<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 September 30, 2001 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 September 30, 2001
-----------------------------                    ------------------------------
Common Stock, $1.00 par value                          39,143,678 shares

<PAGE>

                               ALFA CORPORATION

                                     INDEX

<TABLE>
<CAPTION>
Part I.      Financial Information                                             Page No.
                                                                               --------
             (Consolidated Unaudited)
<S>                                                                            <C>
       Item 1. Financial Statements

             Balance Sheets - September 30, 2001 and
             December 31, 2000                                                      3

             Statements of Income, Nine Months and Three Months
             ended September 30, 2001 and 2000                                      4

             Statements of Comprehensive Income, Nine Months and Three Months
             ended September 30, 2001 and 2000                                      5

             Statements of Cash Flows, Nine Months
             ended September 30, 2001 and 2000                                      6

             Notes to Financial Statements                                          7

             Independent Accountants' Review Report                                12

       Item 2.

             Management's Discussion and Analysis of
             Financial Condition and Results of Operations                         13

       Item 3.
             Market Risk Disclosures                                               22

Part II.     Other Information

       Item 1.

             Legal Proceedings                                                     23

       Item 6.

             Exhibits and Reports on Form 8-K                                      23
</TABLE>



                                       2
<PAGE>

                               ALFA CORPORATION
                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                  September 30,    December 31,
                                                                                       2001           2000
                                                                                 ------------------------------
                                                                                   (Unaudited)
<S>                                                                              <C>             <C>
Assets
  Investments:
     Fixed Maturities Held for Investment, at amortized cost
       (fair value $602,217 in 2001 and $792,959 in 2000)                        $      560,145  $      754,450
     Fixed Maturities Available for Sale, at fair value
       (amortized cost $970,531,590 in 2001 and $937,730,993 in 2000)             1,013,769,609     946,179,812
     Equity Securities, at fair value (cost $60,378,761
       in 2001 and $53,687,943 in 2000)                                              91,515,866     114,594,848
     Mortgage Loans on Real Estate                                                      145,809         214,394
     Investment Real Estate (net of accumulated
       depreciation of $1,411,888 in 2001 and
       $1,299,407 in 2000)                                                            2,691,800       2,045,171
     Policy Loans                                                                    48,935,377      46,335,399
     Collateral Loans                                                                80,183,956      70,022,985
     Other Long-term Investments                                                    146,767,109     118,945,159
     Short-term Investments                                                          82,653,537      55,933,710
---------------------------------------------------------------------------------------------------------------
       Total Investments                                                          1,467,223,208   1,355,025,928
  Cash                                                                                4,388,196       4,475,672
  Accrued Investment Income                                                          14,815,101      14,020,985
  Accounts Receivable                                                                12,498,421      13,885,864
  Reinsurance Balances Receivable                                                     3,783,475       2,935,521
  Due from Affiliates                                                                 4,800,900       5,753,191
  Deferred Policy Acquisition Costs                                                 145,924,525     144,572,014
  Other Assets                                                                        5,553,854       5,633,934
---------------------------------------------------------------------------------------------------------------
       Total Assets                                                              $1,658,987,680  $1,546,303,109
===============================================================================================================

Liabilities
  Policy Liabilities and Accruals - Property and Casualty Insurance              $  142,709,249  $  145,077,064
  Policy Liabilities and Accruals - Life Insurance                                  548,369,854     507,455,793
  Unearned Premiums                                                                 139,311,445     121,688,810
  Dividends to Policyholders                                                         10,247,726      10,033,028
  Premium Deposit and Retirement Deposit Funds                                        5,147,171       5,364,453
  Deferred Income Taxes                                                              43,082,755      42,513,055
  Other Liabilities                                                                  73,737,760      82,021,332
  Due to Affiliates                                                                  15,645,213      15,408,988
  Commercial Paper                                                                  142,434,939     117,642,561
  Notes Payable                                                                               -         103,806
  Notes Payable to Affiliates                                                        33,067,202      25,432,979
---------------------------------------------------------------------------------------------------------------
       Total Liabilities                                                          1,153,753,314   1,072,741,869
---------------------------------------------------------------------------------------------------------------
Commitments and Contingencies
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:  2001 - 39,143,678; 2000 - 39,148,527                               41,891,512      41,891,512
  Capital in Excess of Par Value                                                     25,980,477      24,076,380
  Accumulated Other Comprehensive Income                                             43,978,503      45,444,149
  Retained Earnings                                                                 432,764,660     398,705,679
  Treasury Stock: at cost (2001-2,747,834 shares; 2000-2,742,985 shares)            (39,380,786)    (36,556,480)
---------------------------------------------------------------------------------------------------------------
       Total Stockholders' Equity                                                   505,234,366     473,561,240
---------------------------------------------------------------------------------------------------------------
       Total Liabilities and
       Stockholders' Equity                                                      $1,658,987,680  $1,546,303,109
===============================================================================================================
</TABLE>


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

                                       3
<PAGE>

                               ALFA CORPORATION
                       CONSOLIDATED STATEMENTS OF INCOME
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                 Nine Months Ended              Three Months Ended
                                                                   September 30,                  September 30,
                                                           ----------------------------    --------------------------
                                                                2001            2000            2001          2000
                                                           ----------------------------    --------------------------
<S>                                                        <C>             <C>             <C>            <C>
Revenues
  Premiums - Property and Casualty Insurance               $295,360,960    $281,039,270    $100,133,110   $95,644,024
  Premiums and Policy Charges - Life Insurance               42,658,144      39,843,490      14,005,207    13,026,952
  Net Investment Income                                      62,212,315      54,203,573      22,635,959    19,513,026
  Realized Investment Gains (Losses)                          3,073,113       5,023,687       1,921,977      (595,068)
  Other Income                                                2,080,488       2,049,296         632,348       499,850
---------------------------------------------------------------------------------------    --------------------------

    Total Revenues                                          405,385,020     382,159,316     139,328,601   128,088,784
---------------------------------------------------------------------------------------    --------------------------

Benefits and Expenses
  Benefits & Settlement Expenses                            235,367,411     224,247,509      80,523,430    78,293,317
  Dividends to Policyholders                                  2,780,276       2,696,686         876,026       847,565
  Amortization of Deferred Policy
    Acquisition Costs                                        55,459,983      49,054,008      18,746,640    17,051,736
  Other Operating Expenses                                   41,466,549      33,935,534      13,705,379    12,241,040
---------------------------------------------------------------------------------------    --------------------------

    Total Expenses                                          335,074,219     309,933,737     113,851,475   108,433,658
---------------------------------------------------------------------------------------    --------------------------

Income Before Provision for Income Taxes                     70,310,801      72,225,579      25,477,126    19,655,126

Provision for Income Taxes                                   19,706,801      21,227,398       6,879,643     5,842,374
---------------------------------------------------------------------------------------    --------------------------

Net Income Before Cumulative Effect of Change
    in Accounting Principle, Net of Tax Benefit              50,604,000      50,998,181      18,597,483    13,812,752

Cumulative Effect of Change in Accounting Principle,
    Net of Income Tax Benefit of $140,394                      (260,731)              0          (1,950)            0
---------------------------------------------------------------------------------------    --------------------------

    Net Income                                             $ 50,343,269    $ 50,998,181    $ 18,595,533  $ 13,812,752
=======================================================================================    ==========================

Operating Income                                           $ 48,606,477    $ 47,732,784    $ 17,348,198  $ 14,199,546
=======================================================================================    ==========================

Earnings Per Share:
Operating Income
    - Basic                                                $       1.24    $       1.22    $       0.44  $       0.36
    - Diluted                                              $       1.23    $       1.21    $       0.44  $       0.36

Net Income Before Cumulative Effect of Change
    in Accounting Principle, Net of Tax Benefit
    - Basic                                                $       1.29    $       1.30    $       0.47  $       0.35
    - Diluted                                              $       1.28    $       1.29    $       0.47  $       0.35

Cumulative Effect of Change in Accounting Principle,
    Net of Tax Benefit
    - Basic                                                      ($0.01)   $       0.00          ($0.00) $       0.00
    - Diluted                                                    ($0.01)   $       0.00          ($0.00) $       0.00

Net Income
    - Basic                                                $       1.29    $       1.30    $       0.47  $       0.35
    - Diluted                                              $       1.28    $       1.29    $       0.47  $       0.35
=======================================================================================    ==========================

Average Shares Outstanding
    - Basic                                                  39,157,857      39,194,840      39,153,245    39,050,892
    - Diluted                                                39,474,135      39,425,588      39,519,073    39,311,077
=======================================================================================    ==========================
</TABLE>

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

                                       4
<PAGE>

                               ALFA CORPORATION
                CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                 Nine Months Ended           Three Months Ended
                                                                                    September 30,               September 30,
                                                                              ------------------------   -------------------------

                                                                                  2001         2000          2001          2000
                                                                              ------------------------   -------------------------
<S>                                                                           <C>          <C>           <C>           <C>
Net Income                                                                    $50,343,269  $50,998,181   $18,595,533   $13,812,752
Other Comprehensive (Loss) Income, net of tax:
  Unrealized Investment Gains on Securities Available for Sale                    531,877   16,317,791     2,086,810    12,136,037
  Less:  Reclassification Adjustment for Realized Investment Gains (Losses)     1,997,523    3,265,397     1,249,285      (386,794)
                                                                              -----------  -----------   -----------   -----------

    Total Other Comprehensive (Loss) Income                                    (1,465,646)  13,052,394       837,525    12,522,831
                                                                              -----------  -----------   -----------   -----------

      Total Comprehensive Income                                              $48,877,623  $64,050,575   $19,433,058   $26,335,583
                                                                              ===========  ===========   ===========   ===========
</TABLE>

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

                                       5
<PAGE>

                               ALFA CORPORATION
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                  Nine Months Ended September 30,
                                                                                        2001           2000
                                                                                  -------------------------------
<S>                                                                               <C>             <C>
Cash Flows From Operating Activities:
  Net Income                                                                       $  50,343,269  $  50,998,181

  Adjustments to Reconcile Net Income to Net Cash
  Provided by Operating Activities:
    Policy Acquisition Costs Deferred                                                (64,172,774)   (59,946,765)
    Amortization of Deferred Policy Acquisition Costs                                 55,459,983     49,054,008
    Depreciation and Amortization                                                       (207,654)       401,296
    Provision for Deferred Taxes                                                       1,920,753        944,338
    Interest Credited on Policyholders' Funds                                         16,986,343     15,181,912
    Net Realized Investment Gains                                                     (3,073,113)    (5,023,687)
    Other                                                                                103,245       (505,434)
    Changes in Operating Assets and Liabilities:
      (Increase) in Accrued Investment Income                                           (794,116)    (2,386,828)
      (Increase) Decrease in Accounts Receivable                                      (5,032,673)     2,421,978
      (Increase) in Reinsurance Balances Receivable                                     (847,954)    (1,499,647)
      Decrease (Increase) in Amounts Due From Affiliates                                 952,291     (4,038,965)
      Increase in Amounts Due to Affiliates                                              236,225        990,613
      Decrease in Other Assets                                                            80,080      1,111,886
      Increase in Liability for Policy Reserves                                        2,303,000     11,276,738
      Increase in Liability for Unearned Premiums                                     17,622,635     12,766,225
      (Decrease) Increase in Amounts Held for Others                                      (2,584)         6,684
      Increase in Other Liabilities                                                   11,663,249     15,262,065
                                                                                   -------------  -------------
       Net Cash Provided by Operating Activities                                      83,540,205     87,014,598
                                                                                   -------------  -------------

Cash Flows From Investing Activities:
    Maturities and Redemptions of Fixed Maturities Held for Investment                   193,775        230,638
    Maturities and Redemptions of Fixed Maturities Available for Sale                 70,941,418     40,457,755
    Maturities and Redemptions of Other Investments                                  230,813,383    173,611,709
    Sales of Fixed Maturities Available for Sale                                      29,662,924     36,145,159
    Sales of Other Investments                                                        47,285,569     37,515,121
    Purchase of Fixed Maturities Available for Sale                                 (131,609,922)  (161,599,841)
    Purchase of Other Investments                                                   (327,848,689)  (266,185,049)
    Net (Increase) Decrease in Short-term Investments                                (26,719,827)    17,853,217
    Net (Increase) in Receivable/Payable on Securities                               (10,142,650)    (2,636,111)
                                                                                   -------------  -------------
       Net Cash (Used in) Investing Activities                                      (117,424,019)  (124,607,402)
                                                                                   -------------  -------------

Cash Flows From Financing Activities:
    Increase in Commercial Paper                                                      24,792,378     36,315,722
    (Decrease) in Notes Payable                                                         (103,806)          (964)
    Increase in Notes Payable to Affiliates                                            7,634,223      9,241,892
    Stockholder Dividends Paid                                                       (16,487,023)   (14,955,395)
    Purchase of Treasury Stock                                                        (3,575,199)    (8,870,081)
    Proceeds from Exercise of Stock Options                                            2,153,707        703,117
    Deposits of Policyholders' Funds                                                  54,579,566     52,843,059
    Withdrawal of Policyholders' Funds                                               (35,197,508)   (33,779,196)
                                                                                   -------------  -------------
       Net Cash Provided by Financing Activities                                      33,796,338     41,498,154
                                                                                   -------------  -------------
Net (Decrease) Increase in Cash                                                          (87,476)     3,905,350
Cash - Beginning of Period                                                             4,475,672      6,649,914
                                                                                   -------------  -------------
Cash - End of Period                                                               $   4,388,196  $  10,555,264
                                                                                   =============  =============

Supplemental Disclosures of Cash Flow Information
Cash Paid During the Year for:
    Interest                                                                       $   6,442,252  $   6,582,769
    Income Taxes                                                                   $  10,681,000  $  17,225,000
</TABLE>

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

                                       6
<PAGE>

                               ALFA CORPORATION
             NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
                              September 30, 2001

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

    In the opinion of the Company, the accompanying consolidated 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 accounting principles generally accepted in the United
States of America.  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, 2000.
The results of operations for the nine month and three month periods ended
September 30, 2001 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, net of
related tax effects.  Certain reclassifications have been made to conform
previous classifications to September 30, 2001 classifications and descriptions.

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

    Effective August 1, 1987, the Company 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 (See Note 3).  On
January 1, 2001, Alfa Specialty Insurance Corporation (Specialty), a subsidiary
of Mutual, also became a participant in the Pooling Agreement.  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.  Specialty is a direct writer primarily of nonstandard risk
automobile insurance.  Under the terms of the Pooling Agreement, the Company
cedes to Mutual all of its property and casualty business.  Substantially 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.
Mutual currently retrocedes 65% of the pool to the Company and retains 35%
within the Mutual Group.  Effective January 1, 2001, Specialty's property and
casualty business likewise became included in the pool.  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 storms
to its pool share (65%) of $10 million unless the loss exceeded $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.  Due to
increases in insured property risks, an amendment was made increasing the
Company's participation limits from its pool share of the $10 million level to
$11 million beginning July 1, 1999.  This limit has been amended effective
January 1, 2001 to $11.4 million.   During 2000, the Company's share of losses
exceeding $249 million would have been 13%.  During the first nine months of
2001, the Alfa Group incurred catastrophic losses of approximately $27.7
million, resulting in a reduction in the Company's net income of approximately
$0.12 per diluted share, after reinsurance and taxes.   These parameters have
been amended to $284 million and 14% as of January 1, 2001.  The Company's
participation in the Pooling Agreement may be changed or terminated without the
consent or approval of the Company's shareholders.  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 nine and three month periods ended September 30, 2001 and
2000:

<TABLE>
<CAPTION>

                              Nine  Months Ended September 30,  Three Months Ended September 30,
                              --------------------------------  --------------------------------
                                  2001                2000           2001               2000
                              --------------------------------  --------------------------------
                                                         (in thousands)
<S>                           <C>                  <C>            <C>                 <C>
Premiums ceded to pool          $ 54,545            $ 47,786       $ 19,932           $16,252
Premiums assumed from pool      $296,510            $282,079       $100,518           $96,016
Losses ceded to pool            $ 42,003            $ 31,528       $ 14,221           $10,794
Losses assumed from pool        $184,258            $175,282       $ 62,253           $62,168
</TABLE>

     The Company incurred $7.4 million in storm losses in the first three months
of 2001.  No storm losses were incurred in the second or third quarters of 2001.
The Company incurred approximately $6.7 million in storm losses in the first
nine months of 2000, including $4.2 million in the third quarter.

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.

    Certain legal proceedings are in process at September 30, 2001. Costs for
these and similar legal proceedings, including accruals for outstanding cases,
totaled approximately $760,000 in the first nine months of 2001, $3.0 million in
2000, $6.5 million in 1999 and $5.2 million in 1998. 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. Approximately 18 legal proceedings against Alfa
Life Insurance Corporation (Life) are in process at September 30, 2001. Of the
18 proceedings, four were filed in 2001, five were filed in 2000, seven were
filed in 1999, one was filed in 1997, and one was filed in 1996. In a case tried
in January 2001, in Barbour County, Alabama, the jury returned a verdict for the
plaintiff against Life for $500,000 in compensatory damages and $5,000,000 in
punitive damages. After Life filed post-trial motions, the trial court reduced
the punitive damage award to $1,500,000. Life has appealed the award to the
Alabama Supreme Court. Two of the 18 pending legal proceedings against Life were
filed as purported class actions. At present, only one class action has been
certified against Life. The trial court order certifying that class action has
been appealed to the Alabama Supreme Court. In addition, one purported class
action lawsuit is pending against both Alfa Builders, Inc. and Alfa Mutual Fire
Insurance Company. Additionally, four purported class action lawsuits are
pending against the property and casualty mutual companies involving a number of
issues and allegations which could affect the Company because of a pooling
agreement between the companies. No class has been certified in any of these
five purported class action cases. It should be noted that in Alabama, where the
Company has substantial business, the likelihood of a judgment in any given
suit, including a large mental anguish and/or punitive damage award by a jury,
bearing little or no relation to actual damages, continues to exist, creating
the potential for unpredictable material adverse financial results.

                                       8
<PAGE>

4.   Segment Information
     -------------------

     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 nine month and three month periods ended September 30, 2001 and 2000:

<TABLE>
<CAPTION>
                                  Nine Months Ended September 30,   Three Months Ended September 30,
                                  -------------------------------   --------------------------------
                                     2001      2000      % Change      2001      2000       % Change
                                  -------------------------------   --------------------------------
                                                            (in thousands)
<S>                               <C>        <C>         <C>        <C>        <C>          <C>
Earned premiums
  Personal lines                  $282,805   $268,942          5%   $ 95,875   $ 91,604           5%
  Commercial lines                  10,466     10,125          3%      3,557      3,416           4%
  Pools, associations and fees       3,239      3,012          8%      1,086        996           9%
  Reinsurance ceded                 (1,149)    (1,040)        11%       (385)      (372)          4%
                                  -------------------------------   --------------------------------

     Total                        $295,361   $281,039          5%   $100,133   $ 95,644           5%
                                  ===============================   ================================

Net underwriting income           $ 21,912   $ 27,330        (20%)  $  7,092   $  6,251          13%
                                  ===============================   ================================

Loss ratio                            62.1%      61.9%                  62.1%      64.8%
LAE ratio                              4.0%       5.3%                   4.1%       4.7%
Expense ratio                         26.5%      23.1%                  26.7%      24.0%
                                  --------------------              --------------------

GAAP basis combined ratio             92.6%      90.3%                  92.9%      93.5%
                                  ====================              ====================
Underwriting margin                    7.4%       9.7%                   7.1%       6.5%
                                  ====================              ====================

Net investment income             $ 23,474   $ 22,187          6%   $  9,216   $  8,187          13%
                                  ===============================   ================================

Pre-tax operating income          $ 45,441   $ 49,683         (9%)  $ 16,226   $ 14,433          12%
                                  ===============================   ================================

Operating income, net of tax      $ 33,445   $ 36,482         (8%)  $ 11,828   $ 10,103          17%
                                  ===============================   ================================
</TABLE>

                                       9
<PAGE>

(Note 4. Continued)

     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 nine month and three month periods ended
September 30, 2001 and 2000:

<TABLE>
<CAPTION>
                                  Nine Months Ended September 30,   Three Months Ended September 30,
                                  -------------------------------   --------------------------------
                                     2001      2000      % Change      2001      2000       % Change
                                  -------------------------------   --------------------------------
                                                            (in thousands)
<S>                               <C>        <C>         <C>        <C>        <C>          <C>
Premiums and policy charges
  Universal life policy charges   $ 12,059   $ 10,962         10%   $  4,121   $  3,657          13%
  Universal life policy
    charges - COLI                   2,210      2,055          8%        478        445           7%
  Interest sensitive life
    policy charges                   7,591      7,625          0%      2,539      2,607          (3%)
  Traditional life insurance
    premiums                        20,534     18,878          9%      6,802      6,196          10%
  Group life insurance premiums        264        323        (18%)        65        121         (46%)
                                  -------------------------------   --------------------------------
   Total                          $ 42,658   $ 39,843          7%   $ 14,005   $ 13,026           8%
                                  ===============================   ================================

Net investment income             $ 34,470   $ 30,872         12%   $ 11,564   $ 10,647           9%
                                  ===============================   ================================

Benefits and expenses             $ 50,194   $ 45,558         10%   $ 17,274   $ 15,261          13%
                                  ===============================   ================================

Pre-tax operating income          $ 20,913   $ 19,712          6%   $  6,297   $  6,600          (5%)
                                  ===============================   ================================

Operating income, net of tax      $ 15,530   $ 14,215          9%   $  5,099   $  4,664           9%
                                  ===============================   ================================
</TABLE>

5.   Acquisition of Commercial Lease Portfolio
     -----------------------------------------

     During the first quarter of 2000, the Company signed a definitive agreement
and completed the transaction to acquire the leasing portfolio and assets of OFC
Capital (OFC), an Atlanta-based business unit of First Liberty Bank, that
provides financing for commercial equipment leases. The transaction involved a
cash purchase price of approximately $23.1 million, which is primarily for the
portfolio of leases. OFC operates as a business unit of Alfa Financial
Corporation, a subsidiary of the Company. OFC's operating results for the nine
month and three month periods ended September 30, 2001 were income of
approximately $476,000 and $220,000, respectively.

6.   Financial Accounting Developments
     ---------------------------------

     The Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standard (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 that 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. This standard, as
amended by SFAS No. 137 and SFAS No. 138, became effective for the Company
January 1, 2001. At this

                                       10
<PAGE>

(Note 6. Continued)

time, the Company does not anticipate this standard having a significant impact
on the Company's financial position or income as it does not use derivative
instruments in the normal course of business. On January 1, 2001, the Company
recorded approximately $259,000, net of tax, as the effect upon adoption of this
standard.

     The FASB also issued SFAS No. 140, "Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities (a replacement of SFAS
No. 125)" in September 2000. At this time, the Company does not anticipate this
standard having a significant impact on the Company's financial position or
income.

     The FASB recently issued SFAS No. 141, "Business Combinations," and SFAS
No. 142, "Goodwill and Other Intangible Assets," in September 2001. Based on
current information available and the fact that the Company has not engaged in
material transactions covered by these standards, the Company does not
anticipate these standards having a significant impact on the Company's
financial position or income.

     In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." Subsequently, in August 2001, the FASB issued SFAS No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets." At this
time, the Company does not anticipate either of these standards having a
significant impact on the Company's financial position or income.

                                       11
<PAGE>

                    INDEPENDENT ACCOUNTANTS' REVIEW REPORT



To the Stockholders and Board of Directors
Alfa Corporation:

We have reviewed the consolidated balance sheet of Alfa Corporation and
subsidiaries as of September 30, 2001, and the related consolidated statements
of income and comprehensive income for the three-month and nine-month periods
ended September 30, 2001 and 2000 and the consolidated statement of cash flows
for the nine-month periods ended September 30, 2001 and 2000.  These
consolidated financial statements are the responsibility of the Company's
management.

We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants.  A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters.  It is substantially less in scope than an audit conducted in
accordance with auditing standards generally accepted in the United States of
America, the objective of which is the expression of an opinion regarding the
financial statements taken as a whole.  Accordingly, we do not express such an
opinion.

Based on our review, we are not aware of any material modifications that should
be made to the consolidated financial statements referred to above for them to
be in conformity with accounting principles generally accepted in the United
States of America.

We have previously audited, in accordance with auditing standards generally
accepted in the United States of America, the accompanying consolidated balance
sheet of Alfa Corporation and subsidiaries as of December 31, 2000, and the
related consolidated statements of income, stockholders' equity, cash flows and
comprehensive income for the year then ended (not presented herein); and in our
report dated February 6, 2001, we expressed an unqualified opinion on those
consolidated financial statements.  In our opinion, the information set forth in
the accompanying consolidated balance sheet as of December 31, 2000, is fairly
stated in all material respects, in relation to the consolidated balance sheet
from which it has been derived.

KPMG LLP
November 9, 2001
Birmingham, Alabama

                                       12
<PAGE>

                     MANAGEMENT'S DISCUSSION AND ANALYSIS

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

     The following table sets forth consolidated summarized income statement
information for the nine month and three month periods ended September 30, 2001
and 2000:

<TABLE>
<CAPTION>
                                    Nine Months Ended September 30,       Three Months Ended September 30,
                                  -----------------------------------   -----------------------------------
                                      2001         2000      % Change       2001         2000      % Change
                                  -----------------------------------   -----------------------------------
                                           (in thousands, except share and per share data)
<S>                               <C>           <C>         <C>         <C>        <C>          <C>
Revenues
Property and casualty
 insurance premiums               $   295,361   $   281,039        5%   $   100,133   $    95,644        5%
Life insurance premiums
 and policy charges                    42,658        39,843        7%        14,005        13,026        8%
                                  -----------------------------------   -----------------------------------
    Total premiums and
     policy charges               $   338,019   $   320,882        5%   $   114,138   $   108,670        5%
                                  ===================================   ===================================

Net investment income             $    62,212   $    54,204       15%   $    22,636   $    19,513       16%
                                  ===================================   ===================================

Total revenues                    $   405,385   $   382,159        6%   $   139,329   $   128,089        9%
                                  ===================================   ===================================

Net income
 Property and casualty
  insurance                       $    33,454   $    36,511       (8%)  $    11,844   $    10,132       17%
 Life insurance                        15,530        14,215        9%         5,099         4,664        9%
                                  -----------------------------------   -----------------------------------
    Total insurance
     operations                        48,984        50,726       (3%)       16,943        14,796       15%
 Noninsurance operations                2,550         1,302       96%         1,203           257      368%
 Net realized inv. gains
  (losses)                              1,998         3,265      (39%)        1,249          (387)     423%
 Corporate expenses                    (2,928)       (4,295)      32%          (799)         (853)       6%
 Cumulative effect of
  change in
  accounting principle                   (261)            0       NM             (2)            0       NM
                                  -----------------------------------   -----------------------------------
Net income                        $    50,343   $    50,998       (1%)  $    18,596   $    13,813       35%
                                  ===================================   ===================================

    Net income per share-
     Basic                        $      1.29   $      1.30       (1%)  $      0.47   $      0.35       34%
                                  ===================================   ===================================
     Diluted                      $      1.28   $      1.29       (1%)  $      0.47   $      0.35       34%
                                  ===================================   ===================================

Weighted average
 shares outstanding - Basic        39,157,857    39,194,840              39,153,345    39,050,892
                                  =========================             =========================
                      Diluted      39,474,135    39,425,588              39,519,073    39,311,077
                                  =========================             =========================
</TABLE>

                                       13
<PAGE>

     Total premiums and policy charges increased 5% in the first nine months of
2001 as a result of increased production in both property casualty and life
business and continued good persistency. Net investment income increased 15% in
the first nine months of 2001 while invested assets have grown 8.3% in the nine
months since December 31, 2000.

     Operating income for the first nine months decreased by 8% in the property
casualty subsidiaries due primarily to an increased level of storm activity and
an increase in expenses related to technology initiatives. The 9% increase in
income in the life subsidiary is due to greater premium production and increased
investment income. Noninsurance operations were up 96% due primarily to solid
growth in the loan and lease portfolios. With an improved interest rate spread,
the finance subsidiary was the primary contributor to the approximately $1.3
million increase in noninsurance net income.

     The Company's net income was negatively impacted by a decrease in realized
investment gains. Corporate expenses decreased in the first nine months of 2001
due to lower interest expense on corporate-related debt primarily used to fund
the Company's stock repurchase program.

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 nine month and three month periods ended September 30, 2001 and 2000:

<TABLE>
<CAPTION>
                                    Nine Months Ended September 30,       Three Months Ended September 30,
                                  -----------------------------------   -----------------------------------
                                      2001         2000      % Change       2001         2000      % Change
                                  -----------------------------------   -----------------------------------
                                                                (in thousands)
<S>                               <C>           <C>         <C>         <C>        <C>          <C>
Earned premiums
  Personal lines                  $   282,805   $   268,942        5%   $    95,875   $    91,604        5%
  Commercial lines                     10,466        10,125        3%         3,557         3,416        4%
  Pools, associations and fees          3,239         3,012        8%         1,086           996        9%
  Reinsurance ceded                    (1,149)       (1,040)      11%          (385)         (372)       4%
                                  -----------------------------------   -----------------------------------

     Total                        $   295,361   $   281,039        5%   $   100,133   $    95,644        5%
                                  ===================================   ===================================

Net underwriting income           $    21,912   $    27,330      (20%)  $     7,092   $     6,251       13%
                                  ===================================   ===================================

Loss ratio                               62.1%         61.9%                   62.1%         64.8%
LAE ratio                                 4.0%          5.3%                    4.1%          4.7%
Expense ratio                            26.5%         23.1%                   26.7%         24.0%
                                  --------------------------            --------------------------

GAAP basis combined ratio                92.6%         90.3%                   92.9%         93.5%
                                  ==========================            ==========================
Underwriting margin                       7.4%          9.7%                    7.1%          6.5%
                                  ==========================            ==========================

Net investment income             $    23,474   $    22,187        6%   $     9,216   $     8,187       13%
                                  ===================================   ===================================

Pre-tax operating income          $    45,441   $    49,683       (9%)  $    16,226   $    14,433       12%
                                  ===================================   ===================================

Operating income, net of tax      $    33,445   $    36,482       (8%)  $    11,828   $    10,103       17%
                                  ===================================   ===================================
</TABLE>

                                       14
<PAGE>

     Earned premiums increased 4.7% in the third quarter of 2001 and 5.1% for
the first nine months of 2001 due to increased production in the number of new
homeowner policies written and from continued good persistency in both the
automobile and homeowner lines.

     The Company's core underwriting results continued to be favorable in
comparison to other insurance carriers due in part to a continued good loss
ratio in the automobile line of 61%, compared to the 59% loss ratio experienced
in the first nine months of 2000. The overall loss ratio increased to 62.1% for
the first three quarters of 2001 as the ratio climbed to 62.1% for the third
quarter. While approximately $7.4 million of storm losses were incurred in the
first quarter of 2001, the Company incurred no storm losses in the second or
third quarters of 2001. The Company incurred approximately $6.7 million in storm
losses in the first nine months of 2000, including $4.2 million in the third
quarter. Loss adjustment expenses in the first nine months of 2001 were 4.0% of
earned premiums compared to 5.3% in the same period of 2000. This improvement
resulted from a decrease in loss adjustment expense reserves made following a
review of reserve levels. The increase in business resulting from the mandatory
insurance law becoming effective in Alabama in June 2000 has not resulted in the
emergence of additional claims cost at the anticipated levels. Consequently,
reserves have been adjusted in 2001 to a more normal level. Another factor in
the lower underwriting margin was an increase in expenses from 2000 levels
created by the inclusion of Specialty in the pool. Another item contributing to
the increased expense level was the higher costs related to technology
initiatives.

     Net investment income increased 6% in the first nine months of 2001 in the
property casualty subsidiaries due to continued positive cash flow from
profitable underwriting results which increased invested assets 9.7% since
September 30, 2000.

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 nine month and three month periods ended
September 30, 2001 and 2000:

<TABLE>
<CAPTION>
                                                   Nine Months Ended           Three Months Ended
                                                     September 30,                September 30,
                                             ---------------------------  ---------------------------
                                               2001     2000    % Change     2001     2000   % Change
                                             ---------------------------  ---------------------------
                                                                  (in thousands)
<S>                                          <C>      <C>      <C>        <C>      <C>      <C>
Premiums and policy charges
  Universal life policy charges              $12,059  $10,962        10%  $ 4,121  $ 3,657        13%
  Universal life policy charges - COLI         2,210    2,055         8%      478      445         7%
  Interest sensitive life policy charges       7,591    7,625         0%    2,539    2,607        (3%)
  Traditional life insurance premiums         20,534   18,878         9%    6,802    6,196        10%
  Group life insurance premiums                  264      323       (18%)      65      121       (46%)
                                             ---------------------------  ---------------------------
     Total                                   $42,658  $39,843         7%  $14,005  $13,026         8%
                                             ===========================  ===========================

Net investment income                        $34,470  $30,872        12%  $11,564  $10,647         9%
                                             ===========================  ===========================

Benefits and expenses                        $50,194  $45,558        10%  $17,274  $15,261        13%
                                             ===========================  ===========================

Pre-tax operating income                     $20,913  $19,712         6%  $ 6,297  $ 6,600        (5%)
                                             ===========================  ===========================

Operating income, net of tax                 $15,530  $14,215         9%  $ 5,099  $ 4,664         9%
                                             ===========================  ===========================
</TABLE>

                                       15
<PAGE>

     The Company's life insurance premiums and policy charges increased 7% in
the first nine months of 2001 due to new business and good persistency. First
year collected premiums have increased over 26% in the first nine months of 2001
due to a continuation of increases in sales of term products including the
Company's new 30-year level term product which was first offered in January
2001. Annualized written premiums on this product totaled approximately $3.2
million in the first nine months of 2001. Total new annualized premiums
increased 6.4% in the first three quarters of 2001 and 12.1% in all of 2000.

     Life insurance operating income increased approximately 9% in the first
nine months of 2001. This increase was the result of continuing increases in
production, good persistency and increased investment income. The mortality
ratio of actual to expected death claims increased to 106% in the first nine
months of 2001 from 102% in the first three quarters of 2000. As a result of the
increase in earnings, positive cash flows resulted in a 12.7% increase in
invested assets since September 30, 2000, increasing investment income
approximately 12%.

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

     Noninsurance operations were up 96% due primarily to improved operating
results of Alfa Financial Corporation, the Company's finance subsidiary. Growth
in both the loan and lease portfolios combined with more favorable interest rate
spreads contributed to an increase in net income of $1,259,000 from the finance
subsidiary. Noninsurance operations were positively impacted by the timing of
fluctuations in the market value of assets held by the Company's subsidiary
covering certain employee benefits while earnings from the real estate and
construction subsidiaries were down a total of $330,000 in the first nine months
of 2001 from the same period in 2000.

CORPORATE
---------

     Corporate expenses decreased 32%, or approximately $1.4 million, due
primarily to favorable trends in short-term interest rates. This reduction in
rates allowed the Company's interest expense to decline from levels experienced
in the first nine months of 2000. Corporate interest expense was also reduced by
a decrease in commercial paper borrowings used to fund corporate expenses.

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 nine months ended September 30, 2001 and 2000:

<TABLE>
<CAPTION>

                                                                        Nine Months Ended
                                                                          September 30,
                                                                       -------------------
                                                                          2001      2000
                                                                       -------------------
<S>                                                                    <C>        <C>
Increase in invested assets since January 1, 2001 and 2000                 8.3%     12.3%
Investment yield rate (annualized)                                         7.0%      6.8%
Increase in net investment income since September 30, 2000 and 1999       14.8%     11.5%
</TABLE>

                                       16
<PAGE>

     The marginal 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 $21.9 million in underwriting income in the
first nine months of 2001 and to the improved operating results of the Company's
life subsidiary, which had $15.5 million in operating income in the same period.
The premium from the COLI plan in the life insurance subsidiary is collected in
February and provided positive cash flow in the first quarter of both periods.
Increases in cash resulting from increased commercial paper borrowings were
primarily used to support growth in the loan and lease portfolios of the finance
subsidiary, and to fund the Company's stock repurchase program. As a result of
the overall positive cash flows from operations, invested assets grew 8.3% since
January 1, 2001 and 13.1% since September 30, 2000 (based on amortized cost,
which excludes the impact of SFAS 115), and net investment income increased
14.8%. In addition to the increased investment income created by positive cash
flow from operations, the Company also had improved investment income results
from its finance subsidiary including approximately $1.4 million from its
commercial lease portfolio purchased on March 31, 2000. The overall yield rate,
calculated using amortized cost, has increased slightly to 7.0%. The Company had
net realized investment gains of approximately $3.1 million in the first nine
months of 2001 and $5.0 million in the similar period in 2000. 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
September 30, 2001 and December 31, 2000:

                                             September 30,   December 31,
                                                 2001            2000
                                             ----------------------------
          Fixed maturities
           Taxable
            Mortgage backed (CMO's)              25.5%           25.4%
            Corporate bonds                      30.1            30.5
                                             ----------------------------
             Total taxable                       55.6            55.9
           Tax exempts                           13.6            14.0
                                             ----------------------------
            Total fixed maturities               69.2            69.9
          Equity securities                       6.2             8.5
          Real estate                             0.2             0.2
          Policy loans                            3.3             3.4
          Collateral loans                        5.5             5.2
          Other long term investments            10.0             8.7
          Short term investments                  5.6             4.1
                                             ----------------------------
                                                100.0%          100.0%
                                             ============================

     The majority of the Company's investment portfolio consists of fixed
maturities which are diverse as to both industry and geographic concentration.
Since December 31, 2000, the overall mix of investments has remained relatively
stable with changes due to a shift from equity securities to other long term
investments and to market value fluctuations.

                                       17
<PAGE>

     The rating of the Company's portfolio of fixed maturities using the
Standard & Poor's rating categories is as follows at September 30, 2001 and
December 31, 2000:

                                                   September 30,   December 31,
                                                       2001            2000
                                                   ----------------------------
          RATING
          ------
          AAA to A-                                    90.6%          90.6%
          BBB+ to BBB-                                  8.7            8.3
          BB+ and Below (Below investment grade)        0.7            1.1
                                                      ---------------------
                                                      100.0%         100.0%
                                                      =====================

     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 September 30, 2001, approximately 36.9% 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
September 30, 2001, the Company's total portfolio of fixed maturities had gross
unrealized gains of $54,099,238 and gross unrealized losses of $10,819,147.
Securities are priced by nationally recognized pricing services or by
broker/dealer securities firms. No securities were priced by the Company.

     During the first nine months of 2001, the Company sold approximately $29.7
million in fixed maturities available for sale.  These sales resulted in gross
realized gains of $115,559 and gross realized losses of $1,635,745.  During the
same period in 2000, the Company sold approximately $36.1 million in fixed
maturities available for sale.  These sales resulted in gross realized gains of
$120,725 and gross realized losses of $1,029,950.

     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 September 30, 2001, the Company had
unrealized gains of approximately $8.9 million in such investments.

     In the first nine months of 2001, the Company wrote down four equity
securities totaling $2,727,768, whose declines in value were deemed to be other
than temporary and were recorded as a reduction in realized investment gains.
In addition, the Company wrote down four bonds during the same period totaling
$1,371,340, whose declines in value were also deemed to be other than temporary
and were recorded as a reduction in realized investment gains.

     The Company's investment in other long term investments consists primarily
of consumer loans and commercial leases originated by the finance subsidiary.
These loans and leases are collateralized by automobiles, equipment and other
property.  At September 30, 2001, the delinquency ratio on the loan portfolio
was 1.86%, up from 1.81% at December 31, 2000.  The delinquency ratio on the
lease portfolio at September 30, 2001 was 2.99%, down from 4.68% at December 31,
2000.  Credit losses of approximately $496,000 were incurred in the first nine
months of 2001 including an increase of approximately $111,000 in general
reserves attributable to growth of the consumer loan portfolio.  Leases charged
off in the first three quarters of 2001 were approximately $133,000.  At
September 30, 2001, the Company maintained an allowance for loan losses of

                                       18
<PAGE>

$795,341 or approximately 1.1% of the outstanding loan balance.  In addition, at
September 30, 2001, the Company maintained an allowance for lease losses of
$910,752 or approximately 1.7% of the outstanding lease balance. Other
significant long term investments include assets leased under operating leases,
partnership investments and certain other investments.

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

     The effective tax rate in the first nine months of 2001 was 28.0% compared
to 29.5% for the full year 2000 and 29.4% for the first nine months of 2000.
The decrease in the effective tax rate in the first nine months of 2001 is due
primarily to the reduction in income due to increased storm losses and
additional expenses related to technology initiatives.  The effective rate has
also been impacted by increased tax preference credits on certain investments.
Based on information available at September 30, 2001, the Company currently
anticipates the effective tax rate for all of 2001 to be approximately 28.7%.

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
-------------------------------

     The Company 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.

     The Company's subsidiaries require cash in order to fund policy acquisition
costs, claims, other policy benefits, interest expense, general operating
expenses, and dividends to the Company.  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 Incentive Plan,
pursuant to which a maximum aggregate of 2,000,000 shares of common stock were
reserved for grant to key personnel.  On April 26, 2001, the plan was amended to
increase the maximum aggregate number of shares available for grant to 3,200,000
shares.  Under the plan, options ratably become exercisable annually over three
years and may not be exercised after ten years after the date of the award.
During March 2001, the Company issued 202,000 options.

     On September 24, 2001, the Company's Board of Directors approved an
increase in the stock repurchase program by authorizing the repurchase of an
additional 2,000,000 shares of its outstanding common stock in the open market
or in negotiated transactions in such quantities and at such times and prices as
management may decide.  Consequently, the current authorization would allow the
Company to repurchase up to 6,000,000

                                       19
<PAGE>

shares. During the first nine months of 2001, the Company repurchased 177,950
shares at a cost of $3,575,199. At September 30, 2001, the total repurchased was
3,223,050 shares at a cost of $41,652,727. The Company has reissued 483,216
treasury shares as a result of option exercises.

     Total borrowings increased $32.3 million in the first nine months of 2001
to $175.5 million. At September 30, 2001, the Company had approximately $142.4
million in commercial paper outstanding at rates ranging from 2.55% to 3.51%
with maturities ranging from October 10, 2001 to November 16, 2001. The Company
intends to continue to use the commercial paper program to fund the consumer
loan portfolio, commercial lease portfolio and other corporate short term needs.
Backup lines of credit are in place up to $180 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 $33.1 million in short-term debt
outstanding to affiliates at September 30, 2001 with interest equal to
commercial paper rates payable monthly.

     Cash surrenders paid to policyholders on a statutory basis totaled $11.7
million in the first nine months of 2001 and $12.4 million for the first nine
months of 2000.  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 September 30, 2001, the total
amount of cash that would be required to fund all amounts subject to surrender
was approximately $452.2 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, reduces
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.  In 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.  While this requirement
will affect both the revenues and losses incurred by the Company in the future,
the full extent or impact is not possible to predict and the Company believes
any impact on future results will not be significant.

FINANCIAL ACCOUNTING DEVELOPMENTS
---------------------------------

     The Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standard (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

                                       20
<PAGE>

instruments embedded in investment securities and other contracts, and for
hedging activities. It requires that 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. This standard, as amended by SFAS No.
137 and SFAS No. 138, became effective for the Company January 1, 2001. At this
time, the Company does not anticipate this standard having a significant impact
on the Company's financial position or income as it does not use derivative
instruments in the normal course of business. On January 1, 2001, the Company
recorded approximately $259,000, net of tax, as the effect upon adoption of this
standard.

     The FASB also issued SFAS No. 140, "Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities (a replacement of SFAS
No. 125)" in September 2000.  At this time, the Company does not anticipate this
standard having a significant impact on the Company's financial position or
income.

     The FASB recently issued SFAS No. 141, "Business Combinations," and SFAS
No. 142, "Goodwill and Other Intangible Assets," in September 2001.  Based on
current information available and the fact that the Company has not engaged in
material transactions covered by these standards, the Company does not
anticipate these standards having a significant impact on the Company's
financial position or income.

     In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations."  Subsequently, in August 2001, the FASB issued SFAS No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets."  At this
time, the Company does not anticipate either of these standards having a
significant impact on the Company's financial position or income.

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 expressed 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,
technological changes, political and legal contingencies and general economic
conditions, as well as other risks and uncertainties 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 and may cause actual future results to differ
materially from those contemplated, projected, estimated or budgeted in such
forward-looking statements.

                                       21
<PAGE>

Item 3.
-------

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

     The Company's objectives in managing its investment portfolio are to
maximize investment income and investment returns while minimizing overall
credit risk.  Investment strategies are developed based on many factors
including underwriting results, overall tax position, regulatory requirements,
and fluctuations in interest rates.  Investment decisions are made by management
and approved by the Board of Directors.  Market risk represents the potential
for loss due to adverse changes in the fair value of securities.  The market
risk related to the Company's fixed maturity portfolio are primarily interest
rate risk and prepayment risk.  The market risk related to the Company's equity
portfolio is equity price risk.  There have been no material changes to the
Company's market risk for the nine months ended September 30, 2001.  For further
information, reference is made to Management's Discussion and Analysis of
Results of Operations in Alfa Corporation's Annual Report on Form 10-K for the
year ended December 31, 2000.

                                       22
<PAGE>

                          PART II. OTHER INFORMATION

Item 1.
-------

     LEGAL PROCEEDINGS
     -----------------

     Certain legal proceedings are in process at September 30, 2001.  Costs for
these and similar legal proceedings, including accruals for outstanding cases,
totaled approximately $760,000 in the first nine months of 2001, $3.0 million in
2000, $6.5 million in 1999 and $5.2 million in 1998.  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.  Approximately 18 legal proceedings against Alfa
Life Insurance Corporation (Life) are in process at September 30, 2001.  Of the
18 proceedings, four were filed in 2001, five were filed in 2000, seven were
filed in 1999, one was filed in 1997, and one was filed in 1996.  In a case
tried in January 2001, in Barbour County, Alabama, the jury returned a verdict
for the plaintiff against Life for $500,000 in compensatory damages and
$5,000,000 in punitive damages.  After Life filed post-trial motions, the trial
court reduced the punitive damage award to $1,500,000.  Life has appealed the
award to the Alabama Supreme Court.  Two of the 18 pending legal proceedings
against Life were filed as purported class actions.  At present, only one class
action has been certified against Life.  The trial court order certifying that
class action has been appealed to the Alabama Supreme Court.  In addition, one
purported class action lawsuit is pending against both Alfa Builders, Inc. and
Alfa Mutual Fire Insurance Company.  Additionally, four purported class action
lawsuits are pending against the property and casualty mutual companies
involving a number of issues and allegations which could affect the Company
because of a pooling agreement between the companies. No class has been
certified in any of these five purported class action cases.  It should be noted
that in Alabama, where the Company has substantial business, the likelihood of a
judgment in any given suit, including a large mental anguish and/or punitive
damage award by a jury, bearing little or no relation to actual damages,
continues to exist, creating the potential for unpredictable material adverse
financial results.

Item 6.
-------

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

     (a)  Exhibits:

          11 - Statement of Computation of Per Share Earnings

     (b)  Reports on Form 8-K:

          There were no reports on Form 8-K filed during the quarter ended
          September 30, 2001.

          Items other than those listed above are omitted because they are not
          required or are not applicable.


                                       23
<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      11/12/01                 By:      /s/ Jerry A. Newby
    -------------------               -----------------------------------
                                                  Jerry A. Newby
                                                  President



Date      11/12/01                 By:      /s/ Stephen G. Rutledge
    -------------------               -----------------------------------
                                                  Stephen G. Rutledge
                                                  Senior Vice President,
                                                  (Chief Financial Officer and
                                                  Chief Investment Officer)

                                       24