiaries
similarly are direct writers in Georgia and Mississippi. Both the Mutual Group
and the Company write preferred risk automobile, homeowner, farmowner and mobile
home insurance, fire and allied lines, standard risk automobile and homeowner
insurance, and a limited amount of commercial insurance, including church, and
businessowner insurance. Under the terms of the Pooling Agreement, the Company
cedes to Mutual all of its property and casualty business. All of the Mutual
Group's direct property and casualty business (together with the property and
casualty business ceded by the Company) is included in the pool. Until September
30, 1994, Mutual retroceded 50% of the pooled premiums, losses, loss adjustment
expenses and other underwriting expenses to the Company while retaining 50% of
these amounts itself. On October 1, 1994, the Company increased its
participation in the Pooling Agreement. Mutual currently retrocedes 65% of the
pool to the Company and retains 35% within the Mutual Group. On October 1, 1996,
the Pooling Agreement was amended in conjunction with the restructuring of the
Alfa Insurance Group's catastrophe protection program. Effective November 1,
1996, the allocation of catastrophe costs among the members of the pool was
changed to better reflect the economics of catastrophe finance. The amendment
limited Alfa Corporation's participation in any single catastrophic event or
series of disasters to its pool share (65%) of $10 million unless the loss
exceeds $249 million on a 100% basis in which case the Company's share in the
loss would be based upon its amount of surplus relative to the other members of
the group. Currently, the Company's share of losses exceeding $249 million would
be 13%. Effective July 1, 1999 due to increases in insured property risks, an
amendment was made increasing Alfa Corporation's participation limits from its
pool share of the $10 million level to $11 million. The Company's participation
in the Pooling Agreement may be changed or terminated without the consent or
approval of the Company's shareholders, and the Pooling Agreement may be
terminated by any party thereto upon 90 days notice.

                                       7
<PAGE>

(Note 2. Continued)

     The following table sets forth the premiums and losses ceded to and assumed
from the pool for the six and three month periods ended June 30, 1999 and 1998:

<TABLE>
<CAPTION>
                              Six  Months Ended June 30,  Three Months Ended June 30,
                              --------------------------  ---------------------------
                                  1999          1998          1999           1998
                              ------------  ------------  -------------  ------------
                                                  (in thousands)
<S>                           <C>           <C>           <C>            <C>
Premiums ceded to pool            $ 29,205      $ 27,948        $14,424       $13,851
Premiums assumed from pool        $177,118      $171,354        $88,011       $85,003
Losses ceded to pool              $ 19,739      $ 21,965        $10,211       $ 9,941
Losses assumed from pool          $107,747      $112,546        $54,620       $53,431
</TABLE>

     The Alfa Group incurred no pooled catastrophe losses in the first six
months of 1999. Alfa Group pooled catastrophe losses for 1998 during which $26.8
million occurred in the second quarter. Alfa Corporation's share of these
catastrophe losses totaled $6.5 million.

3.   Contingent Liabilities
     -----------------------

     The property and casualty subsidiaries have entered into the reinsurance
pooling agreement with Alfa Mutual Insurance Company and its affiliates as
discussed in Note 2. Should any member of the affiliated group be unable to meet
its obligation on a claim for a policy written by the Company's property and
casualty subsidiaries, the obligation to pay the claim would remain with the
Company's subsidiaries.

     The liability for estimated unpaid property and casualty losses and loss
adjustment expenses is based upon an evaluation of reported losses and on
estimates of incurred but not reported losses.  Adjustments to the liability
based upon subsequent developments are included in current operations.

     Year 2000 is a critical data management issue which could have substantial
consequences for companies worldwide because of the use of only two digits in
the date field that may cause many computer applications to fail completely or
create erroneous results by the year 2000 unless corrective measures are taken.
Over the past five years, the Company has devoted a significant amount of time
and resources to the issue of year 2000 as it relates to the Company's operating
systems and information technology applications as well as its non-operations
applications. The Company has identified its mission critical systems and many
other year 2000 issues. At June 30, 1999, the Company believes it has
substantially completed the identification and programming remediation steps
required to make its mission critical systems and other systems year 2000
compliant. In addition, the Company estimates it is approximately 97% complete
with actual application and scenario remediation and believes it will be 100%
complete with all year 2000 remediation efforts during the third quarter of
1999. To date the Company has incurred total costs of $2.8 million related to
year 2000 efforts, of which $560,000 was incurred during the second quarter of
1999. To the extent the year 2000 issues are not corrected timely and
successfully, the Company's ability to process its business and pay its claims
timely could be impacted. Such an event could have material adverse consequences
on future financial conditions and results of operations. The Company has begun
the process of developing a contingency plan should an adverse year 2000 issue
occur. As part of the contingency plan, the Company expects to address its
ability to conduct business in environments experiencing both limited and
extensive adverse conditions resulting from the year 2000 issue. It expects to
have such a plan in place by the end of the third quarter of 1999.

                                       8
<PAGE>

     Certain legal proceedings involving policyholders and agents are in process
at June 30, 1999. Costs for these and similar legal proceedings including
accruals for outstanding cases totaled $4.4 million in the first half of 1999
and $1.1 in the similar period in 1998. Such costs totaled $5.2 million in 1998,
$3.6 million in 1997 and $2.7 million in 1996. These proceedings involve alleged
breaches of contract, torts, including bad faith and fraud claims and
miscellaneous other causes of action. These lawsuits involve claims for mental
anguish and punitive damages. The likelihood or extent of a mental anguish or
punitive damage award in any one of these cases is not possible to predict.

     Approximately 84 legal proceedings against Alfa Life Insurance Corporation
involving policyholders and agents are in process at June 30, 1999. Of the 84
proceedings, 17 have been filed in 1999, 43 were filed in 1998, 9 were filed in
1997, 11 were filed in 1996, and 4 were filed in 1995. Of the 43 legal
proceedings filed in1998, one plaintiff's law firm accounted for 35 of the
filings. These same firm accounted for 6 of the 17 filings in 1999. Currently,
three of the proceedings against Alfa Life Insurance Corporation have gone to
trial. In two of the proceedings, the jury awarded the plaintiffs compensatory
and punitive damages against Alfa Life Insurance Corporation. The first jury
verdict has been appealed and the second verdict will be appealed to the Alabama
Supreme Court. In the third proceeding, the jury returned a verdict for Alfa
Life Insurance Corporation. To date, no material losses from this type
litigation have occurred. However, it should be noted that in Alabama, where the
Company has substantial business, the frequency and severity of large mental
anguish and punitive damage awards by juries, bearing little or no relation to
actual damages, continues to exist, creating the potential for unpredictable
material adverse judgments in any given suit.

     In the first quarter of 1999, Alfa Life Insurance Corporation paid $500,000
in settlement of one particular lawsuit. In addition, Alfa Life Insurance
Corporation has reserved $2,000,000 to adjust the values on a certain group of
policies ($350,000 of this amount was reserved prior to the first quarter of
1999).

     Two purported class action lawsuits have been filed against Alfa Life
Insurance Corporation, but they have not been certified at present. One of those
lawsuits was filed during the first quarter of 1999.

     Prior to the first quarter 1999, two purported class action lawsuits had
also been filed against Alfa Financial Corporation, but they have not been
certified at present.

     Also prior to the first quarter 1999, seven purported class action lawsuits
had been filed against the property and casualty mutual companies involving a
number of issues and allegations, but none have been certified. These lawsuits
could affect Alfa Corporation because of a pooling agreement between the
companies.

     Because no class has been certified in any of the class action cases
mentioned above, no amounts have been reserved for them other than the
anticipated expenses for attorney's fees and costs. Future developments in these
class actions and/or class certification could create the need for significant
reserves and expenses in future statements.

                                       9
<PAGE>

4.   Accounting for Costs of Internal Use Software
     ---------------------------------------------

     In March 1998, SOP 98-1, Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use was issued. This SOP provides guidance
for determining whether costs of software developed or obtained for internal use
should be capitalized or expensed as incurred. In the past, the Company has
expensed all such costs when incurred. The company is currently involved in
certain technology projects that involve costs which should be capitalized under
SOP 98-1. In the second quarter of 1999, such costs totaled $414,540 or $0.01
per share which has been capitalized. Through the first half of 1999, these
costs have totaled approximately $746,000 or $0.01 per share which has been
capitalized.

5.   Financial Accounting Developments
     ---------------------------------

     The Financial Accounting Standards Board (FASB) issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities in June 1998. This
Statement establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in investment
securities and other contracts, and for hedging activities. It requires than an
entity recognize all derivatives as either assets or liabilities in the balance
sheet and measure those instruments at fair value. The accounting for changes in
the fair value of a derivative will be included in either earnings or other
comprehensive income depending on the intended use of the derivative instrument.
The Company is currently evaluating this standard, which for the Company is
effective January 1, 2001.

     In December 1997, the AICPA issued a Statement of Position (SOP) 97-3. SOP
97-3 provides: 1) guidance for determining when an entity should recognize a
liability for guaranty fund and other insurance-related assessments, 2) guidance
on how to measure a liability, 3) guidance on when an asset may be recognized
for a portion or all of the assessment liability or paid assessment that can be
recovered through premium tax offsets or policy surcharges, and 4) requirements
for disclosure of certain information. This SOP is effective for financial
statements for fiscal years beginning after December 15, 1998. The Company does
not anticipate implementation of SOP 97-3 to have a material impact on the
Company's financial statements.

                                       10
<PAGE>

                     MANAGEMENT'S DISCUSSION AND ANALYSIS

RESULTS OF OPERATIONS
---------------------

     The following table sets forth consolidated summarized income statement
information for the six months and three months ended June 30, 1999 and 1998:

<TABLE>
<CAPTION>
                                             Six Months Ended June 30,          Three Months Ended June 30,
                                    --------------------------------------  ------------------------------------
                                        1999          1998       % Change       1999          1998       % Change
                                    ------------  ------------  ----------  ------------  ------------  ----------
                                                   (in thousands, except share and per share data)
<S>                                 <C>           <C>           <C>         <C>           <C>           <C>
Revenues
Property and casualty
  insurance premiums                $   176,518   $   170,747          3%   $    88,814   $    86,035          3%
Life insurance premiums
 and policy charges                      24,853        23,339          6%        12,181        11,014         11%
                                    -----------   -----------        ---    -----------   -----------       ----
    Total premiums and
      policy charges                $   201,372   $   194,086          4%   $   100,995   $    97,049          4%
                                    ===========   ===========        ===    ===========   ===========       ====

Net Investment income               $    32,665   $    30,826          6%   $    16,271   $    15,307          6%
                                    ===========   ===========        ===    ===========   ===========       ====

Total Revenues                      $   240,796   $   230,075          5%   $   117,972   $   114,322          3%
                                    ===========   ===========        ===    ===========   ===========       ====

Net income
   Property and casualty
     insurance                      $    22,790   $    19,079         19%   $    13,274   $     7,887         68%
    Life insurance                        6,720         7,146         (6%)        4,302         3,625         19%
                                    -----------   -----------        ---    -----------   -----------       ----
     Total insurance
       operations                        29,510        26,225         13%        17,576        11,512         53%
   Noninsurance operations                1,512         1,151         31%           690           481         43%
   Net realized investment gains          3,572         2,649         35%            11           973        (99%)
   Corporate expenses                    (2,396)       (2,083)       (15%)       (2,360)       (1,084)      (118%)
                                    -----------   -----------        ---    -----------   -----------       ----
        Net income                  $    32,198   $    27,942         15%   $    15,917   $    11,882         34%
                                    ===========   ===========        ===    ===========   ===========       ====

        Net income per share-
         Basic                      $      0.80   $      0.68         15%   $      0.40   $      0.29         37%
                                    ===========   ===========        ===    ===========   ===========       ====
         Diluted                    $      0.79   $      0.68         17%   $      0.40   $      0.29         37%
                                    ===========   ===========        ===    ===========   ===========       ====

Weighted average
  shares outstanding - Basic         40,329,016    40,813,636                39,927,689    40,830,127
                                    ===========   ===========               ===========   ===========
                       Diluted       40,600,606    41,098,166                40,152,132    41,149,299
                                    ===========   ===========               ===========   ===========
</TABLE>

                                       11
<PAGE>

     Total premiums and policy charges increased 4% in the first six months of
1999. Growth in new sales and continued good persistency has been partially
offset by the impact of rate changes, particularly a 2.2% decrease in automobile
rates in December 1998.  Net investment income increased 6% over the first six
months of 1999 while invested assets have grown 6.4% in the six months since
December 31, 1998 resulting from positive cash flows.


     The Company's net income increased 15% in the first six months of 1999 due
to a 19% increase in property casualty operating income and a 35% increase in
realized investment gains.  Offsetting these gains was a decline in operating
income of 6% in life operations due to higher legal costs in the period.
Noninsurance operating income increased 31% in the first six months of 1999, due
primarily to an increase in income in the consumer finance subsidiary and in the
construction subsidiary.


PROPERTY AND CASUALTY INSURANCE OPERATIONS
------------------------------------------

     The following table sets forth the components of property and casualty
insurance earned premiums, net underwriting income, GAAP basis loss, expense and
combined ratios, underwriting margin, net investment income and operating income
for the six months and three months ended June 30, 1999 and 1998:

<TABLE>
<CAPTION>
                                     Six Months Ended June 30,        Three Months Ended June 30,
                                  --------------------------------  --------------------------------
                                    1999       1998      % Change     1999       1998      % Change
                                  ---------  ---------  ----------  ---------  ---------  ----------
                                                            (in thousands)
<S>                               <C>        <C>        <C>         <C>        <C>        <C>
Earned Premiums
  Personal lines                  $168,733   $163,219          3%    $84,838    $82,255          3%
  Commercial lines                   6,421      6,104          5%      3,295      3,086          7%
  Pools, associations and fees       1,964      2,031         (3%)       974      1,010         (4%)
  Reinsurance ceded                   (600)      (607)         1%       (293)      (316)         7%
                                  --------   --------       ----     -------    -------       ----

     Total                        $176,518   $170,747          3%    $88,814    $86,035          3%
                                  ========   ========       ====     =======    =======       ====

Net underwriting income           $ 18,703   $ 14,189         32%    $12,174    $ 4,697        159%
                                  ========   ========       ====     =======    =======       ====

Loss ratio                            60.6%      65.7%                  59.3%      68.4%
LAE Ratio                              5.1%       4.7%                   4.7%       4.8%
Expense ratio                         23.8%      21.2%                  22.3%      21.4%
                                  --------       ----                -------       ----

GAAP basis combined ratio             89.4%      91.7%                  86.3%      94.5%
                                  ========       ====                =======       ====
Underwriting margin                   10.6%       8.3%                  13.7%       5.5%
                                  ========       ====                =======       ====

Net investment income             $ 13,230   $ 12,707          4%    $ 6,721    $ 6,378          5%
                                  ========   ========       ====     =======    =======       ====

Pre-tax operating income          $ 31,827   $ 27,007         18%    $18,858    $11,137         69%
                                  ========   ========       ====     =======    =======       ====

Operating income, net of tax      $ 22,790   $ 19,079         19%    $13,274    $ 7,887         68%
                                  ========   ========       ====     =======    =======       ====
</TABLE>

                                       12
<PAGE>

     Earned premiums increased 3% in both the second quarter and first half of
1999. Growth from new business was modest and premium growth is being impacted
in 1999 by a 2.2% December 1998 rate decrease in automobile insurance, the
company's primary line of business.

     Operating results continued to be profitable with a 13.7% underwriting
margin for the second quarter and 10.6% margin for the first half of 1999. The
results have been favorably impacted by improved loss ratios, primarily
automobile loss ratios, which improved throughout 1998 and were below 61% in the
first two quarters of 1999. Overall operating results improved 68% in the second
quarter and 19% in the first half of 1999 compared to the similar periods in
1998. The increases are due to both the improved operating ratios in 1999, and
due to catastrophe losses incurred in the second quarter of 1998, which totaled
$6.5 million, or 7.3% of premium. The 22.3% expense ratio for the second
quarter, although improved from the 25.2% ratio in the first quarter, still
represents an increased level of expenses. Increased technology expenses reflect
the Company's stated commitment to upgrade its systems for future growth and
improved efficiencies. Additionally, continued legal expenses in the quarter and
administrative expenses in the first quarter related to the retirement of two
executives also impacted expense ratios. The Company incurred no catastrophe
losses in either period due to favorable weather.

     Net investment income increased 4% in the first six months of 1999 in the
property casualty subsidiaries due to continued positive cash flow from
profitable underwriting results which increased invested assets 5.8% since June
30, 1998.

LIFE INSURANCE OPERATIONS
-------------------------

     The following table sets forth life insurance premiums and policy charges,
by type of policy, net investment income, benefits and expenses and life
insurance operating income for the six months and three months ended June 30,
1999 and 1998:

<TABLE>
<CAPTION>
                                              Six Months Ended June 30,    Three Months Ended June 30,
                                             ----------------------------  ----------------------------
                                              1999     1998     % Change     1999     1998    % Change
                                             -------  -------  ----------  --------  -------  ---------
                                                                   (in thousands)
<S>                                          <C>      <C>      <C>         <C>       <C>      <C>
Premiums and Policy Charges
   Universal life policy charges             $ 6,658  $ 6,056        10%    $ 3,434  $ 3,050        13%
   Universal life policy charges - COLI        1,511    1,448         4%        355      343         3%
   Interest sensitive life policy charges      4,951    4,859         2%      2,464    2,436         1%
   Traditional life insurance premiums        11,523   10,727         7%      5,927    5,185        15%
   Group life insurance premiums                 210      249       (16%)         1        0       100%
                                             -------  -------       ---     -------  -------       ---
     Total                                   $24,853  $23,339         6%    $12,181  $11,014        11%
                                             =======  =======       ===     =======  =======       ===

Net investment income                        $18,150  $17,173         6%    $ 9,055  $ 8,612         5%
                                             =======  =======       ===     =======  =======       ===

Benefits and expenses                        $30,741  $27,368        12%    $13,983  $13,011         7%
                                             =======  =======       ===     =======  =======       ===

Pre-tax operating income                     $ 8,879  $ 9,817       (10%)   $ 5,556  $ 4,954        12%
                                             =======  =======       ===     =======  =======       ===

Operating Income                             $ 6,720  $ 7,146        (6%)   $ 4,302  $ 3,625        19%
                                             =======  =======       ===     =======  =======       ===
</TABLE>

                                       13
<PAGE>

     The Company's life insurance premiums and policy charges increased 6% in
the first six months of 1999 due to new business and good persistency. First
year collected premiums have increased over 13% in the first half of 1999 due to
increased new sales of term products and from increased sales of universal life
policies which also have been positively impacted by a term conversion program
in 1998. Total new annualized premium increased 9.9% in the first half of 1999
and 10.3% in all of 1998.

      Life insurance operating income decreased approximately 6% in the first
six months of 1999. The primary factor that caused the decline in first half
earnings was a $3.8 million impact of legal expenses and policy reserve
increases related to certain whole life policies sold more than 10 years ago.
After thoroughly assessing those policies, the Company made a decision to adjust
the values of those policies and the reserves related to those policies. The
impact is included in the 12% increase in benefits and expenses. Partially
offsetting this increase was a decline in death claims of approximately
$1,300,000 or 17.4%. The mortality ratio of actual to expected death claims
improved from 112% in the first six months of 1998 to 88% in the first half of
1999. In spite of the decline in earnings, positive cash flows resulted in a
5.6% increase in invested assets which increased investment income approximately
6%.

NONINSURANCE OPERATIONS
-----------------------

     Noninsurance earnings increased 31% in the first half of 1999 due to an
increase of 14% or approximately $152,000 in net income in the consumer finance
subsidiary, and a 545% increase or approximately $192,000 in net income in the
construction subsidiary due to an increase in both commercial and residential
sales activity. The loan portfolio increased 2.6% to $57.4 million while the
overall portfolio yield rate decreased 24 basis points and loan and leasing
income increased 19.7% as a result of decreased interest expense. The real
estate sales subsidiary's earnings increased 38% or approximately $15,000.

CORPORATE
---------

     Interest expense on corporate debt is the primary corporate expense
incurred. Interest expense in the first six months of 1999 was approximately
$1,057,000 compared to approximately $922,000 for the similar period in 1998.
The increase in interest expense is due to the increase in the average balance
outstanding. The remainder of the corporate expense represents general operating
expenses which may fluctuate from time to time. The increase in other corporate
expenses in the first six months is due to an increase in legal expenses of
approximately $1,500,000.

                                       14
<PAGE>

INVESTMENTS
-----------

     The Company has historically produced positive cash flow from operations
which has resulted in increasing amounts of funds available for investment and,
consequently, higher investment income.  Investment income is also affected by
yield rates.  Information about cash flows, invested assets and yield rates is
presented below for the six months ended June 30, 1999 and 1998:

<TABLE>
<CAPTION>
                                                                                 Six Months Ended
                                                                                     June 30,
                                                                                ------------------
                                                                                  1999      1998
                                                                                --------  --------
<S>                                                                             <C>       <C>
Increase in carrying value of invested assets since January 1, 1999 and 1998        6.4%      3.9%
Investment yield rate (annualized)                                                  6.9%      6.9%
Increase in net investment income since June 30, 1998 and 1997                      6.0%      6.2%
</TABLE>

        The 26.1% increase in positive cash flow from operations is due
primarily to continued profitable operating results in the Company's property
and casualty subsidiaries, which had  $18.7 million in underwriting income in
the first half of 1999. The premium from the COLI plan in the life insurance
subsidiary is collected in February and has provided positive cash flow in the
first half of both periods. As a result of the overall positive cash flows,
invested assets grew 12.4% since January 1, 1999 and 14.6% since June 30, 1998
(based on amortized cost, which excludes the impact of SFAS 115), and net
investment income increased 6.0%.  The overall yield rate, calculated using
amortized cost, has remained flat.  The Company had net realized investment
gains of approximately $5.5 million in the first six months of 1999 and $4.1
million in the similar period in 1998.  These net gains are primarily from sales
of equity securities.  Such realized gains are the result of market conditions
and therefore can fluctuate from period to period.

     The composition of the Company's investment portfolio is as follows at June
30, 1999 and  December 31, 1998:

<TABLE>
<CAPTION>
                                          June 30,   December 31,
                                            1999         1998
                                          ---------  -------------
          <S>                             <C>        <C>
           Fixed maturities
             Taxable
               Mortgage backed (CMO's)        26.1%          27.9%
               Corporate bonds                28.1           30.2
                                             -----          -----
                 Total taxable                54.2           58.1
             Tax exempts                      15.4           13.5
                                             -----          -----
               Total fixed maturities         69.6           71.6
                                             -----          -----
           Equity securities                  10.5            9.5
           Mortgage loans                        -              -
           Real estate                          .2             .1
           Policy loans                        3.5            3.6
           Other long term investments        11.2           10.2
           Short term investments              5.0            5.0
                                             -----          -----
                                             100.0%         100.0%
                                             =====          =====
</TABLE>

     The majority of the Company's investment portfolio consists of fixed
maturities which are diverse as to both industry and geographic concentration.
Since year-end, the overall mix of investments has remained relatively

                                       15
<PAGE>

stable with changes due to market value fluctuations in equities and fixed
maturities.

     The rating of the Company's portfolio of fixed maturities using the
Standard & Poor's rating categories is as follows at June 30, 1999 and December
31, 1998:

                                                     June 30,   December 31,
                                                      1999         1998
                                                    ---------  -------------
          RATING
          ------
          AAA to A-                                     91.4%          89.2%
          BBB+ to BBB-                                   7.8            9.8
          BB+ and Below (Below investment grade)          .8            1.0
                                                       -----          -----
                                                       100.0%         100.0%
                                                       =====          =====

     One hundred percent of the fixed maturity portfolio was rated by an outside
rating service.  No securities were rated by Company management.  The Company
considers bonds with a quality rating of BB+ and below to be below investment
grade or high yield bonds (also called junk bonds).

     At June 30, 1999, approximately 37.5% of fixed maturities were mortgage-
backed securities. Such securities are comprised of Collateralized Mortgage
Obligations (CMO's) and pass through securities. Based on reviews of the
Company's portfolio of mortgage-backed securities, the impact of prepayment risk
on the Company's financial position is not believed to be significant. At June
30, 1999 the Company's total portfolio of fixed maturities had gross unrealized
gains of $18,192,752 and gross unrealized losses of $20,305,491. Securities are
priced by nationally recognized pricing services or by broker/dealer securities
firms. No securities were priced by the Company.

     During the first six months of 1999, the Company sold approximately $9.4
million in fixed maturities available for sale. These sales resulted in gross
realized gains of $12,779 and gross realized losses of $812,408. During the
first six months of 1998 the Company sold approximately $38.6 million in fixed
maturities available for sale. These sales resulted in gross realized gains of
$116,971 and gross realized losses of $55,873.

     The Company monitors its level of investments in high yield fixed
maturities and equity investments held in issuers of high yield debt securities.
Management believes the level of such investments is not significant to the
Company's financial condition. At June 30, 1999, the Company had unrealized
gains of approximately $2,973,000 in such investments.

     In the first six months of 1999, the Company wrote down three equity
securities totaling $742,257, whose declines in value were deemed to be other
than temporary. At June 30, 1999 there were no nonperforming bonds in the
portfolio.

     The Company's investment in other long term investments consists primarily
of loans originated by the consumer finance subsidiary. These loans are
collateralized by automobiles and other property. At June 30, 1999, the
delinquency ratio on the portfolio was 1.44%, down from 2.04% at December 31,
1998. No loans were charged off in the first half of 1999. At June 30, 1999, the
Company maintained an allowance for loan losses of $584,178 or approximately
1.2% of the outstanding loan balance. Long term investments also include

                                       16
<PAGE>

assets leased under operating leases, partnership investments and certain other
investments.

INCOME TAXES
------------

     The slight increase in income tax expense in the first six months of 1999
is the result of the increase in operating income before provision for income
taxes, which increased $4.7 million due primarily to the impact of increased
property casualty underwriting results. The effective tax rate in the first six
months of 1999 was 28.5% compared to 31.9% for the full year 1998 and 30.7% for
the first six months of 1998. The decline in the effective rate is due to the
relative increase in tax free versus taxable income and increased tax preference
credits on certain investments.

IMPACT OF INFLATION
-------------------

     Inflation increases consumers' needs for both life and property and
casualty insurance coverage. Inflation increases claims incurred by property and
casualty insurers as property repairs, replacements and medical expenses
increase. Such cost increases reduce profit margins to the extent that rate
increases are not maintained on an adequate and timely basis. Since inflation
has remained relatively low in recent years, financial results have not been
significantly impacted by inflation.

LIQUIDITY AND CAPITAL  RESOURCES
--------------------------------

     Alfa Corporation receives funds from its subsidiaries consisting of
dividends, payments for funding federal income taxes, and reimbursement of
expenses incurred at the corporate level for the subsidiaries. These funds are
used for paying dividends to stockholders, corporate interest and expenses,
federal income taxes, and for funding additional investments in its
subsidiaries' operations.

     Alfa Corporation's subsidiaries require cash in order to fund policy
acquisition costs, claims, other policy benefits, interest expense, general
operating expenses, and dividends to Alfa Corporation. The major sources of the
Company's liquidity are operations and cash provided by maturing or liquidated
investments. A significant portion of the Company's investment portfolio
consists of readily marketable securities which can be sold for cash. Based on a
review of the Company's matching of asset and liability maturities and on the
interest sensitivity of the majority of policies in force, management believes
the ultimate exposure to loss from interest rate fluctuations is not
significant.

     On October 25, 1993, the Company established a Stock Option Plan, pursuant
to which a maximum aggregate of 2,000,000 shares of common stock have been
reserved for grant to key personnel. The plan expires on October 24, 2003. The
Company granted 783,400 such options on October 25, 1993, 80,000 options on
March 28, 1994, 80,000 options on March 27, 1995, 80,000 options on April 18,
1996, 75,000 options on February 18, 1997, 452,500 options on March 23, 1998 and
167,500 on April 22, 1999. The options ratably become exercisable annually over
three years, and may not be exercised after ten years after the date of award.
At June 30, 1999, there had been 162,282 options exercised, 998,328 options were
exercisable and 73,368 had been canceled leaving 354,968 options available for
grant under the plan.

      In October 1989, the Company's Board of Directors approved a stock
repurchase program authorizing the repurchase of up to 2,000,000 shares of its
outstanding common stock in the open market or in negotiated

                                       17
<PAGE>

transactions in such quantities and at such times and prices as management may
decide. In March 1999, the Board increased the number of shares authorized for
repurchase by 2,000,000. During the first six months of 1999 the Company
repurchased 1,236,400 shares at a cost of $21,529,795. At June 30, 1999 the
total repurchased was 2,356,000 shares at a cost of $26,580,036. The Company has
reissued 162,282 treasury shares as a result of option exercises.

     Total borrowings increased $34.9 million in the first six months of 1999 to
$101.7 million. At June 30, 1999 the Company had approximately $92.7 million in
commercial paper at rates ranging from 4.95% to 5.90% with maturities ranging
from July 1, 1999 to July 21, 1999. The Company intends to continue to use the
commercial paper program to fund the consumer loan portfolio and other corporate
short term needs. Backup lines of credit are in place up to $100 million. The
Company has an A-1+, P-1 commercial paper rating from Standard & Poor's and
Moody's Investors Service. The commercial paper is guaranteed by an affiliate,
Alfa Mutual Insurance Company. In addition, the Company had $8.9 million in
short-term debt outstanding to affiliates at June 30,1999 with interest equal to
commercial paper rates payable monthly and $105,874 outstanding in other short-
term debt at a rate of 7.0%.

     Cash surrenders paid to policyholders on a statutory basis totaled $6.4
million in the first six months of 1999 and $5.9 million for the first six
months of 1998. This level of surrenders is within the Company's pricing
expectations. Historical persistency rates indicate a normal pattern of
surrender activity. The structure of the surrender charges is such that
persistency is encouraged. The majority of the policies in force have surrender
charges which grade downward over a 12 to 15 year period. In addition, the
majority of the in-force business is interest sensitive type policies which
generally have lower rates of surrender. At June 30, 1999 the total amount of
cash that would be required to fund all amounts subject to surrender was
approximately $341.8 million.

     The Company's business is concentrated geographically in Alabama, Georgia
and Mississippi. Accordingly, unusually severe storms or other disasters in
these contiguous states might have a more significant effect on the Company than
on a more geographically diversified insurance company. Unusually severe storms,
other natural disasters and other events could have an adverse impact on the
Company's financial condition and operating results. However, the Company's
current catastrophe protection program, which began November 1, 1996, reduced
the earnings volatility caused by such catastrophe exposures.

    Increasing public interest in the availability and affordability of
insurance has prompted legislative, regulatory and judicial activity in several
states. This includes efforts to contain insurance prices, restrict underwriting
practices and risk classifications, mandate rate reductions and refunds,
eliminate or reduce exemptions from antitrust laws and generally expand
regulation. Because of Alabama's low automobile rates as compared to rates in
most other states, the Company does not expect the type of punitive legislation
and initiatives found in some states to be a factor in its primary market in the
immediate future. During the second quarter of 1999, the Alabama legislature
passed a tort reform package that should help to curb some of the excessive
litigation experienced in recent years. In addition, a mandatory insurance bill
was passed to require motorists to obtain insurance coverage beginning in June,
2000. Such a requirement could affect both the revenues and losses incurred by
the Company in the future. Although the full extent or impact is not possible to
predict, the Company believes any impact on future results will not be
significant.

                                       18
<PAGE>

YEAR 2000
---------

     The Company initially started the identification of year 2000 issues in
1993 and 1994 and began its internal programming modifications in 1995. These
phases along with the testing have continued during the last three years. The
Company believes it has substantially completed the identification and
programming steps and at June 30, 1999 is approximately 97% complete with actual
application and scenario testing, whereby dates are manipulated and results are
compared for accuracy. Such testing and completion of internal programming is
currently scheduled to be completed in the third quarter of 1999. A summary of
mission critical systems follows this section. In addition, the Company has
addressed the issues related to year 2000 in regards to material relationships
with third parties, vendors, suppliers, etc. and has identified such providers,
surveying their efforts and requesting written assurances that year 2000 issues
have been addressed. Of the vendor operating system software identified during
this process, approximately 95% of the programs have been labeled as "year 2000
compliant" by the vendors. In the event that such software fails despite written
assurances and internal testing, the Company expects to work closely with the
vendors to find a remedy in a timely fashion. Also, the Company is continuing to
review all significant non-information technology systems for year 2000
compliance. The most significant such system, the telephone system, has already
been determined to be year 2000 compliant. These efforts as well as the final
phase, follow-up on any unresolved year 2000 issues, are expected to be
completed during the third quarter of 1999.

     The Company has not utilized any year 2000 solution providers in addressing
compliance of its mainframe systems. To date, the issues have been addressed
with internal resources. However, the Company has contracted with external
consultants to assist in the review and updating of its personal computer
systems and associated hardware and software. Due to the longevity of the
process, the number of employees and resources devoted to the efforts and the
time spent, it is not practicable to determine precisely the total costs
attributable to the year 2000 issue. These costs have been expensed as incurred
throughout the process. However, the Company estimates that to date,
approximately $2.8 million has been spent on year 2000 efforts, with
approximately $560,000 expensed in the second quarter of 1999. Future costs are
currently anticipated to total approximately $300,000 for a total estimated cost
of year 2000 efforts of $3.1 million. The Company has absorbed the costs into
its operations with no significant adverse impact on its financial condition or
results of operations. The resources utilized have caused some normal
operational enhancements and systems development to be deferred or delayed.
However, any systems maintenance or statutory required updates have not been
affected.

     To the extent the year 2000 issues are not corrected timely and
successfully, the Company's ability to process its business and pay its claims
timely could be impacted. Such an event could have material adverse consequences
on future financial condition and results of operations. The Company has begun
the process of developing a contingency plan should an adverse year 2000 issue
occur. As part of the contingency plan, the Company expects to address its
ability to conduct business in environments experiencing both limited and
extensive adverse conditions resulting from the year 2000 issue. It expects to
have such a plan in place by the end of the third quarter of 1999.

                                       19
<PAGE>

                      SUMMARY OF MISSION CRITICAL SYSTEMS

<TABLE>
<CAPTION>
=========================================================================
                                         Remediation/   System     Goal
Mission Critical Systems      Research   Programming    Testing    Date
-------------------------------------------------------------------------
<S>                           <C>        <C>           <C>        <C>
Accounting                    Completed   Completed    Completed  N/A
-------------------------------------------------------------------------
Agent Compensation            Completed   Completed    Completed  N/A
-------------------------------------------------------------------------
Claims                        Completed   Completed    Completed  N/A
-------------------------------------------------------------------------
Investment Management         Completed   Completed    Completed  N/A
-------------------------------------------------------------------------
Life Policy Administration    Completed   Completed    Completed  N/A
-------------------------------------------------------------------------
Loan Processing               Completed   Completed     Started   8/31/99
-------------------------------------------------------------------------
Payment Processing            Completed   Completed    Completed  N/A
-------------------------------------------------------------------------
Payroll Processing            Completed   Completed    Completed  N/A
-------------------------------------------------------------------------
Personal Computers - Field    Completed   Completed    Completed  N/A
-------------------------------------------------------------------------
Personal Computer - Based
Field Programs                Completed   Completed     Started   9/30/99
-------------------------------------------------------------------------
Personal Computers -
Home Office                   Completed    Started      Started   9/30/99
-------------------------------------------------------------------------
Postal Software               Completed   Completed    Completed  N/A
-------------------------------------------------------------------------
Property/Casualty
Policy Administration         Completed   Completed    Completed  N/A
=========================================================================
</TABLE>

                                       20
<PAGE>

FINANCIAL ACCOUNTING DEVELOPMENTS

     The Financial Accounting Standards Board (FASB) issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities in June 1998.  This
Statement establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in investment
securities and  other contracts, and for hedging activities.  It requires than
an entity recognize all derivatives as either assets or liabilities in the
balance sheet and measure those instruments at fair value.  The accounting for
changes in the fair value of a derivative will be included in either earnings or
other comprehensive income depending on the intended use of the derivative
instrument.  The Company is currently evaluating this standard, which for the
Company is effective January 1, 2001.

     In December 1997, the AICPA issued a Statement of Position (SOP) 97-3.  SOP
97-3 provides: 1) guidance for determining when an entity should recognize a
liability for guaranty fund and other insurance-related assessments, 2) guidance
on how to measure a liability, 3) guidance on when an asset may be recognized
for a portion or all of the assessment liability or paid assessment that can be
recovered through premium tax offsets or policy surcharges, and 4) requirements
for disclosure of certain information.  This SOP is effective for financial
statements for fiscal years beginning after December 15, 1998.  The Company does
not anticipate implementation of SOP 97-3 to have a material impact on the
Company's financial statements.

INFORMATION ABOUT FORWARD-LOOKING STATEMENTS

     Any statement contained in this report which is not a historical fact, or
which might otherwise be considered an opinion or projection concerning the
Company or its business, whether express or implied, is meant as and should be
considered a forward-looking statement as that term is defined in the Private
Securities Litigation Reform Act of 1995.  Forward-looking statements are based
on assumptions and opinions concerning a variety of known and unknown risks,
including but not necessarily limited to changes in market conditions, natural
disasters and other catastrophic events, increased competition, changes in
availability and cost of reinsurance, changes in governmental regulations, and
general economic conditions, as well as other risks more completely described in
the Company's filings with the Securities and Exchange Commission.  If any of
these assumptions or opinions prove incorrect, any forward-looking statements
made on the basis of such assumptions or opinions may also prove materially
incorrect in one or more respects.

Item 3.
-------

     MARKET RISK DISCLOSURES
     -----------------------

     The Company's Annual Report filed on Form 10-K with the Securities and
Exchange Commission includes quantitative and qualitative market risk disclosure
information.  Since December 31, 1998, there have been no significant changes in
these disclosures.  However, due to recent increases in interest rates, the fair
value of the Company's fixed maturity investments has declined by $18.7 million.
The Company's sensitivity analysis, disclosed in the Annual Report indicates
that a 100 basis point increase in interest rates would result in a hypothetical
decrease in fair value and therefore in stockholders' equity by 7.2%.

                                       21
<PAGE>

                          PART II.  OTHER INFORMATION


Item 4.
-------

     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
     ---------------------------------------------------

     The Annual Meeting of Stockholders was held April 22, 1999. The following
     individuals were elected to the Board of Directors to serve until the next
     annual meeting of stockholders.

           Jerry A. Newby
           Milborn N. Chesser
           Boyd E. Christenberry
           C. Lee Ellis
           James I. Harrison, Jr.
           Hal F. Lee
           John W. Morris
           B. Phil Richardson
           John R. Thomas
           James A. Tolar, Jr.
           Russell R. Wiggins

Item 6.
-------

     EXHIBITS AND REPORTS ON FORM 8-K
     --------------------------------

     None.

                                       22
<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.


                                   ALFA CORPORATION



Date 8/13/99                       By: /S/ Jerry A. Newby
     -------                           ------------------------------
                                       Jerry A. Newby
                                       President



Date 8/13/99                       By: /S/ Donald Price
     -------                           ------------------------------
                                       Donald Price
                                       Senior Vice President, Finance
                                       (Chief Financial Officer)


Date 8/13/99                       By: /S/ John Holley
     -------                           ------------------------------
                                       John Holley
                                       Vice President, Finance
                                       (Chief Accounting Officer)

                                       23